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."