The $2 Million Remcho-CIRM Connection

The California stem cell agency has a no-bid, $2 million, special relationship with the law firm of Remcho, Johansen, & Purcell of San Leandro, Ca.

The firm has had a contract with CIRM since the agency's earliest days. On May 28, the Governance Subcommittee of CIRM directors was asked to act in a retroactive fashion to increase Remcho's contract for 2007-08 from $250,000 to $415,000 to pay for bills for April, May and June. That amounted to a $165,000 or 66 percent increase in the contract.

Based on the transcript of the meeting, it is not entirely clear who authorized the Remcho work without having the subcommittee first actually approve an increase in the contract. CIRM policies require approval by the governance panel if contracts exceed $250,000.

CIRM Chairman Robert Klein, however, offered the explanation for why the work was needed, which included reviewing requests for applications for grants and work on state bond offerings linked to CIRM.

CIRM contracts with Remcho totalled $1.1 million from January 2005 to July 2007 and are slated for $450,000 this year.

John M. Simpson, stem cell project director for Consumer Watchdog of Santa Monica, Ca., asked Klein at the meeting whether the Remcho contract would be put out to bid in the future.

Here is the exchange, based on the transcript of the session.

Simpson:

"...(T)his is a substantial legal contract, and it's down as probably going on into the future. Is there an expectation that this would be put out formally for bid?"

Klein:

"This is a contract that is obviously where the expertise is built upon a number of years of research and development on this initiative specifically. And at the time we originally entered into this contract with Remcho back in 2004, I personally went to the (California) attorney general's office and asked, given the specialized knowledge of the Remcho firm had in spending two years on the research and drafting of this with me and four other attorneys that I had in specialized areas, whether we needed to put this to bid.

"The attorney general's position at that time was we did not because of the specialized nature and depth of knowledge of the firm. It would be a huge bill to get any other firm to get up to the level of knowledge about this initiative and the tremendous amount of research that went into all of its development as well as all the public policies that have subsequently been developed."

We have asked CIRM for a copy of the statement from the attorney general's office that supports the ongoing, no-bid arrangement.