Newsom's taxpayer-funded California diaper program could "lead to waste," state records warned

Newborns outgrow their first diapers in weeks. Experts say so. California records show it, and several organizations that competed with Baby2Baby to run the state's free diaper program made the same point.

One nonprofit pointed to a federal diaper pilot in California that found 83% of family requests were for Size 4 and up. Another warned that providing too many diapers of a single size "can lead to waste as babies may outgrow infant diaper sizes before they are used."

Agency officials raised similar concerns with Baby2Baby, one of whose co-CEOs serves on the board of First Partner Jennifer Siebel Newsom's California Partners Project. Baby2Baby ultimately won the multimillion-dollar contract to manufacture and distribute California-branded free diapers.

Officials questioned Baby2Baby about its plan to send every new baby home from the hospital with 300 to 400 diapers in only the two smallest sizes. They noted that that many diapers at once "might be overwhelming" and that parents "may want alternative sizes... so not to waste product."

The Newsom administration went with Baby2Baby's plan anyway. The recently released contract locks in 400 California-branded diapers for every baby, limited to Newborn and Size 1, handed over once at hospital discharge with "no right to return or exchange diapers."

For 66 days, the state delayed releasing that contract and the related records, citing what the governor called a "competitive bid process." It wasn't.

Those records arrived on July 17, six hours after CBS California Investigates published an investigation revealing that the administration bypassed the normally required competitive-bidding process using an exemption written into the state budget.

Across the 356-page release, there are no bid scoring sheets, evaluation criteria or rankings. The agency's own final recommendation shows the other finalist offered more diapers, in more sizes, for roughly the same price.

One point up front: This story is not about whether Baby2Baby is a good charity. Baby2Baby is a highly rated charity. Its co-CEOs each earn under $70,000, and its celebrity board members earn nothing. About $3.9 million of the $6.2 million contract buys the diapers themselves at a competitive price.

Similarly, nothing in the released records reveals illegal conduct. The exemption lawmakers added to the budget made it legal for the administration to bypass ordinarily required competitive bidding and state contract review.

Instead, the records raise questions about why the state designed a program its own agency warned could waste taxpayer-funded diapers. They also show the state selected Baby2Baby even though its recommendation identified the other finalist as ready to provide the planned direct-to-consumer component.

How the state selected Baby2Baby 

In government contracting, the words matter. A "Request for Proposals," or RFP, kicks off a real competition: vendors submit bids, the bids are scored against published criteria, and losing bidders can protest. A "Request for Information," or RFI, is just what it sounds like: the state asking companies to tell it about themselves. No bids. No scores. No winner.

California issued the second kind. The document that started this process says so itself: it is "Not a Solicitation," issued "for information and planning purposes only."

But state officials repeatedly described it like the first kind. At a 2025 budget hearing, HCAI's director told lawmakers, "We've issued an RFP."

At a May 2026 hearing, HCAI's chief deputy told senators proposals "are evaluated and scored," then narrowed to finalists through interviews.

The records the state released contain no scores. HCAI's July 17 release says all 15 submissions "were reviewed using the same evaluation process," without disclosing what that process was. It never uses the words "competitive bid."

The contract itself confirms the deal was exempt from the Public Contract Code, the State Administrative Manual and Department of General Services review.

How the reporting began

The diaper deal drew fire the day Gov. Gavin Newsom announced it. Critics pointed to the First Partner's ties to a Baby2Baby co-CEO who sits on the board of Jennifer Siebel Newsom's nonprofit, the California Partners Project.

Our May fact-check found the loudest criticisms of the program and Baby2Baby were wrong: taxpayers will pay about 18.5 cents per diaper, not the 50-cent figure circulating online. Baby2Baby is a highly rated charity, and its co-CEOs do not pay themselves six-figure salaries.

Aside from the state refusing to immediately provide a copy of the contract, the initial reporting raised one central red flag: the plan to send every new parent home from the hospital with 400 diapers.

