Cost-cutting cronyism at its best?

The more you learn about the Texas lobby boondoggle (this is where the state's federal relations office was gutted in order to hire K-Street-Project-approved private lobbyists such as DeLay's former Chief of Staff), the more ludicrous the narrative becomes.  

The Texas Office of State-Federal Relations (OSFR) has existed since the 60's, and its purpose is clear from the title. According to the website, it's there in Washington to "advocate for the interests of Texas." Simple. You might even say that they're there to lobby the federal government on behalf of Texas.

For example, Roy Coffee, who served as the Austin Director of the OSFR during Bush's governorship, went right into lobbying after finishing his stint there - it was a natural transition.

Nevertheless, the OSFR hired a lobbyist for the first time in its history in 2003 - Drew Maloney of the Federalist Group. That much has been well-reported. What's been underplayed is that, when it was forced into the public eye, it was boldly justified as a canny cost-cutting measure, a stroke of free-market inspiration.

In the Spring of 2003, Texas was facing a budget crisis. State agencies were being cut across the board, and the OSFR was up for cuts too. The plan was to deeply cut the OSFR's staff and replace their services with a private lobbyist. Of a staff of 17, 10 were to be let go. Now that's privatizing!

But for such a genius idea, it was done very, very quietly. Contracting a lobbyist required a bidding process, the first step of which was issuing a "Request for Proposals." That request appeared in the Texas Register on February 21, 2003.

Now, the Texas Register is issued weekly by the Secretary of State; it's voluminous, full of contracts, rule changes and the like, and really boring. Not the sort of thing you'd pick up for a casual read. Of course, the request went unnoticed in Texas. In D.C., eight firms responded. Members of the OSFR staff quietly went over the bids and selected the Federalist Group's Drew Maloney, who had been Tom DeLay's Chief of Staff until March of `02. The Federalist Group is literally an all Republican firm.

The Governor and his minions at OSFR snuck this past the Democrats, the press, everyone.

I spoke to two Democratic members of the Texas House. They both said that the first they learned of the contract was in going over the budget for 2004-2005 when they found the line item in the Appropriations Act. According to Rep. Jim Dunnam of Waco, "an enterprising staffer" found it amongst the hundreds of pages. This is in late March. By then, the contract had already been awarded to Drew Maloney and had begun March 26.

But they didn't just try to sneak this past the Democrats - the Speaker of the House was also out of the loop.

The Republican Speaker of the Texas House Tom Craddick has been very public in saying that he "never approved of these contracts." His Deputy Press Secretary Chris Cutrone told me that the first Craddick learned of it was during the budget discussions. He said that Craddick was not aware of the Request for Proposals, and that sometime during the discussions, he learned that OSFR had offered to cut their staff and replace them with private lobbyists. He approved of it strictly as a "budgetary decision."

The reason that Craddick has responded so loudly to this is that the OSFR operates under the supervision of an advisory board composed of the Governor, the Lt. Governor, and the Speaker. So a lot of the reporting has said that the contract was approved by the three of them.

But that's not true, and when Craddick complains that the board is "explicitly an advisory board," he's right. It has virtually no power. The Lt. Governor has also said that he did not approve the contracts. Ed Perez, the Executive Director of OSFR, wrote me that "There is no statutory requirement for the Advisory Policy Board members to approve OSFR contracts."

Craddick didn't learn about these contracts until he had to - this wasn't his deal.

Gov. Perry is responsible for this, on whose orders you can probably guess (hint: back in 2003, the Houston Chronicle had an anonymous source who claimed that a certain Majority Leader was responsible). It was clearly his initiative. The Governor appointed Perez to his post, and Perez serves at his pleasure. The idea that a career bureaucrat would come up with this on his own, offering to deeply cut his own staff - from 17 to 7, more than half - is ludicrous.

In our phone conversation, Gov. Perry's spokeswoman Rachael Novier refused to say that the move was the governor's idea, only offering that he "supported" the decision.

But that the Governor is really the one pulling the strings is easily illustrated.

After OSFR awarded the contract to Drew Maloney and the Federalist Group, a second contract was awarded later in 2003 to Piper Rudnick. Heading up the Piper Rudnick team was Jim Hyland, Sen. Kay Bailey Hutchison's (R-Tx.) former legislative director. The firm also employs Dick Armey, the former House Majority Leader from Texas.

Everyone seemed happy with this arrangement until early 2004, when Sen. Hutchison and Gov. Perry clashed over the issue of base closings. Perry made a big show of supporting the Pentagon's draft guidelines; Hutchison came out against. At the same time, Hutchison was reportedly mulling over running against Perry for the Governorship.

Then, in February, the Governor began to publicly worry whether Piper Rudnick had a "conflict of interest" in representing Texas, since the firm was reportedly in negotiations with Florida to lobby to preserve their bases.

Now, there is an inherent conflict of interest when a private lobbyist, with a full slate of corporate clients, is paid with state taxpayer dollars to lobby for federal dollars. So this is obviously a phony line of argument. And the Federalist Group has a host of other governmental clients (cities, counties, university systems, etc.) that the Governor has never had any problem with.

No matter: the contract with Piper Rudnick was abruptly severed in the spring of '04. Another round of bidding ensued, and Todd Boulanger, former member of Team Abramoff, won the contract, despite the fact that his bid wasn't the best, as if that was the point.

In my next post: the money.