NEW ORLEANS -- Louisiana’s largest construction industry trade group is raising concerns that the city of New Orleans may have violated public bid law by using a generic pavement maintenance contract to conduct the first major reconstruction of Bourbon Street in more than 90 years.
An attorney for the Louisiana Associated General Contractors, which represents more than 800 companies across the state, sent a letter to Mayor Mitch Landrieu and city Public Works Director Mark Jernigan on July 24, 10 days after a report by WWL-TV questioned the way the city hired and planned to pay its contractor for work on – and deep underneath – New Orleans’ best-known street.
“LAGC is concerned by the manner in which the City contracted for the Bourbon Street renovations and improvements currently underway,” the association’s general counsel, Murphy Foster III, wrote. He added that “the newly added work is substantially greater in size and volume than the entirety of the original maintenance contract and includes work items well beyond that envisioned in the contract’s original scope.”
The city hired Hard Rock Construction in January to perform specialty pavement maintenance under a $3.9 million contract. But when that contract was used to start the Bourbon Street work in April, city officials already expected the Bourbon Street job to cost $6 million, and with heavy rains and a tangle of water, sewer, drainage and utility lines causing additional expenses and delays, possibly millions more.
Jernigan said in a statement to WWL-TV that the city is reviewing the concerns raised by the LAGC and “will continue to ensure that all public contracting is conducted in compliance with all applicable law.”
Last month, he acknowledged that some of the underground work on Bourbon Street is clearly not covered by the maintenance contract, which would require the city to negotiate prices with Hard Rock as work progressed.
“We ask the contractor, 'What’s your price to perform this work?'” he said. “We ask an engineer to see if it’s cost-reasonable. At the same time, we do an independent cost-estimate within (the Department of Public Works).”
Hard Rock’s vice president, Jan Langford, said her firm would use average unit pricing to charge the city a fair price for items that are not part of the contract.
“We have to justify and back up every single thing,” Langford said.
But the LAGC’s letter says the city is not supposed to add any work outside the scope of the original contract without putting it out for a new bid. The letter warns city officials that their actions could create a breach of contract, put the city at risk of losing the surety bond that protects it if the contractor can’t complete the work, and open the city up to outside legal challenges.
“The city’s issuance of change orders outside the original scope of a contract not only deprives all qualified contractors from competitively pursuing work in accordance with the law, but also could subject the City to certain unanticipated legal challenges with respect to that work,” the letter says.
The industry group’s CEO, Ken Naquin, said the group doesn't plan to sue over the Bourbon Street project, but the letter is a warning to the city to not do this again.
“According to the Public Bid Law, this is not the way to let contracts,” Naquin told WWL-TV. “And it’s not allowed by Public Bid Law, and going forward we’re going to be watching (the city), and we let them know we’re going to be watching them.”
In an interview with WWL-TV last month, Jernigan said he had the authority to use an existing, citywide maintenance contract for the Bourbon work, rather than bidding it out as its own capital improvement project. At the same time, however, he promised Bourbon Street would be “fully reconstructed” by Hard Rock.
“What you see will be smooth street, no standing water, no trip hazards, the sidewalks will be repaired and restored, so it will essentially be almost a brand-new street,” Jernigan said.
The LAGC letter appears to question Jernigan’s authority to declare just anything a “maintenance project.”
“Louisiana legal scholars have categorized maintenance as ‘ordinary repairs,’ whereas capital improvements are distinguishable as being ‘extraordinary repairs,’” the letter scolds.
Jernigan said the city considered putting the Bourbon Street project out to bid as a capital project. But officials wanted to complete the work by the end of the year, and Jernigan said he decided there wasn’t enough time to go through a separate open-bid process.
The LAGC letter says that time concerns are not a legitimate reason to skirt the Public Bid Law.
“Nowhere does the law permit time restraints pertaining to the bid process to be taken into consideration in making this determination,” the letter states.
Naquin explained that his association does not think Hard Rock did anything wrong; the company won the maintenance contract fair and square and simply did the work as directed by the city. Last month, Langford told WWL-TV that Hard Rock had no idea the contract it won in January would later be used to perform the Bourbon Street work.