"There is a simple thing CIRM could do to improve communication. Maybe they can discuss this at their first communication committee or task force meeting. It's really quite simple: Their communications director and vice chairman should respond to questions from the public."When an agenda is posted saying the compensation for the statutory vice chairman will be considered, people who follow the agency want to know what's up. Currently Art Torres is paid $75,000 for what officially is described as a half-time job. As soon as the agenda was posted, CIRM should have expected questions and had answers ready."Because I follow CIRM's activities I sent Don Gibbons, communications officer, an email asking what was under consideration. There has been no response."So then I sent an email to Art Torres asking what is proposed. I didn't get an answer."The first rule of public communication is to anticipate questions and then when they are raised, answer them. I used to get $500-a-day as a consultant offering this sort of advice. No charge this time."An appropriate answer could be: 'The issues involved are considered a personnel matter and will be discussed in executive session. If a decision is made to change Torres' salary, the action will be considered in open session and the public may comment on the proposal before final action is taken.' Again, no charge for the advice."The irony in all this is that Torres might deserve a raise. I hear he is devoting full time to the job. I'm trying to keep an open mind, but it's hard to do so given CIRM's silence."
Wednesday, December 09, 2009
Text of Consumer Watchdog Comments on CIRM Communications Proposal
Here is a statement from John M. Simpson, stem cell project director for Consumer Watchdog of Santa Monica, Ca., related to the proposal to create a subcommittee of CIRM directors to deal with public communication matters. Simpson had a long career as a newspaper editor and has observed and participated in CIRM proceedings for several years. He has both praised and criticized the agency.
Tuesday, December 08, 2009
Coverage Planned of CIRM Directors Meeting Wednesday and Thursday
The California Stem Cell Report will be monitoring from Mexico the two-day meeting of the directors of the California stem cell agency. We will file fresh items as warranted beginning late tomorrow afternoon and continuing into Thursday.
Problems With CIRM's $1 Million, Free HQ Lease
Back in 2005, the California stem cell agency snagged a free, 10-year lease for office space in San Francisco to house its $3 billion effort.
But today something is amiss. All the details are not clear, although CIRM is looking at having someone set up a nonprofit to handle the lease, according to our source. We understand that the agency cannot afford to assume additional expenses because of a 3 percent cap on administrative overhead, which is locked into state law by Prop. 71, the measure that created the agency.
According to the most recent auditor's report on CIRM, the city of San Francisco provides about “20,000 square feet of premium office space free of charge” through November 2015. The value of the office space and “other incentives” was $1 million for the year ended last June 30.
Currently CIRM has 42 employees. It is limited, again by Prop. 71, to no more than 50.
In addition to the office space is the question of parking, now free for CIRM staffers. One estimate places the cost of parking as high as $600 a month in San Francisco, although it can drop below $400. For 50 employees, that could mean $360,000 a year.
San Francisco Mayor Gavin Newsom, CIRM Chairman Robert Klein and Terry Fancher of Stockbridge Capital Partners announced the signing of the free lease with some ballyhoo on June 24, 2005. A city news release said the lease was “critical” to San Francisco's successful, $18 million bid to win the CIRM headquarters. Fancher's Stockbridge Partners, a real estate investment fund, donated the space.
We asked CIRM last month about the lease issues. Don Gibbons, chief communications officer for CIRM, replied,
But today something is amiss. All the details are not clear, although CIRM is looking at having someone set up a nonprofit to handle the lease, according to our source. We understand that the agency cannot afford to assume additional expenses because of a 3 percent cap on administrative overhead, which is locked into state law by Prop. 71, the measure that created the agency.
According to the most recent auditor's report on CIRM, the city of San Francisco provides about “20,000 square feet of premium office space free of charge” through November 2015. The value of the office space and “other incentives” was $1 million for the year ended last June 30.
Currently CIRM has 42 employees. It is limited, again by Prop. 71, to no more than 50.
In addition to the office space is the question of parking, now free for CIRM staffers. One estimate places the cost of parking as high as $600 a month in San Francisco, although it can drop below $400. For 50 employees, that could mean $360,000 a year.
San Francisco Mayor Gavin Newsom, CIRM Chairman Robert Klein and Terry Fancher of Stockbridge Capital Partners announced the signing of the free lease with some ballyhoo on June 24, 2005. A city news release said the lease was “critical” to San Francisco's successful, $18 million bid to win the CIRM headquarters. Fancher's Stockbridge Partners, a real estate investment fund, donated the space.
We asked CIRM last month about the lease issues. Don Gibbons, chief communications officer for CIRM, replied,
“We have no problem with Stockbridge and are not seeking to change the lease, which has six years remaining. However, we have had very preliminary discussions with the City regarding how the lease and related costs could be handled in the future. One option that has had very tentative discussion is a non-profit to own the office space, which would allow us to avoid these costs now as well as in the years beyond the current lease.”Use of a nonprofit in such a fashion does have a precedent in state government. More than one governor has lived in a house in Sacramento owned by such a group, which provided the home to the chief executive of the Golden State at little or no cost.
Inside Stem Cell Funding: The Cost of Making a Grant
How much does it cost to give away $230 million? Something more than $173,000 or about $12,000 for each of the 14 awards in the recent disease team round from the California stem cell agency.
Those are conservative figures based on a document posted Sunday on the CIRM Web site. The report said it could have cost up to $280,000 to approve all the grants in the disease team round if the new “PreApp” review had not been in place. That figure would have climbed to $300,000 or so if you add in about $20,000 for the cost of the CIRM directors' meeting. (We have also added $20,000 to the $152,500 figure reported for PreApp disease team process).
We say our calculations are conservative because the $20,000 figure was reported several years ago, and it is not clear whether it includes all travel and meeting expenses for the directors and staff. The calculations also do not include interest expense, which would perhaps double the total cost of each grant. Interestingly, the debt financing of research makes CIRM grants much more costly to taxpayers than NIH grants.
The main point, however, of the CIRM PreApp report dealt with a staff recommendation that the process be continued in the future. The excellent, 10-page document covered nearly all the bases on the PreApp process, including comments from reviewers, applicants, staff and more. CIRM directors will consider the recommendation to continue the process at their meeting tomorrow and Thursday.
What is missing is an analysis of whether the process removes the CIRM directors, who legally have final say on grants, even further from the approval process. Already, reviewers make the de facto decisions on grants. Directors almost never overturn positive or negative decisions by reviewers. CIRM staff, however, probably made an overt decision not to even dip a toe into that sensitive area.
Here are some of the other conclusions from the report, in addition to cost savings, concerning the virtues of PreApp:
Here is how the PreApp process works. Each initial proposal is assigned to three external reviewers, who receive electronic copies of the proposals. No meeting of the external reviewers is held, and they do not see each other's reviews. Following the external review, CIRM science officers evaluate the proposals. A CIRM review meeting is then held with attendance limited to appropriate science officers, review officers, legal staff and the president of CIRM, Alan Trounson.
According to CIRM, the proposals are “ordered according to the level of enthusiasm across all reviewers with those having a unanimous recommendation to invite on top and a unanimous recommendation not to invite at the bottom.”
