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Archive for January, 2012

Got contract? If not and you want to play, be prepared to pay

Posted in Campaign Contributions, Civil Service, Contract, Contracts, Ethics, Governor's Office, Privatization on January 11, 2012| Leave a Comment »

In September of 2000, the City of New Orleans awarded a contract to SMG Crystal for the management and operation of the New Orleans Cultural Center in an effort to reduce the city’s $915,000 deficit incurred in 1999.

The agreement called for SMG, which also manages the Louisiana Superdome, the New Orleans Arena and the Baton Rouge River Center, to spend $25,000 per year to market and promote the Cultural Center and for the city to pay SMG $175,000 per year, plus an incentive fee based on the amount by which SMG reduced the operating deficit.

The Cultural Center had 19 classified civil service employees, 10 of whom accepted employment with SMG and nine who remained with the city in the Department of Property Management at their same pay rate.

The New Orleans Civil Service Commission filed suit against the city because the agreement, it said, was entered into in violation of its rules that required commission approval prior to privatization of any governmental function.

Rules adopted by the commission specify that:

• Contracts for personal or professional services shall be approved only when such services require unique or specialized skills not presently required of positions in the classified service;

• Any contract for privatization of a governmental service shall contain a provision that thoroughly explains the effects of privatization on the status of current employees, as well as any specific contractual commitments entered into by the parties, which affect the interests of the displaced employees;

• All contracts for personal or professional services first shall be transmitted to the Civil Service Department for initial consideration and review, and again for final approval after all other aspects of contractual review have been completed.

The upshot of that legal action was a ruling, upheld by the Louisiana Supreme Court, that the city must submit for prior approval—or disapproval—by the civil service commission any agreement calling for privatization of any city department or agency.

The ruling said, “If…the commission finds that no civil servants will be involuntarily displaced from the civil service, or, if they will, that the contract was entered into for reasons of efficiency and economy and not for politically motivated reasons (emphasis our) as to the civil servants, it should approve the contract.

“However, if the commission has good reason to believe that civil servants will be involuntarily displaced and that the contract was entered into, not for reasons of efficiency and economy, but for politically motivated reasons, it may refuse to approve the contract,” it said.

Because of this decision, the Louisiana Civil Service Commission receives a printout at its monthly meetings. This printout contains a list of all proposed state contracts for the commission’s review. If there are no objections by the commission, the list is then forwarded to the Office of Contractual Review, located in the Division of Administration, for final approval.

The printout ostensibly is to assure the commission members that:

• No state civil servants will be displaced by the contract, and;

• There are no state civil service employees (or at least an insufficient number of civil servants) who are qualified to performed the needed services.

But It would require more than a single meeting of the civil service commission for its members to make such a determination on each of the proposed contracts.

That’s because the latest printout is 208 pages with an average of 10 proposed contracts per page. The dollar amount on these 2,000 contracts? Almost $4.1 billion.

There is no possible way the commission members can make an intelligent decision on the merits of each and every one of these proposed contracts.

And you can be sure that those in positions to reward political campaign contributors are fully aware of that.

Take C.H. Fenstermaker & Associates of Lafayette, for example.

That firm landed a lucrative $3 million contract with the Governor’s Office of Coastal Protection and Restoration to “provide engineering services for coastal protection and restoration projects.”

That’s a pretty vague description of services and fails to address the issue of whether or not there were qualified state employees to perform the work.

But Fenstermaker and his firm contributed $20,500 to Jindal’s gubernatorial campaigns from 2003 to 2009.

Likewise, Providence Engineering of Baton Rouge, which gave Jindal more than $2,700 in 2007, has a $750,000 contract with the Office of Coastal Protection and Restoration to “provide engineering services for coastal protection and restoration projects on an as-needed basis.”

