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State contracts continue to proliferate

February 6, 2011 by tomaswell

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.

Posted in Campaign Contributions, Contract, Contracts, Education, Governor's Office, Higher Education, Legislature, Legislators, Lobbyist, Public Records, Transparency | 2 Comments »

Leadbelly video of ‘Goodnight Irene’

February 5, 2011 by tomaswell

Below is a video link to a Louisiana legend: Leadbelly.

Leadbelly is featured in my book, Louisiana Rocks! The True Genesis of Rock & Roll. He is just one of about 300 Louisiana artists profiled in the book. Born in Mooringsport near Shreveport, his real name was Hudie Ledbetter. He was incarcerated for murder in the Texas state penitentiary where he is rumored to have sung his way out of prison. He sang for the governor of Texas who then pardoned him. Leadbelly later was sentenced to Angola State Penitentiary in Louisiana for another murder. It was there that he was discovered by folklorist John Lomax who got him another pardon, hired him as his driver, and promoted his singing career.

Record executives tried to turn him into a blues singer which he hated. He considered himself a folk singer and often appeared in concert with another folk singer, Pete Seeger.

Leadbelly wrote four songs which most people will recognize immediately. The first is Good Night Irene, featured in the video below. The other Three are The Rock Island Line, The Midnight Special, and In New Orleans. The latter three are each listed among the “500 Songs that Shaped Rock and Roll,” as compiled by the Rock and Roll Hall of Fame although In New Orleans is listed by its more familiar title, The House of the Rising Sun, a song made famous by the British group The Animals in the mid-60s.

You may learn more about my book by logging onto:

wwwlouisianarockstomaswell.com

Posted in Book Review | Leave a Comment »

Too Big to Fail

February 4, 2011 by tomaswell

By John Sachs
Guest Columnist

In his book Too Big To Fail, Andrew Sorkin provides the reader a blow-by-blow account of the words, actions, and intrigue surrounding the financial crisis in the fall of 2008. The book does not delve into the financial products and practices that led to the crisis. Sorkin has left that task to others, including me, as you will see in the text below. He deals extensively with the personalities of the participants who managed the crisis by providing details as to what each one said and did in the heat of battle. This particular battle, like all battles, revealed the real measure of each man or woman.

Keeping up with the characters, the institutions they represented, and their responsibilities was confusing, or at least it was to me. Nevertheless, I found that if I kept reading and “listening” to each character, the real story unfolded. And it is a story that reveals a truth about all of us: among us, there are good and intelligent folks — and then there are those who are not so good or intelligent.

The following is my brief sketch of the origins of the financial crisis.

The crisis had been festering for a number of years. For more details, I recommend that you read Wikipedia’s account of FNMA and FHLMC, or Fannie Mae and Freddie Mac, as they are more commonly known.

Unlike GNMA (Ginnie Mae) which provides a secondary market financing source only for federally insured mortgages, Fannie and Freddie were free to provide mortgage financing funds to mortgage loan originators through the purchase of, among others, pools of risky subprime loans. And as many of you know, unscrupulous lenders were making home loans to borrowers who had little or no chance of repaying those loans unless their homes appreciated — and/or the rates on their adjustable rate mortgages stayed at or lower than the rate at origination.

Those subprime loans were combined (pooled) to form what is known as securitized loan packages. Then those securities were sold in the financial marketplace to the public: folks like you and me and our 401(k) retirement accounts, banks, mutual funds, etc.

Then along came 2006 and 2007 when many adjustable rate mortgages repriced at significantly higher rates than the borrowers could afford. That led to foreclosures. A significant number of foreclosures created a glut of available housing, and the laws of supply and demand came into play. Housing values fell. When values fell, those homeowners who needed or wanted to sell their homes found that the value of those homes had fallen below the amount they still owed on their mortgages.

Being “under water” led to more foreclosures, more of a housing glut, and then even lower home values. The line of dominos began to fall.

