Full Breakdown
California’s “Competitive” Diaper Deal Was a Non-Competitive Exemption – A Deep Dive
7/20/2026, 8:45:41 PM
The Core Contract
In May 2026 Governor Gavin Newsom announced that nonprofit Baby2Baby would supply “millions of free California-co-branded diapers” to every new parent. The governor described the arrangement as having “gone through a competitive bidding process.” State contract records, however, list the $6.2 million agreement as “NON-COMPETITIVELY BID” under the exemption “Exempt by Policy – Other (buyer must indicate policy).” The contract was released only after a 66-day delay following a public-records request.
Legislative Background
The exemption originated in the 2025 budget proposal, which instructed the state to “identify a partner” for the diaper program but did not mention competition. A single line in the 893-page 2026 Budget Act created a blanket waiver that removed both the competitive-bidding requirement and Department of General Services (DGS) review for the Diaper Access Initiative. Similar language appears in more than two dozen clauses across seven state departments, covering a $253 million opioid-response fund, 988 Suicide & Crisis Lifeline grants, a $12.9 million prison-reentry program, and a $90 million reproductive-health grant. Two-thirds of these exemptions have no expiration date, collectively shielding over $1 billion in appropriations from standard oversight.
Key Figures & Organizations
- Governor Gavin Newsom – announced the diaper partnership and defended the process as competitive.
- Baby2Baby – nonprofit that received the contract; its co-CEOs sit on the board of the First Partner’s California Partners Project.
- Chief Deputy Director, Department of General Services – explained the legal effect of the exemption.
- Elizabeth Landsberg, Director of the Health Care Access Initiative (HCAI) – oversaw the RFI and contract negotiation.
- Large diaper-bank network – responded to the RFI but reported never receiving an interview.
Data & Statistics
- Contract value: $6.2 million (2026).
- Prior Baby2Baby state contracts: $1 million (2022 car-seat) and $1.5 million (2023 L.A. diaper distribution).
- Total non-competitive exemptions identified: more than two dozen, totaling >$1 billion.
- Two-thirds of exemptions never expire.
- Diaper-bank funding after amendment: $16.5 million to eleven named banks, surpassing the $12.5 million allocated to the next phase of the Baby2Baby program.
Why It Matters
The exemption bypasses public advertising, DGS review, and entry in the state’s no-bid database, making the contracts virtually invisible to taxpayers. The program also displaced existing diaper-bank funding, prompting concerns that vulnerable families could lose services while the state directs money to a single, undisclosed partner. The broader pattern raises questions about transparency for a substantial portion of the state budget.
Official Statements & Responses
- The governor’s office asserted the RFI was “still competitive, receiving 15 applicants who were judged on multiple factors including diaper cost, cost for implementation, existing infrastructure for manufacturing/distributing, and other significant considerations.”
- A spokesperson clarified that the term “competitive” referred to the “competitive nature” of the RFI, not to the statutory bidding exemption.
- HCAI Director Elizabeth Landsberg told senators the process was “a robust, meaningful process,” likening it to the state’s CalRx insulin and naloxone programs.
- The Department of General Services chief deputy director noted the exemption “allows you to essentially engage in negotiated contracting outside of state rules.”
Criticism & Opposition
State investigators and lawmakers argue the lack of a public bidding record defeats the purpose of competitive procurement. Diaper-bank representatives said they were either not interviewed or felt “we weren’t seriously considered,” and they received no notification of losing the opportunity. Critics also point out that the RFI explicitly labeled itself “Not a Solicitation,” meaning responses could not form a binding contract, yet the state proceeded to negotiate directly with Baby2Baby.
On-the-Ground Reports
When the governor’s program replaced traditional diaper-bank funding, officials told legislators that the banks “would be able to bid.” No competitive bid occurred, and the budget was later amended to reallocate the full $7.4 million to eleven named diaper and food banks.
Conflicting Reports & Gaps
- Governor’s claim of a competitive process vs. contract database labeling as non-competitive.
- Absence of any published “bid scoring sheets” despite promises to release them.
- No public record of how the $6.2 million contract amount was determined or how other RFI respondents were evaluated.
Verbatim Quotes
- “This is an inaccurate representation of the RFI process. The process was still competitive, receiving 15 applicants who were judged on multiple factors including diaper cost, cost for implementation, existing infrastructure for manufacturing/distributing, and other significant considerations. The Governor was referring to the process being competitive in nature, which remains accurate.” — Governor’s office spokesperson
- “allows you to essentially engage in negotiated contracting outside of state rules,” — Chief Deputy Director, Department of General Services
- “was a robust, meaningful process,” — Elizabeth Landsberg, HCAI Director
- “We weren't seriously considered” — Representative of a large diaper-bank network
What’s Next
The governor’s office has been asked to provide the scoring criteria used in the RFI and to explain why other respondents were not notified. CBS California Investigates is reviewing the governor’s forthcoming response and will publish an update once the records are fully disclosed.
