Times-Picayune (New Orleans)
March 16, 2005 Wednesday
3rd place fits bill for N.O. contract;
Winning firm rated last, lacks experience
BYLINE: By Martha Carr, Staff writer
SECTION: NATIONAL; Pg. 1
LENGTH: 2734 words
Mayor Ray Nagin has awarded a politically active company with no experience in the criminal justice field a contract to create a home monitoring program for municipal offenders, a deal the Nagin administration says could save the city hundreds of thousands in jail costs this year alone.
The mayor passed over two higher-scoring bidders to award a one-year contract with five one-year extensions to Community Based Corrections LLC, a local, minority-owned company created in October 2003 by Burnell Moliere, Jimmie Woods and Ray Valdes. All three have close political ties to District Attorney Eddie Jordan and former Mayor Marc Morial.
A three-person selection committee gave Community Based Corrections the lowest score of the three qualifying bidders, city documents show. The company's price also was the highest, but the mayor allowed CBC to rework its proposal to bring costs more in line with the other two bids, records show.
The contract is capped at $3 million, but the value depends on how many offenders are ordered to enroll.
Neither of the two competing bidders, which included another local, minority-owned firm, was allowed to resubmit their proposals for the Municipal Court job.
The city did renegotiate, however, with minority-owned Total Sentencing Alternatives Program, which received the second highest score, to provide electronic monitoring in Criminal District Court under a separate contract. That contract has yet to be finalized.
Because the contracts are for professional services, Nagin is not required by law to select the lowest bidder.
While the mayor previously has clashed with some of the politicians that CBC's officers are close to, campaign records show that companies owned by Moliere and Woods have begun contributing to Nagin since he took charge at City Hall.
Metro Disposal, a trash-hauling company owned by Woods, gave the mayor $2,500 in February 2003 and another $2,500 in May 2004. Moliere's janitorial company, AME Services, contributed $5,000 to Nagin in February 2003. Both companies received public contracts under Morial and have maintained them during the current administration.
Nagin campaign finance records filed with the state report no donations by either of the two firms that bid unsuccessfully against CBC or by their chief executive officers.
But Nagin's chief administrative officer, Charles Rice, said politics played no part in the mayor's selection of CBC. Rather, the mayor wanted to save the city money and help out local, minority-owned businesses. When asked why the city didn't award both contracts to Total Sentencing Alternatives Program, the minority bidder with the most experience and a higher rating by the selection committee, Rice said the mayor wanted to "spread the wealth."
"I think what the public needs to know is that we selected two vendors, both African-American owned companies, both local vendors, and if we can receive the same service at virtually the same cost from a local vendor, I think it's in the city's best interest to keep the money here at home and employ local people rather than send the money to Georgia," Rice said, referring to the highest-rated and cheapest bidder, PPS of Lawrenceville, Ga.
PPS is a subsidiary of the publicly traded company Universal Health Services.
Rice also said it is his understanding that Valdes is no longer a principal of CBC. Moliere said that's true, but that Valdes continues to provide marketing services for the company. Former Jefferson Parish Council President Robert Evans Jr. also worked for a time as the company's executive vice president, according to CBC's bid documents. Moliere said Evans is no longer with the company.
Cheaper way to monitor
Home monitoring systems have become popular in recent years as cities nationwide grapple with the skyrocketing costs of incarceration. Using voice recognition technology, electronic bracelets or GPS tracking, home monitoring allows nonviolent offenders to remain out of jail while fulfilling the terms of their court sentence.
Proponents say it's an especially viable concept in Municipal Court, where judges typically deal with minor offenses, such as public drunkenness, lewd conduct or criminal trespassing.
But until now, Municipal Court has used home monitoring on a limited basis, with the offender picking up the cost. Rice said enrollment wasn't high enough to significantly cut the city's jail costs, which have ballooned from $29 million in 2002 to $35.1 million last year for all offenders.
"We live in a very poor city, and most of the individuals in Municipal Court are indigent and do not have the financial wherewithal to pay costs," Rice said.
So the city has moved to government-financed home monitoring system, which Municipal Judge John Shea said gives judges an alternative to throwing offenders in jail when they don't pay fines. Last year, almost 34,000 offenders went to jail after failing to pay court-ordered fines, Municipal Court Clerk Ronald Lampard said.
Now, instead of paying $22.39 a day to keep a municipal prisoner in jail, the city will pay $7.73 to CBC for voice monitoring and probation management, a potential savings of $14.66 per day.
The city is required to pay the cost of jailing residents who break city laws, as well as those awaiting trial on state charges.
