Louisiana Voice

The big news out of the nation’s capital last week was a Feb. 3 Washington Post story trumpeting the fact that the federal government spent $15 billion less on contracts for outside products and services during fiscal 2010, the first reduction since 1997.

The $15 billion cutback in contracted services will barely show up in the federal budget but the decrease from $550 billion to $535 billion is a start for those seeking ways to reduce the federal deficit.

The $550 billion spent on contracts during fiscal 2009 was more than double the amount awarded in federal contracts as recently as 2001. Federal contracts have gone unchecked for so long that the practice spawned its own organization. The Professional Services Council is a trade association (read: lobbyist group) formed specifically for the government professional and technical services industry.

Gov. Bobby Jindal and the Louisiana Legislature might be wise to take their cue from Washington for a change instead of continuing to snipe at the Obama administration—at least on this one issue. Obama’s fiscal 2012 budget will propose an additional reduction of 10 percent in federal contracts. That’s another $50 billion or so in cuts, something that should make fiscal conservatives weep for joy.

For fiscal year 2008-09, the latest data available, Louisiana had 6,304 contracts for goods and services worth a whopping $5 billion, according to the state’s annual report for that year. That figure is somewhat misleading in that nearly $3.2 billion was in the form of 1,083 cooperative endeavor agreements ($2.9 billion), 468 interagency contracts ($213.4 million) and 495 intergovernmental contracts ($79.4 million). In other words, it was money simply shuffled between agencies.

But that still leaves 1,292 professional services contracts ($178 million), 160 personal contracts ($7.4 million), and 1,275 consulting contracts (an eye-popping $1.4 billion).

Like the federal contracts, state contracts have increased by 153 percent in dollar amount since fiscal 2005-06 when a paltry $2 billion in contract work was on the books. That amount made a quantum leap to $3.3 billion the very next year (a 64.6 percent increase), and jumped to $4.7 billion in 2007-08, an increase of another 44.5 percent.

Granted, much of that increase in 2006-07 was for contracts for recovery from two devastating 2005 hurricanes—Katrina and Rita—and granted, much of the money was from the influx of federal disaster relief dollars. But once the genie is out of the bottle, it’s hard to put her back. In 2008-09 the dollar amount nudged up another $337 million, helping to set the stage for the budgetary disaster now being faced by the Legislature and the Jindal administration.

The state has a $37.2 million interagency contract with the office of the attorney general for legal representation to various state agencies, boards, commissions, and departments but still sees the need for scores of private legal firms across the state to “provide legal services to various state agencies.” Only the top 50 contracts were listed in the report, but 41 of those totaled an additional $33.4 million. Eight of those contracts were for legal services totaling $18.3 million on behalf of indigents statewide, the report said.

Contracts, particularly professional service and consulting contracts are handed out by the state like so much candy on Halloween night and there appears to be little oversight. Fully half of all state contracts awarded during 2008-09 were not approved by the Office of Contractual Review (OCR).

The $5 billion for the 6,304 contracts approved by OCR is only part of the problem. Hidden away among all the numbers spewed out so far is another $655.5 million for 6,341 contracts that were awarded in fiscal year 2008-09 which were approved not by Contractual Review, but by the individual agencies awarding the contracts.

These contracts, awarded under an obscure state law that allows the OCR director to delegate authority to state agencies for approval of professional, personal, consulting and social services contracts. Typically, such contracts are for $20,000 or less but the statute also grants leeway to the OCR director to delegate that authority to any state agency as deemed appropriate.

Accordingly, 5,334 of those contracts awarded under the delegation of authority were for amounts below the $20,000 threshold. Those 5,334 contracts totaled $51.7 million, an average of $9,700 per contract. Another 1,007 contracts totaling $603.7 million, however, were also awarded under the delegation of authority.

More than half of that amount, $330.9 million, was accounted for in 383 contracts awarded by the Office of Group Benefits.

Group Benefits had another 32 contracts totaling $898 million approved by OCR. Other contracts approved by OCR included 282 for the Office of Economic Development ($629.6 million), and 1,080 awarded by the governor’s office through the Division of Administration ($2.3 billion).

One contract, for $68.9 million was apparently a major windfall for Cypress Realty Partners of Baton Rouge. The contract was for an alternative housing pilot program for the Louisiana Recovery Authority. An internet company profile of Cypress Realty said the company employed six people and had annual revenues of $410,000.

