CIRM Proposal to End Peer Review Requirement

The Consumer Watchdog group has detected a proposed, far-reaching change in how grants could be awarded by the $3 billion California stem cell agency.

John M. Simpson, stem cell project director for the Santa Monica group, reported on his blog Wednesday that CIRM is proposed to eliminate language that requires peer review of grant applications. Instead, the CIRM president, currently Alan Trounson, would review the applications.

Simpson quotes a CIRM spokesman as saying that the language is intended to apply in the cases of applications for small grants for conferences and workshops. However, Simpson notes that the proposed language goes well beyond that.

He said that the language in the grants administration policy that would be eliminated is:

"'All research proposals will be peer reviewed so that the most promising scientific proposals are funded.'

"The reason given:

"'This is a substantive change to allow for the possibility of Program Announcements under which the President, rather than the GWG(Grants Working Group), will review applications.'"

The change comes up at a June 20 meeting on the grants administration policy. Simpson said he will suggest modification of the proposal so that it would not strike the peer review requirement. Instead Simpson would add the following:

"Proposals to fund conferences, symposia, workshops or similar events will be reviewed by the President."

CIRM Dredging Up Old Economic Controversy

Four years ago, supporters of California stem cell research ballyhooed the economic impact of the Prop. 71, the ballot measure that created the state's $3 billion inquiry into human embryonic stem cells.

A $200,000 study commissioned by the Prop. 71 campaign predicted healthcare savings of as much as $12.6 billion over 30 years and a net state government profit of at least $1 billion. The study was instantly a bone of contention during the campaign and long after and held up as an example of stem cell hype.

"Hopelessly optimistic" was how one reasonably detached writer, David Hamilton, described the campaign analysis in a "biotech bubble" story for Slate.com.

The study was ordered up by then Prop. 71 campaign chief Robert Klein. Now chairman of the California stem cell agency, Klein has commissioned another economic impact report by the same organization, Analysis Group of Palo Alto, Ca. This time the study will cost only $49,900 but it comes at the expense of taxpayers – not campaign donors. It also diverts funds from other activities of the stem cell agency. The question is why?

With few exceptions, no one is likely to deny that California's stem cell research can benefit the state economically. The principal dispute is about the magnitude of the impact. However, this latest study suffers from the same problem as the first. It is not likely to produce a finding that runs contrary to the beliefs of Chairman Klein and other supporters of the stem cell research. That leaves CIRM open to credibility challenges.

The study is also not necessary to convince true believers. And adamant opponents will never believe it. That leaves only a tiny segment of the population as a propaganda target, if one is to believe Klein. He has repeatedly minimized the size of that group, citing overwhelming support for hESC research among the general population.

The study will certainly generate several results – none of which is favorable for CIRM. It will raise questions about unnecessary spending of taxpayer money. It will rekindle a debate about the true economic impact of CIRM, stirring up controversies better left dormant. And it will feed concerns about stem cell hype on the part of the agency and raise questions about its credibility.

Here are samples from the David Hamilton's piece Feb. 6, 2007, in which the former Wall Street Journal reporter wrote that the campaign study appeared "hopelessly optimistic."

"To begin with, they assume that stem-cell treatments will work in the first place. Many of the most hyped biotechnology innovations of the last 25 years have yet to live up to their early promise. And when they do work, they often tend to improve medical care at the margins instead of revolutionizing it."

"What about the potential of stem-cell research to spur economic development—can a state that sponsors stem-cell research hope to attract cool scientists who will then draw others, plus a coterie of entrepreneurs and venture capitalists? Biotech companies do tend to cluster in places like San Francisco and Boston, but their overall impact on regional economies tends to be limited. While they often pay high salaries, the vast majority of these companies are tiny, unprofitable startups with fewer than 100 employees. They frequently collapse well before they earn a dollar in sales. Even successful biotech ventures are often bought out by distant drug companies, which sometimes shut down the acquired company while transferring its research activities and any products elsewhere."

Hamilton also cited a study by Richard Gilbert, a UC Berkeley economist, who estimated California's potential royalty income from CIRM research could be as low as $18 million compared to $1.1 billion suggested by the 2004 study by the Analysis Group.

