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Schwarzenegger may have pushed for General Motors to get lucrative state contract

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Schwarzenegger may have pushed for General Motors to get lucrative state contract

Mercury News ^ | 9/22/07 | Kimberly Kindy

Posted on 09/22/2007 8:00:35 PM PDT by NormsRevenge

SACRAMENTO - Despite state laws that require government officials to seek competitive bids on large purchases, internal documents reveal that state officials held a series of private meetings with General Motors during which they agreed to buy "flex-fuel" vehicles from the automaker - a month before a bid for such vehicles was ever issued.

--snip--

Soon after, the state solicited bids to buy an entire fleet of flex-fuel vehicles designed to run on high-grade ethanol. General Motors dealerships won all of the contracts for ... 1,300 cars and trucks and $17 million in sales, because they were the only automaker that met the state's qualifications.

Legal experts said the sequence of events - and especially the no-bid pilot project - appear to run afoul of state contract laws, ... .

--snip--

State officials insist they followed the law, but e-mails indicate that several key players expressed concern at the time about the appearance of wrongdoing.

--snip--

The paper also reported that only GM vehicles - Chevy Impalas and Silverados - qualified to be purchased for the fleet.

But the new documents, provided by the state in response to a public records request, add considerably to the picture.

They show that the flex-fuel deal came about only after a state policy that prohibited the purchase was eliminated at the last-minute.

Soon after, the fleet contract was modified to add flex-fuel vehicles. An e-mail obtained by the Mercury News shows that just days before that modification was made, Gov. Arnold Schwarzenegger appeared to be pushing for it.

Schwarzenegger has long-time ties to GM, having served as spokesman for the Hummer, ... received millions in contributions from the company to his charitable and political causes, ....

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GM will be painted as the bad guy...

I can't believe they support that hack in the first place.

hack... he's doing a much better job than anyone has done in the last couple decades

perhaps if all you see him doing is lifting barbels and driving hummers, then you certainly havent seen the man who has obviously proven the theory you can do anything if you put your mind to it.

not like the coward like bush...

I dont know about you but I havent even seen bush be as aggressive as arnold, and go to japan and other asian countries to try to open up trades with them.

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You have to see things from the other point of view—that's why this is seen as a bad thing. If it had been Priuses or Camrys, then there would have been no complaints.

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hack... he's doing a much better job than anyone has done in the last couple decades

perhaps if all you see him doing is lifting barbels and driving hummers, then you certainly havent seen the man who has obviously proven the theory you can do anything if you put your mind to it.

not like the coward like bush...

I dont know about you but I havent even seen bush be as aggressive as arnold, and go to japan and other asian countries to try to open up trades with them.

I've never been a big Arnold fan but I've gained respect for the guy after watching his administration go through it's up and downs. He acknowledges and adjusts for his mistakes. Something that will never be said about Bush who is clueless and resorts to the "double-down" strategy when he makes a mistake.

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"Number 3."

"Don't you want to read it Mr. President?"

"I was paid to lead, not to read."

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You have to see things from the other point of view—that's why this is seen as a bad thing. If it had been Priuses or Camrys, then there would have been no complaints.

Precisely... :AH-HA_wink:

Edited by FUTURE_OF_GM
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The State Senator who is pushing the investigation, Dean Florez, is planning to run for Lieutenant Governor, and ultimately has his eye on the Governor's office. The State of California already has a bunch of flex-fuel Tauruses, but there are only two E85 fueling stations in the State. However, several more will be opened within a year.

The Republican establishment in the State does not like Arnold. To them, he's a RINO, Republican in name only. Arnold is pro-choice, pro-gay rights, pro-gun control, pro-universal healthcare and has done little to rein in the size of government or its spending. He's probably left of most Democrats outside of California.

Here's the unabridged article:

Schwarzenegger may have pushed for GM to get state contract

The governor has strong financial ties to automaker

By Kimberly Kindy

San Jose Mercury News Sacramento Bureau

San Jose Mercury News

Article Launched:09/22/2007 04:27:19 PM PDT

SACRAMENTO - Despite state laws that require government officials to seek competitive bids on large purchases, internal documents reveal that state officials held a series of private meetings with General Motors during which they agreed to buy "flex-fuel" vehicles from the automaker - a month before a bid for such vehicles was ever issued.

