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As Newsom Pushes To Extend Emergency Spending Authority During Pandemic, Lobbyist Influence Remains Opaque

Governor Gavin Newsom signed the 2020 Budget Act on June 29, 2020.
Office of Gov. Gavin Newsom
Governor Gavin Newsom signed the 2020 Budget Act on June 29, 2020.

As Newsom faces a mounting recall effort, proponents behind the campaign have also criticized the governor for a lack of transparency since taking office.

At the onset of the COVID-19 pandemic, lobbyist Mark Weideman reached out to Gov. Gavin Newsom’s chief of staff with an offer.

Weideman’s client, manufacturer BYD, wanted to donate 50,000 masks and thousands of bottles of hand sanitizer. The state accepted.

Within weeks, the state inked a no-bid $990 million deal with BYD for N95 and surgical masks, which was later extended by an additional $316 million.

Newsom’s office denies any wrongdoing.

Weideman and BYD did not respond to interview requests.

The interaction sheds a sliver of light into the shadowy world of lobbying for no-bid contracts during the state’s pandemic response. While lobbyists have to disclose efforts to influence policy and legislation, they are not required to disclose lobbying activities when vying for lucrative contracts.

Government ethics experts say that’s an area that demands greater transparency in order for Californians to understand how their government awards contracts and opportunities, especially as Newsom pushes to extend his emergency spending authority for another year. The nonpartisan Legislative Analyst’s Office warns that under the extension, “there would be no reasonable checks and balances on the Governor’s COVID-19 spending authority.”

The Weideman Group lobbies for three companies — BYD, Blue Shield of California and Bloom Energy — that have received no-bid contracts tied to the pandemic response, as first reported by CalMatters in May. The contracts ranged from $2 million to over $1 billion. A recent CapRadio investigation found those companies and one executive contributed $376,000 to Newsom and his ballot measure committee since mid-2019.

Weideman also represents Pacific6, an investment firm that lobbied Newsom to reopen a decommissioned hospital during the pandemic. The company and its executives contributed $44,000 to the governor in the fall, weeks before the state gave the hospital final approval to reopen.

The four companies paid Weideman’s firm a combined $1,190,000 in 2019 and 2020. But the full scope of how lobbying has influenced the awarding of no-bid contracts and other pandemic response opportunities remains opaque.

Newsom’s office declined an interview request.

“Protecting the public from the spread of the coronavirus is of the upmost [sic] importance to the administration,” Newsom’s press secretary Daniel Lopez wrote in an email. “Contracts related to COVID-19 are based on protecting the health of our residents and are posted online for the public to review.”

The state website listing COVID-19 contracts can be found here. Lopez did not address a follow-up question about whether lobbying efforts for these contracts should be publicly disclosed.

The companies that responded to CapRadio’s request for comment denied any wrongdoing.

As Newsom faces a mounting recall effort, proponents behind the campaign have also criticized the governor for a lack of transparency since taking office.

Government ethics experts say the lack of transparency when it comes to lobbying and no-bid contracts may raise red flags in the minds of voters.

“It presents the appearance that something's just not right here,” said John Pelissero, senior scholar at the Markkula Center for Applied Ethics at Santa Clara University. “It's important to think about how the public would view this and whether that's a proper relationship.”

Lack of disclosure

Newsom’s office says the administration moved swiftly at the start of the pandemic to acquire essential services and materials as cases started to climb and hospitals feared a surge of patients.

“The state had to work quickly to get the necessary equipment in place to save lives,” Erin Mellon, spokesperson for the governor, wrote last month in an emailed statement to CapRadio.

During states of emergency, the governor has the power to circumvent the traditional bidding process when awarding contracts. That process allows multiple companies to respond to contract opportunities, and is designed to secure the most cost-effective proposal and avoid favoritism. But it can also be time-consuming.

Lobbyists and the companies that hire them are required to disclose detailed information to the state about lobbying lawmakers and the governor on policy matters.

But according to Monica Hassan, deputy director of public affairs for the Department of General Services, her department is “not aware of anything that would require lobbyists to disclose procurement work on behalf of clients.”

“DGS does not have oversight over lobbyists,” she added in an email.

The California Secretary of State’s office and Fair Political Practices Commission deferred comment to the Department of General Services, which sets state procurement policies.

No-bid contracts

In the early weeks of the pandemic, Newsom said California was competing in a “wild west” marketplace for protective gear. Amid the scramble, BYD secured the $990 million no-bid mask contract.

Ahead of the deal, Weideman brokered a donation of 50,000 BYD masks to the state.

“It would be great if you could notify GGN and let me know next steps to explore and hopefully execute on BYD’s offer to help California,” Weideman wrote in an email to Newsom’s chief of staff and two other officials. “GGN” appears to be an abbreviation for “Governor Gavin Newsom.”

The email from Weideman, obtained by CapRadio through a public records request, also contained media clips, reinforcing the lobbyist’s claim that the manufacturer’s recent pivot to personal protective equipment made it the world’s largest mask producer.

"In the last few weeks, BYD redesigned its production lines in Shenzhen to produce face masks and hand sanitizer to address the COVID-19 crisis ... They are prepared to donate 50,000 masks to the State of California, along with thousands of bottles of hand sanitizer."
In an email to Gov. Gavin Newsom’s chief of staff, Mark Weideman claimed that BYD’s recent pivot to personal protective equipment made it the world’s largest mask producer.