We could be wrong about all this. Perhaps the Analysis Group will produce a study that is hailed as balanced, objective and useful. CIRM tells us to look for the report, originally scheduled for January, to appear later this month.

Stem Cell Research, Money and State Efforts

The United States is lagging behind other countries in terms of its global share of human embryonic stem cell research, but that could change as more states pump dollars into the effort.

That's the upshot of a report by Aaron Levine(pictured), assistant professor of public policy at Georgia Tech, in the online publication Cell Stem Cell.

He said supportive policies and public research dollars in the United Kingdom, Israel, China, Singapore and Australia are producing unusually large shares of published hESC research.

However, the Georgia Tech press release on Levine's work says,

"Venturing where the federal government fears to tread, states like California, New York, Connecticut and Maryland are becoming places researchers can turn to for human embryonic stem cell funding. But Levine thinks that development may complicate matters.

"'There are a variety of funding sources out there now, but it makes the field more complicated for scientists to follow the various rules set forth by the states and foundations,' said Levine. 'I think scientists would prefer clear oversight from a federal government that’s supportive of their research.'

"Levine plans to follow up this current work with a look at how collaboration is affected by these different state policies."

Monya Baker of Nature's Niche stem cell blog also wrote about the study.

She reported,

"'The study chips away at the question but doesn't necessarily take into account a number of other factors,' says Stanford University’s Jennifer McCormick, whose work has also found that the rate of the US publications in human ES cell research was lagging relative to other countries. For example, the study does not control for the fact that some countries invest more in commercial than academic research or that some countries recognize patents covering human ES cell research and others do not. "

Andrea Gawrylewski of The Scientist had this:

Brian Salter, professor of politics and biomedicine at King's College London, said the Levine study does not take into account the hierarchy of journals and journal impact factors. She quoted Salter as saying,

"Underperforming countries may have scientists who go for the higher status journals."

Fresh Human Eggs and Stem Cell Economics

The price of human eggs and their scarcity, at least for stem cell research, once again have risen as topics, but this time in New York.

The events in the Empire State, however, dovetail nicely with a similar, ongoing issue at the Golden State's $3 billion stem cell agency.

Hawk-eyed Jesse Reynolds of the Center for Genetics and Society in Oakland, Ca., spotted the New York egg issue and reported on it on the Biopolitical Times.

He wrote on June 3,

"One aspect that caught my eye, not surprisingly, concerns the sourcing of fresh human eggs for cloning-based stem cell research (a.k.a. somatic cell nuclear transfer, or SCNT). Although NYSTEM's brief authorizing law is silent on this and related issues, such matters have been deliberated by NYSTEM's Ethics Committee. The draft strategic plan reveals the Committee and the program's governing board are considering offering compensation for women to provide eggs. (pages 26-27)

"This would be an unfortunate deviation to the generally agreed-upon practice of only reimbursing for expenses. I am aware of no ethics committee that has endorsed payments,* and of only one research team which offered them (and that was before the consensus against compensation crystallized in 2004). The good news is that there is still time for input: NYSTEM has not explored the issue in depth, and the Ethics Committee will discuss the topic at its next meeting."

Earlier this year, we reported that the California stem cell agency has embarked on a review of the human egg market and the needs of researchers, some of whom are complaining that they do not have enough raw material.

The study was set in motion after Harvard scientist Kevin Eggan told the CIRM Standards Working Group that he and his colleagues had spent $100,000 advertising for donors and "pursued every option" for collecting eggs with little success.

CIRM President Alan Trounson said "accessing those eggs is no trivial matter." He said scientists are seeking grants from CIRM for research that may not be feasible because of the lack of human eggs.

A wide-ranging review of the issue and related topics is expected to surface publicly at CIRM sometime this year. Issues that may be aired include: availability of eggs and their numbers, researchers' perceptions of the problem, possible reimbursement of IVF treatment, use of eggs by CIRM researchers from other areas where compensation restrictions are not so tight (such as possibly New York) and the grandfathering of cell lines that were derived before CIRM regulations were adopted.

