State cancels $250M contract awarded for flood relief program, will restart contract procurement process

Amid mounting concerns and formal protests from contractors that were not selected to manage the state’s $1.6 billion federal flood relief program, the state has decided, effectively, to throw out the existing request for proposals and restart the contract solicitation process.

It is unclear how long the action could delay implementation of the flood recovery program, which was created on paper last fall, when Congress approved federal recovery dollars for Louisiana. But a spokesman for the Louisiana Division of Administration says it shouldn’t slow things down by much.

“If it works like we expect it to there should really be no difference in the time as measured by when homeowners can begin to draw down on federal funds,” says Division of Administration spokesman Jacques Berry. “Homeowners should not see any delay.”

U.S. Rep. Garret Graves, who was instrumental in getting flood recovery dollars to Louisiana, disagrees, and issued a sharply worded statement in the wake of the state’s actions today.

“This is very disappointing news,” Graves says. “This will further delay the allocation of badly needed flood relief funds that we appropriated in September. It is impossible to explain to flood victims why $1.6 billion in recovery dollars are stuck in the bureaucracy, while homes remain gutted, moldy and uninsulated.”

Controversy over the lucrative management contract, worth between an estimated $250 million and $350 million, has been building in recent days.

Earlier this month, the state awarded the contract to a team of local and national companies led by IEM, which submitted a $250 million proposal, $65 million less than the second place finisher in the process.

But that second-place finisher, a joint-venture called PDRM and headed by CSRS, filed a complaint with the State Licensing Board for Contractors, arguing that IEM did not have a commercial contractor’s license as required by law when it submitted its proposal in February.

In an opinion Thursday, the board ruled that applicants needed to have a residential contractor’s license at the time they submitted proposals, which neither IEM nor PDRM had at the time.

Other losing bidders were expected to file protests of their own today with the state challenging IEM’s award on various grounds.

Berry says the decision to cancel the RFP was based on the licensing board’s action on Thursday, as well as “concerns that the costs received in the Restore Louisiana RFP were high.” He says a new procurement document—technically, a solicitation for offers—will be issued now to “allow the state to accept a new set of proposals in an expedited procurement process. The goal is to ensure not only a minimal delay to homeowners who are rebuilding, but also a construction program that offers the best cost and quality product for homeowners and the state’s taxpayers.”

Berry says he expects the new procurement process to take just 10 days or so and that a contractor could be selected by late March or early April.

IEM CEO Madhu Beriwal had little to say about today’s developments.

“IEM is still the team awarded the contract,” she says. “We have not received official cancellation of the RFP.”

PDRM, meanwhile, declines to comment.

A spokesman for the team that finished third, SLS, says the group will participate in the new process.

“We’re disappointed, obviously, because we were the only fully qualified team,” he says. “But we will resubmit. We want to do what is in the best interest of the state.”

—Stephanie Riegel

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