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KATRINA: CH2M Hill Gets Another Clean-up Contract

by Gordon Russell and James VarneyThe Times-Picayune
January 20th, 2006

New Orleans Mayor Ray Nagin's administration said Thursday that it has taken a step forward in erasing another eyesore: Katrina cars.

Those mud-caked autos, cluttered under overpasses or askew on neutral grounds with their windows smashed, may be towed away soon, although a date has not been fixed. A contract for the removal of the vehicles has been signed with a Colorado firm already involved in bringing tens of thousands of trailers to the city, and the deal is expected to be finalized within two weeks, administrators said.

But the details of the contract, including a start date for the work, remain subject to negotiation, administrators said. That gap and other issues came under fire Thursday from City Council members who objected to the fact that local companies lost out on the lucrative work.

While the removal of abandoned cars took the spotlight at the meeting, it was but one of three hurricane recovery tasks the mayor has begun to address. Companies also have been selected to restore damaged city buildings and to provide short-term city workers, deals that could net the firms tens of millions of dollars collectively, Chief Administrative Officer Brenda Hatfield said. The priciest job in the lot -- cleaning and renovating public buildings, and filing the reams of paperwork required for federal reimbursement -- will be performed by The Shaw Group of Baton Rouge.

CH2M Hill, a national company based in Denver, landed the deal for the collection and disposal of about 30,000 damaged and abandoned cars, trucks, buses and boats littering public streets and rights of way.

Henry Consulting, a local company owned by Troy Henry, won the third contract, to provide workers to augment city staff in various areas on an as-needed basis, Hatfield said.

The news that the car cleanup deal had been inked irked the City Council, which blasted the administration Thursday for going with a national firm rather than local operators, and for agreeing to a contract before some concerns had been ironed out. Hatfield said the administration is "especially eager" to clear streets of damaged cars, and she hopes the other contracts will be finalized within two weeks.

Prices unclear


It's impossible to say at this point how much the contracts are worth. Few of the 24 companies that submitted proposals to perform one or more of the seven tasks bid out by the Nagin administration estimated the jobs' overall worth. One firm that did, Montgomery Watson Harza, put the cost of restoring the 225 city buildings that received "minor or moderate damage" from Hurricane Katrina at $77 million to $90 million. The same firm estimated the cost of a related task, project scheduling and reporting, which was awarded to Shaw, at $4.5 million to $5.7 million.

The Shaw Group did not provide overall cost estimates in its proposal, instead providing a list of "FEMA-approved" hourly rates the city would have to pay for people of various job classifications. The rates range from $40 an hour for laborers to $225 per hour for "senior directors."

If Montgomery Watson's numbers are in the same range, the contract could well be the largest professional-services job awarded by the city, eclipsing the $81 million deal former Mayor Marc Morial signed with Johnson Controls Inc. However, in this case, city officials hope nearly all the work will be paid for by the Federal Emergency Management Agency.

Expensive work

The job of removing abandoned cars from the city's streets could be almost as lucrative -- perhaps even more so.

The winning bidder, CH2M Hill, estimated the cost of the job at $100 million. But that price was based on 100,000 cars being removed, while the city's request for bids put the number at 30,000. Other firms submitted much lower estimates, in part because of the disparity in the estimated number of vehicles.

For instance, Montgomery Watson estimated the cost of vehicle disposal at $9 million to $11 million, based on 30,000 cars being removed. But the firm also included a caveat, that "additional decontamination and disposal" could bump that price up to $25 million, putting its price in the vicinity of CH2M Hill's on a per-vehicle basis.

Neither firm presented a per-vehicle price, though many other bidders did. Parking Administrator Richard Boseman said the city will be reimbursed for some of the contract costs by FEMA. But until the contracts are signed, the actual cost is difficult to predict.

That uncertainty was one point that gnawed at City Council members, who spent considerable time at their Thursday meeting berating Boseman about the new contract. Council members were openly skeptical that an outfit already engaged in the protracted effort to get trailers set up in the city as a temporary housing solution could effectively complete another major task.