Parenting and pediatric experts caution that newborns often outgrow diaper sizes within the first few weeks, and stockpiling leads to waste. At the time, program officials couldn't say how they planned to ensure taxpayer-funded diapers given out in bulk would not go to waste.

It would be 66 days before the state turned over records showing agency officials had raised the same questions we did.

Concerns about diaper waste and sizes

The warnings came from everywhere, including inside HCAI, the agency that signed the deal.

The state warned Baby2Baby directly. HCAI's August 2025 follow-up questions acknowledged that sending parents home with 300 to 400 diapers "might be overwhelming" and that parents "may want alternative sizes than N and Size 1 so not to waste product." Its September questionnaire repeated the concern: a large number of diapers at discharge "might present logistical problems."

Baby2Baby pushed back, noting its diaper boxes are "not a burdensome or hard to carry package." It also argued against offering additional sizes, saying even one more would create "additional logistical challenges" and "a higher risk of surplus inventory."

The state's budget question had asked for quantities in three sizes, including Size 2. Baby2Baby attached a note titled "Why We Don't Recommend Including Size 2 Diapers."

But Baby2Baby was in the minority.

Other applicants pointed to data. CalCAPA, an independent organization that leads the federally funded diaper pilot in California, reported that 83% of all diaper requests were for sizes 4 and up, 70% for Sizes 5 and up, and Newborn sizes are "often outgrown within just a few weeks." The pilot also found families have the most support right after birth, while the greatest need comes during the toddler years.

Several organizations urged the state to rethink the plan. Sacramento Food Bank and Family Services, which, after state funding cuts, scaled back to offering only sizes 4 through 7 and training pants, warned that "providing too many diapers of a single size can lead to waste as babies may outgrow infant diaper sizes before they are used."

Second Harvest, which lets families choose from sizes 0 to 7, advocated for "a similar model statewide... to reduce waste."

Help a Mother Out recommended families choose sizes "to reduce waste."

The signed contract requires only two sizes: Newborn (up to 10 pounds) and Size 1 (8 to 14 pounds). One supply of 400 diapers per baby, two boxes of 200. "There is no right to return or exchange diapers."

The contract addresses unused inventory only on Baby2Baby's side, allowing the nonprofit to roll it into the following contract year. Nothing addresses waste once the diapers reach families. No size exchange. No mechanism if a baby outgrows the supply.

How long 400 diapers could last

The state told respondents that 400 diapers represented "a three-month supply," based on "approximately 4-5 diapers per day." Its own internal Q&A added: "We welcome feedback if this seems too low."

It got the feedback. 

A usage analysis from JSL Partners, a supplier to California food banks, estimated newborn use at about 10 diapers a day. By its calculations, a baby would need roughly 170 newborn diapers and 657 Size 1 diapers during the first three months – more than twice the 400 diapers supplied, and in very different proportions from the contract's even 200/200 split.

Parenting experts have raised the same concern for years.

The state's own analysis flagged problems

Before the contract, HCAI's internal May 2025 presentation compared four program designs. Of the hospital-giveaway model the state ultimately chose, it warned: "Families with higher incomes would all receive free diapers; possibly reducing the public health effectiveness of the program."

The same deck lists "Diaper Banks Support: No" for that model, noting the banks "would prefer direct funding." An alternative, "Consolidated Purchasing" through the state's existing diaper bank network, was rated as having the lowest implementation difficulty. That's the approach the Legislative Analyst's Office had recommended.

Lawmakers saw the same problem in real time. 

"The idea that we are not providing health care to somebody who desperately needs it, but we're going to be giving diapers to somebody who makes $200,000 and happens to have a birth in a hospital seems really tone deaf in this moment in time," Assemblymember Mia Bonta said at a May 2025 budget hearing.

At the same hearing, the Legislature's independent analyst said the program is "really a small benefit for a big group of people. So it's not targeted in terms of need."

Baby2Baby was selected months before the announcement

On Jan. 7, 2026, HCAI Deputy Director Vishaal Pegany emailed Baby2Baby: "After thoughtful consideration, HCAI is pleased to share that we would like to move forward with Baby2Baby." Baby2Baby's chief operating officer accepted that same evening.