BYD paid Weideman Group $395,000 for lobbying services in 2019-2020.

Pelissero, the Santa Clara University ethics scholar, described Weideman’s email exchange as a “bit like priming the pump” ahead of the huge mask deal. He says while there’s no evidence of illegal wrongdoing in the exchange, it raises transparency questions about lobbying and procurement.

Bob Stern, former general counsel to the California Fair Political Practices Commission, said the donation doesn’t raise any alarms for him. He added that one could argue Weideman is simply a shrewd lobbyist playing by the established rules of the game.

“There’s not even an appearance problem,” he said. “This is how business is done in Sacramento.”

More concerning to Stern was the $20,000 contribution from BYD’s president to Newsom’s reelection campaign several months prior to the mask deal, which was explored in a recent CapRadio investigation into major Newsom donors and no-bid pandemic contracts.

Early in the pandemic, Newsom also reached out to Bloom Energy to refurbish ventilators under a $2 million no-bid contract. A few months earlier, Bloom contributed $31,000 to Newsom; several months after receiving the contract, it contributed another $25,000.

The company paid Weideman Group $240,000 for lobbying services in 2019-2020.

Company spokesperson Jennifer Duffourg wrote in an email to CapRadio, “There was no lobbying that occurred by any party with respect to Bloom’s ventilator refurbishment effort.”

She continued: “Bloom Energy is very proud to have repaired more than 1,300 life-saving ventilators — at cost — in its facilities in California and Delaware that were used across America, for the sole purpose of saving lives."

A year into the pandemic, the governor’s expanded powers remain under California’s state of emergency. After a rocky start to the state’s vaccine rollout, Newsom enlisted Blue Shield of California to handle distribution under a no-bid contract worth up to $15 million. The company has contributed $300,000 to Newsom’s ballot measure committee since mid-2019.

Blue Shield paid Weideman Group $480,000 for lobbying services in 2019-2020.

“The Weideman Group played no role in the decision by the state” to award the vaccine distribution contract, Blue Shield spokesperson Mark Seelig wrote in an email. He added that the company will not profit from the contract.

BYD and Blue Shield were Weideman Group’s top-paying clients in 2019 to 2020; Bloom was the 9th highest paying among the firm’s 38 clients, according to Secretary of State records.

Hospital reopening

Lobbying disclosures for Blue Shield, BYD and Bloom Energy describe Weideman Group’s lobbying on an array of legislative and regulatory issues, but make no mention of COVID-19 contracts or response.

Only Pacific6, the investment company that lobbied to reopen a decommissioned hospital in Long Beach during the pandemic, identified its pandemic-related lobbying activities in its disclosure forms.

The city of Long Beach in late 2019 leased the defunct Community Hospital to a partnership of several companies, including Pacific6. Early in the pandemic, the company connected with state lawmakers and urged Newsom to allocate emergency funds to reopen the hospital. The funds didn’t come through, and for months the facility remained shuttered.

In October and November, Pacific6 and its executives contributed $44,000 to Newsom. Within weeks, the state completed its final inspection of the hospital. Shortly after the new year, it reopened to non-coronavirus patients.

Pacific6 denies that the contributions were intended to influence the hospital’s reopening, and a spokesperson initially denied that Weideman Group had lobbied on the issue. CapRadio pointed out that the company’s disclosure forms described the Weideman Group lobbying the administration on “hospital financing” and “hospital reopening issues.”

John Molina, Pacific6 co-founder, said in a follow-up interview that the Weideman Group “did not do much for us on the hospital itself.”

He said the lobbying firm tried, unsuccessfully, to help obtain state funding for the reopening and participated in “some strategy phone calls.” The firm also lobbied on issues related to ventilators and COVID-19 testing, which overlaps with other Pacific6 investments.

Calls for greater transparency

Newsom wants to extend his emergency spending authority for another year, according to his latest budget proposal. The emergency authority is set to expire in June; the pandemic is expected to last at least through the year.

But the nonpartisan Legislative Analyst’s Office says the proposal “raises various concerns” and has recommended the Legislature push for more oversight.

“The administration would have access to nearly unlimited funding in the budget year while having minimal requirements to notify the Legislature when funds are accessed and no requirement to report on how funds are actually spent on the state’s COVID-19 response,” the LAO wrote in a recent report.

State lawmakers, including Democrats, have previously expressed frustration about being sidelined during the pandemic response.

Dan Schnur, a professor of political communications at University of California, Berkeley and University of Southern California, says it’s worth giving Newsom the benefit of the doubt that these pandemic contracts and opportunities were awarded legitimately and with the best interests of Californians in mind.

But in exchange for that good faith from voters, he adds, the administration should be more forthright about how the pandemic contracts are awarded and the role lobbyists played.

“There's no need right now to show up with torches and pitchforks on the Capitol lawn,” said Schnur. But Newsom “owes it to the voters to provide the information so they can see for themselves that everything he did was on the up-and-up.”

Pelissero of the Markkula Center agrees.

“There were shortcuts that were taken not to try to harm anyone, but to try to maximize the benefit to people who needed testing, who needed PPE and so forth,” he said.

But he argues those shortcuts — such as circumventing competitive bidding — come with obligations to voters.

“Transparency is certainly an ethical approach to making difficult decisions,” he said.

Copyright 2021 CapRadio

Scott Rodd