Here are a few others:

• BCG Engineering & Consulting: $3 million contract “to provide engineering services for coastal protection and restoration projects on an as-needed basis.” BCG contributed $5,000 in January of 2010 for a Jindal “fun hunt.” BCG also contributed about $100,000 more to other candidates;

• HNTB Corp., which made an in-kind contribution of $1,947 last March, has two such contracts with the Office of Coastal Protection—one for $3 million and another for $750,000;

• ASC State & Local Solutions made two $5,000 contributions to Jindal in 2003 as well as an additional $48,000 to 11 other candidates, including State Treasurer John Kennedy, then legislator Bill Cassidy, then-Lt. Gov. Mitch Landrieu, former New Orleans Mayor Ray Nagin and former Gov. Kathleen Blanco. The contributions appear to have paid handsome dividends; ACS has consulting contracts worth $74.5 million and $13.95 million with the Office of Community Development and the Department of Children and Family Services, respectively;

• Volkert & Associates: $892,350 contract with the Division of Administration for “relocation assistance services for University Medical Center in New Orleans in accordance with federal relocation guidelines (seven contributions to Jindal between 2003 and 2011 totaling $7,000);

• T. Baker Smith & Son: $3 million contract with the Governor’s Office of Coastal Protection and Restoration for “engineering services for coastal protection and restoration projects on an as-needed basis,” and a $250,000 contract with the Department of Natural Resources (DNR) for “engineering services for the Atchafalaya Basin Program.” T. Baker Smith contributed $5,000 to Jindal in 2008;

• Ardaman & Associates: $3 million contract with Governor’s Office of Coastal Protection and Restoration “to provide geotechnical services for coastal protection and restoration projects on an as-needed basis.” Contributed $1,000 to Jindal in 2008;

• Morris P. Hebert, Inc.: $1 million contract with Governor’s Office of Coastal Protection and Restoration “to provide the means for surveying assistance for coastal protection for coastal restoration projects on an as-needed basis. Hebert contributed $1,000 to Jindal in 2007;

• Peter Meyer Advertising of New Orleans: $5 million contract for advertising and communication services for the Department of Economic Development; $8,000 in contributions to former Lt. Gov. Mitch Landrieu;

• Trumpet Consulting of New Orleans: $3.9 million contract with the Office of Culture, Recreation and Tourism (which is part of the lieutenant governor’s office) “for creative, marketing, media, brand identity for the Office of the Lieutenant Governor and the Department of Culture, Recreation and Tourism; $1,000 contribution to Landrieu by Trumpet in 2006 and $1,000 to Jindal by Trumpet agent David Lukinovich;

• URS Corp.: Eight contracts with seven separate agencies for more than $4.5 million; five separate contributions to Jindal totaling $12,500, all in 2003;

• C&C Technologies: $3 million with the DNR to “provide the means for surveying assistance for coastal restoration projects on an as-needed basis; $5,000 contribution to Jindal in 2007 by C&C President Thomas Chance;

• CH2M Hill Corp.: $12 million contract with the Office of Coastal Restoration and Management to “provide environmental science consultant services,” $3 million contract with DNR to “provide engineering assistance for coastal restoration projects; $16,000 in four contributions to Jindal from 2003 to 2011and more than $50,000 to several other candidates;

• Sigma Corp.: $750,000 contract with the Governor’s Office of Coastal Restoration and Management and a $250,000 contract with the Department of Natural Resources; $5,750 in two contributions to Jindal in 2003 and 2008 and $10,500 in three contributions to Jindal between 2003 and 2010 by Sigma President Miles Williams;

• CSRS, Inc.: $2,125,674 contract with the Governor’s Office of Coastal Protection and Restoration “to augment existing professional engineering staff.” CSRS made a $5,000 contribution to Jindal in 2008. CSRS Vice President Curtis Soderberg made contributions of $5,000 to Jindal in each of his three gubernatorial campaigns for a total of $15,000;

• Value Options, Inc.: $13.75 million contract with the Office of Group Benefits to “provide a fully-insured managed mental health and substance abuse treatment service. Value Options contributed $5,000 to Jindal in 2008.

Next, we will take a look at contracts which call for services that it would seem state employees could perform and at contracts that simply defy logic.

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To limit exposure to official actions, make announcement late Friday or late Thursday before big weekend holiday

Posted in Governor's Office, OGB, Office of Group Benefits, ORM, Office of Risk Management, Teague, Transparency, Uncategorized on January 2, 2012| Leave a Comment »

It is a long-held tradition at all levels of government that anytime an agency does not want attention drawn to any official action, make the announcement late on a Friday afternoon when most of the “working” media have left for the weekend.

If that Friday just happens to be on the eve of a major holiday like Christmas or New Year’s, so much the better.

That’s what happened with the Division of Administration (DOA) and two news releases about major personnel changes recently. We waited until now to assist DOA in disseminating the stories.

