Government Fleet Top News

Lawmaker Seeks Flex-Fuel Deal Subpoenas

September 26, 2007

SACRAMENTO - A state senator said Tuesday that he will seek subpoenas to force members of Gov. Arnold Schwarzenegger's administration to testify about what he described as a non-competitive purchase of state fleet vehicles from General Motors, reported in San Jose Mercury News.

Sen. Dean Florez, (D-Bakersfield), for weeks has asked administration officials to appear at a legislative hearing, held Tuesday, to answer questions about internal state documents that show the state agreed to buy vehicles from the automaker before a competitive bid was issued.

The questions focus on the state's purchase over the past two years of 1,100 "flex-fuel" GM vehicles, which are designed to run on high-grade ethanol. GM was the only car manufacturer that made vehicles that qualified for the contract. A policy that banned the flex-fuel vehicles from the fleet was changed right before the bid went out.

Florez said he wants to know what the governor and his administration knew about the $17 million deal.

"If we don't receive the documents, we are fully prepared to go to the Senate Rules Committee to serve subpoenas," Florez said at the hearing, adding that he is also seeking testimony from decision-makers within the governor's office and state contract managers that were involved with the deal.Chilling effect

Schwarzenegger spokesman Aaron McLear said it is rare for such information to be released because it would have a "chilling effect" on information that is shared with the administration by advisers. The Governor's Office has asserted that state law protects it from releasing documents and providing testimony. The Department of General Services, which buys and manages the state fleet, sent officials to the hearing, where they defended the purchases according to San Jose Mercury News.

Florez is examining the state contract in response to a Mercury News investigation that most recently focused on questions surrounding the bidding process for the fleet. Those concerns follow an initial story that showed the alternative-fuel fleet, for two years, had been running exclusively on standard gasoline. High-grade ethanol has never been widely available in California, which is why the department banned purchase of the vehicles from 2002 until 2005.

Most recently, internal state documents obtained by the Mercury News revealed that officials with GM and the state signed a memorandum of understanding - agreeing to a limited buy of the vehicles - a month before a competitive bid was issued for the work.

The small program expanded to a large fleet buy of more than 900 of the "flex-fuel" Chevrolet Impalas and Silverado pickups. Records also show the fleet purchases came about only after the state policy that prohibited buying them was eliminated at the last minute, and 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, a Department of General Services contract manager said the change was needed "per the Governors (sic) request."

On Tuesday, administration officials said they were insulted by implications that their bidding procedures may have been compromised by the memorandum of understanding.

Will Semmes, chief deputy director of the General Services Department, said that although GM was the only automaker able to secure the flex-fuel buys and that made vehicles that qualified for the contract, the process was competitive because dealerships had to bid against one another for the sales.

"Our procurement staff finds that insulting, frankly," said Semmes, who was appointed to his post by Schwarzenegger. "There are a lot of people in DGS who are trying to keep this very separate."

Florez has said it's important to determine what the governor knew, if anything, because GM is a longtime contributor to Schwarzenegger's charities and campaigns - donating far more than any other automaker.

The senator will need to submit a written request for the subpoenas, giving legal arguments for seeking information and testimony, something he has not yet done. The request will be reviewed by Secretary of the Senate Gregory Schmidt, who will make recommendations to Senate leader Don Perata, D-Oakland. Perata will decide whether the Rules Committee will consider the request.GM ad campaign

Also at the hearing Tuesday, Florez accused the General Services Department of promoting a GM national advertising campaign by wrapping a state-owned, flex-fuel Chevy Impala and two Silverado pickups with adhesive vinyl with a GM slogan: "Buy Yellow. Go Green."

The Impala was driven by a state employee to a conference in June where fleet managers and automakers met to talk about the latest technology in the automobile industry. The state was also at the conference, and used the Impala, to promote its efforts to "green the fleet," said Richard Shedd, a General Services fleet manager who signed off on the idea.

However, the hearing revealed that the vehicle was fueled with standard gasoline - not the alternative fuel the car was meant to run on, which is an ethanol blend, E85. That vehicle's advertising wrap also includes GM's Web-site address.

Shedd said Tuesday that using the advertising wrap was a mistake.

"In hindsight, we shouldn't have done that," he testified.

A fueling station opened two weeks ago in the state garage, where the flex-fuel Impala is located, but E-85 was not available at the time the vehicle was taken to the conference in Sonoma.

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