Various e-mails, memos and documents obtained by the Mercury News show that the meetings took place over five months and culminated with state officials signing a Memorandum of Understanding with GM for what was then a small pilot project of 50 to 100 vehicles. No other automaker was offered a chance at the deal.

Soon after, the state solicited bids to buy an entire fleet of flex-fuel vehicles designed to run on high-grade ethanol. General Motors dealerships won all of the contracts for what was ultimately 1,300 cars and trucks and $17 million in sales, because they were the only automaker that met the state's qualifications.

Legal experts said the sequence of events - and especially the pre-bid agreement for the pilot program - appear to run afoul of state contract laws, which are designed to ensure fairness and that taxpayers get the best deal for their money.

"The law is fairly clear in this area. Competitive bidding has to be in good faith. That means you don't have agreements like this arranged ahead of time," said Robert Fellmeth, director of the Center for Public Interest Law at the University of San Diego.

State officials insist they followed the law, but e-mails indicate that several key players expressed concern at the time about the appearance of wrongdoing.

The new questions about the bidding process only reinforce concerns about the purchase that have been bubbling since July, when the Mercury News first reported that the alternative fuel fleet was running exclusively on standard gasoline because high-grade ethanol has never been widely available in California. The paper also reported that only GM vehicles - Chevy Impalas and Silverados - qualified to be purchased for the fleet.

But the new documents, provided by the state in response to a public records request, add considerably to the picture. They show that the flex-fuel deal came about only after a state policy that prohibited the purchase was eliminated at the last-minute. Soon after, the fleet contract was modified to add flex-fuel vehicles. An e-mail obtained by the Mercury News shows that just days before that modification was made, Gov. Arnold Schwarzenegger appeared to be pushing for it.

Schwarzenegger has long-time ties to GM, having served as spokesman for the Hummer, and has also received millions in contributions from the company to his charitable and political causes, far more than other automakers.

"This is a unique situation," said Sen. Dean Florez, D-Bakersfield, who has launched a legislative investigation into the contract, "where the governor had a pre-existing financial relationship with a company that still heavily supports him and who appears to have earned a sole-source contract."

Schwarzenegger's spokespeople have said repeatedly that neither the governor nor members of his office played any role in shaping the contract. GM officials also maintain the process was above board.

A state Senate committee led by Florez is demanding that officials from the governor's office appear at a Tuesday hearing to answer questions in connection with the purchase - a demand they are so far resisting.

The twisting turn of events that culminated in the deal began back in September 2005, when state officials sat down with GM to talk about how to make flex-fuel vehicles part of the state's fleet.

It was a tricky proposition because the state actually had a policy in place, dating back to 2002, that prohibited purchasing the vehicles because the fuel is not widely available. But e-mails and documents suggest that state officials - including, it appears, the governor - were set on buying flex-fuel vehicles, anyway.

Initially, the effort proceeded on two tracks. There were the private meetings with GM about the smaller pilot project, begun initially at the request of the automaker. And there were separate discussions within the state's Department of General Services - which oversees the state's vehicle purchases - about a larger contract that eventually came to include flex-fuel vehicles.

Alan Lloyd, Secretary of the California Environmental Protection Agency at the time, was an architect of the pilot project. He said all along that the goal was to move flex-fuel vehicles into the state fleet - not to limit it to a small effort. It's unclear to what extent General Services knew about the commitments made in those meetings.

"The idea was always to go bigger," Lloyd said in an interview. "We were looking at the Department of General Services because they were responsible for the fleets. If they were going to start buying some more of the vehicles, we thought the pilot project was a great way to kick start it."

LLoyd, who was part of Schwarzenegger's cabinet, said he did not intend to help GM get an exclusive contract. However, he also concedes that no other automaker was invited to the meetings in fall 2005, which he organized with GM.

General Services officials, however, said they were working on plans to purchase flex-fuel vehicles before they ever heard of GM's meetings with state officials on the same topic.