DOA actually issued its official announcements not on Fridays but toward the close of business on Thursday, Dec. 22, and Thursday, Dec. 29 because, well, both Fridays were official state holidays for Christmas and New Year’s, respectively. It had the same effect, of course, as a Friday release on a normal work week: near zero media attention and less than zero media follow-up.

On Thursday, Dec. 22, the official news release went out announcing the appointment of Charles Calvi, Jr., to serve as Chief Executive Officer of the Louisiana Office of Group Benefits (OGB).

The following Thursday, on Dec. 29, it was announced that Mark Brady was leaving as DOA Deputy Commissioner of Administration.

Both announcements were made by Commissioner of Administration Paul Rainwater.

Actually, the second news release was not so much to announce Brady’s departure as to proclaim the appointment of Assistant Commissioner Ray Stockstill as his successor. In fact, Rainwater devoted precisely two sentences to Brady:

“Rainwater also thanked and praised outgoing Deputy Commissioner Mark Brady, who will assist the Division in transition through January before returning to the private sector,” the news release said. The release quoted Rainwater as saying, “‘Mark’s contribution has been invaluable, and I am grateful for the integrity, intelligence, and passion that he brought to the job and that I’m sure will serve him well in his next endeavors.’”

That’s it. Nothing about his tenure at DOA, nothing about his previous background, nothing about his reasons for leaving or his future plans except that he was “returning to the private sector.”

There were no mentions of the previous two OGB CEOs, both of whom left or were fired in 2011. Nor was there any explanation of how the two moves may be inter-connected or how Brady was at the forefront of last spring’s efforts to sell off OGB to private investors.

Tommy Teague was fired by Brady last April 15 when Brady and Rainwater concluded that Teague was not sufficiently enthusiastic about the administration’s proposed selloff of group benefits and its $500 million surplus.

He was replaced by Scott Kipper, who resigned effective June 24, after a controversial report by Chaffe & Associates of New Orleans did not square up with the administration’s insistence that the OGB sale and accompanying elimination of 149 jobs would be good for the state, 62,000 state employees and even more retirees and dependents.

When the Chaffe report did not say what Gov. Jindal desired, the administration subsequently retained Morgan Keegan to conduct a financial analysis of OGB preparatory to a second effort to sell off the agency despite vocal opposition from retired state employees, retired teachers and a state district judges’ association.

The Morgan Keegan report is expected to be finalized and submitted to the state in February but if events play out the way they did with the Chaffe report, don’t expect Rainwater to be forthcoming with contents of the report. Rainwater, despite harsh criticism from legislators, steadfastly refused to release the Chaffe report to lawmakers.

Rainwater did not hesitate to throw Brady under the bus during Brady’s testimony before the Senate and Governmental Affairs Committee. Committee members, lead by Sen. Ed Murray, subjected Brady to withering criticism over the administration’s refusal to release the report as Rainwater busied himself texting even as Brady twisted in the wind.

Following the Chaffe debacle and Jindal’s embarrassing setback in his efforts to sell three state prisons, the administration pulled back on its privatizing efforts. In the interim, the Office of Risk Management (ORM) has been transferred to a third private firm in apparent violation of the state’s contract with F.A. Richard & Associates (FARA).

The state paid FARA $68 million to take ORM off its hands and then amended that contract by another $6.8 million less than two weeks before FARA was sold to Avizent Risk Management Solutions of Ohio which was in turn recently purchased by York Claims Service of New York.

The state’s original contract with FARA specifically prohibits any transfer of contractual services without prior written consent. When a public records request was made for written consent to transfer the contract, DOA responded that no such documents exist.

Rainwater announced nothing further will be done toward the sale of OGB until early 2013. And while OGB proposed a rate increase of about three percent for the coming year, the administration insisted on at least a five percent bump. The bigger increase will obviously make the agency far more attractive to potential buyers.

Calvi has more than 40 years of experience in the healthcare, insurance and employee benefits fields. For seven years he worked for Gulf South Health Plan. He also worked eight years as CEO of BestCare, Inc., where he developed and owned the first Physician Hospital Network in the state.

Stockstill is a retire-rehire employee who had previously worked in DOA as state director for planning and budget until being named assistant commissioner in February of 2010. He retired from that $180,000 per year position, effective Christmas Day of 2010 and returned as a re-hire two days later.

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