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.
http://wwwprd.doa.louisiana.gov/laservices/publicpages/ServiceDetail.cfm?service_id=3467
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.
http://www.laworks.net/WorkforceDev/WFD_MainMenu.asp
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 Number | 718453 |
| 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 |
| Amount | $717,202.00 |
| Begin Date | 10/20/2012 |
| End Date | 9/30/2015 |
| Approval Date | 12/3/2012 |
| Document Type | OTHER CONTRACT – CFMS |
| Status | ENCUMBRANCE SUCCESSFUL |
| 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?
Louisiana Voice 
WOW! Thanks for this reporting Tom. Unfortunately, I suspect that in their last couple of years in power this will be happening with even more frequency.
How true Gerry. Gotta empty out everything in the till before making their getaways.
Excellent work, Tom.
Great work, Tom. I was wondering if there was a way to find out who in LED signed the contract with LR3.
Clearly there are many questions concerning LR3 operations and the nonexistent RFP. Without an RFP and stated goals there is no possible way for real accountability. How are they effectively quantifying the return on investment? No RFP =No ROI. A basic principle for reputable consulting firms. I find the billing invoice to LED questionable. Why would the LED be invoiced for services such as web hosting and what looks like a fee for service to an IT employee to monitor the site? That should be covered by LR3. Aren’t they providing an online service in order to connect to the potential clients? I attempted to access FastStart through the LED link you provided above Tom and found the link to FastStart appeared but when I went to access the specific information like any business would to see if they qualified and what popped up,”Server error in application, the resource cannot be found.” So where is the IT personnel who should be correcting the hosted website in no less than 24 hours. And this is the critical link for FastStart as it is the link to eligibility requirements and the forms with which a business would need in order to utilize FastStart at all. We are left with many questions and perhaps that is the reason for lack of RFP’s in Louisiana state government because it would hold them to some accountability when hiring companies paid by the taxpayers and who are contracted to provide a service to Louisiana citizens and Louisiana businesses . The Jindal reign strikes again, and again and again. And to think we have two more painful years with this corrupt administration. Thanks Tom.
You might also want to look at contract number 718703, which has the IDENTICAL description as the one to LR3, but was awarded to Covalent Logic right around the same time.
Perhaps BJ will put you on the payroll for ferreting out waste and duplication. Oh wait, there’s a better chance he would pay you to keep quiet. Good job!
John Kennedy’s suggestion that there is a lot of money to be saved by eliminating some professional services contracts has been dismissed by the administration (and apparently the legislature) as disingenuous. This very excellent report suggests it is disingenuous to NOT look at them.
It will, indeed, be interesting to see whether Alvarez and Marsal look at professional services contracts. My guess is they will not because a) nobody in a position to do so seems willing to look seriously at reducing current professional services contracts in number or dollars b) The first and most obvious candidate for elimination would be their own contract and c) Doing a common-sense analysis of the contracts would take more time than their exorbitant hourly fees would allow (without another amendment, of course).
One would think Treasurer Kennedy might have a comment on this one. By the time the present occupants of the mansion in Baton Rouge leave, this state will be broke, thousands will still be uninsured , more mentally ill will be on the street, children will believe the earth is 6000 years old…but all of BJ’s friends will be flush. Mission accomplished.
While you’re all patting yourselves on the back, you better take a second look and start drafting your retraction.
I’m a retired federal prosecutor (not one of the ones in the news last year!) I’ve never personally met the parties discussed here but tangentially know them. Meredith Eicher was sentenced to 5 months (served 2) over 2 decades ago for matters involving her family. Since then she has been an exemplary part of the community and is a trusted tax professional and bookkeeper to many law firms and businesses in this area. She has not moved away or changed her name. She has worked tirelessly to rebuild her name, credibility and a life that you so thoughtlessly attempt to sweep away with careless assumptions.
The business you have LIBELED here (I use the term intentionally) is the client of ANOTHER PERSON AT AN ADDRESS THAT OFFICES SEVERAL PEOPLE. Corporations often use the address of their accountants and attorneys as business addresses. Would you recklessly lump all the people who use the same attorney or CPA (or same postal annex office) into a conspiracy? Would you do so without even the courtesy of a phone call to those you name? Oh, yes, that’s exactly what you did! Duh.