The released records show no notice to the other respondents. Several told CBS California Investigates they learned they were no longer under consideration when the governor announced the deal. 

Under a traditional competitive bid, losing bidders are notified and generally have an opportunity to protest. But this was not legally a bid, so there was no formal bid-protest process.

The contract was signed in late April. Gov. Newsom announced it May 8, describing a deal that "went through a competitive bidding process." His office later said he was referring to the "competitive nature" of the state's information-gathering process and was not using "bidding" in its formal technical sense.

We checked the office's response against the state's own records.

How the diaper program was designed

Baby2Baby was already operating a hospital-based newborn supply program when California wrote its statewide proposal.

In May 2023, Vice President Kamala Harris announced a newborn supply pilot pairing the U.S. Department of Health and Human Services with Baby2Baby under a memorandum of understanding between the agency and the nonprofit. Kits were delivered to new mothers through hospital sites in three states.

By the time California went looking for a partner, Baby2Baby told the state its hospital-based program had expanded to 15 states, including California. It was also at least Baby2Baby's third no-bid state deal. Lawmakers had twice written Baby2Baby into the budget by name: $1 million for infant car seat distribution in 2022 and $1.5 million for "Baby2Baby - Diaper Production and Distribution" in 2023.

Then, on Jan. 10, 2025, months before the state contacted potential vendors, HCAI wrote a budget proposal that closely mirrored Baby2Baby's existing model: one statewide partner would manufacture diapers and distribute them to new mothers through hospitals. The proposal had already settled on 400 diapers per baby and projected $3.8 million in first-year manufacturing costs.

By the time potential vendors were contacted, the program's core design was already set. The RFI sought information "from diaper manufacturers" capable of carrying out that framework, although several respondents proposed different sizes and distribution models.

Some proposed broader diaper sizes, direct-to-consumer delivery and systems designed to reduce waste. But the final agreement returned to Baby2Baby's model.

The contract's two-size, 200-of-each design came directly from Baby2Baby's response. The nonprofit explained the diapers would come as "200 newborn diapers and 200 size one diapers (Baby2Baby diapers come packed 200 per box)."

The records do not indicate the state formally selected Baby2Baby before issuing the RFI. But they show California designed the program around a model Baby2Baby was already using before considering other vendors, then signed a contract that closely followed Baby2Baby's proposal despite repeated warnings for some about limited sizes, bulk hospital distribution and potential waste.

More diapers and more options

The state budgeted $7.4 million for the program's first year.

HCAI's own Finalists Recommendation shows SupplyBank.org, an Oakland nonprofit that describes itself as California's largest charitable diaper distributor, offered to use the full amount. With the stated $7.4 million budget, it "could commit to distributing 49M diapers," in four sizes, including preemie. Its proposal even noted the program budget "has more dollars than what were necessary."

The state instead agreed to buy 40 million diapers in two sizes from Baby2Baby for $6.1 million. HCAI's own comparison priced the finalists nearly identically per diaper. Baby2Baby's total was lower because it covered fewer diapers, not because its diapers cost less.

The initial program proposal planned a Phase 2: a marketplace where families could buy low-cost diapers directly, which the state's own memo estimated could save a family up to $631 a year.

That memo says selecting Baby2Baby "would not enable consumers to directly purchase low-cost diapers thereafter in the second phase." SupplyBank was rated "Ready," and was the only respondent identified as having "Potential to be a market disruptor through DTC [direct-to-consumer] sales."

The state chose Baby2Baby, which declined to identify its diaper manufacturer during the RFI. The state was still asking in August: "Could you share who the diaper manufacturer is?" The manufacturer is in Mexico.

At a May 2026 hearing, senators clarified that Phase 2 would not provide free diapers, but lower-cost diapers families could buy, likely through a different vendor. Asked directly, HCAI's director confirmed: "Correct."

CBS California Investigates has asked who made the final decision.