CIRM said,
Those are conservative figures based on a document posted Sunday on the CIRM Web site. The report said it could have cost up to $280,000 to approve all the grants in the disease team round if the new “PreApp” review had not been in place. That figure would have climbed to $300,000 or so if you add in about $20,000 for the cost of the CIRM directors' meeting. (We have also added $20,000 to the $152,500 figure reported for PreApp disease team process).
We say our calculations are conservative because the $20,000 figure was reported several years ago, and it is not clear whether it includes all travel and meeting expenses for the directors and staff. The calculations also do not include interest expense, which would perhaps double the total cost of each grant. Interestingly, the debt financing of research makes CIRM grants much more costly to taxpayers than NIH grants.
The main point, however, of the CIRM PreApp report dealt with a staff recommendation that the process be continued in the future. The excellent, 10-page document covered nearly all the bases on the PreApp process, including comments from reviewers, applicants, staff and more. CIRM directors will consider the recommendation to continue the process at their meeting tomorrow and Thursday.
What is missing is an analysis of whether the process removes the CIRM directors, who legally have final say on grants, even further from the approval process. Already, reviewers make the de facto decisions on grants. Directors almost never overturn positive or negative decisions by reviewers. CIRM staff, however, probably made an overt decision not to even dip a toe into that sensitive area.
Here are some of the other conclusions from the report, in addition to cost savings, concerning the virtues of PreApp:
- It “encouraged many new successful applicants – more than 50% of applicants had never previously applied for a CIRM grant.”
- Several reviewers “indicated that the overall quality of applications reviewed after the PreApp process was better than without PreApp.”
- Most applicants (87 percent), when given a choice between limiting the number of applications submitted per institution and an open submission of PreApps, preferred the PreApp process.
Here is how the PreApp process works. Each initial proposal is assigned to three external reviewers, who receive electronic copies of the proposals. No meeting of the external reviewers is held, and they do not see each other's reviews. Following the external review, CIRM science officers evaluate the proposals. A CIRM review meeting is then held with attendance limited to appropriate science officers, review officers, legal staff and the president of CIRM, Alan Trounson.
According to CIRM, the proposals are “ordered according to the level of enthusiasm across all reviewers with those having a unanimous recommendation to invite on top and a unanimous recommendation not to invite at the bottom.”
CIRM said,
“The PreApps were considered and discussed taking into account any discrepancies among reviewers. For each application, the science officers took a majority vote to invite or not invite the applicant to submit a full application. The CIRM President and CIRM CSO (chief scientific officer)do not participate in the vote unless the Science Officers are at a tie.”The report is a forthright and clear explanation of the PreApp process that should be required reading for all potential applicants. It also could serve as a model for other background information on all items on the CIRM directors' agendas.
Venture Capitalist, Bankers to Weigh In on $500 Million Loan Program
The California stem cell agency is promising an interesting cast of characters for its meeting tomorrow concerning its fledgling $500 million biotech loan program.
Representatives from Proteus Venture Partners, VitaPath Genetics, Inc., Burrill & Co. and Silicon Valley Bank have been invited to appear, according to a document posted today.
Duane Roth, chairman of the CIRM Loan Task Force, says that the panel of CIRM directors will review the initial loan policy and terms in light of feedback from potential applicants. It may well be that significant changes in the loan program will be forthcoming.
Also added to the agenda are links to the loan administration policy and terms.
Representatives from Proteus Venture Partners, VitaPath Genetics, Inc., Burrill & Co. and Silicon Valley Bank have been invited to appear, according to a document posted today.
Duane Roth, chairman of the CIRM Loan Task Force, says that the panel of CIRM directors will review the initial loan policy and terms in light of feedback from potential applicants. It may well be that significant changes in the loan program will be forthcoming.
Also added to the agenda are links to the loan administration policy and terms.
Monday, December 07, 2009
Info Dribbling Out for CIRM Directors Meeting Wednesday
Directors of the $3 billion California stem cell agency meet in only two days, but only just now are details beginning to emerge about what they plan to decide and why.
On Friday, the skimpy directors agenda was virtually barren of background information on the CIRM Web site. Some information for the public, businesses and researchers began to appear yesterday and more today.
Now up is a 10-page report supporting continuation of the triage process for grant applications, an $80 million proposal for early translational grants, a one-page status report on the CIRM budget (no evident problems), the routine CIRM annual audit and appointment of an administrative chairman for the group that makes the de facto decisions on CIRM grants.
CIRM staff has nominated John Sladek, professor of pediatric and neuroscience at the University of Colorado, as the administrative head of the Grants Working Group, on which he has served on for about two years.
Missing from the agenda is any background information on the proposed salary increase for Vice Chairman Art Torres, who has been paid $75,000 a year for half-time work. He has been in the position since last March.
Also missing:
As the Sunlight Foundation of Washington, D.C., points out,
On Friday, the skimpy directors agenda was virtually barren of background information on the CIRM Web site. Some information for the public, businesses and researchers began to appear yesterday and more today.
Now up is a 10-page report supporting continuation of the triage process for grant applications, an $80 million proposal for early translational grants, a one-page status report on the CIRM budget (no evident problems), the routine CIRM annual audit and appointment of an administrative chairman for the group that makes the de facto decisions on CIRM grants.
CIRM staff has nominated John Sladek, professor of pediatric and neuroscience at the University of Colorado, as the administrative head of the Grants Working Group, on which he has served on for about two years.
Missing from the agenda is any background information on the proposed salary increase for Vice Chairman Art Torres, who has been paid $75,000 a year for half-time work. He has been in the position since last March.
Also missing:
- The chairman's report, which has never been available but which often contains important information
- Wording of proposed changes in how the grant reviewers operate
- Justification for new action on a $16 million disease team grant to Don Cleveland of the Ludwig Institute, Samuel Pfaff of Salk and Lawrence Goldstein of UC San Diego
- Background on the proposed modification of terms of the $230 million disease team round
- Wording and justification for a change in the conflict of interest appeals policy, which CIRM describes as a “correction”
- And the rationale for creation of a directors subcommittee on communications with the public, including the media.
As the Sunlight Foundation of Washington, D.C., points out,
“Public oversight, civic participation and electoral engagement—the stuff of democratic accountability—all depend on a transparent, open government.The foundation also notes,
“Indeed, transparency and openness are the very foundations for public trust; without the former the latter cannot survive.”
“Information cannot be considered public if it is available only inside a government building, during limited hours or for a fee. In the 21st century, information is properly described as 'public' only if it is available online, 24/7, for free, in some kind of reasonably parseable format. Almost all of our public sphere is now online, and our public information should be there, too.”The CIRM directors meeting begins at 4 p.m. Wednesday at Stanford with an offsite teleconference location at the City of Hope in the Los Angeles area. The meeting will be audiocast on the Internet, but no public participation is possible through the Internet. However, it is possible to send comments via the Internet to CIRM officials using this email address: info@cirm.ca.gov. You can ask that email comments be read by staff during the public comment period, but there is no guarantee that will occur. Details of the audiocast and City of Hope address are available on the agenda.
