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Did a California rail PR deal go too far?

Though now derailed, the $9-million PR contract involving two former Schwarzenegger officials raises questions about cronyism.

September 12, 2009

Adam Mendelsohn may be the best public relations operative in the world, for all we know. And Steve Schmidt, one of his partners at Mercury Public Affairs, may be equally indispensable. Perhaps that's why the state of California nearly signed a five-year, $9-million contract with their company last week.

But here's another possibility: Perhaps they were the leading contenders for the contract because of who they knew, not what they offered. Perhaps the fact that Mendelsohn was Gov. Arnold Schwarzenegger's communications director and Schmidt managed the governor's 2006 reelection effort explains why they were recommended over eight other bidders for the contract with the state's high-speed rail commission. And consider this: Two of the three members of the staff panel that recommended Mercury had worked with Mendelsohn in the Schwarzenegger administration. One worked directly for him.

We'll never know for sure, will we? Mendelsohn says his company is the best for the job, and unless someone accidentally leaves a memo around saying "let's give the $9 million to Adam and Steve even though we know they can't do the work," it's unlikely he'll ever be proved wrong.

Mercury didn't break any laws. But let us be clear: These are the kinds of deals that make citizens cynical about government. Why would Californians trust Sacramento with their money when they see Schwarzenegger aides passing out millions of taxpayer dollars to friends and former colleagues? Some observers have pointed out, in Mercury's defense, that other bidders for the contract also had ties to the governor's office. But why should that make us feel better? If anything, it's even more disheartening.

When The Times caught wind that Mercury was about to win the contract, the rail commission (five of whose nine members were named or retained by Schwarzenegger) delayed the vote until October. But many questions remain. What were the deliverables Mercury promised, and on what timeline -- and how did that compare with the promises of the other bidders? Why does the project need $9 million in PR in the first place? The staff recommendation, which offered few details, "wouldn't be adequate in kindergarten," said Richard Katz, a commission member.

Surely if the staff knows it is making a controversial choice, it should provide extra documentation and an especially transparent process. Yet that's not what happened.

The commission now plans to redo the bidding. Meanwhile, the Public Policy Institute of California released a poll Thursday showing new heights of cynicism about state politics: 73% of respondents believe state government is "run by a few big interests looking out for themselves."

And why wouldn't they think that?

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