The more we look at that contract between the Louisiana Department of Economic Development (DED) and LR3 Consulting, the more unanswered questions arise.
LR3, you may remember from our Feb. 5 post, is run by Lionel Rainey, III, who also happens to be the PR spokesperson retained by those who wish to form their own city of the St. George area of East Baton Rouge Parish, separate and apart from the city of Baton Rouge.
If one didn’t know better (and we truly did not initially), Rainey could easily be taken as the leader of the movement since local television news reports on the pullout efforts invariably feature him reciting the proponents’ talking points. Turns out he’s just a hired gun.
(Proponents, by the way, don’t like the term pullout because, they say, the St. George area is not within the Baton Rouge city corporate limits in the first place, so technically, it is not a pullout or secession; it’s simply a movement to incorporate the currently unincorporated area as a city of its very own.)
Before LR3, there was 3 Lions Consulting which was awarded a three-year contract (July 1, 2012, through June 30, 2015) by DED 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 DED’s Louisiana FastStart program (LFS) at a contract cost of $699,999.
In other words, Contract No. 713974 called for 3 Lions to compile a data base of potential employees for Louisiana plants and businesses—the same thing that the Louisiana Workforce Commission had been doing and which it still does.
But barely three months into the contract and after being paid just under $31,000, Jeff Lynn, LFS executive director, sent a one-paragraph letter of termination to 3 Lions partner Stanley Levy, III. “In accordance with the terms of our contract…Louisiana FastStart hereby provides you with the required five (5) day written notice to terminate our agreement, effective Oct. 19, 2012…”
The reason given for the termination was a two-word message scribbled on DED’s performance evaluation: “Ownership change.”
Levy apparently had parted company with his partner, precipitating the contract cancellation. His 3 Lions partner? Lionel Rainey, III, who had incorporated his new business, LR3, only a month before. LR3 was subsequently awarded an even bigger three-year contract ($717,204) on Oct. 20, 2012, just one day following the termination date of the 3 Lions contract.
The LR3 contract, to run from Oct. 20, 2012 through Sept. 30, 2015, again calls for the “development, establishment and/or delivery of a database of potential trainees for continued pre-hire training using a customized assessment instrument to determine skills proficiencies based on individual company requirements.”
Through January 13 of this year, DED had paid LR3 $186,880.
But the LR3 contract, like that of 3 Lions before it, is broken into three yearly maximums of $217,204 the first year and $249,999 in each of the second and third years.
For 3 Lions, the payment maximums were $169,999 the first year and $249,999 in each of the second and third years.
This was done, according to DED Communications Director Gary Perilloux, so as to avoid the necessity of issuing a request for proposals (RFP) and thus avoid “competitive bidding or competitive negotiation.”
The issuing of service contracts is permissible so long as the “total contract amount is less than $250,000 per twelve-month period,” according to Title 39, Section 1494.1 of the Louisiana Revised Statutes which then goes on to say, “Service requirements shall not be artificially divided so as to exempt contracts from the request for proposal process.”
Section 1499 of the same title says, “The head of the using agency or the agency procurement officer shall negotiate with the highest qualified persons for all contracts for professional, personal, or those consulting services for less than fifty thousand dollars, or those social services qualifying under R.S. 39:1494.1(A) at compensation which the head of the using agency determines in writing to be fair and reasonable to the state (emphasis DED’s). In making this determination, the head of the using agency shall take into account, in the following order of importance, the professional or technical competence of offerers, the technical merits of offers, and the compensation for which the services are to be rendered, including fee. Negotiation of consulting services for $50,000 or more or social services not qualifying under R.S. 39:1494.1(A) shall be conducted in accordance with Part II, Subpart B hereof. [RFP]
To justify the contract, an undated letter was sent to Sandra Gillen, since retired as the Director of the Office of Contractual Review, by DED contracts reviewer Chris Stewart which certified that “The services (being contracted for) are not available as a product or a prior or existing professional, personal, consulting, or social services contract.”
But wait. Not so fast.
LouisianaVoice has found yet a third contract with Covalent, LLC, for an even larger amount–$749,997—awarded more than a month after the LR3 contract.
That contract, divided into three equal maximum payments of, wait for it… $249,999, calls for the “development, establishment, and/or delivery of a database of potential trainees for continued pre-hire training using a customized assessment instrument to determine skills proficiencies based on individual company requirements.”
