Kendra Arnold - Is Newsom's diaper deal cronyism or coincidence?

California awarded a multimillion-dollar no-bid contract to a nonprofit with ties to Governor Gavin Newsom's inner circle. Was it the best choice for taxpayers, or another example of political favoritism?

Kendra Arnold, Executive Director of the Foundation for Accountability and Civic Trust (FACT), joins the show to discuss the ethics concerns surrounding California's $6.2 million diaper contract, the calls for an investigation, and what it could reveal about government spending and accountability. 

Transcript

SPEAKER_01 0:05

Hey, welcome back to the Lawrence Lawrence Show. It's a pleasure to be with you. Some of Gavin Newsom's policies for the state of California stink like a dirty diaper. And Gavin Newsom, of course, I think clearly intends to run for President of the United States. And I would expect that at some point he would expect to have to explain all this stuff. So I want to explain it to you, but I've invited Kendra Arnold on, who's executive director of the Foundation for Accountability and Civic Trust, otherwise known as FACT. Kendra, welcome back to the program.

SPEAKER_00 0:37

Thanks for having me.

SPEAKER_01 0:39

What should my audience know about some of these no-bid, multi-million dollar contracts that are currently being handed up by, I guess, would-be presidential candidate, California Governor Gavin Newsom?

SPEAKER_00 0:51

Yeah, these contracts are uh not good. And I think one of the reasons why when we before we even get to the particular contract is the purpose of the rules around these government contracts. And unlike other forms of government in our democracy, we award contracts in a fair and unbiased manner. We protect our taxpayer funds and make sure they're going to a legitimate company who's made a good bid to do work on behalf of the citizens. And this is very important because this eliminates access based on relationships or political donations, bribery, kickbacks, and all kinds of conflicts of interest. So when we remember how important those rules are, when we see these contracts, this is something that we should definitely take very seriously. And in our case, we recently sent a letter to the California State Auditor asking to look into one of the Newsom administration's contracts with Baby to Baby to distribute diapers. And the contract was worth $6.2 million.

SPEAKER_01 2:04

Yep.

SPEAKER_00 2:06

So one of the reasons why this came up, and this is in a really important case, is because of the transparency issues. So initially, uh the Newsome administration was asked for the contract and the documents around the competitive bidding process. And they responded and said, this is a competitive bidding process, and basically indicated, we'll get you these contracts. And they never came out with them, which kind of raised a red flag for us and many other people. I believe CBS News has been working on this for um almost 60 days trying to get the documents. But initially we thought this is really strange. And so we started looking into how these how this contract was actually awarded. And we found some things indicating this was actually a no-bid process and that it was done through a special procurement um provision put into a bill. And so we're still trying to get to the bottom of all of that, but meanwhile, there has these public documents that our citizens and have every right to see, and yet they are not releasing them. So we really don't know what's in these, what's in the contract or how or why it was awarded.

SPEAKER_01 3:20

I'm talking to Kendra Arnold, who's with C Fact, which is she's the executive director of the Foundation for Accountability and Civic Trust, FACT. Uh so explain the connection to Jennifer Seibel Newsom, who is the governor's wife, uh, and this this contract, this no-bid contract for baby to baby.

SPEAKER_00 3:40

So when we were looking at it, that is one of the things that initially alerted us was the baby-to-baby organization has two CEOs, both of which look to be political donors. And immediately, you know, that does raise some flags usually because we're like, okay, we want to see if there's other relationships here. And one of them is tied to Newsom's wife through another organization that they are um that she's on the board of. So we see just these general relationships that often can lead to conflicts of interest or different things that we want our elected officials to explain when they happen. So, you know, it's not um it's not one of those things where we can tell every type of relationship or know every little fact that goes into this. But when you see those red flags, you want your elected officials to come forward and explain why, you know, someone could have gotten why it looks like someone may have gotten preferential treatment. And generally, again, that's what the no bid contract is there to protect against.

SPEAKER_01 4:48

Well, in fact, did fact look into when they say we're going to have this nonprofit baby to baby, and we're going to get diapers out to, you know, less well uh less affluent uh moms in California. Did they even get a good deal on the diapers? Because my understanding is they did not. And you would think it's a nonprofit. They should get the best kind of deal on the diapers. And it sounds like that didn't happen.

SPEAKER_00 5:13

That was exactly. That is another thing that kind of alerted us to it. Several media organizations have tried to get to the bottom of this. And of course, without the contract, we can't see the actual numbers. And so when you do the math, though, we know the 6.2 million contract was out. When you divide it out and see kind of the analysis from a couple media organizations, has been that it's the same price for a diaper as if you'd walk into a general retail store and buy them. So obviously that is problematic for a lot of people because that goes into whether or not it's wasteful government spending.

SPEAKER_01 5:51

Well, and hold on, uh uh Kendra, if you don't mind my pointing this out. When when you buy from Target, you understand you're paying for the cost of the product plus the cost of the store, the bricks and mortar store, plus the cost of all the associates, plus some profit, because Target makes a profit or they try to make a profit. So when you're paying that same amount of money to a private nonprofit like Baby to Baby, should we suspect that all the money that would have gone to Target to pay for their other expenses, bricks and mortar, CEO, associates, and everything else, is going to somebody at Baby to Baby, maybe even friends of the governor's wife?

SPEAKER_00 6:30

That is so, yes, and especially with large government purchases, one of the things that we want our government to do is leverage the power of buying in bulk, essentially. And so we expect the government to get lower prices on items that they are buying in mass quantities. And if that is the case here, then we would want them to get a lower price. Now, without them releasing the contract, which, you know, it is a public document, they absolutely have to release it and it will come out. Um, there's, you know, I think they have even admitted that it is a public document. They are just trying to slow play the release. And then we can see what how they set the price and what they agreed to do. But that's very important because it gives the taxpayers who are funding this program an ability to say, either you made a bad deal, or yeah, where is this extra profit going? Who is the beneficiary of that?

SPEAKER_01 7:30

And does it go to the why I guess friends and family of the governor's wife, Jennifer Steibel Newsham? Kendra, keep up the good work at fact. That's the foundation for accountability and civic trust, and we appreciate you coming on the program. In a moment, we're going to get to your phone calls and your emails at 866-HLars. If you believe in supporting American craftsmanship, veterans, and independent talk radio, go to my website, pick up a limited edition Lars Larson Show Challenge coin made by American veterans. Well, all proceeds go to benefit veterans. Not a penny of it goes to us. And you've got the Lars Larson show.