The 'Open Kimono' and Skimpy Audit Coverage

The California State Auditor's report on the state's stem cell agency drew light coverage with at least two major papers apparently skipping the story.

Internet searches, which are not always perfect, showed that neither the Los Angeles Times nor The Sacramento Bee carried a story on Wednesday, the day following the audit. The Bee, however, carried an editorial that explored the implications of the audit, declaring that CIRM "could be putting its grants and grant reviewers in jeopardy by not adopting a more transparent conflict-of-interest policy."

Reporter Terri Somers of the San Diego Union-Tribune wrote a thorough piece that touched on nearly all the findings of the auditor, including the issues of intellectual property and disclosure of the economic interests of grant reviewers. She quoted State Sen. Sheila Kuehl, D-Santa Monica, chair of the Health Committee, author of a bill to dealing with CIRM's IP policy, as saying,

"I think the audit really supports the need for that legislation."

Somers wrote:

"Auditors recognized the numerous public meetings held by the institute to solicit input into the formation of this policy. But they criticized the institute for failing to provide them with documentation showing how they processed the input into policy.

"'It's hard for me to determine whether this is the auditors being overly demanding or the institute continuing to do what it has done in the past – oppose all attempts to make it conduct its business in the open sunshine of the public,' said Jerry Flanagan, of the Foundation for Taxpayer and Consumer Rights, which has been keeping tabs on the institute."

On the reviewer disclosure issue, Somers quoted Dale Carlson, chief communications officer for CIRM, as saying,

"'Although they're paid a small fee, they basically do it as a favor . . . to advance the science. They are not eligible to receive any of this grant money.'
"Meanwhile, other agencies outside the state are offering to pay them more to review far fewer grants, he said.
"'If you are given the opportunity to be paid 10 times as much as we are paying for a small portion of the workload we are going to lay on you, and you don't have to open your kimono, where do you think you're going to go?' Carlson asked."

The Bee's editorial today noted CIRM's position that grant reviewers do not, in fact, make what amount to decisions on grants.
The Bee wrote:

"...(T)his claim is negated by how the institute went about awarding its first research grants this month. Prior to its Feb. 15 and 16 meetings, the grant reviewers pored through 231 grant applications. They recommended that 88 be funded immediately or awarded when funds become available, and that 143 others not receive funding.

"When the oversight board made its final decisions, none of these 143 "rejects" were recommended for funding. Some 72 were selected largely on the fact that reviewers gave them scores above 74 points. That suggests the grant reviewers are the ultimate arbiters on what research grants are not funded, and that they largely control what is funded. In our book, that makes them decision-makers and very important public officials.

"The state auditor's report, requested by former state Sen. Deborah Ortiz of Sacramento, noted that violations of Section 1090 'may result in a felony conviction and void a contract.' In other words, the institute could be putting its grants and grant reviewers in jeopardy by not adopting a more transparent conflict-of-interest policy."

In two stories Wednesday and Thursday, reporter Carl Hall of the San Francisco Chronicle focused on contracting, spending and accounting issues in the audit. He wrote on Wednesday:

"The auditors' report underscored the potential waste of millions of dollars in taxpayer-backed bond proceeds if grants aren't closely monitored in the years ahead."

On Thursday, Hall said, among other things:

"Ten contracts worth a combined $1.5 million were signed without following appropriate bidding rules, the auditors said. In the biggest example, the stem cell institute paid $537,000 for grant-tracking software and support services without advertising or seeking competition."

Steve Johnson of the San Jose Mercury News wrote,

"Doug Cordiner, chief deputy state auditor, said the flaws cited in the report do not appear to add up to a significant amount of money.

"'It's not anything untoward as far as what we've seen at other agencies,' he said."