Amazon's proposal to the state

Among the responses the state accepted months past its own deadline was one from Amazon Business, submitted in September 2025.

Amazon proposed two models. One was a state-branded storefront with Amazon handling inventory, fulfillment, delivery and returns. The other was a pre-funded voucher system allowing families to choose items "by style, color, size" from a curated catalog and have them delivered wherever they prefer. No lugging 400 newborn diapers home from the hospital. No outgrown boxes.

Amazon appears in none of the state's comparison or finalist documents. CBS California Investigates has asked whether its response was ever evaluated.

How many organizations responded?

How many organizations responded depends on which state document you read. The Executive Summary and May deck say 11. The Finalists Recommendation says "fourteen." The press release, the governor's office's email to CBS California Investigates and the chief deputy's testimony to senators ("We got 15 proposals back") say 15. Same agency, same process, three numbers.

Part of the answer appears to be timing. Responses were due May 15, 2025. But the records show the state continuing to engage with responses that arrived in late July, August and September, including follow-up questions and pricing negotiations into October.

Four organizations that responded later, including Amazon and a national diaper bank network, do not appear in the May comparison spreadsheet. It was a rolling, informal process, consistent with what HCAI's chief deputy director told senators the exemption allows: "negotiated contracting outside of state rules."

The Finalists Recommendation states HCAI "met with all RFI respondents or organizations representing RFI respondents." At least one respondent told CBS California Investigates it applied, asked for updates and never got an interview. 

We've asked which respondents got direct meetings and which were merely "represented," and by whom.

The contract's legal authority  

The executed contract's face sheet cited its authority to skip contract oversight: Health and Safety Code Section 127692(b).

That provision is part of California's affordable drug manufacturing law and governs the state's CalRx prescription drug program. It says nothing about diapers. The RFI itself was run through the CalRx program, with responses sent to diapers@calrx.ca.gov.

In the released copy of the contract, the prescription-drug citation is crossed out and replaced with the Budget Act exemption beside a notation reading "RZ 5-20-2026." The contract was signed April 28 and announced May 8. CBS California Investigates requested the records May 12. The notation is dated May 20, eight days after CBS California Investigates requested the records. 

The record suggests a reason for the paperwork change. The exemption lives in a budget act, and budget acts expire. 

At a May 2026 Senate hearing, HCAI Director Elizabeth Landsberg told lawmakers the administration was seeking "a technical correction to add identical language that was included in the '25 budget act and was inadvertently left out" when the governor's new budget was released.

Her chief deputy, Scott Christman, explained why: the exemption "is attached to the fund source," and to amend the contract for more money, "the exemption will have to be with it. If the exemption is removed then it's essentially defunct."

What legal authority covered the contract on the day it was signed, when its face sheet cited a prescription-drug law? We've asked the governor's office.

Confidentiality is written into the Baby2Baby deal

The contract creates a Joint Steering Committee that meets monthly. The agreement states its meetings "are not open or public meetings" under Bagley-Keene, California's open meeting law.

The committee also oversees a "mutually approved communications strategy document that outlines talking points, verbiage and best practices." The state and Baby2Baby jointly approve the communications strategy and talking points.

A separate publicity clause says neither party may issue any press release about the agreement without the other's prior written consent. 

The contract's performance standards also rely on Baby2Baby's own testing protocol. The diapers' quality methodologies are "based on contractor diapers' test protocol."

Even the program's public-facing website runs through the vendor: HCAI's official Diaper Access Initiative link directs users to a page hosted on baby2baby.org, not ca.gov.

Two provisions cut the other way, for the record's sake. Baby2Baby must provide HCAI monthly reports covering hospitals enrolled, counties reached, diapers shipped by size and children served. The state may also audit and copy records for three years after final payment. We'll request those records.

Where the Baby2Baby contract's $6.2 million goes

Concerns that Baby2Baby is cashing in on this deal are, on the record, overstated. The contract is cost-reimbursement: the state pays "actual costs incurred," supported by invoices and documentation, capped by a cost worksheet.