If CBC monitors 250 to 400 offenders a day -- an average that city officials say is a reasonable estimate -- it could save taxpayers $1.3 million to $2.1 million a year.
In the program's first two months, a total of 364 offenders were enrolled, at a cost savings of $159,030, Moliere said.
How it works
The monitoring works like this:
An offender is sentenced to home monitoring, and a case worker develops a call schedule to fit the nature of the offense. The offender then calls in and registers his or her voice, and is paged, or required to call in on a prescribed schedule, depending upon where the offender is supposed to be at a certain time. If an offender fails to call in or the system detects another voice, the authorities are notified.
Rice said there is no way the city can lose under the program. CBC doesn't get paid unless offenders enroll in the program, and the more offenders enroll, the greater the savings in jail costs, he said. Judges also have the option of requiring an offender to pay for the monitoring, city officials said.
"I assure you this is not set up for anybody to make a killing off of anything," Rice said. "It's all about reducing the amount of money we pay to the sheriff, and making things more efficient."
A spokeswoman for Orleans Parish Criminal Sheriff Marlin Gusman, whose budget could be adversely affected by a decrease in jail population, said the sheriff has seen little impact thus far.
Lowest bidder skipped
But records show the city could have saved more had it awarded the contract to the low bidder.
The city's request for proposals was broken down into three parts: home monitoring, probation management and fine collection.
If the city had hired PPS, the cheapest bidder and the company with the highest score from the selection committee, it would be paying $7.50 per day for voice monitoring and probation management, compared with $7.73 a day with CBC.
Although the difference is nominal, CBC also gets 10 percent of every delinquent fine it collects, down from the 38 percent it originally proposed. PPS offered to do fine collection free of charge.
Clay Cox, chief executive officer for PPS, said even CBC's lowered price accounts for some "good margins." He also said his company would have welcomed an opportunity to renegotiate its bid.
"Getting a percentage of a fine and a fee, that's crazy," Cox said. "There is plenty of money to be made by doing it right and treating people fairly. The fine money belongs to the taxpayers."
William Welch, chief executive officer of Total Sentencing Alternatives Program, declined to comment because of his company's ongoing negotiations to monitor pretrial detainees in criminal court using electronic bracelets.
But the president of ShadowTrack Technologies, the Covington subcontractor CBC originally proposed to do the voice monitoring, said his company typically charges offenders $4.50 a day to enroll in the program, which accounts for the cost of the service and a profit to his company. Comparatively, the city has agreed to pay CBC $6.75 a day for the same type of service.
ShadowTrack did not submit an independent bid.
Short on experience
In addition to the price issue, the city selected the firm with the least experience in the criminal justice field.
Woods runs a trash-hauling company. Moliere's experience is in janitorial services and public housing, according to his resume. Valdes has worked as a financier specializing in large municipal leases.
In comparison, PPS has been in the electronic monitoring business for 16 years and holds contracts with the cities of Atlanta, Salt Lake City and Montgomery, Ala., to name a few. The company also worked with judges in New Orleans municipal and traffic courts for two years doing electronic monitoring, probation monitoring and fine collection, with offenders picking up the cost of the service, according to its bid.
TSAP began working as a protégé of PPS when the company was under contract to New Orleans' municipal and traffic courts in 2000 and 2001, and it has run the program on its own since then. It has five years of experience working in Orleans Parish courts, according to its bid.
As for CBC, the New Orleans contract is its first major job. The company has no real experience. In its bid, it cited instead the experience of three subcontractors it proposed using, including ShadowTrack.
None of the subcontractors listed in the bid is now working on the contract, Rice said.
Subcontractor severs ties
ShadowTrack president Robert Magaletta said he cut off his relationship with CBC late last year after the company first asked him to lower his price, then, without notifying him, approached a competing vendor about working on the city contract.
ShadowTrack had been with CBC from the start, signing the company on as its exclusive dealer in the metro area in October 2003. But CBC produced no significant business for ShadowTrack, Magaletta said, never having more than 10 private-pay offenders on the service at any one time.
Magaletta also said he grew increasingly leery of dealing with Woods and Valdes, who have received subpoenas from a federal grand jury investigating city contracts meted out during Morial's administration.
"I had been hearing about the problems these people were having involved with city of New Orleans," he said. "I just preferred to stay away from this group."
Moliere said in a written statement that the separation was because of "philosophical business differences and different approaches to the marketplace."
He also said CBC has provided services to criminal courts in Orleans and Jefferson parishes, New Orleans Traffic Court, and the Louisiana Department of Parole and Probation. When asked whether the company held any contracts with those agencies, Moliere said it had relationships with individual judges and agencies, but no formal contracts. He did not specify a total number of clients enrolled.
