Wednesday, February 18, 2009

Price no object in N.O. car - removal - City appears to choose top-dollar contract

Times-Picayune, The (New Orleans, LA) - Wednesday, March 22, 2006

Author: James Varney Staff writer

In seeking a contract to remove thousands of flooded and wrecked cars from New Orleans, Mayor Ray Nagin 's administration recommended that the city go with the highest quoted price for the job, a review of the 14 proposals submitted last year shows.

It appears the chosen proposal, a $1,000-per- car bid from Colorado-based CH2M Hill, was nearly triple the cost of at least three other bids, records show. The gap between CH2M Hill and the other companies cannot be precisely ascertained, because not every proposal included a price, and some of those that did listed tasks that others did not.

It is clear, however, that CH2M Hill's price has remained relatively constant, because administrators confirmed last week that the contract still being finalized would cost approximately $23 million and the number of uninsured junkers still clogging city streets is between 20,000 and 25,000.

That contrasts with $350 per car , the "firm, fixed price," offered by a consortium led by the Shaw Group, which a five-person review committee ranked as the second-best bid, just two points behind CH2M Hill, according to the committee's scoring sheet.

At least two other offers, from Contingency Management Solutions of Metairie and from MWH Global of Denver, were in the same ballpark as Shaw's, records show.

The contract for removing "abandoned and damaged vehicles" is a professional services one, meaning the mayor is not required by law to select the lowest bidder. On the other hand, price was supposed to figure as 20 percent of each proposal's grade, but the committee gave almost every submission the full 20 points in that category, meaning no advantage accrued to the cheaper submissions.

Jack Dupree, president of Southern Scrap Materials Co., which partnered with Shaw, said those curious figures are a warning sign that the contract doesn't pass the smell test.

"Something's not adding up here," he said. "I've never seen so little transparency in a deal, and it's a mystery why, if you've got a price and picked a winner, nothing has been signed. Why haven't they done it at the price CH2M Hill said they could do it for?"

Controversy has begun to swirl around the issue almost seven months after Katrina made thousands of water-stained, abandoned cars as much a symbol of the city's streets as potholes were before the storm. Queries first arose after revelations that a Texas car -crushing company had offered, in the aftermath of Hurricane Katrina, to pay the city $100 per junked car . The bid, made informally by K&L Auto Crushers at one of Nagin 's town hall meetings, still stands, although the terms would have to be renegotiated, K&L's Dan Simpson said last week.

Making money

A rarely invoked city ordinance could also pave the way for the rapid and potentially lucrative removal of the vehicular blight, according to some legal experts.

At the original price and with the original estimate of 30,000 flooded cars , K&L's offer would have netted the cash-starved city $3 million. In contrast, the city is proceeding with the CH2M Hill deal, which includes towing, cataloging and storing the cars at an estimated cost of about $23 million, administrators said.

Thus, even at somewhat lower rates, the city would have taken in more than $3 million if it went with K&L or one of the other car -crushing companies that have proposed similar arrangements, according to the State Police.

Meanwhile, as some national conservative pundits pounded Nagin on the topic this week, the administration appeared to circle its wagons. Neither the mayor nor his staffers have answered questions about the car - removal contract in the past few days.

In the face of the Nagin administration's silence, New Orleans City Council members questioned the deal, with some of them saying a costly arrangement makes no sense if feasible money-making ideas are on the table.

"It seems to me it would have made sense to investigate this," said Councilwoman Renee Gill Pratt. "If someone was willing to pay us money, why wouldn't we want to do that and save money, too?"

Gill Pratt said she plans to raise the issue at the council's budget committee meeting Thursday.

Slow pace?

Council members also expressed frustration at the protracted pace of events. In an interview last week before the car -crushing offers and proposal discrepancies made headlines, Parking Administrator Richard Boseman estimated it could be another six months from the time the deal is signed before the cleanup is finished, though he held out hope it could be quicker. Either way, it's been too long, Councilman Jay Batt argued.

"To take six more months at least, when maybe we could have the cars off the street right now? That's just ridiculous," he said.

Batt said he's not sure the car -crusher options are solid, given they have been presented informally. Nevertheless, if the Nagin administration were less secretive about its contracting practices, some of this embarrassment might have been avoided, Batt said.

"The mayor is tweaking his contracts while the streets look terrible," he said.

Such comments suggest the pending contract with CH2M Hill, whose press office has also not responded to phone calls, is poised to become another contentious issue between a council and an administration already at odds on a host of post-Katrina spending matters.

More spending matters could arise when the second half of the car job is being considered.