Saturday, December 05, 2009
Art, Bill, Nadia and Stem Cell Billions
The vice chairman of the $3 billion California stem cell agency, Art Torres, today will return to his old roots as a campaigner when he hits the hustings on behalf of the wife of the state treasurer, Bill Lockyer. Torres(at left), who is up for a pay increase at the CIRM board meeting next week, will be “pounding the pavement” in Hayward for Nadia Lockyer, who is running for a seat on the Alameda County Board of Supervisors, according to an item on the Political Blotter.
Torres, former chairman of the state Democratic Party, and Bill Lockyer are friends and served together for many years in the California Legislature. Lockyer is also instrumental in matters of money for the stem cell agency. He is the person who presides over the sale and allocation of state bonds, which are virtually the only source of funding for CIRM.
Josh Richman wrote on the Political Blotter that Torres was quoted in a Nadia Lockyer news release as saying that he is proud to support her candidacy.
Torres also said,
“I have had the pleasure of knowing her ever since she was a young person who was intent on serving her community and making a difference. Over the years, Nadia has proven herself as a leader who has consistently fought to empower her community, and Alameda County will greatly benefit from her dedication, hard work, and enthusiasm.”All politics is local – that's the way the old saying goes. In this case, it also reaches into the laboratories of the more than 300 researchers whose work is financed by the California stem cell agency -- not to mention the hundreds more expected to be funded in next several years, as well as their institutions and businesses.
Friday, December 04, 2009
Changes Upcoming in $500 Million State Biotech Loan Program?
California biotech firms looking to dip into a new $500 million source of capital would be well-advised to sit in on a meeting next week of the state's stem cell agency.
A group of its directors – the Loan Task Force – meets next Wednesday at noon on the Stanford University campus to discuss the state of the unprecedented lending program and, more specifically, the loan terms. The session offers a golden opportunity to learn about the program, influence its direction and chat with key figures at the $3 billion funding agency.
The loan program is clearly in its formative stages. CIRM only approved its first loan --- $20 million loan to Novocell, Inc., of San Diego – a little more than a month ago.
Curiously, while CIRM has embarked on an effort to become more friendly to the biotech industry, it has provided little public information about the specifics to be discussed next week. That's the sort of stuff, however, that is needed to draw busy executives to the task force meeting to provide valuable input on the program and to encourage them to seek funding.
With three business days left before the task force meeting, the agenda states only that the panel will hear a presentation and discuss loan terms.
In order to provide more information to businesses, the public and other interested parties, the California Stem Cell Report yesterday queried Duane Roth, chairman of the task force and vice chairman of the stem cell agency, about next week's meeting.
Roth, a San Diego businessman, told us that the meeting will include a review of the initial loan policy and terms in light of feedback from potential applicants. He indicated that the session will focus on items that need further review or adjustment. Those specifics and any others identified at the meeting would come back to the task force and then the full CIRM board for action on later dates. It is fair to say that significant changes could be in the works.
The biotech loan program is significantly different than ordinary commercial lending. It specifically targets firms that otherwise could not raise cash or secure conventional financing. The idea is provide help to firms that are in what is known as the financial “valley of death.”
For more on the biotech loan program, click on the label “biotech loans” at the end of this article. You can find a list of members of loan task force here.
A group of its directors – the Loan Task Force – meets next Wednesday at noon on the Stanford University campus to discuss the state of the unprecedented lending program and, more specifically, the loan terms. The session offers a golden opportunity to learn about the program, influence its direction and chat with key figures at the $3 billion funding agency.
The loan program is clearly in its formative stages. CIRM only approved its first loan --- $20 million loan to Novocell, Inc., of San Diego – a little more than a month ago.
Curiously, while CIRM has embarked on an effort to become more friendly to the biotech industry, it has provided little public information about the specifics to be discussed next week. That's the sort of stuff, however, that is needed to draw busy executives to the task force meeting to provide valuable input on the program and to encourage them to seek funding.
With three business days left before the task force meeting, the agenda states only that the panel will hear a presentation and discuss loan terms.
In order to provide more information to businesses, the public and other interested parties, the California Stem Cell Report yesterday queried Duane Roth, chairman of the task force and vice chairman of the stem cell agency, about next week's meeting.
Roth, a San Diego businessman, told us that the meeting will include a review of the initial loan policy and terms in light of feedback from potential applicants. He indicated that the session will focus on items that need further review or adjustment. Those specifics and any others identified at the meeting would come back to the task force and then the full CIRM board for action on later dates. It is fair to say that significant changes could be in the works.
The biotech loan program is significantly different than ordinary commercial lending. It specifically targets firms that otherwise could not raise cash or secure conventional financing. The idea is provide help to firms that are in what is known as the financial “valley of death.”
For more on the biotech loan program, click on the label “biotech loans” at the end of this article. You can find a list of members of loan task force here.
Thursday, December 03, 2009
CIRM Approves $300,000 More for Tech Help, Including Grant Management
The Governance Subcommittee of the California stem cell agency yesterday approved spending an additional $300,000 for technology assistance as it wrestles with its $1.2 million – and growing – grants management system.
A $100,000 increase was okayed for Turner Consulting Group of Washington, D.C., and a $200,000 extension for 25by7 of Santa Monica, Ca., according to a CIRM spokesman. Turner began work August 2008 on the grants management system under a $120,000 contract. Increases were approved last February and September. With the latest increase, the value of the two-year contract now stands at $350,000. Turner's contract is scheduled to end next June but may well be extended.
25by7's original $175,000 contract for network, server and desktop support began one year ago. Under the action yesterday, the contract was extended for one year, bringing its two year total to $375,000.
CIRM expects to seek additional information technology help next year.
The directors subcommittee also heard a report on the system designed to oversee $3 billion in grants and loans. It was first public accounting of how much has been spent on the grant management system, which CIRM has described as "a risk." No details were available concerning directors' comments.
A $100,000 increase was okayed for Turner Consulting Group of Washington, D.C., and a $200,000 extension for 25by7 of Santa Monica, Ca., according to a CIRM spokesman. Turner began work August 2008 on the grants management system under a $120,000 contract. Increases were approved last February and September. With the latest increase, the value of the two-year contract now stands at $350,000. Turner's contract is scheduled to end next June but may well be extended.
25by7's original $175,000 contract for network, server and desktop support began one year ago. Under the action yesterday, the contract was extended for one year, bringing its two year total to $375,000.
CIRM expects to seek additional information technology help next year.
The directors subcommittee also heard a report on the system designed to oversee $3 billion in grants and loans. It was first public accounting of how much has been spent on the grant management system, which CIRM has described as "a risk." No details were available concerning directors' comments.
Monday, November 30, 2009
Coming Up at CIRM: Grant Triage and More Cash for Training, Translational Research
Directors of the California stem cell agency will meet Dec. 9-10 to consider a pay increase for one of its two vice chairmen and to give away more money for training at state and community colleges.
