LOS ANGELES (CBSLA) -- The Los Angeles Unified School District's choice for its coronavirus testing lab for hundreds of thousands of students is raising questions.
The lab just opened up and the founder had ties to school superintendent Austin Beutner.
Investigative reporter David Goldstein says thousands of district employees have already been tested.
The company, SummerBio, was formed just months ago and now has the district's nearly $50 million coronavirus testing contract.
Beutner got COVID-19 testing a few weeks ago. He and hundreds of thousands of students and teachers will be getting the same tests from Summe Bio, which up until a few months ago didn't exist.
Dr. Susan Butler-Wu, an associate professor of clinical pathology at Keck School of Medicine, says she doesn't know anything about SummerBio, but she has concerns about labs jumping into the COVID testing business.
"I would personally be a little nervous going with a company that hasn't existed up until a couple of months ago," she said. "My concern is there are labs out there that are not up to snuff because they don't have that experience."
California state documents show SummerBio was formed in May of this year.
The address in Northern California turns out to be a postal box in a UPS store.
But three months later, Beutner chose them for a nearly $50 million contract with LAUSD -- paid for by taxpayers.
According to the paperwork, SummerBio was created by Sky Dayton, an entrepreneur who started Earthlink and other companies, and KCAL9/CBS2 found he had business ties to Superintendent Beutner.
Beutner served on the board of Dayton's company Earthlink from 2001 to 2003.
Beutner's former venture capital company Evercore also had a business relationship with another company co-founded by Dayton, but the district claims they've done no business together since 2008.
Dayton also contributed to Beutner's run for mayor in 2011. The district says the money was returned.
LAUSD claims they vetted 22 COVID-19 testing labs before Beutner — under emergency coronavirus powers — chose Summer Bio which a spokesperson says had the lowest price and fastest service.
According to the contract, the district is paying $20 per test for the first 475,000 tests and less after that.
School board member Jackie Goldberg says the price was the key and she doesn't have any problems doing business with a company where Beutner had close relationships with the owner.
"We went with the new company because basically, they offered us the best deal," she said. "If we excluded every company that he had a relationship with, we'd have a lot of people we couldn't do business with because this guy has got a lot of relationships."
A district spokesperson says SummerBio is operated by industry veterans.
Their website says they've developed a unique approach designed to provide rapid, affordable and high-volume testing.
SummerBio is licensed by the state and has applied for an emergency use authorization from the FDA. It's not yet been granted.
Attorney Bob Stern, who helped write California's ethics law, says he doesn't see an ethical violation with Beutner picking a company where he knows the owner but would like more information on why.
"An explanation of why he chose this particular company, why this company with no experience was picked and why this company where he had close connections with the owner was picked," said Stern.
Superintendent Beutner and Dayton refused interview requests.
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