It will be interesting to see if Alvarez and Marsal (A&M), with its $5 million contract, will find any significant savings in its whirlwind four-month tour of the labyrinth that is Louisiana state government.
We’ve been poking around the Louisiana Department of Economic Development (LED) and we’ve come up with a number of contracts—83 to be precise—which look as though they could be a duplication of some services provided by the Louisiana Workforce Commission. The 83 contracts, ranging from $8,000 to $717,000, were issued to 63 individuals and 20 companies and totaled more than $8.5 million. Before you go searching for your calculators, we’ll save you the trouble: it works out to about $102,600 per contract.
Of the 83 contracts, 63 at a combined cost of $6.3 million were issued to “provide assistance as requested in connection with LED’s FastStart program, including but not limited to the development and/or delivery of materials for training classes for the LA. FastStart Program.” The others were for writing, editing, graphic design, art work, video production, development of a PowerPoint production and “to establish a database of potential trainees for continued pre-hire training using a customized assessment instrument to determine skills proficiencies based on individual company requirements…for the Louisiana FastStart (LFS) Program as may be requested by LED.” (Emphasis ours.)
It is one contract in particular that got our attention. But first, a little background:
Louisiana FastStart is a single-source workforce solutions provider that works at no cost with businesses to anticipate and address workforce needs in the startup or expansion process.
The FastStart process includes project evaluation, workforce solutions, material development, pre-employment identification, course (classes) delivery, evaluation and feedback, customized training, core skills training, warehouse and distribution, research and development.
The thing that makes us believe A&M could obliterate many, if not all, of these contracts is the fact that the Louisiana Workforce Commission (LWC) appears to provide many of these very same services. http://www.laworks.net/Downloads/employment/employerhandbook.pdf
LWC aids employers in finding any type of employee by registering professional, semi-professional, skilled and unskilled applicants and even provides access to its Business and Career Solutions Center for businesses to conduct job interviews. The center employs the latest computer technology to select qualified applicants for job screening and referral.
LWC also offers several Business and Career Solutions centers throughout the state which provide online job listings, education, skills and interest assessments, job counseling and placement assistance, computer access, basic skills upgrades.
LWC, in fact, has more than $130 million in contracts with individuals, companies, community action agencies and local governments for the purpose of training applicants and finding them jobs.
But LED’s $717,000 contract no. 718453 with a company called LR3 would appear to warrant closer examination.
The president of LR3 is one Lionel Rainey, III, who people in Baton Rouge will recognize as the public face of a concerted effort to break away from Baton Rouge and to create a separate city of St. George in East Baton Rouge Parish.
That effort has sharply divided the residents of unincorporated South Baton Rouge with opponents wanting to remain part of the greater community of Baton Rouge. For the proponents, the motivation would seem to be education or more specifically, charter schools.
State Rep. Bodi White (R-Central) is a major supporter of the pullout even though Central is on the northern edge of East Baton Rouge Parish.
More than a year ago and before the St. George pullout movement was formalized, White called on businesses in South Baton Rouge in an effort to drum up financial support for a charter school in that part of the parish.
Lately, as momentum on both sides has picked up, local television has begun covering the issue on almost a daily basis. Each time a TV news story airs, Rainey invariably is the spokesperson for the proponents.
But what about that contract with LED?
Well, first of all, it was awarded on a no-bid basis. In other words, LED never issued a request for proposals (RFP) nor did LR3 ever submit a proposal despite having no obvious qualifications for creating an Internet database system.
When asked about the no-bid contract, LED responded by pointing out that contracts for social services may be awarded “without the necessity of competitive bidding or competitive negotiation,” provided the director of the Office of Contractual Review determines that certain conditions apply, one of which is that the total contract amount is less than $250,000 per 12-month period.
At the same time, LED’s response acknowledged that service requirements “shall not be artificially divided so as to exempt contracts from the (RFP) process.”
And that’s where things get a bit dicey.
LATRAC, the state database for contracts, lists the amount of Contract no. 718453 as $717,202 over three years (Oct. 20, 2012 through Sept. 30, 2015) while the LED contract document breaks the contract into three amounts: $217,204 the first year and $249,999 in the second and third years.
|Contract Title||LR3 CONSULTING, LLC|
|Contract Description||DEVELOPMENT, ESTABLISHMENT AND/OR DELIV- ERY OF A DATABASE OF POTENTIAL TRAINEES FOR CONTINUED PRE-HIRE TRAINING USING A CUSTOMIZED ASSESSMENT INSTRUMENT TO DE- TERMINE SKILLS PROFICIENCIES BASED ON INDIVIDUAL COMPANY REQUIREMENTS (ED6); 100% STATUTORY DEDICATION – LED FUNDS|
|Agency||DED – OFFICE OF THE SECRETARY|
|Document Type||OTHER CONTRACT – CFMS|
|Contractor||LR3 CONSULTING LLC|
|Contractor City and State||BATON ROUGE , LA|
Not only did LED appear to be circumventing the RFP procedure by breaking the contract into three sections, but there appear to also be questions about another state regulation that says agency heads shall take into account, in the following order, “the professional or technical competence of offers, the technical merits of offers, and the compensation for which services are to be rendered, including fee.”
First, there appears to have been no “offer” from LR3, which only incorporated as a business on Sept. 19, 2012—barely a month before its $717,000 contract with LED took effect on Oct. 20, 2012.
So, to recap, we have a company that is barely a month old landing a $717,000 contract with a state agency without benefit of competitive bidding, or without a formal proposal from a contracting firm that provided no evidence of its qualifications to perform work that appears to be already available through another state agency, LWC.
And then there’s LR3’s billing address.
Invoices submitted to LED by LR3 give its billing address as 2133 Silverside Drive, Suite A, in Baton Rouge.
Rainey is also listed as president of Vote Guards Dot Org., of the same address.
But there also are three other businesses of 2133 Silverside Drive, Suite A, Baton Rouge, according to the Louisiana Secretary of State’s corporate web page: Phoenix Consulting Group, BP Oil Claim Solutions, LLC, and EFL Angels Foundation.
All three list Meredith Eicher as a corporate officer.
Meredith Eicher, along with her sister Ashley, was sentenced to five months in prison in 1990 after pleading guilty to two counts of aiding and abetting mail fraud in connection with the collapse of Champion Insurance Co.
She also was ordered to serve two years’ probation after her release and fined $10,000.
Champion, the third largest insurer in the state, collapsed in June of 1989, leaving $150 million in unpaid claims. Her father, John Eicher, was sentenced to 46 months in prison in connection with the collapse which also implicated then State Insurance Commissioner Doug Green, who received $2.7 million in bribes from the Eichers. He received a 25-year federal sentence.
All in all, when one takes the St. George pullout effort that is supported by a political figure at the opposite end of East Baton Rouge Parish and led by an individual whose newly founded company, housed in the same office as four other companies—three of which have as a corporate officer someone who participated in the defrauding of $150 million in insurance claims 25 years ago—lands a $717,000 no-bid contract with the state, one has to ask….
What could possibly go wrong?