The agenda for the meeting at Stanford University was posted yesterday on the CIRM Web site. As usual, only the sketchiest information is currently available on the matters to be considered, but more is expected to posted over the next few days.
CIRM did not specify the amount of the increase proposed for Art Torres, who has served as a vice chairman for eight months. Currently he receives a $75,000 salary for what is supposed to be a half-time job. Our impression, however, is that he putting in considerably more effort than that.
Torres, former head of the state Democratic Party and longtime state legislator, brings to the board political know-how and connections along with state government expertise that are found nowhere else at CIRM.
Duane Roth, a San Diego businessman, is the other CIRM vice chairman. He has declined a salary.
The board is expected to act on additional grants in the “Bridges” training program. The board last January put off funding some applications in the so-called tier two category because of CIRM's financial difficulties, which are now resolved through June 2011.
Grant applicants may be interested in an item dealing with conflict of interest appeals on applications. The board is scheduled to make an unspecified “correction” concerning such appeals.
Of special interest to applicants is a CIRM staff recommendation to continue the triage or pre-application process on grants. The procedure was used on the disease team round and involves initial staff and outside reviewer screening of brief grant proposals. Only those applicants who make that cut may apply for grants.
Also on tap is approval of a round of “early translational” grants and creation of a board of directors “Subcommittee on Communications with the California Public” and a “Task Force on Public Media.” The task force would be derived from the communications subcommittee.
If you have comments for the directors on these proposals, you can send them directly to CIRM at mking@cirm.ca.gov. If you would like to comment on them for the benefit of readers of the California Stem Cell Report, you may do so by clicking on the word “comments” at the end of this item. Anonymous comments are permitted.
The agenda for the meeting at Stanford University was posted yesterday on the CIRM Web site. As usual, only the sketchiest information is currently available on the matters to be considered, but more is expected to posted over the next few days.
CIRM did not specify the amount of the increase proposed for Art Torres, who has served as a vice chairman for eight months. Currently he receives a $75,000 salary for what is supposed to be a half-time job. Our impression, however, is that he putting in considerably more effort than that.
Torres, former head of the state Democratic Party and longtime state legislator, brings to the board political know-how and connections along with state government expertise that are found nowhere else at CIRM.
Duane Roth, a San Diego businessman, is the other CIRM vice chairman. He has declined a salary.
The board is expected to act on additional grants in the “Bridges” training program. The board last January put off funding some applications in the so-called tier two category because of CIRM's financial difficulties, which are now resolved through June 2011.
Grant applicants may be interested in an item dealing with conflict of interest appeals on applications. The board is scheduled to make an unspecified “correction” concerning such appeals.
Of special interest to applicants is a CIRM staff recommendation to continue the triage or pre-application process on grants. The procedure was used on the disease team round and involves initial staff and outside reviewer screening of brief grant proposals. Only those applicants who make that cut may apply for grants.
Also on tap is approval of a round of “early translational” grants and creation of a board of directors “Subcommittee on Communications with the California Public” and a “Task Force on Public Media.” The task force would be derived from the communications subcommittee.
If you have comments for the directors on these proposals, you can send them directly to CIRM at mking@cirm.ca.gov. If you would like to comment on them for the benefit of readers of the California Stem Cell Report, you may do so by clicking on the word “comments” at the end of this item. Anonymous comments are permitted.
Saturday, November 28, 2009
New Figures Show CIRM Spending $1.2 Million-plus for Grant Management
In its first-ever public accounting of spending for its grant management system, the California stem cell agency this week disclosed it has already laid out more than $1.2 million, with substantially greater expenditures to come in the near future.
Overseeing CIRM's largess is no small task. The agency has approved 320 grants and one loan worth more than $1 billion. It is expected to approve another $2 billion over the next five or so years – more if it can secure funding beyond its current bonding authorization of $3 billion.
The amount CIRM is spending for grant management, not including state staff time, is tiny compared to the total portfolio. However, grant management is critical for the agency, which labelled the task as a “risk” as recently as last June.
In a new staff report prepared for a meeting Wednesday of the CIRM directors' Governance Subcommittee, the agency said it has made “considerable headway” since last spring. But CIRM said additional work will be needed, including a decision on whether to buy additional software or develop it in-house with the use of more consultants.
More immediately, the staff asked directors for approval of an additional $300,000 for technology assistance, extending and expanding two existing contracts with Turner Consulting of Washington, D.C., and 25by7 of Santa Monica, Ca. Some of the increases will cover costs in addition to grant management.
CIRM did not offer a total for past grant management spending in the documents it prepared for its directors. Nor did it predict the ultimate cost. The California Stem Cell Report compiled the $1.2 million figure from two new documents on the CIRM Web site. The first was a report on grants managements expenditures through June 30, 2009. The second was a report on all spending on outside contracts through Sept. 30, 2009, including additional funds for grant management.
The report on grant management is the most complete explanation of the status of the system, which was supposed to cost no more than $757,000, directors were told in October of 2007. But by spring of 2008, CIRM began hiring outside consultants to deal with the issue.
Currently, 48 percent of CIRM's staff (20 out of the current 42 employees) is involved “centrally in some part of the grant life-cycle,” which includes everything from applications to standards enforcement,
The agency, however, does not have a single information technology staff person dedicated to grants management, according to its report. It had one in 2005-6, but he resigned. Currently CIRM has five grant management officers compared to one in 2006-7.
CIRM staff began “compliance site visits” in 2008-9 when it had 295 grants awarded, completing eight visits that fiscal year. CIRM expects to see 230 progress reports from grant recipients during the current fiscal year, compared to 16 in 2006-7.
CIRM posted the reports on the grant management system and the contract extensions on its Web site last Wednesday. The public can participate in next Wednesday's Governance meeting at teleconference locations in San Francisco, Palo Alto, Los Angeles(2), Stanford, Irvine and La Jolla. Specific addresses can be found on the agenda.
Overseeing CIRM's largess is no small task. The agency has approved 320 grants and one loan worth more than $1 billion. It is expected to approve another $2 billion over the next five or so years – more if it can secure funding beyond its current bonding authorization of $3 billion.
The amount CIRM is spending for grant management, not including state staff time, is tiny compared to the total portfolio. However, grant management is critical for the agency, which labelled the task as a “risk” as recently as last June.
In a new staff report prepared for a meeting Wednesday of the CIRM directors' Governance Subcommittee, the agency said it has made “considerable headway” since last spring. But CIRM said additional work will be needed, including a decision on whether to buy additional software or develop it in-house with the use of more consultants.
More immediately, the staff asked directors for approval of an additional $300,000 for technology assistance, extending and expanding two existing contracts with Turner Consulting of Washington, D.C., and 25by7 of Santa Monica, Ca. Some of the increases will cover costs in addition to grant management.
CIRM did not offer a total for past grant management spending in the documents it prepared for its directors. Nor did it predict the ultimate cost. The California Stem Cell Report compiled the $1.2 million figure from two new documents on the CIRM Web site. The first was a report on grants managements expenditures through June 30, 2009. The second was a report on all spending on outside contracts through Sept. 30, 2009, including additional funds for grant management.