In the short term, the city is simply inking a deal with CH2M Hill to cart off the cars and warehouse them. Future work, on the other hand, will involve a second contract that includes the remediation and recycling of environmentally hazardous materials and then the scrapping of the cars . In theory, the city could make some money back at that point, but the outline of that contract hasn't even been sketched out yet, let alone advertised, officials said.

The holdups on the current contract remain maddeningly vague to some players such as Dupree of Southern Scrap. City officials said they are simply awaiting the green light from FEMA, which could reimburse the city 100 percent of the costs if it approves the contract. But the Federal Emergency Management Agency said it is waiting on paperwork from the city.

Dupree accused the city of shifting the scope of the work and blamed some of the delays on those constant changes.

"The scope of this thing has been changed by the city four or five times already," he said. "This whole thing should be much further along, and we're severely frustrated by what's happened."

Saturday, February 7, 2009

Pastor's business got big sewer contract - Firm incorporated after work began

Times-Picayune, The (New Orleans, LA) - Saturday, May 13, 2006
Author: Gordon Russell Staff writer

A multimillion-dollar subcontract involving the inspection of the city's damaged sewer system was awarded in October to a company organized by a politically active minister who incorporated the firm months after the work began.

State records show the company, Management Construction Consultant Inc., was formed Dec. 20 by Bishop O.C. Coleman of Greater Light Ministries and two of Coleman's associates.

The company was incorporated nearly three months after the firm began sending invoices to Montgomery Watson Harza, the prime contractor overseeing the job for the Sewerage & Water Board. In total, MCCI was given subcontracts worth $2.5 million for work on the city's water and sewer systems.

The company also was a subcontractor on a separate $24 million contract awarded by the city's Department of Public Works to assess the drainage system, according to Sal Mansour, a vice president at Montgomery Watson. Mansour could not provide the amount of that subcontract, and it could not be obtained by The Times-Picayune by the close of business Friday.

Coleman has been a vocal supporter of Mayor Ray Nagin. Nagin said he had "no knowledge" of the subcontracts landed by Coleman, and said he hadn't intervened on the minister's behalf.

"The bishop (Coleman) hangs around City Hall quite a bit and was there before I became elected," Nagin said in an e-mail. "I have never lobbied on behalf of him" or his companies, he said.

Thus far, FEMA has paid only a fraction of the $14 million contract given to Montgomery Watson for the sewer analysis, though the work is complete. A "working document" prepared by FEMA said much of the work performed by subcontractors, including that done by MCCI, is "not eligible for reimbursement" because of a lack of a "clear scope of work."

According to Mansour, most of MCCI's work involved taking off manhole covers to visually assess damage. Records show the company billed between $90 and $106 per hour for such labor.

Mansour of Mongomery Watson said the back-and-forth with FEMA over record-keeping is routine and is likely to be resolved. MCCI, as well as all the other subcontractors, did everything expected of it, he said.

"Unfortunately, this is what it means to work with FEMA," Mansour said. "It's torture."

'A private matter'

How MCCI came to be hired -- given that it didn't exist on paper and still lacks a listed phone number -- is something of a mystery.

Coleman, who was one of a group of African-American ministers to express support for Nagin midway through his first term after the mayor came under fire from another powerful group of black ministers led by Bishop Paul Morton, declined to discuss the contract , calling it a private matter.

"I don't feel I need to explain myself," he said, adding that his lawyers had advised him not to talk to the media.

Mansour said Montgomery Watson largely relied on subcontractors or individuals it had previously done business with, but said he is not sure if MCCI fell into that category.

Mansour said he was not surprised or bothered to learn that MCCI didn't exist on paper at the time it was hired by Montgomery Watson. In the post-Katrina chaos, he said, everyone was focused on getting work done rather than filling out paperwork; in fact, he noted, Montgomery Watson's contract with the S&WB wasn't actually signed until March.

He said he believes someone from MCCI called his company after learning about the contract and offered to help.

"I don't recall how we found them," he said. "We were short on labor, and we tried to go to different places. This company was able to provide us with manpower."

Friendly relationship

The answer may lie in the person of Benjamin Edwards Sr., a longtime member of the water board who also is a politically active minister and a friend of Coleman.

Edwards, who was originally appointed to the water board by former Mayor Sidney Barthelemy -- and who was retained by Barthelemy's successor, Marc Morial -- has long been known for his activism in the board's contracting practices. Nagin has never appointed Edwards, but has allowed him to continue serving even though his term expired in late 2003.

Edwards has long been a staunch advocate for minority-owned businesses getting a fair slice of the board's work. He said he became aware of MCCI's existence last year, but has no relationship with the firm. "I've heard of every company that comes to the Sewerage & Water Board," he said.