That worksheet breaks down the $6.2 million: $3.9 million for the diapers themselves, $750,000 for shipping, $610,000 for warehousing, $917,000 for a year of program personnel and $35,000 for communications. There is no profit line. Baby2Baby's co-CEOs each earn under $70,000 a year.

Two line items still deserve scrutiny. The personnel funding covers 12 Baby2Baby staff positions, including titles that appear organization-wide – salaries Baby2Baby might otherwise pay from its own budget.

The state will also reimburse Baby2Baby for up to $610,000 in warehousing costs. The contract requires documentation of those expenses, but does not say whether the money will expand existing infrastructure or whether any resulting capacity must be reserved for the state program.

What Baby2Baby pays its manufacturer for each diaper is not in the public record; Baby2Baby marked its underlying pricing details confidential during the process, and we are honoring those markings. The contract's own numbers are public: $0.07615 per Newborn diaper and $0.09065 per Size 1, with shipping and warehousing billed on separate lines.

Notably, the state marked one copy of Baby2Baby's pricing confidential and withheld it on that basis, then released the same figures unredacted in four other documents in the same production. CBS California Investigates is redacting the pricing marked confidential in our published documents and in this story to avoid disclosing information that could harm the nonprofit.

California branding on the diapers

Baby2Baby keeps its own packaging plain on purpose. Its diapers, it told the state, are "stripped of the bells and whistles of commercial brands, in order to bring the cost down per diaper."

The Newsom administration wanted state branding on the box anyway. Its own recommendation memo weighed marketing the diapers "under its own brand rather than using the nonprofit product's branding" and flagged what that decision put at stake: how consumers would judge "the diaper's quality and how this impacts the State's reputation." HCAI recommended a name: "Golden State Start."

The memo also noted the other finalist's offer that a simple one- or two-color state design "could reduce" its diaper cost.

The signed contract settled it. The state controls the packaging design, and the per-diaper price is defined as "including Golden State Start branding." Custom state branding, on a product its own vendor deliberately keeps plain to save money.

How the diaper program survived the budget fight

In June 2025, lawmakers removed the governor's proposed program and its no-bid exemption from the budget, redirecting its $7.4 million to 11 named diaper banks instead.

The program returned weeks later in a companion bill negotiated "after nearly two weeks of closed-door negotiations," with the exemption rewritten and a second year of funding, $12.5 million, already committed.

This year, lawmakers renewed the exemption for that second phase. The renewal drew pushback.

State Sen. Caroline Menjivar, the budget subcommittee chair, put the issue to HCAI directly: "we defend the contract with Baby to Baby by saying that we went through the regular... public process. However, we went through a more streamlined one, and to your point, a process that does not have oversight and full transparency."

Then she said this:

"And optically speaking, it was not a smart move to choose the vendor that we chose. Given that negotiations are gonna continue to happen, I'm not inclined to fight to continue to do another public contract exemption. I don't think that's to the benefit of Californians."

"I will say the optics of this vendor is not good at all," Menjivar also warned the agency. "The administration and the governor is gonna be gone, and we're gonna continue to get hit on this."

Lawmakers renewed the exemption anyway.

According to HCAI's own testimony, that renewal enables a Year 2 amendment with the same vendor, with $11 million to $12 million of the $12.5 million going toward diapers. HCAI told lawmakers it planned to use the same exemption to amend the Baby2Baby contract rather than conduct a new competitive bid.

Phase 2, the planned direct-to-consumer marketplace, gets the same treatment: HCAI told senators the renewed exemption "would also support contracting for Phase two" with an additional partner. Same exemption. Same negotiated process.

The governor's office has pointed out that diaper banks and the diaper program each received $7.4 million in the final 2025 budget. But that compares two different programs in a single year. The diaper banks' $7.4 million represented a year-over-year cut of about $2 million, or roughly 20%, according to the Legislative Analyst's Office, and came from the Legislature rather than the governor's proposed budget.