The subject comes under the Standards Working Group, which has a July 25 meeting scheduled in Los Angeles. However, no topic for that session has been announced. We are asking CIRM when the egg issue will come up.

On other related notes:

The Feb. 28 meeting of the Standards Working Group on eggs and other matters carried a reference by CIRM Chairman Robert Klein to an "opinion" by CIRM outside counsel. We queried CIRM about the opinion. Here is the agency's response:

"There is no email or other written legal opinion from James Harrison regarding reimbursements for IVF costs. The transcript from the working group reflects that Bob did query Harrison during the meeting asking him to send a copy of law 1260 (SB1260 by Sen. Deborah Ortiz), which deals with payments for eggs. Harrison did send the bill in an email and that is what is referenced in the transcript. Bob requested that so that he could show a section toward the end of the bill that explicitly states nothing in 1260 is designed to change anything in Prop. 71."

Marcy Darnovsky of the Center for Genetics and Society also has a rundown on writings by feminist scholars on eggs and cloning-based stem cell research. You can find the citations and links to the articles here.

San Francisco Business Times Surveys CIRM

Reporter Ron Leuty of the San Francisco Business Times put together a wide-ranging series of articles this week on the state of California's stem cell agency.

The six pieces cover everything from CIRM's proposed $18 million training program and $500 million biotech bank to its lab construction grants and CIRM-connected research results. Leuty wrote:

"Nary a segment isn’t touched in CIRM’s strategy: companies, newly minted researchers, community college biology students, cutting-edge investigators, small labs, shared labs and big buildings. Likewise, (CIRM Chairman Robert) Klein said CIRM’s portfolio of funded technologies, products and disease targets will be broad. At the very least, stem cells could offer the pharmaceutical industry a more accurate and more animal friendly way of testing the toxicity of drugs. At most, they could change the medical treatments forever."

Much of the ground is familiar to our readers, but Leuty brings a fresh look and interviews with businessmen, scientists and others that are worth reading. Unfortunately the articles are locked behind a subscription only web site. But our bet is that Leuty will ship you copies if you send him an email. He can be contacted through the Business Times website.

It is also a likely bet that CIRM has ordered up some reprints as well. If not, they should.

Fresh Comment

Larry Ebert of the IPBiz blog has posted a comment on the Koch/Murphy item below.

Koch's Experience

An attorney, who must remain anonymous but who is familiar with intellectual property law, sent the following re Nancy Koch in the item below:

"Chiron's chief IP attorney, under whom she worked, was a strong and insightful patent portfolio strategist, so she probably has good experience from working with him."

Murphy and Koch: IP and Presidential Consulting

The California stem cell agency has picked up a couple of consultants – one for intellectual property and one to advise its president – with contracts totalling $230,000.

Nancy Koch (see photo) has been hired part-time for six months through Oct. 7 on a $150,000 contract to deal with IP matters. Richard Murphy snagged an $80,000, four-month contract to assist CIRM President Alan Trounson. It is Murphy's third tour of duty at the $3 billion agency.

Murphy first served on CIRM's board of directors and then as the $300,000, six-month interim president at CIRM. His latest contract runs through July 31.

In response to a query, CIRM reported that Koch was deputy general counsel of Chiron Corp. and its successor Novartis Vaccines and Diagnostics, Inc. During 11 years at Chiron/Novartis, Koch was responsible for a wide range of intellectual property matters including litigation and licensing. Between 1983 and 1995, Ms. Koch worked at the Farella, Braun and Martel law firm in San Francisco.

CIRM Looking for More Help

The California stem cell agency is continuing to hire, currently listing eight openings ranging from a public relations staffer to an intellectual property lawyer.

If it fills the positions, staffing at CIRM will hit about 39 persons, creeping up on its legal limit of 50.

Recently, CIRM posted an opening for an attorney (salary up to $165,000) to deal with legislative matters and provide legal support to CIRM Chairman Robert Klein. The position would also assist outside counsel on conflicts of interest, deal with agency regulations, the biotech loan program and bond financing for CIRM as well as "finalizing" intellectual property regulations. The agency has also been seeking a staff IP attorney for some time at a salary of up $277,500.