The report on grant management is the most complete explanation of the status of the system, which was supposed to cost no more than $757,000, directors were told in October of 2007. But by spring of 2008, CIRM began hiring outside consultants to deal with the issue.
The contract at that time involved Grantium of Ottowa, Canda. CIRM staff said.
“However, that effort failed because CIRM's needs continued to evolve rapidly beyond the original scope, so the two parties mutual agreed to terminate the contract in 2009.”CIRM cannot solve its technology issues in-house because Prop. 71, written by CIRM Chairman Robert Klein and others, capped the CIRM staff at 50 employees. The grant report said that “it has long been clear” that the agency faced critical problems because of the hiring cap.
Currently, 48 percent of CIRM's staff (20 out of the current 42 employees) is involved “centrally in some part of the grant life-cycle,” which includes everything from applications to standards enforcement,
The agency, however, does not have a single information technology staff person dedicated to grants management, according to its report. It had one in 2005-6, but he resigned. Currently CIRM has five grant management officers compared to one in 2006-7.
CIRM staff began “compliance site visits” in 2008-9 when it had 295 grants awarded, completing eight visits that fiscal year. CIRM expects to see 230 progress reports from grant recipients during the current fiscal year, compared to 16 in 2006-7.
CIRM posted the reports on the grant management system and the contract extensions on its Web site last Wednesday. The public can participate in next Wednesday's Governance meeting at teleconference locations in San Francisco, Palo Alto, Los Angeles(2), Stanford, Irvine and La Jolla. Specific addresses can be found on the agenda.
The item below contains additional links to additional information concerning CIRM grant management.
CIRM Grant Management Info and Costs
Here is a rundown on key documents related to CIRM's $1.2 million-plus expenditures on its grant management system.
Articles from the California Stem Cell Report
Cost Overruns and Candor from CIRM – May 29, 2008
Vagueness in CIRM budget, June 2009, with some info on the system:“The budget does not appear to contain a straight-forward accounting of all the past costs associated with the Grantium program or the projected cost of the new system. It appears to be something in the neighborhood of $610,000.”
CIRM's Troubled Grant Management System: A $1 Billion Oversight Matter – July 13, 2009
CIRM Grant Oversight Receives $150,000 Boost – July 22, 2009
California Courts and CIRM: Both Troubled by Technology Problems – Oct. 25, 2009
CIRM Documents
Transcript, CIRM directors meeting, October 2007, during which CIRM staff said the cost would not exceed $757,000
CIRM document describing grant management system as a risk – June 2009
First public accounting of CIRM expenditures on grant management system, November 2009
Articles from the California Stem Cell Report
Cost Overruns and Candor from CIRM – May 29, 2008
Vagueness in CIRM budget, June 2009, with some info on the system:“The budget does not appear to contain a straight-forward accounting of all the past costs associated with the Grantium program or the projected cost of the new system. It appears to be something in the neighborhood of $610,000.”
CIRM's Troubled Grant Management System: A $1 Billion Oversight Matter – July 13, 2009
CIRM Grant Oversight Receives $150,000 Boost – July 22, 2009
California Courts and CIRM: Both Troubled by Technology Problems – Oct. 25, 2009
CIRM Documents
Transcript, CIRM directors meeting, October 2007, during which CIRM staff said the cost would not exceed $757,000
CIRM document describing grant management system as a risk – June 2009
First public accounting of CIRM expenditures on grant management system, November 2009
Tuesday, November 24, 2009
Buying BMWs and Grant Oversight
Revocation of three grants by the California stem cell agency has sparked a modest exchange of comments on TheScientist.com Web site.
Jef Akst wrote, on Nov. 16, about CIRM's grant oversight in an article headlined, “When does oversight overstep?”
Here is a sample from two comments.
Terry Iorns:
Jef Akst wrote, on Nov. 16, about CIRM's grant oversight in an article headlined, “When does oversight overstep?”
Here is a sample from two comments.
Terry Iorns:
“I agree with others in the areas of be able to pursue serendipity and whether proper terms of oversight were apparent to the researcher, but I don't think getting the grant is a blank check to do any kind of research.Anand Rajan KD:
“I see no difference in using the funds to pursue unrelated research and using the funds to buy a BMW.”
“'Taxpayer money' is just an euphemism for people to poke their nose into what is not their business in the first place. If at all - like the previous poster noted - there can be financial administrative oversight. You can look out for any scientist buying a BMW with his grant money, but if he is doing experiments with the money you gave him, where is the problem?”
Monday, November 23, 2009
How to Handle Pesky Media Types
What do you do when a cranky reporter comes calling and asks questions you do not want to answer or cannot?
One prospective contractor with the California stem cell agency today provided a fine example of how to deal with such a situation. We are offering it as a model that can be used by scientists, government officials and business men and women alike.
After we posted our item today involving Turner Consulting Group of Washington, D.C., we emailed a note to the firm, alerting it to the piece and asking two questions about the size of the proposed contract with CIRM and the nature of the work, none of which CIRM has yet disclosed.
Here is the verbatim response from David Cassidy, vice president of the firm:
Cassidy acted within hours of the initial query, which is very important in an era when information moves at cyberspace speed. Prompt response is especially important with mainstream media, which is constantly producing a product for Web sites that change hourly in addition to the normal print and broadcast efforts. Failure to respond and late responses mean unanswered questions in a reader's mind, often reflectively unfavorably on an organization.
Cassidy's email was polite, reflecting a personal, professional and organizational confidence that would be likely to accrue to Turner's benefit.
Finally, Cassidy threw out some diversionary meat, a tactic that helps throw the running dogs of the media off the scent. His email contained two pieces of fresh – and fresh is important – information (Turner's blog and the $199 million cost savings). Even if the new material does not make it into print, questioning media types often find such stuff palliative.
Our query could have been handled reasonably in other ways as well. But Turner's response more than filled the bill, given that it wisely deferred to CIRM, and creates a benign foundation on which to build.
One prospective contractor with the California stem cell agency today provided a fine example of how to deal with such a situation. We are offering it as a model that can be used by scientists, government officials and business men and women alike.
After we posted our item today involving Turner Consulting Group of Washington, D.C., we emailed a note to the firm, alerting it to the piece and asking two questions about the size of the proposed contract with CIRM and the nature of the work, none of which CIRM has yet disclosed.
Here is the verbatim response from David Cassidy, vice president of the firm:
“Hello David,Cassidy did not answer our questions, but he delivered a response that served the best interests of his company, deferring to CIRM, which probably will wind up paying Turner a lot of money.
“Thank you for your e-mail, and for mentioning us in your blog. We are avid bloggers ourselves; feel free to browse http://blog.tcg.com if you haven't already!
“Your questions regarding CIRM are best addressed by that agency, if you'd like to invite them to do so.
“By the way, you may be interested to know that our very latest figures (yet to be published) show that we've saved the federal government $199 million. Our goal is to save US taxpayers $1 BILLION by 2016, by supporting our government clients with superior technology and management consulting services.
