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Archive for December, 2011

Notable Quotables (in their own words)

Posted in Campaign Contributions, Ethics, Governor's Office, Notable Quotables, Transparency on December 14, 2011| Leave a Comment »

“Has Jindal’s press secretary ever heard of the term ‘appearance of impropriety’? Jindal does not appear to realize that a leader’s role in government ethics is not just tooting his own horn. It is educating government officials and the public about how to responsibly handle conflicts and how not to create appearances of inpropriety. An important way to do this is through setting an example.”

–CityEthics.org, commenting in March of this year about contributions to the Supriya Jindal Foundation for Louisiana’s Children by corporations who enjoy lucrative state contracts or which have received needed relief from state regulations.

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Ethics Board to consider Guillot, Roemer BESE conflicts but thanks to Jindal, board no longer has enforcement powers

Posted in BESE, Ethics, Governor's Office, Transparency on December 14, 2011| 1 Comment »

“Today, we take the first step towards building a better Louisiana where our ethics laws are the gold standard.”

With those 19 words, Gov. Bobby Jindal on Feb. 10, 2008, signed into law SB-1 of the 2008 special legislative session which, among other things, banned legislators and other state officials from contracting with the state.

SB-1, which became Act 2 with Jindal’s signature, was the centerpiece of the new governor’s agenda (he had been in office little over a month at the time). It also prohibited businesses owned by state and local public officials from receiving recovery-related contracts whether competitively bid or not.

So where does that leave Jay Guillot, a principal of Hunt Guillot & Associates (HGA) of Ruston? The Louisiana Board of Ethics will take up that question this week, thanks to an inquiry submitted by LouisianaVoice after Guillot appeared to be dragging his heels in seeking a clarification.

At the same time, LouisianaVoice inquired as to the legality of Baton Rouge BESE member Chas Roemer’s voting on matters involving charter schools that come before the board. Roemer’s sister, Caroline Roemer Shirley, is executive director of the Louisiana Association of Public Charter Schools and has already been directed by the Ethics Board not to speak at BESE meetings on behalf of matters concerning charter schools or to talk to BESE members about charter school matters because of her brother’s membership on the board.

Chas Roemer, however, has consistently voted on matters concerning charter schools and in some cases, even made motions to approve or not approve certain agenda items concerning charter schools.

It would seem that Guillot would have sought a ruling from the Ethics Board prior to qualifying to run for the District 5 seat on the Board of Elementary and Secondary Education (BESE). Instead, after winning the election, he retained Tech graduate attorney Jimmy Faircloth, who once worked as executive counsel for Jindal, to submit the matter to the board. But Faircloth not only did not get the request to the board in time for its December meeting but has now missed the deadline for January as well.

At issue is Guillot’s qualification to serve on BESE in light of nearly $17 million in state contracts held by his company. One of those contracts is for $16 million and involves HGA’s monitoring of the administration of grants to parishes and municipalities as part of the recovery process from Hurricanes Katrina, Rita, Ike and Gustav.

Act 2 would appear to give Guillot a technical out when it said that no officer holder (including BESE members), spouse or “legal entity” (including any corporation or partnership) may enter into a contract with the state unless competitively bid or competitively negotiated through a request for proposals (RFP) (emphasis ours).

The $16 million contract for HGA was negotiated through an RFP.

But the law then goes on to disqualify office holders, including BESE members, from participating in a contract or subcontract that is funded or reimbursed in whole or in part with federal funds or for any disaster recovery contract (emphasis ours). HGA’s own model file system submitted to the Division of Administration (DOA) defines its contract as a “Disaster Recovery Program.”

Moreover, the state’s contract data page, which lists all state contracts, the amount and the purpose, describes that $16 million contract as “Awarded by RFP, ….100 percent federal CDBG (Community Development Block Grant), HUD funds (emphasis ours)….grant management activities for infrastructure and other projects undertaken as a result of damages incurred as a result of hurricanes Katrina/Rita and to a lesser extent as a result of hurricanes Gustav/Ike.”

The passage and subsequent signing of SB-1 into law by Jindal prompted the Lafayette Advertiser to gush, “Louisiana has adopted a comprehensive plan for ethics reform, something many of us didn’t expect to see in our lifetimes.”

Even the New Orleans Times-Picayune said the new law would increase “government transparency and accountability.”

It’s just that kind of non-reporting, the reluctance to peel back the layers to find the real story that allows Jindal to continue to attend fundraisers all over the U.S. while touting the new era of “accountability and transparency,” thanks to his “gold standard” of ethics reform.

Even that beacon of ethical behavior, New Gingrich, got in on the act, saying that Jindal all but single-handedly fixed “the culture of corruption and cronyism that has long dominated Louisiana politics…” We’ll give Gingrich this much: he should know corruption and cronyism when he sees it.

That all sounds well and good, but what exactly does it all mean? Is it really the “gold standard” of transparency and accountability?