Another recent posting is for a science writer/multimedia editor with a salary of up to $75,000. The position would be in CIRM's public relations department with responsibilities for creating videos, writing research summaries and developing pitches for the media.

Other job openings at CIRM include scientific officer, grants management specialist, grants review specialist and two administrative coordinators.

CIRM To Update Goals; Watchdog Urges Openness

The California stem cell agency is moving to revise its strategic plan, as well it should as the field has changed and the ambitious, original goals have not been met.

Just how the changes will be made is unclear. But John M. Simpson of Consumer Watchdog is urging an open process that reflects the spirit of the original proposal. Simpson wrote on his blog:

"...(I)t is essential that the the methodology in developing the plan not be scrapped.

"Key to the plan was the open and transparent way it was developed. Hearings were held around the state. Seventy interviews with 73 individuals were conducted. The interview team even asked me what I thought. Strategic Plan Advisory Committee meetings were public.

"I'm not saying the update needs to take as much, time but certainly it must have the same inclusive approach if it is to win the same broad-based support from all stakeholders that the original plan enjoyed."

Trounson and Clues to CIRM's Scientific Interests

Want to track the latest scientific thinking at the $3 billion California stem cell agency? What research looks promising to the folks at CIRM? And does it mean possibilities for future funding?

CIRM President Alan Trounson is now offering some clues. He has begun a practice of discussing what he considers interesting research at the beginning of meetings of the CIRM board of directors. He also touches on issues of the day in stem cell research during the presentations.

His observations are tucked away in two different places on the CIRM web site. They can be found in the transcripts of the meetings of the board of directors, which is known as the Oversight Committee, as well as on the online agendas of the meetings, but only after the meetings take place – at least so far.

In May, Trounson discussed a report in Nature in April involving the McEwen Center for Regenerative Medcine (Gordon Keller's group) and research by Lei Yang. VistaGen Therapeutics of South San Francisco was also involved. Trounson's slides from the agenda can be found here.

Among other things, Trounson said he anticipated "that there will be a proposal coming downstream for clinical trials." He said,

"Interestingly, in these studies there was not any observation of teratomas or unwanted cell types."

Other topics for Trounson in May:

-- The Catriona Jameson work at UC San Diego involving TargeGen of San Diego, Ca., and the work, also reported in Nature April 2008 involving Michael Clarke's lab, Stanford and the University of Michigan.

-- Work involving Lorenz Studer, Sloan Kettering and Wakayama Riken, published in Nature Medicine March 2008.

Here are links to the transcript and slides in March and the transcript in January, where he also discussed recent stem cell research. No slides were posted in January.

(A tip of the hat to John M. Simpson of Consumer Watchdog who pointed out the usefulness of Trounson's briefings.)

Fresh Comment

"Anonymous" has posted a comment on the "Cost Overruns" item.

CIRM View on Remcho Fees

Don Gibbons, chief communications officer for CIRM, sent the following comment on the item below concerning the contract with its outside lawyers:

"You state the board approved a '$165,000 retroactive payment.' That is not what occurred. The board approved an increase in the total amount billable during the life of the contract which runs through June 30. CIRM also made it clear that it did not expect to need the full amount. The only retroactive piece is for the hours billed in April and May, which while not yet invoiced, are expected to be under $60,000, and again this occurred because of a cancelled committee meeting in April."

Correction

The "Cost Overruns" item below incorrectly reported that CIRM has "roughly 26" employees. CIRM today reported that it has 31 employees.

CIRM's Outside Lawyers Win Retroactive, 66 Percent Pay Hike

A key panel of CIRM directors has approved a $165,000, retroactive payment to its outside attorneys, Remcho, Johansen and Purcell of San Leandro, Ca. Details of the proposed action were never disclosed to the public in advance of approval.