“Thanks,
“Dave”
Cassidy acted within hours of the initial query, which is very important in an era when information moves at cyberspace speed. Prompt response is especially important with mainstream media, which is constantly producing a product for Web sites that change hourly in addition to the normal print and broadcast efforts. Failure to respond and late responses mean unanswered questions in a reader's mind, often reflectively unfavorably on an organization.
Cassidy's email was polite, reflecting a personal, professional and organizational confidence that would be likely to accrue to Turner's benefit.
Finally, Cassidy threw out some diversionary meat, a tactic that helps throw the running dogs of the media off the scent. His email contained two pieces of fresh – and fresh is important – information (Turner's blog and the $199 million cost savings). Even if the new material does not make it into print, questioning media types often find such stuff palliative.
Our query could have been handled reasonably in other ways as well. But Turner's response more than filled the bill, given that it wisely deferred to CIRM, and creates a benign foundation on which to build.
CIRM Directors to Discuss Agency's Management of $1 Billion in Grants
A panel of directors of the California stem cell agency is slated to be briefed early next month on the “at risk” system that it uses to oversee more than $1 billion in grants to more than 300 California scientists.
In June, CIRM staff warned that the grant management system was troubled. Its complete costs have not been reported publicly although directors were told in 2007 that the amount would be no more than $757,000. CIRM has since severed its contract with the original contractor and hired additional consulting and technology help.
Grant management and others issues related to CIRM's information technology are on the agenda of the Governance Subcommittee of the agency's board of directors on Dec. 2. The information posted on the agency's Web site is skimpy at this point, but hopefully will be supplemented before the long Thanksgiving weekend.
Also to be considered is the addition of Turner Consulting Group and 25by7 to CIRM's outside contractors, who together account for the second largest category of spending, $3.1 million, in the agency's operational budget. CIRM must rely on non-state employees because of the 50-person cap on its staff, a limit that is embedded in state law by Prop. 71, which created CIRM.
The 25by7 firm is appears to be a technology support business with operations in San Jose, Santa Monica, Los Angeles and New York. The one-sentence item on the CIRM agenda says directors will be asked to approve a contract with 25by7 for network, server and desktop services. No value for the contract was available on the CIRM Web site.
Also up for approval is a contract with Turner, again with no value specified. No details were provided on the nature of Turner's work nor was it identified beyond its name. Turner may well be the Washington, D.C., information technology firm that says that it saved the government more than $166 million through its work, which includes grants management. Its clients include the NIH, the National Science Foundation and the USDA.
The Governance meeting will be available for public participation at a number of locations throughout the state. Specific addresses can be found on the agenda.
In June, CIRM staff warned that the grant management system was troubled. Its complete costs have not been reported publicly although directors were told in 2007 that the amount would be no more than $757,000. CIRM has since severed its contract with the original contractor and hired additional consulting and technology help.
Grant management and others issues related to CIRM's information technology are on the agenda of the Governance Subcommittee of the agency's board of directors on Dec. 2. The information posted on the agency's Web site is skimpy at this point, but hopefully will be supplemented before the long Thanksgiving weekend.
Also to be considered is the addition of Turner Consulting Group and 25by7 to CIRM's outside contractors, who together account for the second largest category of spending, $3.1 million, in the agency's operational budget. CIRM must rely on non-state employees because of the 50-person cap on its staff, a limit that is embedded in state law by Prop. 71, which created CIRM.
The 25by7 firm is appears to be a technology support business with operations in San Jose, Santa Monica, Los Angeles and New York. The one-sentence item on the CIRM agenda says directors will be asked to approve a contract with 25by7 for network, server and desktop services. No value for the contract was available on the CIRM Web site.
Also up for approval is a contract with Turner, again with no value specified. No details were provided on the nature of Turner's work nor was it identified beyond its name. Turner may well be the Washington, D.C., information technology firm that says that it saved the government more than $166 million through its work, which includes grants management. Its clients include the NIH, the National Science Foundation and the USDA.
The Governance meeting will be available for public participation at a number of locations throughout the state. Specific addresses can be found on the agenda.
Friday, November 20, 2009
ACT Seeks hESC Clinical Trial
Advanced Cell Technology has become the second U.S. company to seek permission to begin clinical trials for a therapy based on human embryonic stem cells.
The Santa Monica, Ca., firm said yesterday that it has applied to the FDA to start trials aimed at reversing vision loss with retinal cells created from the stem cells.
The firm, which has labs in Massachusetts, is only the second business to seek to perform clinical trials involving hESC. Geron, another California company, was the first, but its efforts are now on hold until late next year because of FDA safety concerns.
Neither of the firms has received funding from the California stem cell agency. ACT, however, moved its headquarters to California, partly to seek funding from CIRM.
The firm's announcement received modest news coverage. Steve Connor of the Independent in Great Britain quoted Robert Lanza, ACT's chief scientific officer as saying,
The Santa Monica, Ca., firm said yesterday that it has applied to the FDA to start trials aimed at reversing vision loss with retinal cells created from the stem cells.
The firm, which has labs in Massachusetts, is only the second business to seek to perform clinical trials involving hESC. Geron, another California company, was the first, but its efforts are now on hold until late next year because of FDA safety concerns.
Neither of the firms has received funding from the California stem cell agency. ACT, however, moved its headquarters to California, partly to seek funding from CIRM.
The firm's announcement received modest news coverage. Steve Connor of the Independent in Great Britain quoted Robert Lanza, ACT's chief scientific officer as saying,
"'We've seen absolutely no adverse effects whatsoever in any of the preclinical experiments and our cells are more than 99.9 per cent pure. We certainly expect them [the FDA] to come back with comments and questions but our hope is that we will start sometime early next year. We're optimistic and certainly confident in our own data. We've been in dialogue [with the FDA] and we know what was on their mind and what they wanted us to do. We're hoping, assuming no hitches, to begin early next year, perhaps March."Here are links to additional coverage: Los Angeles Times, Science, Nature, MassHighTech.
Thursday, November 19, 2009
Scripps' Loring Teams with International Stem Cell Corp.
The Scripps Research Institute and scientist Jeanne Loring are collaborating with International Stem Cell Corp. of Oceanside, Ca., to study parthenogenic stem cells and their potential therapeutic use, it was announced today.
In a news release from the company, Loring, director of the Center for Regenerative Medicine at Scripps, said,
Kenneth Aldrich, chairman of International Stem Cell said,
In a news release from the company, Loring, director of the Center for Regenerative Medicine at Scripps, said,
“"Parthenogenetic cell lines are uniquely valuable for our quest to understand the genetic and epigenetic processes that control stem cells. We are excited about the opportunity to collaborate with scientists at ISCO."International Stem Cell said its scientists have derived a type of cell found in the human eye from parthenogenetic stem cells that may have application in treatment of macular degeneration. The company said it and Loring and will study these cells as part of the collaboration.
Kenneth Aldrich, chairman of International Stem Cell said,
“Our intent is to begin to provide these parthenogenetic stem cell lines to advance the field of regenerative medicine, as well as to commercialize our cells for cell transplant therapies.”The firm has applied for grants from the California stem cell agency, but so far has not been successful. CIRM, however, is currently trying to link more closely with industry.