The collapse in the housing market then led to a collapse in the value of those securities that had as their basis the value of the pools of mortgages. Matters continued from bad to worse not only in actual home values, but also for investors who owned the securitized mortgages on those homes — as well as those who had insured the repayment of the loans. It was huge. It was unprecedented. And it continues to this day even though the federal government has come to the rescue of nearly everyone who was affected. The government’s involvement reduced a worldwide financial crisis to simply a terrible ongoing problem with which we continue to cope.

However, not everyone involved in the crisis was destroyed. Those folks not harmed had had the good judgment to recognize the risks associated with the fallacious assumptions that housing prices would always go up and that interest rates on home mortgages would always stay low. They had prudently managed their risks by not loading-up on risky, high-yield, mortgage-backed securities.

Those firms that did not get greedy and that managed their risks wisely included Bank of America, Wells Fargo, JP Morgan, and Goldman Sachs. Those that bet the bank and lost included Bear Stearns, Lehman Brothers, Merrill Lynch, Wachovia, and AIG.

This brings us to the point I wish to make and that is that all too often the virtuous suffer because of the faults of others. How so, you may ask? In this instance, the global financial markets are dominated by only a very few institutions. As much as we wish that they themselves could police this critical marketplace, they cannot and will not — if for no other reason than they are housed in and regulated by numerous countries, and in some instances managed by greedy and/or incompetent managers who cannot be controlled by others.

Then there is the matter of associated risk and its management. We know now that some financial products are too complex and involve significant risk for even the most sophisticated investors. Such products should be placed off limits to other than avowed gamblers and even then only in manageable amounts. No regulated investment banker, broker dealer, or government entity should be allowed to involve itself in such risky product markets.

In conclusion, where “Too Big To Fail” is a consideration, regulation must exist in order to manage the risks that affect everyone. We, the prudent masses, should never again be asked to bail out the greedy and incompetent few.

Like Louisiana Music? Be sure to check out Louisiana Rocks! The True Genesis of Rock & Roll! This book is the only complete history of all genres of Louisiana rock and roll. Re-live all those great old songs that used to play late nights on WTIX, WNOE, KAAY. Learn about all the great artists like Elvis, Johnny Cash, Jim Reeves, D.J. Fontana, Floyd Cramer, and Hank Williams who got their start on the Louisiana Hayride. Check your local bookstore or log onto http://www.louisianarockstomaswell.com.

Posted in Business, Economy | Leave a Comment »

State can’t wean itself of golf course involvement

February 1, 2011 by tomaswell

The State of Louisiana just can’t seem to wean itself of its involvement in the golf course business.

Even though several golf courses in Louisiana have gone under in recent months, the state continues to invest its resources into the construction and management of several facilities across the state.

Most recently, the Office of State Purchasing received proposals for the management of the Black Bear Stay and Play Lodge at the Poverty Point Reservoir State Park near Delhi.

While the proposed bid opening was on Jan. 4, no contract has been awarded, nor has any information been forthcoming as to the bidders’ identities or if the bid opening was even held on schedule.

The 7,100-yard, 300-acre course was designed by Bechtol Russell Golf of Austin, Texas, and constructed by Weitz Golf International. It is operated under the administration of the Department of Culture, Recreation, and Tourism (DCRT).

The request for proposals (RFP) stipulates that lodge personnel shall include a “first-class” hotel manager, meaning that he or she must be knowledgeable, experienced, and effective, and that the contractor shall submit a detailed monthly accounting of all transactions.

The lodge includes 17 guest rooms, a swimming pool and fenced tennis court and maintains a 61 percent occupancy rate, according to the RFP, which also said the DCRT “intends to work diligently with the successful proposer to ensure the profitability of a Stay and Play Lodge operation at Black Bear Golf Course. The economic, professional, social, and recreational elements critical to the success and image of a quality golf environment are foremost in consideration.”

The RFP also said the State Legislative auditor, federal and internal auditors of the Division of Administration “shall have the option to audit all accounts directly pertaining to the contract for a period of five years” after the contract goes into effect. “Records shall be made available during normal working hours for this purpose,” it added.

A check of the Legislative Auditor’s web page could find no instance of an audit ever having been conducted of either the Black Bear Golf Course or Poverty Point Reservoir State Park.

