Faced with a $150 million budget deficit at UC Berkeley, university administrators were grappling last year with how to break the news to faculty and the media about the need for major spending and staffing cuts.
The solution? University officials bypassed Berkeley’s own communications staff and approved spending $419,400 to hire an outside public relations agency “to address media and stakeholder backlash,” newly released documents indicate.
The contract with Sard Verbinnen & Co., which bills itself as a global public relations firm, was aimed at helping the university communicate with alumni, faculty, donors, legislators and others about how it was going to address the deficit.
“Campus leadership was considering how best to deal with the considerable communications challenges it was facing and believed that outside expertise would likely be needed,” Dianne Klein, a spokeswoman for UC President Janet Napolitano, said Thursday. “The president said that if the campus felt that hiring an outside firm was the best course, that one should be hired. Moreover, the firm was paid with unrestricted donor funds, not state or tuition dollars.”
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At the time Sard Verbinnen was advising the Berkeley campus, UC officials were dealing with a separate scandal at UC Davis over the use of at least three outside public relations firms to enhance the reputation of that school and then-Chancellor Linda P.B. Katehi, who ultimately resigned under pressure.
Amid the controversy over the UC Davis contracts, which were made public by The Sacramento Bee, UC Berkeley abruptly canceled its contract with Sard Verbinnen.
Before the contract was scrapped, however, UC Berkeley paid the firm a total of $306,447.05 for work through June 2016. The firm’s duties had quickly expanded beyond dealing only with the deficit, documents show, and included offering advice on how to strengthen the image of Chancellor Nicholas Dirks as he addressed the shortfall.
“Dirks must not shy away from public view at this point in time,” an April 23 email from the firm to Berkeley communications executives advised. “He must demonstrably take control of the situation both publicly and behind the scenes.”
Failure to aggressively address the deficit publicly, the firm wrote, would damage support for the university “and Dirks’ own reputation.”
The company also provided help in answering media inquiries from CBS News and the Los Angeles Times, discussed the San Francisco Chronicle’s “track record” and monitored “relevant media coverage,” the documents show.
Within months of being hired to work on the deficit issue in January 2016, Sard Verbinnen’s role expanded to include helping to deal with explosive sexual harassment cases and investigations that were roiling the campus, the documents show.
Dirks said in August 2016 that he planned to resign, an announcement that coincided with the San Francisco Chronicle’s report that the campus spent more than $200,000 on two other consultants to “improve the chancellor’s strategic profile nationally and internationally.”
The newly released documents concerning the Sard Verbinnen contract provide more details about how UC officials responded to fears about negative attention toward the Berkeley campus. The contract and emails are just coming to light now because campus officials released the documents in February – more than eight months after The Bee filed a California Public Records Act request seeking them.
Berkeley spokesman Dan Mogulof defended the hiring of the outside firm, saying “no tuition or state dollars” were used to pay for the PR contract.
“Monies used to pay for (the) Sard Verbinnen contract came exclusively from two funds that draw on philanthropic donations that are gifted by donors without restriction and are allocated at the discretion of the Chancellor and/or Provost,” Mogulof wrote in an email response to queries from The Bee.
Berkeley officials say they needed the firm’s help despite having a campuswide communications and public affairs office that employs 31 people. Of that staff, only five were “professionally prepared, able, and available to work on budget-related communications,” Mogulof said.
The university also employs dozens of additional staff members in communications and public relations jobs within individual departments, based on Bee research.
University communications staff did not have the “experience and expertise” to deal with the deficit, Mogulof said.
The contract documents described a two-phase effort expected to last 48 weeks. But an email provided to The Bee indicates that one university official proposed scuttling the contract in a May 5 email that was time-stamped 59 minutes after The Bee filed its Public Records Act request for details of the deal. Mogulof said the timing was “a complete coincidence.”
“The contract ended when campus leadership determined that the firm’s services were no longer needed,” Mogulof wrote in an email. “Discussion about exactly when to terminate the contract began in April, at around the same time campus leadership began to consider significant changes in how the budgetary issues would be addressed on a substantive level.”
At the time, the campus leadership was under fire for high-profile sexual harassment cases and internal investigations, and Dirks announced in August that he was resigning. His decision to step down, which becomes final once a successor is named, came one week after Katehi resigned under pressure from Napolitano.
Napolitano suspended Katehi in April, in part because of her involvement in hiring outside public relations firms to boost her reputation and that of the UC Davis campus.
The Berkeley public relations effort apparently began in November 2015, with the university contacting at least half a dozen firms to submit proposals, according to emails released to The Bee.
Berkeley officials would not release the names of the other companies considered for the contract.