To learn the answer to that, one need look no further than the Supriya Jindal Foundation for Louisiana’s Children. The foundation, which installs high-tech multimedia whiteboards in Louisiana schools, provides a convenient conduit into which corporations have poured upwards of a million dollars as a means of circumventing campaign contribution limitations. It is also a handy way for the corporations to either avoid fines and penalties from state regulators or, better yet, to land lucrative state contracts.

So again, what does all this mean for the inquiry about Guillot’s conflict of interest now pending before the State Ethics Board? For that matter, what about Roemer?

Well, first of all, the Thursday hearing on the matter will be held in executive session, so who knows what goes on behind closed doors? Ethics Board attorney Tracy Barker, who is handling the inquiry, said the complaint would be received and reviewed in executive session. “The board will make a decision to either order an investigation to consider the matter further, or it will decide no investigation is merited and the matter will be closed,” she said.

Secondly, if scores of previous rulings are an indication, historically there has been a lot of latitude given public officials in their dealings with the state and its boards and agencies.

For whatever reason, Jindal holds undue sway over many legislators and over a lot of agencies that should be autonomous, the Ethics Board among them. Guillot and Roemer are his hand-picked candidates (the governor contributed thousands of dollars to the recent campaigns of both men) and it would be no surprise if the word had already come down from the fourth floor of the State Capitol earlier in the week.

It remains to be seen if the Ethics Board has the backbone to enforce the spirit of the law or if it will instead crater and look for sufficient wiggle room to appease Jindal.

Vegas oddsmakers would likely put little stock in any “gold standard.”

Jindal is simply too transparent.

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Notable Quotables (in their own words)

Posted in Contract, Contracts, Ethics, Governor's Office, Notable Quotables, ORM, Office of Risk Management, Privatization on December 12, 2011| 1 Comment »

“The Division of Administration has no records which are responsive to your request.”

–Attorney David W. Boggs, responding to a request by LouisianaVoice for copies of required written authorization for the transfer of the $74.9 million contract between F.A. Richard & Associates and the State to take over operations of the Office of Risk Management to a second company, and later a third.

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DOA apparently allowed several major violations of contract through poor oversight & management of ORM privatization

Posted in Contract, Contracts, Governor's Office, Legislature, Legislators, ORM, Office of Risk Management, Transparency on December 12, 2011| 7 Comments »

If Gov. Bobby Jindal’s privatization pilot program is any indication, legislators might wish to take a long, hard look before allowing the governor to move forward with privatizing the Office of Group Benefits, prisons, Medicaid or education.

Former Commissioner of Administration Angéle Davis on June 3, 2010, signed a contract whereby F.A. Richard & Associates (FARA) of Mandeville was to assume the operations of the Louisiana Office of Risk Management. Also signing the agreement were State Risk Director J.S. “Bud” Thompson, and FARA President/CEO Todd Richard.

Now, it appears that the terms of that contract with FARA may have been violated not once, not twice, but probably three times.

Under terms of that contract, the state agreed to pay FARA “a maximum amount of $68,118,971.” In May of this year, barely 10 months later, Thompson appeared before the Joint Committee on the Budget to request an amendment to FARA’s contract in the amount of $6,811,897, or exactly 10 percent, “not to exceed $74,930,868.”

Legislators were somewhat piqued to learn to learn from ORM Assistant Director Patti Gonzales that a little-known provision allows a one-time contract amendment of up to 10 percent by the Office of Contractual Review without concurrence of the legislature. The Office of Contractual Review works directly under the supervision of the Commissioner of Administration.

Then, less than two weeks after legislators learned they had no recourse in the matter, it was learned that FARA had been sold to Avizent, a national claims and risk management service provider based in Columbus, Ohio. Obviously, the deal was already in the works at the time the amendment was executed.

Understandably, that raised the issue of whether the contract amendment was needed more to sweeten the deal for Avizent than for FARA to carry out its contractual obligations.

No sooner had the dust settled from that transaction than in November of this year it was learned that ORM, a $400 million state agency, was going to be run—for a while, at least—by York Claims Service of New York City.

York operates as an independent adjustment company and third party administrator and is a subsidiary of York Insurance Services Group of Parsippany, New Jersey.

Close on the heels of that revelation, it was learned Cherie Pinac, manager of FARA’s Baton Rouge office, had submitted her resignation to accept a position with local claims adjusting firm Hammerman & Gainer. About that same time, it was also reported that Hammerman & Gainer would be subcontracted to take over ORM’s property claims.

But under terms of Section 11.0 (“Assignment”) of the June 3, 2010, FARA contract, it is specifically spelled out that “Contractor shall not assign any interest in this contract by assignment, transfer, or novation (Novation: the substitution of a new contract for an old one or the substitution of one party in a contract with another party; the replacement of existing debt or obligation with a new one.), without prior written consent of the state. (emphasis ours).

