Why did Pence abort RFRA-related PR contract?

Indiana's economic development agency has unexpectedly canceled a $750,000 public relations contract with a global PR firm that was supposed to enhance the state's reputation after a national firestorm over the state's new religious freedom law.

In an abrupt announcement Thursday afternoon, Chris Cotterill, executive vice president of the Indiana Economic Development Corp., cited strong employment numbers, national recognition for the state's business-friendly climate and cost management efforts in the decision to cancel the contract with Porter Novelli.

Gov. Mike Pence said through a spokeswoman he supports the decision.

"Given the record-setting pace of job creation by businesses across Indiana, Governor Pence supports the decision by the IEDC to conclude the contract with Porter Novelli and continue current efforts to promote the advantages of doing business and creating jobs in our state," said press secretary Kara Brooks.

The IEDC said the state will pay Porter Novelli $365,000 for work already completed.

But what that work entailed is unclear. The IEDC denied a request from The Indianapolis Star for any reports or recommendations furnished by the New York-based company.

"During this time, we engaged in meaningful dialogue and received strategic counsel focused on identifying the State's leading assets, outlining key audiences and strategies to integrate these variables into future marketing efforts," IEDC spokeswoman Abby Gras said in an email. "Porter Novelli's initial guidance will enable us to redouble our marketing efforts to attract business and tourism to Indiana through current initiatives as we continue to seek opportunities to share Indiana's story."

Neither she nor Porter Novelli representatives would say whether the firm made any recommendations about civil rights protections for gays and lesbians — an issue likely to become a flashpoint during next year's legislative session and the 2016 gubernatorial election.

There is little doubt that the Pence administration and the global PR firm have a difference of opinion on gay rights. Last week, when the U.S. Supreme Court legalized same-sex marriage nationwide, Pence issued a statement expressing disappointment in the decision. Porter Novelli, on the other hand, expressed support for the LGBT community, replacing its company logo's usual orange color with rainbow colors on its website.

But if policy or ideological differences played a role in the termination of the contract, neither side is saying so.

"Discussions with our contractor were, as you can expect, wide-ranging and geared toward assessing our current position and how we can continue to improve our ongoing marketing efforts," Gras said. "The nature of those discussions (is) necessarily confidential as they are deliberative efforts for the IEDC to consider various factors as part of its decision making."

She later added, via an emailed statement late Thursday night: "Our agreement did not involve policy or legislation. Any speculation to the contrary is incorrect."

Democrats and some Republican business leaders are advocating a state law that would ban discrimination based on sexual orientation and gender identity. They see such a measure as the best way to restore the state's reputation after the controversy over Indiana's Religious Freedom Restoration Act.

Pence, however, has traditionally opposed new protections for gays and lesbians — a stance from which he has not wavered, even as recent polls show his reputation among voters has continued to suffer since the RFRA controversy.

Brad MacAfee, Porter Novelli's North American president, declined an interview request from The Star, but the company did issue a statement.

"We respect this decision by the Indiana Economic Development Corporation (IEDC) as it recalibrates its resources and spending priorities," the statement said. "We know that the State will continue its efforts to strengthen Indiana's global brand reputation. We also know that, when assessed on the basis of its dynamic and diverse workforce, its commitment to innovation, abundant natural resources and thriving arts and cultural offerings, Indiana has a great story to tell. We hope that the framework developed by Porter Novelli, which sets forth best practices for future efforts, proves useful to our trusted colleagues in the IEDC."

The IEDC hired Porter Novelli in May to help develop a plan to rebuild the state's image after widespread criticism over the religious freedom law that Pence signed into law in March. The law was intended to protect religious believers from government overreach, but critics contended the law would allow business owners to refuse service to gays and lesbians for religious reasons. Those concerns prompted boycott threats from businesses and event planners.

The firestorm quieted after lawmakers revised its language, but convention and tourism officials across the state say they are still being questioned about that law and that its true effects might not be known for years.

"The recent controversy has advanced the thinking of just a lot of people, that you can't take for granted that people know what Indiana is," the IEDC's Cotterill said in April when announcing the state's plan to hire Porter Novelli.

He said at the time that the state planned to spend $2 million with the firm, plus however much more was needed in advertising buys.

The state's initial contract with the company allowed up to $750,000 for the first phase of a "reputation enhancement initiative." That phase was to run through Sept. 30 and called for the ad firm to assess the perceptions and expectations of the state and to develop a campaign and strategic approach, including the development and design of a marketing campaign.

Indiana Democratic Party Chairman John Zody slammed the decision to cancel the contract, saying it "raises more questions than provides answers."

"Indiana can't afford the cost of kneejerk reactions due to mismanagement by the Pence Administration," he said.

He also disputed the administration's claims of economic success.

"Aside from the $250 million economic panic Governor Pence caused the state, Indiana ranked 44th in the nation for total economic growth at .4 percent GDP in 2014. Further, Indiana ranks 38th in the nation for income per capita, and Hoosiers make 86 cents to every one American dollar."

IEDC officials, however, cited a recent CNBC ranking that listed Indiana as the best state in the nation for the cost of doing business. They also highlighted the creation of 119,000 private-sector jobs since Pence took office and a decline in the unemployment rate.

"Indiana continues to make headlines as a state that is attracting and adding private-sector jobs at record-setting levels and is being recognized by national publications for its business-friendly climate," Cotterill said.

The Associated Press contributed to this story.

Call Star reporter Tony Cook at (317) 444-6081. Follow him on Twitter: @indystartony.