John M. Simpson of Consumer Watchdog reported the approval on his blog, saying,

"Stem Cell Agency Chairman Bob Klein said Remcho billed the additional hours because of (James) Harrison's work on the agency's first bond sale, efforts to negotiate discounts in the grant awards to build research facilities and added involvement in vetting Requests for Applications (RFAs) for grants."

Simpson, who attended the Governance Subcommittee meeting Wednesday and made comments during the session, wrote,

"I suggested that retroactively approving the increase was bad policy. Klein said the item was on the agenda for an earlier planned governance committee meeting, but the session was canceled.

"He said that Harrison ran up the additional billable hours at the law firm's risk, though I can't imagine the agency would have refused to pay."

Well prior to the meeting, the California Stem Cell Report asked for more information on the cryptic Remcho agenda item, but CIRM repeatedly refused to disclose what was being considered despite the fact that the information is certainly a public record.

Cost Overruns and Candor from CIRM

The California stem cell agency now says it is "mind-bogglingly silly" to think, in effect, that the total cost of the Grantium contract for a new grant management program would only be $757,000.

CIRM's directors were assured last October during their meeting in San Diego that the figure was the "complete cost." The expenses were reviewed at the time in some detail by Ed Dorrington, CIRM's information technology director. Richard Murphy, interim president of CIRM, vouched for the figures as well.

We raised questions about the cost in our posting below -- "CIRM Lagging" – since CIRM is seeking an additional $85,000 to perform work that is necessary for the Grantium software.

Don Gibbons, chief communications officer for CIRM, responded to our item,

"Regarding your posting on Grantium, it is mind bogglingly silly to think that a one-person IT department at CIRM could handle all the internal aspects of migrating to a new grant management system while maintaining a legacy system that is our responsibility."

Our response: CIRM's chief executive told its board one thing in October. Now CIRM says something different. New, complex software installations are usually difficult. The costs should have been anticipated. That's what good management is all about.

Additionally, CIRM has chosen to go lean on its staff, keeping it far less than the 50 authorized even after some directors have repeatedly worried about burnout and overwork. In fact, last December Murphy told the directors' Governance Subcommittee that he had chosen not to replace a departing information technology staffer because "the institute is now working quite well in its computer capabilities." That was two months after the Grantium contract was approved by directors.

CIRM Chairman Robert Klein also chimed in at the time, praising the "lean" staffing at CIRM. Lean is good, especially in state agencies that sometimes tend to be overstaffed. But there can also be a financial cost – perhaps in this case $85,000. Less obvious is the wear and tear on employees that results from excessively long hours week-in and week-out.

(Editor's Note: An earlier version of this item incorrectly reported that CIRM had "roughly 26" employees. Following the posting of this item, CIRM reported that it has 31 employees.)

Consumer Watchdog: No Way to Run $6 Billion Enterprise

John M. Simpson, stem cell project director for Consumer Watchdog, commented on his blog Tuesday on the financial matters before the CIRM Governance Subcommittee today.

He said,

"There is simply no excuse for the documents being unavailable the day before the meeting. They should have been there when the agenda was posted. Members of the subcommittee cannot make informed decisions when they receive documents at the last minute. Nor can interested stakeholders offer intelligent comment.

"This is simply not the way to run a $6 billion publicly funded program."

CIRM posted its report on contracts this morning. Still missing is the amendment to Remcho's big contract for legal services. The meeting begins at 3 p.m. today.

CIRM Lagging on Budget Preparation

The California stem cell agency is only one month away from a new budget year, but it has not yet presented to its directors a spending plan for the next 12 months.

This afternoon's meeting of the agency's Governance Subcommittee would have been a good time to offer the proposed budget. That would allow CIRM's directors to make suggestions for revisions and raise questions that might take time to answer.

Presumably CIRM President Alan Trounson will offer a spending plan in time for the June 26 board of directors meetings, but that will come only a few days before the financial year begins on July 1.

While it is too late to present a budget to the Governance Subcommittee, CIRM directors certainly can offer suggestions today about the type of information that they would like to see in the budget proposal, including a bit longer perspective than just the next 12 months.

