Why a $250M flood recovery contract is now in question

(Editor’s Note: This story has been revised from an earlier version to include comments from IEM’s attorney.)

A lucrative contract to manage the state’s $1.2 billion flood recovery program is up in the air, after the Louisiana State Licensing Board for Contractors today accepted a board attorney’s advisory opinion that calls into question the top two bidders for the contract, which is worth somewhere between $250 million and $350 million.

At a meeting held earlier today, the licensing board agreed with the recommendation of its attorney, Larry Bankston, who issued a written opinion saying, “It is our opinion that RFP contractor as defined in the RFP must possesses a Louisiana Residential Construction License at the time of the submittal of the proposal on Feb. 22.”

IEM, the company selected by the state earlier this month to be awarded the contract, did not have a residential or commercial contractor’s license at the time it submitted its proposal, though several of the construction companies with which it is partnering on the deal did have commercial licenses.

IEM has since received both residential and commercial licenses.

The team that finished second to IEM, a joint venture led by CSRS called PDRM, filed a  complaint with the licensing board earlier this month, arguing that IEM should be disqualified because of the licensing issue.

Ironically, however, PDRM’s proposal is now potentially in jeopardy because neither CSRS nor the other contractors on that team has a residential contractor’s license.

IEM’s attorney Larry Roedel says his client disagrees with Bankston’s opinion and says the opinion is just that, an advisory opinion.

“No one has said the advisory opinion will be used to disqualify anyone,” Roedel says. “We will argue (to the state)  that the licenses were not required but that we got them anyway before any contract was signed, and we will wait to to see what happens.”

CSRS President Tim Barfield says the next step for his team is to file a formal protest with the Louisiana Division of Administration’s Office of Community Development, which is overseeing the program. The deadline for lodging protests ends Friday.

It’s unclear how long the protest process will delay the finalizing of the contract, which Roedel says IEM is continuing to negotiate with the state.  Attorneys familiar with the process say first a hearing officer with the OCD will review the protest and issue an opinion. That opinion can be appealed to Commissioner of Administration Jay Dardenne. Beyond that, the aggrieved party can file a lawsuit with the 19th Judicial District Court.

Barfield says litigation isn’t in anyone’s best interest at this point.

“We don’t want to hold the program up,” Barfield says. “A lot of people out there are suffering.  So we need to see how this plays out, but I don’t think this is in the best interest of anyone to tie this up for six months while people are out there suffering.”

In theory, if IEM and PDRM’s proposals are thrown out, the contract would go to the third-place finisher in the bidding process, a joint venture called Rebuild Louisiana Now. Its team members include: SLS Companies, of Galveston, Texas; the Mississippi-based Horn Accounting Services; Ardurra Group, a New Orleans-based engineering group; and Elos Environmental, of Hammond.

—Stephanie Riegel

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