“There is little ... public interest in knowing our evaluation of specific firms that we did not hire and strong public interest in our continued ability to access these services,” public records coordinator Liane Ko wrote in an email to The Bee.
By December, Berkeley officials were closing in on a decision to award what one email referred to as the “high priority contract.”
Claire Holmes, then the school’s associate vice chancellor for communications and public affairs, emailed Berkeley’s chief procurement officer, Jim Hine, on Dec. 22 about the contract.
“Per the chancellor’s direction,” she wrote, the school was planning “to hire a crisis communications agency to assist us manage internal and external communications associated with some upcoming activities and reorganizations on the Berkeley campus.”
“Yesterday, President Napolitano called Chancellor Dirks to let him know she would like us to have the agency on board in early January, which accelerates our timeline,” wrote Holmes, who subsequently left her post and now is associate vice chancellor for the UC Davis Health System.
“Given the sensitivity of this work and the visibility of it with leadership, I wanted to make sure you were aware,” she wrote to Hine.
That email was sent one day after Holmes and others met with John Christiansen, managing director of Sard Verbinnen’s San Francisco office, documents show.
In a follow-up email to Holmes, Christiansen proposed a $15,000 per month retainer and sketched out an estimate of fees that he suggested would total between $220,000 and $270,000 between January and August.
Berkeley and Sard Verbinnen officials met again on Saturday, Jan. 16, 2016, at a lunch inside the Hotel Shattuck Plaza restaurant Five, which bills itself as “serving sophisticated American cuisine influenced by European techniques and refined with the best resources California has to offer.”
The university officials were scheduled to meet for lunch with Christiansen, who bills at a rate of $675 an hour, the documents state, and his colleague from Sard Verbinnen, Scott Lindlaw, an attorney and former Associated Press reporter in Sacramento whose rate is $575 per hour.
Three days after that lunch, documents indicate, Sard Verbinnen was named as the winning bidder, and the contract with the school was signed Jan. 25.
“The UC Berkeley Office of Communications & Public Affairs is partnering with Sard Verbinnen & Co. LLC. for additional senior counsel to support our office and campus leadership in developing communications strategies and messages to address media and stakeholder backlash as the campus prepares for a major, budget-related structural reorganization,” the contract read.
The company agreed to “participate in onboarding process, meet with key campus leaders, and get up to speed on UC Berkeley’s financial situation and planned changes.”
Sard Verbinnen also said it would create talking points, “coach and continue to counsel senior leadership to evolve narratives and key message tracks,” “develop and propose strategies to strengthen ‘positive’ narrative” and “develop set of key messages and or recommended actions to position UCB as taking bold action …”
With Sard Verbinnen on board, Chancellor Dirks’ office announced on Feb. 10 that the university had a $150 million deficit and that he was beginning a “strategic planning process designed to ensure our excellence in the face of continuing financial challenges.”
The Berkeley campus has a $2.5 billion operating budget. University officials blamed the deficit partly on dwindling state support.
Over the next three months, the school announced cost-cutting measures that included eliminating “roughly 500 positions over the course of the next two years, including through using normal attrition and position control.”
By May, workers began to receive layoff notices. Workers rallied in protest over layoffs. Faculty criticized Dirks over his handling of high-profile sexual harassment cases on campus. About the same time, the San Francisco Chronicle revealed that a fence built around the chancellor’s campus residence cost $700,000.
About 60 miles up Interstate 80 at UC Davis, the chancellor was also mired in scandal.
Katehi was suspended from her post in April by Napolitano, who said Katehi had misled her and the media about her involvement in hiring public relations firms to scrub the internet of negative postings about Katehi and UC Davis.
At 1:46 p.m. on May 5, The Bee emailed a Public Records Act request to UC Berkeley seeking the Sard Verbinnen records. At 2:45 p.m., Holmes emailed Mogulof indicating that Dirks planned to talk to Napolitano’s office “about their views on whether or not to continue to retain SARD.”
“The proposal I made was to stop the current contract, and keep $50k in case of emergency,” she wrote. “I will call John Christensen (sic) with a heads up that this is being discussed.”
The next day, Napolitano’s deputy chief of staff, Bernie Jones, emailed Holmes and other Berkeley officials to inform them that “the feeling up here is that we would be supportive of your not renewing the firm.”
Mogulof said discussions scrapping the contract already were well underway by then.
Canceling the contract required 30 days notice, and by June 10 the firm’s work ended. Berkeley agreed to pay a total of $306,447.05.
Sard Verbinnen’s work over the course of the contract included at least 30 teleconferences between Jan. 29 and May 5 that averaged an hour each, Mogulof said, eight campus visits between late January and April, and media training sessions in February for campus leadership.