Edwards described his relationship with Coleman as friendly, saying Coleman attends services at his 9th Ward ministry, Third Shiloh Missionary Baptist Church, about once a year. But they've never done business together, Edwards said.

However, there is a pattern of coincidences between Edwards and Coleman. The two men, or entities they control, donated money in recent months on the same day and in the same amount to both Nagin and several City Council candidates.

In most cases, the donations are listed consecutively on campaign finance forms, suggesting they were received simultaneously.

For instance, City Councilman Oliver Thomas reported receiving $5,000 apiece on March 2 from Coleman's Management Construction Consultant Inc. and Third Shiloh Housing Inc., a nonprofit run by Edwards.

Moreover, Thomas' report notes that both were cashier's checks -- the only two contributions Thomas received that were so designated. The checks bear similar numbers as well, though they are not consecutive.

Nagin, meanwhile, reported receiving $5,000 apiece from the same two firms on March 27. The contributions are not listed consecutively -- Nagin's reports are filed electronically, in alphabetical order. The address Nagin's campaign listed for Third Shiloh, Edwards' nonprofit, is 4948 Chef Menteur Highway. That is the same address MCCI gives as its home base in state corporate filings.

Edwards said he has no idea why a check would have been recorded by the Nagin campaign that way. Nagin adviser David White said the campaign enters the address based on what's listed on the check, but he could not locate the actual checks late Friday.

Another detail shows that many of MCCI's employee time sheets, which were submitted to Montgomery Watson to back up its billing invoices, were signed by a supervisor whose name appears to be "B. Edwards."

Ben Edwards said he did not sign any invoices, and a check of Third Shiloh corporate documents he has signed shows a signature that is not similar to his. Coleman would not say who "B. Edwards" was. He referred questions to a cousin, who also said he did not have the answers.

Edwards said he does not know who "B. Edwards" is but said it is not his son, Benjamin Edwards Jr., who he said is a financial adviser based in Atlanta. Edwards added that he has "400 or 500 relatives" and does not know of any who work for MCCI. But he said he couldn't be sure that none did, either.

Independent spending

In total, MCCI has given Nagin's campaign $10,000, while Third Shiloh Housing Inc. has kicked in another $5,000 to the mayor's war chest. Neither firm has donated to Nagin's runoff opponent, Lt. Gov. Mitch Landrieu.

Edwards has acknowledged that the contributions from Third Shiloh, which is exempt from federal taxes, violates the housing group's nonprofit charter, which prohibits it from making political donations. He said he has asked some of the candidates who received the checks to return the money as a result.

White, Nagin's treasurer, said Edwards asked the campaign Thursday to return his $5,000 contribution because of the violation. White said he planned to send the money back, and noted that it's not the candidate's job to determine whether a corporation making a contribution is violating its tax-free status.

Even with his money being returned, Edwards has gone well beyond the traditional cap of $5,000 on individual donations to help Nagin's re-election campaign.

Last month, Edwards said he and other family members had spent more than $100,000 on pro-Nagin billboards in Atlanta, Houston and other hubs of Katrina evacuees. He said he planned to sponsor radio ads outside the city as well. By Friday, Edwards said his family's efforts had topped $171,000, and would exceed $200,000 by the May 20 runoff.

Nagin has raised only about $500,000 on his own behalf since Jan. 1.

"It's been a good run, and it's not over with yet," Edwards said. "I haven't spent this kind of money and been this excited about a race since I ran a campaign in 1985. I'm very excited about the direction this city is heading. I'm excited about the mayor and what he's doing."

Such spending is allowed under state law provided it is "independent," meaning the person or group paying for the ads does not collude or coordinate with the campaign. Both Edwards and Nagin campaign staffers said there has been no coordination between the two camps.

Under state law, individuals or groups who engage in such "independent expenditures" are required to file reports with the state showing where the money came from and how it was spent. Edwards said last month he was not aware of that law. He said Friday, however, that he planned to visit the state Ethics Commission, which supervises campaign-finance laws, to clarify the situation.

Edwards stressed that his strong backing of Nagin springs not from any sense of debt to the mayor but from a strong feeling that Nagin is the right man for the job.

Edwards also said he has spent about $700,000 of his own money since the storm offering rental assistance and free gutting to homeowners around the 9th Ward.

"My character and integrity speaks for itself," he said.

Edwards said he was able to bankroll the nearly $1 million cost of supporting both Nagin and his neighbors through a combination of hard work and wise investments.

In a long career at BellSouth, Edwards said he racked up thousands of hours of overtime, in part by working storm-damage details. After he left, he said, he formed a company called Edwards Telecommunications that was "very successful." Since then, the money has continued to accrue because of sound investments, he said.