Some possible questions to be addressed include:

Does CIRM plan to bring its staffing up to the limit of 50 over the next three years? If not, why not? (CIRM directors have repeatedly expressed concern about staff burnout and overwork. The agency has also has lost a substantial number of employees since its inception, including 25 percent in a two-month period last year.)

What is the anticipated impact of the Prop. 71 spending cap on operations over the next 10 years? Are there steps that need to be taken now to avoid a financial crunch later when less flexibility may exist?

Given the heavy reliance on outside contracting, are steps being taken to assure that the staff, which is trained mainly in scientific matters, performs well in selecting and monitoring contractors? What steps are being taken to assure that outside contractors do not have conflicts of interest that could motivate them improperly? Do the proposed $500 million biotech lending program and administration of the $1.1 billion lab construction effort pose special oversight issues?

What steps are being taken to avoid overruns linked to outside contracts, such as the apparent overrun on the grants management contract with Grantium of Ottowa, Canada. (Directors were assured last October that the complete cost of the three-year contract would be $757,000. Recently, CIRM posted an $85,000 RFP for a consultant to help with work on the program. We asked CIRM on May 15 about the need for the consultant. We have received no response to that question.)

Obviously other budget issues need to be addressed as well. But we would hope that Trounson and his tiny 26-person staff would begin to publicly address some of these issues soon.

A Brief Look at CIRM's Outside Contracts

The California stem cell agency plans to post on its web site later today a key financial document on its legal, lobbying, public relations and other outside contracts, less than 24 hours before the report is to come before a panel of the agency's directors.

The document reviews some of CIRM's spending this year for outside contractors, who consume the second largest amount of money in the agency's operational budget (see item below). However, the document was missing even a guess at how much will be spent by the end of this fiscal year, which is about one month away.

The report only covered expenditures for contracts through February. It also contained no total for all outside contracts through February. Nor did it appear to specify all of the ongoing obligations resulting from multiyear contracts.

A quick look at the document showed that CIRM has contracted for $596,899 worth of legal services, apparently mostly for the first three quarters of the year. The figure included $250,000 for the Remcho law firm(see item below). CIRM also spent $100,000 with the State Department of Justice. CIRM has had seven attorneys or law firms on its staff or under contract during the reporting period, including a general counsel. Joining the agency recently is attorney Nancy Koch, who won a $150,000 contract for intellectual property, most of which will be spent during the next fiscal year.

We should note that our $596,899 figure does include $36,900 for the Nielsen, Merksamer law firm of Sacramento, Ca., which performs lobbying services among other things. CIRM classified Nielsen's services under "public education" rather than legal services or lobbying. Our total for legal services does not include, however, $20,000 for the Rubenstein Associates PR firm of New York City.

In February, the Consumer Watchdog group disclosed a $10,000 CIRM contract with Rubenstein through the Remcho law firm and said CIRM was "laundering" its PR advice through Remcho. It was not clear whether the $10,000 figure in February was part of the $20,000 reported by CIRM in today's outside contracting report.

After a flap developed in 2005 about outside contracts, CIRM directors told CIRM staff to provide quarterly reports on outside contracting. The last came in December 2007.

Look for a link to the outside contracting report under the Governance Subcommittee agenda. Its meeting is scheduled for 3 p.m. Wednesday in Los Angeles with teleconference locations in San Francisco at CIRM headquarters, Sacramento, La Jolla, Carlsbad, Palo Alto and Stanford. All of the locations are open to the public.

Don Gibbons, chief communications officer for CIRM, provided a copy of the outside contracting report to the California Stem Cell Report this afternoon and said it was expected to be posted later today. However, he is working through the state bureaucracy, which sometimes does not move with great alacrity.

The Murky World of $2 Million in CIRM Spending

A key committee of directors of the California stem cell agency on Wednesday will examine one of the most important aspects of the $3 billion institute's operating budget, but one that remains hidden from the public with only one day left before the matter is to be aired.

One can only speculate about the reasons for the secrecy. Perhaps it is a deliberate and quite possibly illegal attempt to avoid public scrutiny of CIRM's outside contracts, which are the second largest element in its budget. Or perhaps the secrecy is related to CIRM's inability to produce budget documents in a timely fashion.

