A joint venture with ties to businessman Jim Bernhard and his Baton Rouge-based private equity firm, Bernhard Capital Partners, scored a major victory today when the LSU Board of Supervisors voted against the recommendation of its own staff and paid consultant.
Rather than launch a public bid process for a private partner to modernize and operate the aging energy system on the main campus, the board voted to begin negotiating a long-term contract for the potentially lucrative deal with two competing ventures that submitted proposals to LSU earlier this year outside of a formal procurement.
The ventures, both of which have existing relationships with LSU and the state, are: Louisiana Energy Partners, which is owned, in part, by Bernhard Energy, a Bernhard Capital company, and Enwave Energy.
LAEP has a long-term deal with the state to provide energy services at the Shaw Center for the Arts, which enables it to also provide energy services to other state office buildings and can be amended to include other state facilities. Enwave Energy provides energy services to the LSU Health Sciences Center in New Orleans.
Today’s action was orchestrated by the LSU board’s properties and facilities committee, which killed a measure that would have set in motion a formal, two-step public procurement process designed to attract the best players in the industry.
Instead, the committee approved a substitute motion, instructing LSU staff to begin negotiating directly with LAEP and Enwave and to bring two deals back to the board in 90 days. If, at that time, the board doesn’t feel either deal is good for LSU, then it will launch the procurement process.
Only one committee member, Shreveport-area businessman Wayne Brown, opposed the substitute motion in favor of an open process. Later, the full board approved the committee action. Board members Jimmie Woods and Jay Blossman abstained from the vote because of conflicts of interest.
Woods’ company, Metro Service Group, is a DBE that has served as a subcontractor to various Bernhard companies. Blossman is a paid board member of one of Bernhard’s companies.
For more than a year, LSU has been studying how best to structure a public-private partnership to upgrade its outdated and inefficient energy system. But the prospective P3, which is expected to be worth tens of millions of dollars over many years has, not surprisingly, generated a lot of interest in industry circles and controversy in political ones.
Bernhard is one of the most powerful Democratic businessmen in the state and is a supporter of Gov. John Bel Edwards, who appointed him to the LSU board earlier this summer.
Bernhard stepped down just three weeks later because of potential conflicts of interest between companies he owns that do business with LSU.
Edwards did not pressure board members to forego a procurement process in favor of giving LAEP an easier shot at getting the deal, his communications director says.
“He talked to them and told them to do whatever they felt was best for LSU,” Shauna Sanford says.
Prior to the vote, Baton Rouge board member Collis Temple said it was a difficult decision. Late Thursday, Temple said no one had pressured him to vote for going with LAEP over publicly bidding the deal but admitted he was torn.
“I’m 50-50 on it, trying to evaluate and listen to all the sides,” he said at the time. “Jim’s entity has made a pretty strong pitch. It appears to have a lot of capacity. They’ve done a lot of due diligence.”