The Louisiana Legislature last year appropriated $301,000 for the Black Bear Golf Club and since 1997 the state has poured more than $141 million into golf courses all over the state.

The Black Bear course was constructed on private property owned by the Poverty Point Development Corp. under the auspices of the Louisiana Department of Transportation and Development as part of a retirement community developed by State Sen. Francis Thompson and his brother, Mike Thompson. Once completed, the golf course was donated to DCRT with the proviso that a “professional manager” be appointed to administer the day to day operations of Black Bear.

The manager who was initially appointed was Mike Thompson. Thompson was convicted in federal court in January 2010 for violation of the Hobbs Act and in July, he was sentenced to 18 months in the federal correctional facility in Pollock. Specifically, Thompson was charged with having an employee of the Poverty Point Reservoir District perform work on Thompson’s private property during the time the employee was on the clock at the district.

Posted in Budget, House, Senate, Legislature, Legislators, Public Records, Taxes | Tagged , , , , | Leave a Comment »

Department of Corrections to receive prison phone bids

February 1, 2011 by tomaswell

Vendors who wished to provide prison pay telephone service were scheduled to have submitted their bid proposals this week, according to information received from the Louisiana Department of Corrections.

Prison telephone service is big business, profitable to the vendor and to the Department of Corrections but has been a source of controversy across the country for several years.

The Center for Constitutional Rights (CCR) has been conducting a long legal battle against what it terms as inflated collect phone call rates and “kickback commissions” paid to states.

Louisiana’s contract, awarded on a competitive bid basis, does not approach CCR’s claim of charges levied against prisoners’ families who are the ones who ultimately pay the cost of the phone calls. While CCR maintains that some phone services charge up to $6 per minute for calls (in California, the rate is about $3.50 per minute), Global Tel Link Corp. charges from 9 cents to 25 cents per minute, depending on the distance and time of day.

In addition to the per-minute charge, there is a surcharge for each phone call placed from any state correctional facility that varies from 80 cents to $4.50, depending upon whether the call is local or person-to-person collect. All charges are paid by the call recipient, not the prisoner and therein lies the rub.

CCR and an organization called the New York Campaign for Telephone Justice feel that the exorbitant charges are not only wrong, but illegal. New York State receives 57.5 percent of all profits from prisoner phone charges. That comes to about $200 million per year for New York. Global Tel Link pays Louisiana 55 percent under its contract.

Some of Louisiana’s commissions are spent on computer software and security.

“We are not challenging how the commissions are spent,” CCR said. “But the high rates for prison phone calls are being paid by the families of incarcerated people.”

Louisiana’s 12 prison facilities grossed slightly more than $3 million during fiscal 2009-2010, netting the state more than $1.6 million, state records show.

In some states, the practice appears to be more questionable. While Louisiana, with the largest rate of incarceration in the nation, generated only $3 million in phone bills in FY 2009-2010 charges to California prisoners’ families came to more than $120 million.

Not surprisingly, prison phone contracts are a prized commodity in other states. Some carriers offer California counties signing bonuses. In the case of Los Angeles County, the bonus for the 2004 contract was $17 million.

An investigation conducted by Associated Press revealed that California counties received more than $300 million in revenue from prisoner phone calls over a five-year period.

“It’s a gouging of family members, those who have never committed a crime, said Charles Carbone, an attorney with Prison Focus, a San Francisco-based prisoner rights group.

The California State Assembly passed a law in 2000 that would have required negotiating for lower rates but then-Gov. Gray Davis vetoed the bill, saying it would cost the state $30 million per year in revenue.

Like Louisiana Music? Be sure to check out Louisiana Rocks! The True Genesis of Rock & Roll! This book is the only complete history of all genres of Louisiana rock and roll. Re-live all those great old songs that used to play late nights on WTIX, WNOE, KAAY. Learn about all the great artists like Elvis, Johnny Cash, Jim Reeves, D.J. Fontana, Floyd Cramer, and Hank Williams who got their start on the Louisiana Hayride. Check your local bookstore or log onto http://www.louisianarockstomaswell.com.

Posted in Contract, Contracts, Prison, Transparency | 3 Comments »

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