Whatever the reason, both are causes for concern. After nearly four years, CIRM should be able to produce routine budget documents quickly. Trying to avoid public scrutiny is hardly fitting for an enterprise that styles itself as an exemplar of bioethics and openness. Withholding the information also makes it virtually impossible for the public or other interested parties to comment intelligently before the CIRM Governance Subcommittee, which convenes on Wednesday to examine the agency's $2 million or so in outside contracts.

CIRM has an operating budget of about $8 million. The largest item in the budget – something like $5 million -- goes for benefits and salaries, including two salaries that rank among the top 10 highest for California state employees, according to a San Francisco Chronicle story this past weekend.

When we cite the budget figures, we must qualify them with terms such as "or so" and "roughly" because CIRM's latest effort at a budget is something of a hodge-podge, missing such things as updated totals with year-to-year comparisons. The most recent available document came up last December. It appears to show something like a $200,000 to $600,000-plus increase in outside contracts since last June, although some of that will be for the 2008-09 budget year.

Up for consideration at Wednesday's Governance meeting is a modification in the roughly $500,000-a-year contract for legal services with the law firm of Remcho, Johhansen & Purcell of the San Leandro, Ca. The Remcho contract is on top of the salaries of four other attorneys working for CIRM including a general counsel but not attorney/Chairman Robert Klein.

James Harrison is the lawyer with Remcho who appears to do most of his firm's work for CIRM. He has been working with Klein since at least the 2004 campaign for Prop. 71, which created CIRM. Harrison wrote portions of the initiative as did Klein. Harrison appears to be a skilled and competent attorney. The agenda item on his contract suggests that it will be extended or perhaps payments will be increased or both. It is not likely that Klein is bringing the contract before the directors in order to cut it.

How much is the proposed increase? We can't tell you. CIRM will not disclose details of the budget item. We began asking for some indication of the details on May 22. At first we were told that the information would not be made public until tomorrow morning, one day before the meeting. That raised a question of whether a document on the matter existed at CIRM. In that case, it would be a public record that would have to be disclosed under state law. We were then told that all of the information about the matter was "verbal," as of last Friday. We were told at another point that a one-page, proposed unsigned contract extension existed for Remcho but that it was deemed not to be a public record.

Whatever the actual facts are, it would not be the first time that public information has been withheld by CIRM for reasons that are difficult to understand. One memorable case last year involved a $31 million proposal by the California State University and College system. Klein's office refused to release the document, but the California Stem Cell Report linked to it after finding it on a non-CIRM Internet site.

Also on the agenda of the Governance Subcommittee, which is chaired by former Hollywood studio executive Sherry Lansing, is more information that is not available to the public. It deals with a look at all the outside contracting, but again we can tell you nothing further about its specifics because CIRM has chosen to withhold the report.

CIRM's staff is capped by law at 50(currently it has only about 26 employees). And "privatizing" some of its work work is necessary and makes good sense. But the use of outside contractors by government agencies requires careful selection and keen oversight.

The California legislative analyst said in a lengthy report in 1996 that outside contracting problems for state government include accountability, accurate cost comparisons and quality control. We also wonder whether it is possible for CIRM's tiny staff to properly monitor a host of contractors, particularly in the case of the proposed $500 million biotech lending program.

We asked John M. Simpson of Consumer Watchdog for his thoughts on outside contracting by CIRM. Simpson, who has watched CIRM closely for about three years, said,

"While there are some services that are best performed by outside contractors, there is a real danger of going outside when it's unnecessary and the work should be performed by staff.

"For instance, while I greatly respect James Harrison's abilities as a lawyer, I am hard pressed to understand why the stem cell agency spends so much on an outside legal counsel when it has a staff counsel.

"The point is that contracts with outside vendors offer a multitude of opportunities for waste and abuse. All of them must be closely evaluated by the oversight board. Moreover, circumstances change. Some of what made sense to be contracted out as the institute was in start-up mode, might now be more appropriately handled by staff."