In other words, Covalent’s contract calls for it to perform services which are identical to those of first 3 Lions and then of LR3.
And yes, there is that same letter from Chris Steward to Gillen’s successor, Pamela Rice which certifies that “The services (being contracted for) are not available as a product or a prior or existing professional, personal, consulting, or social services contract.”
But…but…what about the LR3 contract?
Good question. It looks as though someone misrepresented the facts with that certification. DED now has two firms performing services that appear to be duplications of work being done by LWC—and neither of the contracts which combine for almost $1.5 million, was awarded on a competitive bid basis.
Apparently, Covalent is performing some work, though not nearly as much as LR3. From Jan. 3, 2013 through May 30, 2013, Covalent has been paid a grand sum of $35,465—and nothing since May 30. That’s a far cry from the $249,999 allowed under its contract.
All of which raises the obvious question: Why do these firms require such massive contracts and why did DED find it necessary to break them up in apparent violation of state statutes just so it could make the contract awards to whom it wanted?
And why did DED desire the services of Rainey over Levy to the point of cancelling the 3 Lions contract so it could award a second no-bid contract to Rainey’s new company? And why, only six weeks after awarding Rainey a $717,000 contract did DED contract with Covalent for $749,997 to perform the same services as Rainey?
What were the backgrounds of Levy and Rainey? And why did they terminate their partnership, especially when it cost Levy a nice, fat state contract?
For openers, LouisianaVoice found records that show LR3 was on the payroll of State Rep. John Schroder (R-Covington) since November of 2012 and has received $16,250 in 11 monthly payments of $1,250, one payment of $1,875 and another of $625. All payments were made at least a year after the 2011 elections.
3 Lions, before the dissolution, also appears have spread its services around. The firm received $5,600 from John Conroy in 2012 before Conroy dropped out of the Baton Rouge mayor’s race; $8,000 from State Treasurer John Kennedy, $34,000 from Board of Elementary and Secondary Education President Chas Roemer during Roemer’s campaign for re-election in 2011, and $52,600 from Secretary of State Tom Schedler during his 2011 campaign for re-election.
While Rainey and LR3 got the $717,000 contract with DED and a $20,000 contract with the Secretary of State’s office, Levy, with his new company, Fuse Media, has only managed a modest $49,825 post-LR3 contract to “develop a strategic communications plan, video series and animated PowerPoint slides for the Governor’s Office of Coastal Restoration.”
Louisiana Voice 
Looks like some under the table deals. Give the political consultants free state contracts and in return get discounted services for political campaigns. Likely a federal crime.
The mere fact that you, having done a thorough job investigating the matter, are having to ask the questions you are asking begs the most obvious question, “Why is nobody else doing such common-sense reviews of these contracts?”
If the parties involved deigned to do so, they might offer something in the way of explanations. Since they don’t have to, we have to guess they won’t.
What is wrong with this picture?
Mr. Aswell, as your masthead states, LouisianaVoice is dedicated exposing Graft, Lies, and Corruption in Louisiana. And I know that there is so much of all three components that even you, as capable as you are, are unable to locate, research, and report it all. However, in this case, I so wish that you would pause and organize an effort on behalf of concerned Louisiana citizens to bring to justice those who in this instance have circumvented parts of the law and clearly violated others. If you can’t stop and do that, please give those of us who will guidance as to how to proceed. Enough is enough.
Jindal belongs in a Federal Prison. Something will stick to him, somehow, someday. He’ll slip up.
Did Mr. Perilloux offer any reason why it was prudent for the State to avoid competitive bidding?
In defense of Mr. Perilloux, he is a classified employee and is not in upper management. His duties are restricted to providing information to the public that is given him by his superiors, some of whom are also classified employees and can only do as instructed by unclassified appointees further up the food chain—like Stephen Moret. For Mr. Perilloux to go outside his lines of authority would subject him to being immediately teagued. Bottom line: Mr. Perilloux is not the problem.
So why aren’t the Ethics Board, State Attorney General’s Office, Legislators, and Statewide Newspaper Editors investigating this? They are either unwilling or unable! They are either too lazy or too fearful! They are either corrupt or inept! In this case, the answer is “ALL OF THE ABOVE!”
If ever there was a time for the legislature, in the face of a bleeding treasury and blatant abuse of power, to call a special session and “jail Jindal” by halting any more contractural agreements and expenditures until a formal public review of all contracts. Of course, that may not be legal. What else is new.