"I'm just surprised that a national company that seems to be overwhelmed with trailers would get the job when so many local companies are looking for work," Councilwoman Renee Gill Pratt said, garnering a smattering of applause from the audience.

Boseman assured her that local companies would benefit from a trickle-down effect by working as subcontractors, and the audience groaned. Gill Pratt scoffed at that argument, noting that in other cases, such as contracts for debris removal or putting blue tarps on roofs, layers of subcontractors multiply, with workers earning less and less at each step.

"It seems like whoever is at the top gets most of the money," she said. "By the time it gets to the sub of the sub of the subcontractor, it's just peanuts."

Council members also said no contract should have been signed until questions, such as where the cars will end up, are answered. The worst scenario, the council said, is one in which the cars simply are dumped somewhere -- although Councilwoman Cynthia Willard Lewis encouraged Boseman to toss the wrecked autos into the Mississippi River.

Finally, council members were perplexed that a deal had been signed with so many negotiations ongoing. Councilman Eddie Sapir, for example, conceded that the Nagin administration is within its rights entering into such an agreement, but said it should be done in a more open manner.

"Put it out there in the sunshine," he said. "Last September the mayor told us he would furnish us with every single solitary contract they've entered into, and to date we still don't have that information."

Temporary workers OK'd

The council did not address the other pending contracts. Henry Consulting, the only minority-owned firm in the group, is slated to receive what appears to be the smallest of those contracts. The company estimates it will charge about $4.2 million per year for city staff augmentation, although it's not clear in its proposal how many employees that means.

Other proposals were similarly vague on that question, presumably because city officials have not specified how many employees they'll need, what sorts of jobs they'll perform and how long they'll be needed. Montgomery Watson, for instance, put the cost of augmenting city staff at anywhere from $5.6 million to $29.5 million, depending on those factors.

Though it may seem ironic that city officials are awarding a contract for "staff augmentation" just months after Nagin laid off nearly half the city's work force, they have said that the employees supplied by the private contractor will work on a temporary basis on specific, short-term jobs.

Nagin's selections dovetail with the recommendations of a panel of five administrators that reviewed the various proposals. Staffers gave The Shaw Group the highest mark for building stabilization and renovation, something the company has already been performing for the city under an "emergency contract" the city awarded it in October.

Likewise, CH2M Hill was the top scorer in staff rankings for vehicle collection and disposal. And Henry Consulting, one of only a few minority-owned firms to bid, received the No. 2 score from administrators for staff augmentation.

Precisely how the rankings were determined was difficult to gauge. While cost was supposed to be a major consideration, most of the firms declined to provide overall costs, instead listing per-hour prices that various staffers involved in the work would be paid. In part, the costs of the various jobs are hazy because city officials have yet to determine the scope of the various tasks.

Political donors

While the deal for Henry Consulting is that company's first foray into the world of post-Katrina contracting with the city, The Shaw Group and CH2M Hill are no strangers to the game.

Both companies received controversial no-bid deals to prepare trailer sites for displaced residents around southeast Louisiana and elsewhere along the Gulf Coast, contracts with preliminary caps of $100 million. The Shaw Group also won a deal worth more than $100 million to place blue tarps on damaged roofs, as well as contracts to inspect homes in New Orleans, assess public buildings and "de-water" the flooded city.

Both Shaw and CH2M Hill are major donors in the national political arena, giving tens of thousands of dollars to congressional candidates.

CH2M Hill's political action committee has given $127,250 to Senate and House candidates during the current election cycle, with 63 percent of the money going to Republican candidates, according to www.opensecrets.org. According to the same source, The Shaw Group has given $51,500, with Republican candidates receiving 60 percent of the money. The Shaw Group also employs Joe Allbaugh, a former FEMA director who also ran President Bush's 2000 campaign, as a lobbyist.



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