GOP calls for outside counsel reform in wake of Rendell controversy

John O'Brien Apr. 23, 2009, 2:37pm




HARRISBURG, Pa. (Legal Newsline) - Three of Pennsylvania's Republican lawmakers are using the recent attention Gov. Ed Rendell has received over a controversial legal contract to again push for more transparency in their government.

Members of the House of Representatives on Thursday introduced a bill they say will end pay-to-pay politics in the state. They claim Rendell has used loopholes in state laws to give no-bid contracts to his former law firm and campaign contributors.

"Our legislation seeks to put an end to this practice, not only within the executive branch but within the legislative caucuses and at the local government level too," Rep. Doug Reichley said. "The practice of awarding contracts to friends, contributors or insiders is wrong and must end."

Reichley criticized Rendell, a Democrat, in September when he attempted to get three pieces of similar legislation passed.

This time, he is joined by Reps. Glen Grell and Stan Saylor for the latest piece of legislation, part of the GOP's overall PATH (Pennsylvania's Agenda for Trust in Harrisburg) plan.

After setting up a meeting between Republican Attorney General Tom Corbett and Houston-based plaintiffs firm Bailey Perrin Bailey, Rendell hired BPB to file suit against Janssen Pharmaceutica over alleged off-label marketing of one of its prescription drugs.

Corbett was not impressed with BPB's evidence at the meeting and declined to file the suit himself. Rendell hired BPB to represent the state, but has received criticism because the firm contributed $75,000 directly to his 2006 campaign, $16,000 in airplane travel and $25,000 to the Democratic Governors Association.

Attorneys for Janssen have challenged the contingent fee agreement between Rendell and the firm. Their appeal is currently before the Pennsylvania Supreme Court.

Attorneys for Janssen are not making the argument for BPB's disqualification based on the contributions given to Rendell, but have mentioned them in several briefs.

"Mr. (Kenneth) Bailey's contributions of more than $100,000 to the Governor and the Association just as the Governor's General Counsel negotiated and executed its no-bid contingent fee contract with Bailey Perrin are relevant because they give rise to a distinct notice of impropriety, thereby making it unlikely that litigation decision-making by Bailey Perrin will be perceived as fair and impartial and solely in the public interest," one reply brief says.

"The contributions are further relevant because they are indicative of the sort of abuse of executive power that the doctrine of separation of powers was meant to check."

BPB had written, "Janssen's gratuitous identification of campaign contributions are no more relevant to the resolution of this matter than political contributions (Janssen counsel) Drinker Biddle & Reath's Political Action Committee made to various candidates presumably aligned with Drinker's and/or its clients' interests, which totaled nearly $120,000 during the 2004-06 election cycles."

Last year, Reichley admitted that Rendell's actions were not against the law but feels the way contracts are given should be changed.

"In fairness to the governor, what he did was within the letter of the law," Reichley said. "He didn't break the law. It's not illegal what he did."

Another contract for which Rendell has received criticism gave his former firm nearly $2 million for work on a project that would have made Interstate 80 a toll road. The federal government eventually denied Rendell's proposal.

"All that work for nothing," Reichley said last year.

That didn't stop Ballard Spahr & Ingersoll from earning $1.8 million for its work. Corbett had given the Philadelphia firm the no-bid contract in May 2007 under an emergency procurement provision, Reichley said.

"The issue of leasing I-80 was not a manmade or natural disaster," Reichley said. "It was highly questionable to rush to award this contract under the emergency provision."

The Republican lawmakers say the legislation will:

-Change the Procurement Code to make it applicable to legislative and judicial branches as well as the executive;

-Limit the use of sole source procurement by eliminating certain loopholes;

-Prohibit sole-source, emergency, legal and insurance work from campaign contributors.

-Allow the Budget Office to hire a consultant only as it relates to the Commonwealth's interest in the financial markets;

-Eliminate the sole-sourcing of legal work, requiring legal contracts to be RFPed and open for public review prior to execution;

-Reinstate and expanding the open records requirements (contracts must be publicly posted for five days before execution); and

-Prohibit the executive and legislative branches from hiring lobbyists as consultants.

"Pennsylvanians need and deserve an open process for state and local government contracts," Saylor said.

"To restore the trust of the people in their government, it's needed. Our constituents and all taxpayers deserve this accountability."

Also as part of the legislation, the Procurement, Public Ground and Buildings Board would be created. The seven-member agency would approve all sole-source contracts and consist of the governor, treasurer, attorney general, president pro tempore of the Senate, speaker of the House, president judge of the Superior Court and one member of the Superior Court appointed by the chief justice.

A majority would be needed to decide if an emergency or sole-source contract is in the best interest of the state.

Bailey has contributed heavily in other states, also gaving $50,000 to Mississippi Attorney General Jim Hood, who hired BPB to pursue a claim against Eli Lilly & Co.

In Louisiana, another state BPB is representing in litigation, Bailey gave $20,000 to the state's Democratic Party. In Arkansas, which hired BPB for a suit against Janssen, he gave $70,000 to the Democratic Party in 2006.

Attorneys for Janssen argue that counsel representing a government office should be motivated by justice, not money, and that BPB is controlling the decision-making instead of someone from the Office of General Counsel.

"There wasn't the slightest bit of pay-to-play here," Rendell told the Philadelphia Inquirer. "I never put a dime of state money in jeopardy for Ken Bailey."

Legal Newsline first reported the story in July, but the case has recently drawn attention from major newspapers in Pennsylvania and the Wall Street Journal.

Reichley also said that he is asking for information from Rendell on the contracts he has awarded since 2003.

From Legal Newsline: Reach John O'Brien by e-mail at

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