They point to a June 2005 memo that shows state fleet managers recommended the move back to flex-fuel to upper management, mostly because the vehicles would soon be widely available even though the ethanol blend - E85 - would not yet be sold in California.

However, it is clear there was, at least initially, no consensus in the department. An e-mail three months later - from General Services manager Rick Slama - showed he planned to re-issue the policy that banned the purchase of the flex-fuel vehicles. He was stopped by the former director of the department, Ron Joseph, but expressed confusion as to why.

Joseph, who retired last year, could not be reached for comment.

What is clear is that by the next month, October, the department was ready to move ahead. On Oct. 7, 2005, state contracting manager Rita Hamilton said the ethanol-fueled vehicles needed to be added to the state lineup, "per the Governors (sic) request."

A mere six days later, the contract specifications were altered for a large planned purchase, adding flex-fuel vehicles to the mix. And two months after that, the policy that had prohibited the state from purchasing flex-fuel vehicles - the one Slama was going to renew - was reversed.

Despite the language of Hamilton's e-mail, Schwarzenegger spokesman Aaron McLear insisted that no one from the governor's office contacted her or anyone else in the state's Department of General Services.

"The governor's office never instructed the Department of General Services to add flex-fuel to the procurement for the fleet," said McLear. "The governor previously expressed his desire to have the state fleet be made more green - that's no secret....but he never contacted General Services about flex-fuel vehicles."

Hamilton declined comment about the e-mail she sent to several officials in General Services' upper management.

General Services officials also said nothing improper happened. They said the bid specifications were altered, in part, to allow CalTrans to use the vehicles acquired for the pilot project. Those vehicles typically have run on E85 that flows from two pumps built by the state exclusively for the project.

"It's our job to make sure state departments are able to purchase vehicles that they need," said Will Semmes, the department's Chief Deputy Director. "Otherwise we become the problem."

At the time, General Motors was the only car manufacturer certified with the California Air Resources Board to sell flex-fuel vehicles in the state. As a result, only GM dealers were able to bid on the flex-fuel portion of the vehicle contract. Other automakers had not gone through the lengthy certification process, in part, if not entirely, because of the then-state policy that prohibited the purchase of flex-fuel vehicles.

Ford Motor Company, American Honda Motor Co. and several other auto manufacturers declined comment on the way the contract was handled. Several said they were concerned their remarks would prevent them from landing future fleet contracts.

While officials today uniformly express confidence in the legality of the state flex-fuel purchases, that was not the case in the fall of 2005. By then, a copy of the Memorandum of Understanding for the pilot project had been given to the Department of General Services, sparking a flurry of e-mails among employees worried that it might appear the fix was in for GM.

In a Dec. 14, 2005 e-mail to a state Air Resources Board official, Slama, the General Services manager, said the department's own legal counsel had concerns with the "language of the MOU and its implications" adding that two Schwarzenegger officials were also concerned that the agreement had the "appearance of this being a noncompetitive (sic) bid project."

The Schwarzenegger officials were department director Joseph and Rob Cook, who served as a deputy director with General Services. Both were appointed to their posts by the governor.

The concerns only grew when a GM press release begin to circulate in state offices touting the pilot project. Records show a department spokesman protested that the department was in charge of such buys and should make them through the competitive bidding process as required by law.

"As the state agency responsible for maintaining the integrity of the procurement process, DGS cannot concur that this is an approved press release," wrote Matt Bender, a former spokesman with General Services in a Dec. 27, 2005 e-mail. "This press release appears to create the impression that the outcome of a solicitation currently in process has been preordained."

The GM press release went out anyway, one month before competitive bidding began. And the agreement the state made with GM for the pilot project was honored. In the end, however, the vehicles used in the project were purchased by General Services under the terms of the broader fleet contract.

At his Tuesday hearing, Senator Florez hopes to further dissect the deal.

"They seem to have circumvented bidding laws and California contract procedures and they were very successful at it," Florez said. "This contract should have been done in the light of day. We plan to force it out into the light."

If the Senate hearing turns up evidence of possible wrongdoing, the Attorney General could launch a criminal investigation. Violating state contract laws is punishable by fines and even prison time.