Under terms of Section 15.0 (“Subcontractors”), it is also stipulated that “The contractor may, with prior written permission from the state, enter into subcontracts with third parties for the performance of any part of the contractor’s duties and obligations.” (emphasis ours).

With that in mind, at 6:47 a.m. on Wednesday, Dec. 7, we made the following written request of Commissioner of Administration Paul Rainwater:

“Pursuant to the Public Records Act of Louisiana, R.S. 44:1 et seq., I respectfully request the following information:

Please provide me with the time, date and location at which I may view:

The written consent provided by the Division of Administration to F.A. Richard & Associates (FARA) granting FARA the authority to sell, assign or otherwise convey and/or transfer its interest, oversight or ownership/management of the operations of the Louisiana Office of Risk Management under the terms of Contract No. 692289 (signed by Todd Richard, J.S. Thompson, Jr., and Angéle Davis on June 3, 2010, and approved by the Office of Contractual Review on June 8, 2010) to Avizent Claims in May of 2011;

The written consent provided by the Division of Administration to F.A. Richard & Associates (FARA) and/or Avizent Claims the authority to sell, assign or otherwise convey and/or transfer its interest, oversight or ownership/management of the operations of the Louisiana Office of Risk Management under the terms of Contract No. 692289 (signed by Todd Richard, J.S. Thompson, Jr., and Angéle Davis on June 3, 2010, and approved by the Office of Contractual Review on June 8, 2010) to York Claims Service of New York/New Jersey at any time during calendar year 2011;

The written consent provided by the Division of Administration to F.A. Richard & Associates (FARA) and/or Avizent and/or York to subcontract or otherwise assign any portion of the operations of the Louisiana Office of Risk Management, specifically PROPERTY and/or LIABILITY lines claims to Hammerman & Gainer, Inc., of Baton Rouge, Louisiana, or any other subcontractor, said lines being inclusive of Contract No. 692289 and originally assigned to FARA.”

Rainwater apparently chose to ignore our request even though the state public records law says that any public record must be made available immediately upon request unless the record is unavailable. In such case, the custodian of the record (Rainwater) must respond within three working days to say when the record will be available for examination.

As second request was then made on Friday, Dec. 9 at 2:22 p.m.

Again, nothing.

So, at 9:17 p.m. on Sunday, Dec. 11, we sent an email to David Boggs of the Office of General Counsel for the Division of Administration (DOA) asking that he kindly remind his boss of the terms of the state law as well as the civil and criminal penalties (fines, attorney fees and imprisonment of up to six months).

While making it clear that an amicable resolution was preferred, we nevertheless made it clear that we would pursue legal remedies if the records were not provided by the close of business on Wednesday, Dec. 14.

At 4:53 p.m. On Monday, Dec. 12, the following email was received from David Boggs:

“The Division of Administration has received your public records requests dated December 7 and 9, 2011. You requested three separate consent letters provided to F.A. Richard & Associates, Inc. The Division of Administration has no records which are responsive to your request.

Sincerely,

David W. Boggs
Office of General Counsel
Division of Administration”

So there we have it:

• No “prior written consent” for Avizent to assume the $68.1 million, er, $74.9 million contract with the State of Louisiana to take over ORM;

• No “prior written consent” for York Claims Service to assume the contract;

• No “prior written permission” for Hammerman & Gainer to assume handling of ORM property claims.

Considering the manner in which DOA has failed to enforce the terms of the FARA contract, which are quite plain in both simplicity and intent, it should send up all kinds of red flags and set off alarms throughout the House and Senate.

In seeing the way in which Commissioner of Administration Paul Rainwater chose to ignore our indisputably legal requests for public records (until a lawsuit was threatened), it is abundantly apparent that there was an egregious lack of oversight in the way ORM is being run and in the fast and loose manner in which a $74.9 million contract is shuttled from one vendor to another—with no apparent authority to do so.

Several companies submitted proposals to take over the operations of ORM. Avizent was not among them. Nor was York Claims Service. Even Hammerman-Gainer, which expressed an early interest, never submitted a proposal.

Questions need to be asked:

• Why was a $6.9 million amendment to the FARA contract necessary when FARA was obviously already negotiating a deal with Avizent?

• Why did Avizent sell out to York?

• What role did the ORM contract play in those transactions?

• Why were written terms of the contract with FARA not enforced?

• How did Avizent, York and Hammerman & Gainer manage to enter into the picture?

• Should the state’s contract with FARA be revoked and/or declared null and void?

Hopefully, at least a few curious legislators will ask these—and more—questions before Bobby Jindal is allowed to privatize the entire state.

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Notable Quotables (in their own words)

Posted in BESE, Education, Notable Quotables on December 8, 2011| 1 Comment »

“If I’d been required to take those two tests when I was a 10th-grader, my life would almost certainly have been very different.”

–Orange County (Florida) School Board Member Rick Roach, who holds two master’s degrees, after taking–and failing–the Florida Comprehensive Assessment Test (FCAT).

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