Gov. Newsom's 2025 proposed budget funded the Baby2Baby program at the expense of traditional diaper bank funding. Lawmakers then amended the budget to remove the governor's program entirely, reallocating that $7.4 million back to diaper and food banks, per the LAO's recommendation, before passing the budget.

The additional $7.4 million for the governor's program was later added in the Budget Bill Jr. Our point-by-point response to the governor's office has the details.

One in four California births

The governor promoted the program as providing free diapers to new families statewide. HCAI says every family welcoming a newborn at a participating hospital may receive the supply.

The contract reveals the limits of that promise. Year 1 targets up to 40 million diapers, which the agreement describes as enough for approximately 25% of California births. Eligibility remains subject to diaper availability at participating hospitals, and the contract says the state is not responsible for shortages.

Two months into implementation, HCAI reported that 15 of California's 203 birthing hospitals were actively participating, with 91 onboarding and five finalizing agreements.

The fight for the diaper program records

The fight to get these records was a story of its own and raised new concerns.

The Newsom administration waited 24 days to decide whether it would even allow the public to see the records, then repeatedly delayed releasing them months after the high-profile diaper deal announcement.

In our second report, we publicly detailed every extension, which came at a time when lawmakers were moving legislation that would give agencies even more time to respond to public records requests like these.

After cross-referencing the state contract database, non-competitive bid database, two years of budget hearings and four different budget bills connected to Baby2Baby's non-competitive contracts dating back to 2022, we found the diaper contract listed as "NON-COMPETITIVELY BID," despite the governor's public description of a "competitive bidding process."

Our third report revealed how a single sentence in the state budget exempted the diaper program from competitive bidding and state contracting oversight. It was one of more than two dozen similar exemptions in California's new budget, covering more than $1 billion in spending, from a $253 million opioid-response fund to suicide-crisis grants and a prison re-entry program. Two out of three never expire.

Because those deals are also exempt from normal state contracting oversight, they are largely absent from a public database specifically intended to track noncompetitively bid contracts.

The Baby2Baby contract was listed as "NON-COMPETITIVELY BID" in the state's broader contract database, but it did not appear in the separate public database for no-bid contracts. Without that listing, the governor's public announcement is what initially led us to identify the deal.

On July 17, six hours after we published that investigation, California posted the records we had been requesting for 66 days. The records went up at 5:34 p.m.

Thirty minutes later, the governor's office emailed CBS California Investigates to "clarify misrepresentations and factual inaccuracies." It requested corrections and called parts of our reporting "demonstrably false."

We checked each claim against the state's own records and published a point-by-point response. That report also laid out the budget history behind the diaper deal.

That review measured the office's assertions against the governor's own budget documents, the Legislature's bill texts and analyses, the Legislative Analyst's Office, and the records the state itself released.

Some of the office's answers confirmed parts of our reporting rather than contradicting them. It acknowledged the governor was not using "bidding" in its formal legal sense, while its explanation that the deal is labeled "non-competitive" because of an exemption restated a central finding of our reporting.

Where the record supported additional context or detail, we updated our story and said so.

What the email requesting corrections did not do was answer the questions we had put to the state.

To be clear about what the records show  

Nothing in the released records shows the governor's office or First Partner Jennifer Siebel Newsom directly selected Baby2Baby.

Every contracting exemption described in this story is legal and was approved by the Legislature.

The diaper banks' allocations are also exempt from competitive bidding and Department of General Services oversight, and those agreements do not appear in the no-bid database either. The distinction our reporting draws is who selected the recipients and how publicly: lawmakers named the diaper banks in a public bill and voted on their allocations.

The records instead raise questions about why the state designed a program its own analysis warned could result in wasted diapers, used a process that did not formally test that design through competitive bidding, selected Baby2Baby over another finalist its own memo rated ready to build the planned second phase, and then publicly described the process as competitive bidding.

We sent the state several follow-up questions July 20. We are still waiting for answers.

(Document links in this story open the individual state records on DocumentCloud, redacted to remove personal contact information and confidential pricing information.)