State withholds $1.3M from IEM over issues with Restore Louisiana contract

    Though Gov. John Bel Edwards’ administration has applauded the performance of the $1.6 billion Restore Louisiana program—a federally funded initiative to get victims of the August 2016 flood back into their homes, the state is withholding more than $1.3 million in payments to the firm administering the program, IEM, for issues related to the execution of its $308 million, three-year contract.

    According to documents provided by the state Office of Community Development, which oversees the program, the problems center on IEM’s failure to meet several deliverables under the terms of its contract, as well as for errors found in the case files of more than 600 flood victims.

    Given the size of the Restore Louisiana program and the scope of the hefty contract to administer it—IEM’s contract covers both program management and construction management services—the number of errors and associated penalties represent just a small percent of the total.

    Still, it’s big money—public money—and bears watching because an increasing amount of federal money is going to disaster relief programs, as catastrophic weather events become more common. How OCD and its contractors handle programs like Restore Louisiana will determine the course of future relief efforts which, seemingly, are all but inevitable.

    The problems related to IEM’s administration of the Restore Louisiana program were identified by an independent quality control firm and are spelled out in three letters the state sent to the firm in February 2018, August 2018 and April 2019.

    According to the letters from 2018, problems started within months of the program’s start up,  when IEM failed to produce 2,000 environmental review reports per week, as its contract stipulated it would.

    The firm also fell short of completing a contractually required 4,500 damage assessments per month.

    The April 2019 letter notes that problems continued to crop up with later phases of the program. According to that letter, IEM didn’t complete repairs to some homes within the required 120 days, and didn’t complete grant award closings to some recipients within the contractually required 14 days.

    Additionally, the firm transferred hundreds of files to OCD for processing that contained errors, such as missing documentation, incorrect pricing information or incorrect damage assessment amounts, among others.

    OCD Executive Director Pat Forbes says both IEM and its subcontractors share responsibility for the problems that have been identified. But his office says it’s important to consider the overall size of the Restore Louisiana program and number of flood victims it has successfully served over the past 2.5 years.

    Some 43,000 applications have been processed and grants totaling $556 million have been awarded to more than 15,000 homeowners.

    Given those numbers, is IEM’s performance typical?

    Forbes can’t say.

    “There is no such thing as a typical contract, and this is the first time we have had a contract like this that includes both program management and construction,” he says. “Just as every disaster is unique so is every contract.”

    Forbes also declines to say whether OCD is pleased with IEM’s performance. But he says the state is “focused on getting homeowners back into their homes, and while we strive every day to make continued progress, we know that it will never be fast enough.”

    IEM declines to comment, citing a clause in its contract that precludes it from discussing its contract with the state. But the firm is challenging the penalty findings. OCD could not make documents related to IEM’s challenge immediately available.

    Read the full story from Business Report here.

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