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Monday, April 12, 2010

Procurement controversies -- New Orleans, La., USA

Recovery oversight firm is channel for no-bid contracts, inspector general reports
The city of New Orleans is using a controversial recovery management contract with MWH Americas to dole out no-bid deals to other firms, according to a recent draft report by the city's inspector general.

"In at least two instances, the city procured services from other firms by instructing MWH to enter into subcontracts with the firms and act as a pass-through for billing purposes," Inspector General Ed Quatrevaux wrote in a March 4 draft report.

"This practice circumvents the requirement for competitive procurement of services through an advertised request for proposals."

MWH Americas' president, Dan McConville, was in New Orleans last week to meet with City Council members who are concerned with the report's findings. But company spokeswoman Meg VanderLaan said the company will not address the inspector general's findings publicly until it does so formally within the 30 business days granted to the subjects of such reports to respond.

The city's deadline to respond is Thursday.

New Orleans' city charter requires competitive, properly advertised procurement for all contracts worth more than $15,000, but it's unclear whether the alleged violation of that local law would lead to the rejection of any federal assistance.

Ironically, the city's main adviser for complying with FEMA's complex reimbursement rules is one of two companies the inspector general says was hired improperly through the MWH contract.

The inspector general said the city put out a solicitation for competitive bids in March 2008 for a consultant on FEMA reimbursement.

But soon, the city canceled it and instead "instructed MWH" in February 2009 to hire Integrated Disaster Solutions as a subcontractor to do the job. Integrated Disaster Solutions is a joint venture with Louis Berger Group, one of the world's largest construction management firms.

The inspector general's report said a similar "pass-through" contract was arranged for Wink Design Group in June 2009 so that firm could do a facility condition assessment for the Chevron Building

COMMENT: It seems the oft-used retort to allegations of improper procurement is that the contractor did a damned fine job, so what's the problem? The problem is that the ends are not meant to justify the means. Both must be justified, independently.

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