Piyush/Teepell will be at the Academy Awards and accept the Oscars for saving Louisiana from the federal government. They won the Communication war and changed or destroyed our republic/democracy, and will continue the rape as long as we, the ignorant and prejudiced electorates refuse to be educated and participate in the game. In all communication, fear, prejudice and ignorance play equal roles, and these are good personal attributes, but cannot work as a good government. I tried to participate in a town hall tele-show last night sponsored by my La. Democratic party and was bombarded with robo calls from my congressman Vance McCallister holding a Republican town hall meeting and heard Vance agree that our President should be impeached for his lawlessness, or something like that. and think my tax money paid for his damned show. I will not give up fighting ignorance and prejudice. ron thompson
Patrick Robinson raised an interesting and important question. Where is our Attorney General in all of this? The AG refuses first one type of lawsuit where the state is getting robbed by outsiders. And now when the state is getting robbed from the inside he again does nothing. Just what in the world is he responsible for? He is worthless to us taxpaying citizens that see so much of what we pay to the state squandered by the likes of “Jinfail” and his toadies.
Amazing example of manipulating the procurement process. Good question (where is the AG?)
The Attorney General is the state’s attorney. Therefore, it represents the interests of the state and its agencies. It does not represent citizens in actions against the state.
As we put him in office (AG) (Jindal) many appointees, the people of Louisiana have the right to take them out, then that’s a good place to start. If these individuals are blind to what is going on, then they need to be given their walking papers in the next election. Spreading the information as Tom has done should be the next step in removing incompetent officials. There are too many good lawyers that would stand up for what’s right and we must share the good, the bad and the ugly info with all those that can make a difference by getting this news out, starting with the newspapers, news programs, radio medias as well as the computer outreach resources available to thousands of citizens. What one doesn’t know can hurt them and let’s hope it’s not too late, the people need to know, so share with friends and state officials that are elected by the people and stand for the people. Time will tell and keep following the money, a surprise might lie ahead of where it might lead. Again thanks Tom, job well done!!!
That’s funny. In most states the AG also is supposed to investigate any possible illegalities performed by state agencies. In that case the state is the citizens. In the other the state is Louis XIV and his ministers. Happy Mardi Graw!
The fun never stops! I read in the Advocate this morning that Jerry Phillips (Undersecretary of DHH) is retiring before this Legislative Session begins. I don’t blame him. He is the individual who, for the past year, has had the responsibility for answering the questions CMS has posed concerning the PROPOSED funding mechanism of the new “Privatized Charity Hospital System”. The Federal Government (CMS) allows individual states to “draw down” Federal Funding while awaiting rulings on whether or not that state’s PROPOSED plan is approved. For the past year, Louisiana has drawn down hundreds of millions of dollars in Federal Funding it would not have otherwise received in anticipation CMS will approve its (already implemented) plan. With the retirement of Jerry Phillips before the Legislative Session begins, Kristy Nichols will be responsible for answering those questions to both CMS and the Legislature. Want to bet Alvarez and Marsal doesn’t end up with a contract to answer those questions? And since the Ethic’s Board is nothing but Jindal’s Lapdogs, we might even see Jerry Phillips working for Alvarez and Marsal!
We might. But, we could also see him retire one day and go right back to work for DHH the next, thus drawing a salary and his retirement benefits at the same time. His comments in the article you reference certainly seem to imply this. If he has the side benefit of not being on the griddle during the legislative session, it will be a further bonus for him.
Jindal is no slow learner. Mr. Robinson, you are absolutely correct, he is the warped brains behind privatizing all government functions for the simple and obvious reason tax money that should go to corporate America with no pesky regulations or restrictions. All part of the communication plan, remember, he got elected 2nd time out lying about the LSU study which he claimed said we needed to reform ethics so we could get more business. The special session to do so was hilariously unethical. Only thing it did was to give lobbyists a cap on how much they could spend on lunch with legislators and exempt his office from everything and now, he and teepell has a list of more donors they can hit up.I tested the Ethics joke by requesting an investigation when it appeared that Teepell used state players and state equipment in filming his political ad about the Veterans Honor Medal(starring Bodi White, General Landreneaux, and of course the LDVA Chief Lane Carson.Docket no.2012-147, no reply yet) I wonder if he can privatize the National Guard? ron thompson