A assume you are the former criminal prosecutor from San Diego since that’s the only Maria Arroyo I could find.
As for your claim that I libel anyone in my post, I would simply reiterate a few facts:
1) FACT: LR3 was exactly one month old when it was awarded a no-bid contract;
2) FACT: Because there were no proposals asked or given, details of LR3′s experience and qualifications are sketchy at best and non-existent at worst;
3) FACT: The contract was conveniently broken up into three sections by Louisiana FastStart so as to (as admitted by a spokesperson for LED) avoid the necessity of an RFP which would have allowed competing companies to submit proposals on the work and which would have provided information about LR3′s qualifications;
4) FACT: Lionel Rainey III is in fact the public face of the St. George pullout effort and is in fact president of LR3.
5) FACT: LR3 does in fact have the same mailing address as four other entities, one in which he is listed as an officer, and three in which Meredith Eicher is listed as an officer.
6) FACT: Meredith did in fact plead guilty in the Champion Insurance case and was in fact sentenced to 5 months because of the defrauding of 150,000 claims.
You are claiming that I libeled LR3.
Libel is defined as “a published false statement that is damaging to a person’s reputation.”
So if you will demonstrate to me where I libeled anyone by publishing a false statement, I will gladly prepare the retraction you demand.
Otherwise, there will be no such retraction.
Finally, if, as you claim, you have never met the parties discussed and know them only “tangentially,” you must be clairvoyant. Otherwise, how would you know whether or not I actually called them?
Duh.
Thanks for addressing this thinly-veiled threat and revealing to this person that yours is not the all-too-typical blog filled with biased opinions in the guise of facts. I am curious as to her motivation for chiming in on this.
LA and NJ, evil twins joined at the hip. You know the bid company hired and fired by NJ is the same outfit from Gonzalez that ran LA’s Road Home. You know how well that turned out.
So, LR3, a completely unqualified startup company, gets what amounts to a “bogus” contract from LED, an unrelated State Agency, in order for Jindal to funnel money to State Rep. Bodi White to reward/compensate him for his efforts to advance Jindal’s Charter School efforts through the Department of Education. And who better to use to accomplish this, apparently as a consultant, than a proven mail fraud cheater, Meredith Eicher.
And without you Mr. Aswell, this yet another unethical (and illegal?) action by Jindal would go unnoticed. Thank you for what you have done and are doing for our down-and-out state. Our Legislators and administrators charged with law/statute enforcement and prudent management are certainly not doing their jobs.
This from the Golden Ethics Administration! I guess by golden he meant to go get the gold, from our pockets to his.
You misspelled “Spokesperson and Media Contact”, which is all Rainey is according to their website. May want to correct it.
If Bodi White is in the thick of it then it can’t be good.
Tom, all these individuals that are mentioned throughout yours and other blogs tend to make one wonder who to trust. Kinda scary that a retired former criminal prosecutor from San Diego would make excuses for an individual who hurt the thousands of citizens of which my son was one, through the Champion Insurance fiasco, and defend Meredith Eicher, a convicted criminal. Surely this person doesn’t know anything about the corrupt politics in Louisiana, especially the destruction going on by the present administration. EWE was almost a Saint compared to the jindalist that are in control. At least Edwards’ would talk to the press and take questions unlike what we have in office today. Tom all I can say is thank you from the hard working people of Louisiana.
Thanks Tom, and facts are just facts. I remember Meredith and her family and I see nothing libelous in your facts. I was grateful for the work as a struggling lawyer for Champion. I took a slight hit when Champion went under. I am proud of her for rebuilding her life and professional accomplishments. Becoming a Jindalite is where the money is, and as soon as Jindal gets all of the business of government in the hands of insurance companies and corporate America, Jindal can push for tax increases so that “profit” can be in the hands of corporate America, not Obama’s government. ron thompson
I actually support getting a new school system if taxes don’t go up too much, but I don’t trust these politicians at all. I knew something was suspicious about Lionel Rainey III, I guess he is working the system. From what I understand he doesn’t live or even own any property in the St. George area.
Lionel Rainey is a political consultant. I guess this is one way for politicians to pay him to work on campaigns.
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I’m a (johnny(literally)-come-lately to the blog. But the Eichers? In 1988-89, I was the investigative reporter who uncovered documents that were critical in sending the family and their captive Insurance Commissioner to prison. History repeats.
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