Two other contracts, both intergovernmental, were with out-of-state universities and totaled more than $900,000. Jackson State University of Jackson, Mississippi, was awarded a contract in the amount of $536,435 to “recruit, select and train teachers for placement in high need local education agencies/school systems.”

Clemson University of Clemson, South Carolina, was awarded a $375,000 contract to develop “active, selective catalysts for the conversion of natural-gas derived syngas (synthetic gas) to ethanol.”

Several contractors were paid to represent the state in other countries. Pathfinder Team Consulting received a $690,000 contract to provide foreign representative services in Europe while Access Marketing got a $234,000 contract to serve as a foreign marketing representative in Ontario Province and western Canada for the Office of Tourism.

A contract for $148,500 was awarded to Louis Bowden, dba Asia Capital to provide foreign representative services in China. Steve Lee and Hernan Gonzalez each received $75,000 contracts to provide foreign representation in Taiwan and Mexico, respectively. Ofihotel S.A. had a $60,000 contract to provide foreign representation in Central America.

Following is a partial list of contracts for fiscal year 2008-09:

• V- Vehicle Company, Ouachita Parish ($87 million);

• Foster Poultry Farms, Union Parish ($50 million) as inducement to purchase and operate poultry production and processing plant and provide 1,100 jobs;

• Lafourche Parish Council ($24.8 million), repair, rebuild, replace hurricane-damaged infrastructure;

• Bayou Lafourche Fresh Water District ($17.5 million) to clear debris from Bayou Lafourche;

• Lafourche Parish School Board ($480,000) to provide academic assistance in literacy and/or math, enrichment, recreation, technology, tutoring parental involvement and family literacy activities;

• Lafourche Parish Council, Office of Community Action ($319,964) to provide services and programs in accordance with the Community Service Block Grant Act of 1981;

• Terrebonne Port Commission ($10 million) for bulkhead, land improvements and other related infrastructure improvements, planning and construction;

• Terrebonne Parish Consolidated Government ($2.2 million) to provide intensive residential treatment program, provide funding to assist with design of a ring levee to surround Chabert Medical Center;

• St. Mary Parish Government/Council ($3.55 million) to operate a 52-bed inpatient treatment programs to individuals with addictive disorders; to operate a 12-adult bed and 21-children’s bed for TANF-eligible women and their dependent children;

• Vermilion Parish School Board ($9.2 million), rebuild, repair, replace hurricane-damaged primary and secondary public school infrastructure;

• Vermilion Parish Police Jury ($5.5 million) to repair, rebuild, replace hurricane-damaged infrastructure;

• St. Martin Parish School Board ($302,784) to provide comprehensive/preventive services to registered students;

• Jefferson Davis Parish Police Jury ($310,821) to complete strategic prevention framework planning process for substance abuse;

• West Feliciana Acquisition, LLC ($6 million) for acquisition, improvement, and operation of a paper mill in St. Francisville, creating 200-375 jobs;

• City of Ville Platte ($675,000) to provide juvenile delinquency prevention/diversion services to youth;

• City of Hammond ($367,728) to provide juvenile delinquency/diversion services;

• Southeastern Louisiana University TIP Comptroller’s Office ($2.1 million) to provide a continuum of family preservation, community based family support services;

• Lallie Kemp Regional Medical Center ($785,000) to provide Ryan White Care Act Aids Drug Assistance program;

• Grambling State University ($106,601) to provide educational opportunities for persons committed to entering or continuing in the field of child welfare;

• Louisiana Tech University ($1.2 million) to provide lessons to youth ages 11-14 to prevent/reduce addictive disorders;

• Southeastern Louisiana Area Health Education Center ($5 million) to provide system point of entry services for St. Mary, Terrebonne, Lafourche, Tangipahoa, and Washington parishes;

• First Steps Referral and Consulting ($2.8 million) to provide system point of entry services and provide site development workshop training to school leadership and teachers in Acadia, Evangeline, St. Martin, and Vermilion parishes;

• Families Helping Families at the Crossroads of Louisiana ($2.7 million) to provide point of entry services in LaSalle, Avoyelles, and Winn parishes;

• Youth Empowerment Project ($1.3 million) to provide system point of entry services for reintegration services for youth and counseling for families in Acadia, Evangeline, St. Martin, Vermilion, Jefferson Davis, and Allen parishes.