Wednesday, November 18, 2009
Biotech Firms: The Undead of Capitalism?
The Wall Street Journal today did not describe biotech companies as zombies but it might as well have.
That, despite an increasingly brighter financial picture for the biotech business.
All this was contained in a piece by Brett Arends. He said the good news – the brighter picture – is the bad news. He wrote that the biotech industry, which includes stem cells, is “incredibly popular with many private investors,” but is a “risky area with very mixed results.”
Arends said,
He continued,
Arends quoted Don Collins of Ironwood Capital Management as saying,
Arends concluded,
(The WSJ may have restricted the Arends article to subscribers. If you cannot access it, send an email to djensen@californiastemcellreport.com, and we will send the article to you.)
That, despite an increasingly brighter financial picture for the biotech business.
All this was contained in a piece by Brett Arends. He said the good news – the brighter picture – is the bad news. He wrote that the biotech industry, which includes stem cells, is “incredibly popular with many private investors,” but is a “risky area with very mixed results.”
Arends said,
“It's hard enough to value a profitable company that makes widgets or coffee. How do you value a speculative science project that may not come to fruition for years, if ever? ...(A)nalysts in the sector sometimes talk about 'the probability-adjusted net present value of peak sales,' essentially guessing how much a company might make off a drug at peak sales, lowering that value to reflect how long it will take to get there, and then calculating the probability that a drug will make it through clinical trials and win approval.”
He continued,
“And then there's the dormancy risk—few biotech companies go bankrupt....Many of them just go nowhere.”Sort of like zombie enterprises, the undead of capitalism.
Arends quoted Don Collins of Ironwood Capital Management as saying,
"They don't have any debt, so there is no one to force them out of business. So as the cash dwindles, the companies just shrink and shrink and shrink, until they have three guys working there and a business development manager going out looking for money.. They can stay like that for a long time.'The WSJ article pointed out that the average retiurn on a biotech IPO since 2001 has been minus 18 percent. Between 1995 and 2000, it was a meager 8.44 percent. You could have earned more investing in plain old bonds or cash.
“Old biotechs, in other words, never die.”
Arends concluded,
“Capitalism famously depends on 'creative destruction,' in which bad or weak companies get weeded out. The strong survive. The best industries in which to invest are often those which have been starved of capital for a generation—think gold and oil. The worst, in turn, are often those like biotech, where it's all too easy to get capital without showing results.”Something for the California stem cell agency to think about as it kicks off its unprecedented, $500 million biotech loan program, which optimistically projects “profits” of $100 million despite default rates of up 50 percent.
(The WSJ may have restricted the Arends article to subscribers. If you cannot access it, send an email to djensen@californiastemcellreport.com, and we will send the article to you.)
Tuesday, November 17, 2009
CIRM Releases Bank Info That It Once Withheld
The California stem cell agency late today released information on a $250,000 contract with Square 1 bank that the agency previously had refused to disclose at the request of Square 1.
The move was prompted by inquiries from the California Stem Cell Report about the withholding of the information, which is public record and should have been released earlier.
Don Gibbons, chief communications officer for CIRM, said in an email,
John M. Simpson, stem cell project director for Consumer Watchdog of Santa Monica, Ca., was harshly criticial of the earlier censorship of the Square 1 contract. Following the release of the information, he said,
The current contract will serve as a baseline for future arrangements. Square 1 and CIRM staff will be working together to smooth out the process and build relationships that will be valuable in the future. The linkage between Square 1 and the $3 billion stem cell agency, the world's largest source of funding for human embryonic stem cell research, will also enhance the bank's prestige and ability to secure additional profitable business.
It is also likely that the fee structure, as now disclosed by CIRM, will be modified in future arrangements, which will require a new, public bidding process.
The redacted contract can be found here. The newly released information can be found here.
The move was prompted by inquiries from the California Stem Cell Report about the withholding of the information, which is public record and should have been released earlier.
Don Gibbons, chief communications officer for CIRM, said in an email,
“After your inquiry, we contacted Square 1 to see if they would reconsider their request to treat the pricing information as confidential, in the interest of public disclosure. Square 1 has agreed that we should produce an unredacted copy of attachment B to the contract, but they would like to note that they sought to protect the pricing information because they do regard it as proprietary (i.e., it is not known to their competitors and could give them a competitive advantage), but that they will waive their objection to producing the information in the interests of transparency. The unredacted document is attached.CIRM is to be commended for pushing forward with its effort to release the information. Square 1 did the right thing as well, even though it contends the information should be proprietary. We wrote earlier about the implications for CIRM in connection with failing to comply with state public record law.
“CIRM staff initially redacted the pricing information at Square 1’s request, but we remain responsible for deciding whether to honor such requests. We could have asked Square 1 to waive its request before we produced the document. In retrospect, we should have slowed down and taken the time to do that.”
John M. Simpson, stem cell project director for Consumer Watchdog of Santa Monica, Ca., was harshly criticial of the earlier censorship of the Square 1 contract. Following the release of the information, he said,
“I'm glad CIRM is doing the right thing. I hope the staff learns something from this experience.”One of the downsides for many businesses in dealing with the state is that it does require disclosure of information that many business would like to keep out of the public gaze. But there can be great benefits as well. In the case of Square 1, this initial contract gives it a leg up on competitors in terms of securing much a more lucrative, long-term contract with CIRM for its fledgling, $500 million biotech loan program.
The current contract will serve as a baseline for future arrangements. Square 1 and CIRM staff will be working together to smooth out the process and build relationships that will be valuable in the future. The linkage between Square 1 and the $3 billion stem cell agency, the world's largest source of funding for human embryonic stem cell research, will also enhance the bank's prestige and ability to secure additional profitable business.
It is also likely that the fee structure, as now disclosed by CIRM, will be modified in future arrangements, which will require a new, public bidding process.
The redacted contract can be found here. The newly released information can be found here.
CIRM's Openness Failures Raise Broader Questions
The chairman of the California stem cell agency, Robert Klein, frequently is given to declaring that the $3 billion research effort adheres to the highest standards of openness and transparency.
Recently, however, the agency has had difficulty even complying with the basic state public records law and the state Constitution's public access guarantees, much less achieving a higher level of performance.
The specific instances are relatively minor, but they raise important questions concerning the conduct of the public's business. How is CIRM, which cannot operate without outside contractors, overseeing their efforts? Is CIRM becoming too cozy with industry? And how can CIRM maintain its credibility unless it is forthright about its affairs?
One longtime CIRM observer, John M. Simpson, stem cell project director of Consumer Watchdog of Santa Monica, Ca., described as “outrageous” CIRM's most recent failure to comply with the open records law.
In response to a query, he said,
In the case of Levin, the censored material involved 16 pieces of information including its legal business name, address, whether it is a partnership or corporation, name of the person signing the document and his or her title along with his signature and date of the signing. Even the names of those categories were blacked out.
(See page 14 of the contract for a look at the redaction. A blank copy of the state form involved can be found here.
