Senator puzzled by state deal to tow cars
Firm's office flooded, vacant, phone off
Thursday, March 30, 2006
By James Varney Staff writer
The featured local company in a proposed $62 million state contract to remove abandoned cars from southern Louisiana lists a flood-ruined 9th Ward address as its headquarters and has a disconnected phone, according to public documents and a cursory investigation by a state senator. Advertisement
The Department of Environmental Quality contract remains unsigned, although the negotiations have apparently been completed between the state and TruSource Facility Services of Georgia and L&L Steel Builders Inc. of 1939 Desire St. in New Orleans, state officials said. It is this contract that the city of New Orleans requested to join this week, following days of questions about its decision not to sell tens of thousands of hurricane-wrecked vehicles to crushers but instead to pay a company $23 million to clear the cityscape of the blight.
State Sen. Ken Hollis, R-Metairie, said both tortured deals and the recent developments strain credulity that they are on the up and up. Consequently, he is asking people at all stages of the negotiations to appear before a joint committee meeting next week to explain the situation.
"This whole thing is just a maze," Hollis said. "I've spent a lot of time trying to get to the bottom of this, and it keeps changing by the hour. I'm inviting all the players next Wednesday so we can sift out what is going on."
Senator has doubts
Hollis said he sent a staffer to the Desire Street address L&L lists on incorporation papers with the secretary or state as its principal address and the address of its director, Lionel Lewis Jr. The company updated its records and appointed a new registered agent Tuesday, the records show, but the address was not changed.
"I got a phone number for them and it's disconnected, and I sent a guy out to check on the address," Hollis said. "He called back and said, 'I'm standing in front of that address right now. It's a house that had six to 10 feet of water in it.' "
Meanwhile, the Web site for the company with which L&L is paired, TruSource in Douglasville, Ga., lists as its president and CEO Tujuanza A. Buttone. State officials said the company specializes in janitorial services, while Buttone's bio page stresses her entrepreneurial beginning selling "candy, potato chips and snacks to fellow classmates" in middle school. Buttone could not be reached for comment late Wednesday.
Hollis said he does not understand how two companies with little visible experience would be able to manage the gargantuan task of securing and towing thousands of cars from an area ravaged by Hurricanes Katrina and Rita.
"So now I've got questions about both the city and the state contract because they're intertwined," he said. "It's just common sense. How could you expect a janitorial company to go out and pick up and crush an unspecified number of cars? It doesn't make sense."
In the city's letter asking to join the state contract, Chief Administrative Officer Brenda Hatfield seemed to mirror some of Hollis' skepticism.
On Tuesday, Hatfield wrote DEQ Secretary Mike McDaniel, saying that "we are accepting the state's offer to include the City of New Orleans 'Region' when awarding your contract for the above-referenced bid." But Hatfield, echoing concerns voiced last week by other city officials, immediately added a string of caveats that indicate she doubts the state contract's viability. Her doubts include whether "the contract will actually begin, the time required by the contractor to deliver the required performance bond, (and) the ability of the contractor to fully perform in a timely manner and other contingencies."
Options still open
By Wednesday night the confusion deepened, as Nagin's administration issued an unsigned statement that appeared to leave every option open, including the $23 million deal with CH2M Hill, a Denver-based company that won the car-removal contract competitively last year and then last week said it was withdrawing from the matter. Less than 24 hours later, it said it was jumping back in.
"If state efforts fail, we will follow up with CH2M Hill and also look at other alternatives," the administration statement said.
The state efforts have continued apace, according to DEQ Assistant Secretary Chuck Carr Brown. Brown said the department had no concerns about TruSource's or L&L's ability to perform the work, although he repeatedly put the deal's final sign-off responsibility on the shoulders of state purchasing agents, not DEQ.
"The companies have passed every litmus test we've put in front of them," he said.
However, Brown acknowledged TruSource did not have a performance bond. That bond would not be obtained, he said, until the state sends an "intent to award" letter to the company, and that letter would not be sent until the Federal Emergency Management Agency, from which the state seeks full reimbursement, signs off on the deal and forwards the $62 million required to pay for it. Brown said he expects FEMA approval as soon as today.
The image of a company based in one of New Orleans most devastated neighborhoods with no apparent phone handling such a mammoth, lucrative job did not faze Brown.
"That's why we have state bid laws," he said. "If they can't perform the work, then we'll move to the next bidder."
'Is this a joke?'
At least one car-salvage professional involved in the ongoing case thinks that's what will happen. Joel Dupre, president of Southern Scrap Material Co., which was part of a consortium that lost out on the city proposal, said neither CH2M Hill nor TruSource would prove capable.
"I had an officer from CH2M Hill come into my office last year, and he sat there and said, 'Well, we got this contract, but we didn't expect to get it and we have no idea how to do it.' And then he asked if we could handle it," Dupre recounted. "I could not believe it. I said, 'Do you all have a camera on me? Is this a joke?' "
CH2M Hill officials could not be reached late Wednesday.
At the heart of the controversy, Dupre contends, is money. The city's bid price is exorbitant, the state's suspiciously cheap, he said. Dupre's consortium bid $350 for towing and storage per car in New Orleans, and he described himself as speechless when he learned CH2M Hill had submitted a price of $1,000 per vehicle. For the state contract, on the other hand, Dupre's price for Orleans and all the other affected parishes was about $120 million, double the bid from TruSource. The next-closest proposal, Dupre said, was about $180 million.
"You can't do it for their price," he said. "You've got cars out there in trees, cars in swamps, cars you might have to get with a helicopter, and the state got lowballed."
Dupre and state and city officials said they had not received an invitation from Hollis to testify next week in Baton Rouge. But Dupre said he was willing to appear before the committee.
"We're really embarrassing ourselves with this," he said. "At a time where Louisiana is looking for help from a national audience, we are reverting to politics as usual."
. . . . . . .
James Varney can be reached at email@example.com or (504) 826-3386.