CBC replaced ShadowTrack with Biometric Corp. of Dallas, whose president says the company has six years of experience in voice-based home incarceration systems.
CBC has hired its own staff to provide probation services, Rice said. For fine collection, the company has partnered with Gavin & Associates, a woman-owned company that will fulfill the 35 percent disadvantaged business enterprise goal for the contract, Rice said.
New York deal under fire
But what CBC lacks in practical experience, it more than makes up for when it comes to the politics of cutting deals with governments.
Although the New Orleans contract has drawn little attention, a similar CBC arrangement in Buffalo, N.Y., is being investigated by the FBI.
Erie County comptroller Nancy Naples has alleged that George A. Holt Jr., chairman of the county legislature, attempted to secretly award CBC a $3 million no-bid contract by slipping in a last-minute budget amendment in a late-night meeting Dec. 8. Naples told the Buffalo News last week that she was interviewed by federal agents for more than an hour about what she says was an "illegal" deal.
When questioned about the amendment, Holt told the Buffalo News that his staff inadvertently specified Community Based Corrections in the resolution, when his intent was only to reserve money for a later competitive bidding process. Holt has agreed to meet with FBI agents later this week.
He also told the newspaper that he flew to New Orleans in August to visit the firm, during which time CBC's principals held a fund-raiser for him at Pampy's Creole Kitchen, a political hot spot owned by Morial confidant Stan Barre. Campaign finance reports show that Holt received three checks at that function: $500 from Woods, $200 from Barre and $250 from bail bondsman Blair Boutte.
Barre, who has been subpoenaed in the ongoing federal probe of contracts awarded under Morial, said he has nothing to do with Community Based Corrections.
"I'm telling you, I wish those guys well, but I've got nothing to do with that bracelet stuff."
As for his contribution to Holt, Barre said: "I think I wrote him a check because Burnell (Moliere) begged like I don't know what, and he's a good customer," Barre said.
Boutte, president of the small eastern New Orleans political organization DOVE, also confirmed writing Holt a check. But he said he is not affiliated with CBC and did not attend the fund-raiser at Pampy's.
Holt got only one other contribution during the six-month reporting period that ended Jan. 15. He told the Buffalo News that accepting the $500 from Woods was a mistake and that he intends to return the money.
Active in politics
In New Orleans, the political connections necessary for deal-making were already well established.
Woods has a piece of the city's waste disposal contract through his company Metro Disposal Inc. Woods also has served on fund-raising committees for Jordan and donated $10,000 to Morial's third-term effort through Metro Disposal.
Moliere's Norco-based janitorial company, AME Services, has major contracts with the Orleans Parish School Board and the New Orleans Aviation Board. However, Schools Superintendent Tony Amato has threatened in recent months to cancel AME's contract, claiming the company has collected millions while leaving campuses filthy.
Moliere also contributed to Jordan, served on his fund-raising committees and headed his transition team. Moliere and AME Services contributed $10,000 to Morial's attempt at a third term.
Valdes, based in Metairie, arranged the financing for numerous high-dollar equipment leases at City Hall during Morial's tenure, including a controversial $81 million energy-efficiency contract with Johnson Controls Inc. that has been a focus of the ongoing federal investigation of Morial-era contracts. Valdes also arranged leases for hundreds of city buses, police cars and other vehicles. Top Nagin officials have complained bitterly about the above-market financing fees in some of those deals, which won't be completely paid off until 2022.
The financier contributed $5,000 to Jordan's 2002 campaign for district attorney through one of his companies, American Lease Financing LLC. He and a relative also made corporate and personal contributions of $15,000 to Morial's third-term bid. Valdes is the ex-husband of former Jefferson Parish Councilwoman Anne Marie Vandenweghe.
Metro Disposal and AME Services have likewise come under criticism from the Nagin administration.
In hiring Kimberly Williamson Butler as his first chief administrative officer, Nagin approvingly cited an episode in which Butler, as director of the Downtown Development District, refused to cave into political pressure and award a street-cleaning contract to AME.
Metro Disposal, meanwhile, was written up and briefly put on probation by former Sanitation Director Lynn Wiltz, who said in memos that the company had failed to live up to parts of its contract. Wiltz was fired a few months later, and Rice has said he is satisfied with Metro Disposal's performance.
Ditto for AME, he said.
"My experience with AME has been positive," he said. "They've done a pretty good job for us maintaining Gallier Hall and several other buildings."