Previously CIRM had posted such information for other companies voluntarily on its Web site, so we had assumed that the redactions were a mistake and consequently did not write about the matter. (After we questioned the redaction, CIRM ultimately provided the material it had chosen to withhold.)
Then came the response to our Oct. 16 request for a copy of the contract with Square One bank. It was another relatively routine matter, although it involves the start-up stages of a $500 million biotech loan program that is expected to have default rates up to 50 percent.
The copy of the contract showed that it was capped at $250,000, but that information had been reported earlier. Censored was the following information: underwriting fee to be paid per loan, annual service fee, warrant administration fee and the legal fee to be paid by CIRM to Square One
Such information is public record and commonly disclosed by state agencies. Otherwise, invoices to CIRM and payments by the agency containing that information would be cloaked in secrecy.
On Nov. 8, we asked CIRM for the legal justification for not providing the Square One fee information. Yesterday (Nov. 16), Don Gibbons, chief communications officer for CIRM, replied with one sentence,
As Consumer Watchdog's Simpson indicated earlier, CIRM's actions raise questions about the management of its outside contractors, which are essential to the agency's operations. CIRM would cease to function without its outside help. It is restricted by an ill-considered provision in Prop. 71 to only 50 employees. Currently the cost of contracting is the second largest item ($3.1 million) in its operational budget, just behind salaries and benefits.
In the case of Square One, CIRM's attorneys should have told the firm that its request did not comply with state law. CIRM should have then released the entire document. In our case, we have had decades of experience with public record law and can generally tell when there is a flagrant violation. But other members of the public are likely to accept whatever CIRM, driven by desires of its suppliers, deigns to pass along.
The contracts signed by Levin and Square One are state documents. CIRM is required by law to determine what is public or confidential, not the outside contractors. Certainly they can and should be consulted, but their wishes must not be blindly followed. To do so is to open CIRM to unnecessary legal challenges by foes of stem cell research.
Failure to be forthright also raises questions about other areas of CIRM that bear attention, such as the problems with the software that is critical to the oversight of what is now a $1 billion grant portfolio along with the $250,000 federal lobbying contract with Tony Podesta, also heavily censored and we suspect unnecessarily so.
Managing outside contractors has always been difficult for government, both at the state and national levels. The stories of abuses are legion, whether it is a Defense Department boondoggle or fouled up databases at the state Department of Motor Vehicles. CIRM must make it clear to its contractors that the agency's needs must be met and that the interests of the taxpayers do not necessarily coincide with those of the contractors.
Recently, however, the agency has had difficulty even complying with the basic state public records law and the state Constitution's public access guarantees, much less achieving a higher level of performance.
The specific instances are relatively minor, but they raise important questions concerning the conduct of the public's business. How is CIRM, which cannot operate without outside contractors, overseeing their efforts? Is CIRM becoming too cozy with industry? And how can CIRM maintain its credibility unless it is forthright about its affairs?
One longtime CIRM observer, John M. Simpson, stem cell project director of Consumer Watchdog of Santa Monica, Ca., described as “outrageous” CIRM's most recent failure to comply with the open records law.
In response to a query, he said,
"CIRM's lawyers need to learn who their client is when they are employed at a public agency. It's the citizens of California, not vested special interests."The two most recent cases involving CIRM's failure to comply with state public records law both concern contracts with private firms. The first is a $100,000 contract with Levin & Co., of Boston, Mass., to help search for candidates for the position of vice president for research and development. The second involves a $250,000 contract with Square One Bank to conduct a financial review of Novocell, which was approved for a $20 million loan by CIRM directors last month.
In the case of Levin, the censored material involved 16 pieces of information including its legal business name, address, whether it is a partnership or corporation, name of the person signing the document and his or her title along with his signature and date of the signing. Even the names of those categories were blacked out.
(See page 14 of the contract for a look at the redaction. A blank copy of the state form involved can be found here.
Previously CIRM had posted such information for other companies voluntarily on its Web site, so we had assumed that the redactions were a mistake and consequently did not write about the matter. (After we questioned the redaction, CIRM ultimately provided the material it had chosen to withhold.)
Then came the response to our Oct. 16 request for a copy of the contract with Square One bank. It was another relatively routine matter, although it involves the start-up stages of a $500 million biotech loan program that is expected to have default rates up to 50 percent.
The copy of the contract showed that it was capped at $250,000, but that information had been reported earlier. Censored was the following information: underwriting fee to be paid per loan, annual service fee, warrant administration fee and the legal fee to be paid by CIRM to Square One
Such information is public record and commonly disclosed by state agencies. Otherwise, invoices to CIRM and payments by the agency containing that information would be cloaked in secrecy.
On Nov. 8, we asked CIRM for the legal justification for not providing the Square One fee information. Yesterday (Nov. 16), Don Gibbons, chief communications officer for CIRM, replied with one sentence,
“From our legal team: The redactions were made at the request of Square 1 Bank, based on its determination that the fee structure is confidential and proprietary.“In response, we emailed Gibbons,
“I assume that your response ...means that the lawyers agree that the material is confidential under state law. It does not directly say that, however. Please let me know if CIRM lawyers think otherwise.”Gibbons' complete reply:
“We let all contractors make initial decisions on what is proprietary. Square One made the decision that the structure of their fees, not the ultimate amount paid, was proprietary. In the interest of transparency, we have asked them to reconsider that decision.”As of this writing, we have received no further response from Gibbons. Also yesterday, we asked Square One about its justification for censoring the information, but have received no response. (We will carry its response verbatim if we receive one.)
As Consumer Watchdog's Simpson indicated earlier, CIRM's actions raise questions about the management of its outside contractors, which are essential to the agency's operations. CIRM would cease to function without its outside help. It is restricted by an ill-considered provision in Prop. 71 to only 50 employees. Currently the cost of contracting is the second largest item ($3.1 million) in its operational budget, just behind salaries and benefits.
In the case of Square One, CIRM's attorneys should have told the firm that its request did not comply with state law. CIRM should have then released the entire document. In our case, we have had decades of experience with public record law and can generally tell when there is a flagrant violation. But other members of the public are likely to accept whatever CIRM, driven by desires of its suppliers, deigns to pass along.
The contracts signed by Levin and Square One are state documents. CIRM is required by law to determine what is public or confidential, not the outside contractors. Certainly they can and should be consulted, but their wishes must not be blindly followed. To do so is to open CIRM to unnecessary legal challenges by foes of stem cell research.
Failure to be forthright also raises questions about other areas of CIRM that bear attention, such as the problems with the software that is critical to the oversight of what is now a $1 billion grant portfolio along with the $250,000 federal lobbying contract with Tony Podesta, also heavily censored and we suspect unnecessarily so.
Managing outside contractors has always been difficult for government, both at the state and national levels. The stories of abuses are legion, whether it is a Defense Department boondoggle or fouled up databases at the state Department of Motor Vehicles. CIRM must make it clear to its contractors that the agency's needs must be met and that the interests of the taxpayers do not necessarily coincide with those of the contractors.
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