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i really dont see why there is too much contraversy over it except that they arent foriegn cars...

but really people shouldnt be bitching about that either

i mean think, good deal to me, 1300 vehicles at 17 million, thats like an average price of 13076 per vehicle... dont know if state purchased vehicles pay sales taxes...

but, regardless... if u could get an impala or a silverado for 13000 i'd buy it... and sell it again... if this was part of last months fleet sale... who knows

and its good that arnold sticks up for american jobs and GM in particular...

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Florez is just another dirtbag politician and hopefully the voters call him out on it. DO YOU HEAR ME MR. FLOREZ?

His job is to make laws. Not enforce them. Enforcement is managed by the attorney general.

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At the time, General Motors was the only car manufacturer certified with the California Air Resources Board to sell flex-fuel vehicles in the state. As a result, only GM dealers were able to bid on the flex-fuel portion of the vehicle contract. Other automakers had not gone through the lengthy certification process, in part, if not entirely, because of the then-state policy that prohibited the purchase of flex-fuel vehicles.

So what's the problem?

By their own admission, GM was the only automaker eligible to bid, so what's the big deal?

i really dont see why there is too much contraversy over it except that they arent foriegn cars...

I'm not even sure that's the major issue (Although I'm sure it is one of them) I think it's just simple politics. This guy wants Arnold's job and he's going to use our tax dollars and valuable time to go after it instead of actually doing something productive. Typical of a politician and typical of California.

His job is to make laws. Not enforce them. Enforcement is managed by the attorney general.

Thank you very much... This is exactly what I was trying to say, you just did a better job.

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This is such a non-story in Southern California. I think the newspapers around Sacramento and the bay area cover all of the minutia of state politics too closely. So the story is that the governor met with GM before he announced an open bid for flex fuel vehicles? hmmm.... and no other companies had the vehicles that the state needed? Wow, what a scandal!

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This is such a non-story in Southern California. I think the newspapers around Sacramento and the bay area cover all of the minutia of state politics too closely. So the story is that the governor met with GM before he announced an open bid for flex fuel vehicles? hmmm.... and no other companies had the vehicles that the state needed? Wow, what a scandal!

yea if no other company had gone through gm's troubles to get certified... then so be it... besides the japs dont even make any e-85 vehicles

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yea if no other company had gone through gm's troubles to get certified... then so be it... besides the japs dont even make any e-85 vehicles

Cool... this guy needs to be our next President. I keep saying it!!!

You don;t put out multiple bids on a product that only one company offers.

What was he supposed to have GMC bid against Chevrolet? :P

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Cool... this guy needs to be our next President. I keep saying it!!!

You don;t put out multiple bids on a product that only one company offers.

What was he supposed to have GMC bid against Chevrolet? :P

seems like they probably did looking at the killer deal they got...

Sierra & GP vrs Silverado & Impy

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and here i thought someone in CA might get a clue such as 'hey why don't we team up with GM and the electric industry and build the volt here'?

but i would never accuse CA of being that forward thinking

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and here i thought someone in CA might get a clue such as 'hey why don't we team up with GM and the electric industry and build the volt here'?

but i would never accuse CA of being that forward thinking

California is building the Tesla 100% electric car. Now that is forward thinking.

Tesla

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California is building the Tesla 100% electric car. Now that is forward thinking.

Tesla

nice try. where is the volume production from a major reputable manufacturer. tesla is a niche startup. won't make a dent anytime soon.

i'm talking cranking out 100k cars a year.....within 3-5 years

Edited by regfootball
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nice try. where is the volume production from a major reputable manufacturer. tesla is a niche startup. won't make a dent anytime soon.

i'm talking cranking out 100k cars a year.....within 3-5 years

Isn't the only California GM facility of that size fully utilized by Toyota? Perhaps you would have GM use precious resources to build a new plant when they have facilities elsewhere that are empty/underutilized.

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Isn't the only California GM facility of that size fully utilized by Toyota? Perhaps you would have GM use precious resources to build a new plant when they have facilities elsewhere that are empty/underutilized.

property tax is a bitch... expecially with land costing millions for 1 acre...

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