Reacting to repeated scandals involving city subcontractors, the New Orleans City Council has passed an ordinance requiring anyone awarded a city contract to disclose the names of all subcontractors who will get part of the money. The law, which covers all contracts worth more than $15,000, applies both to subcontractors already chosen at the time the contract is awarded...
Anyone awarded a city contract worth more than $15,000 now must disclose the names of all subcontractors who will get part of the money.
Reacting to repeated scandals involving city subcontractors, the New Orleans City Council has passed an ordinance requiring anyone awarded a city contract to disclose the names of all subcontractors who will get part of the money.
The law, which covers all contracts worth more than $15,000, applies both to subcontractors already chosen at the time the contract is awarded and those hired later. If a prime contractor fails to disclose any subcontractors, the city can suspend payments, though that was not made mandatory.
The law also requires "a sworn affidavit listing all persons, natural or artificial, with an ownership interest in the contractor," excluding owners of shares in publicly traded corporations or mutual funds.
The law, introduced by President Arnie Fielkow, was passed 5-0 on Tuesday, with Councilwomen Stacy Head and Cynthia Hedge-Morrell absent.
Increasing transparency
It is the latest in a series of actions the council has taken to try to increase transparency in the awarding of city contracts.
The ordinance 'is designed to build confidence in the manner in which the city awards contracts,' City Council President Arnie Fielkow says.Fielkow noted that the city already requires professional-services contractors to disclose their "disadvantaged" subcontractors to prove they are in compliance with the city's requirements for awarding work to companies owned by women or minorities.
In addition, he said, the council requires disclosure of subcontractors on the relatively small number of contracts it awards.
The measure passed Tuesday broadens the reporting requirement to all individuals or companies that receive city contracts.
Fielkow said in a written statement that the ordinance "is designed to build confidence in the manner in which the city awards contracts. The city serves as a steward for taxpayer money, and this disclosure requirement will ensure that the public knows which individuals and entities receive city contracts."
'Transformational' change hinted at
Thursday, meanwhile, Mayor Mitch Landrieu is expected to announce several executive orders making other significant changes in the way the city awards contracts. Details have not been released, but Landrieu's press office labeled the changes "transformational."
Some of the biggest scandals from the administrations of former mayors Marc Morial and Ray Nagin involved subcontractors, who initially tended to avoid public scrutiny because their business relationships were with a city vendor, not with City Hall directly.
Near the end of his second term, Morial signed a series of energy-management contracts with Johnson Controls Inc. that were supposed to save the city money by reducing the amount it spent each year to heat, cool and light city buildings and operate traffic signals. The work was to cost the city $81 million over 20 years, including interest and maintenance.
After Nagin took office in 2002, his aides criticized the deal, saying it was too expensive, was laden with patronage for subcontractors connected to Morial and lacked any way to verify a large part of the savings guaranteed to the city. Nagin's staff renegotiated parts of the agreement, reducing the total price to about $75 million.
The deal eventually triggered a federal corruption investigation that led to at least a dozen guilty pleas, including those of Stan "Pampy" Barré, a restaurateur and Morial confidant; Reginald Walker, owner of a construction company; Kerry DeCay, the city's director of property management under Morial; and Terry Songy, the former project manager for Johnson Controls.
Nagin's family vacations
The lack of transparency about subcontracts became an issue during Nagin's administration with the disclosure that Nagin and his family vacationed in Hawaii and Jamaica at the expense of a company owned by Mark St. Pierre, who held lucrative technology subcontracts with the city.
St. Pierre was a close friend of Greg Meffert, Nagin's chief technology officer, who also took his family to Hawaii at St. Pierre's expense. In addition, St. Pierre gave Meffert unrestricted use of a corporate credit card, then paid him hundreds of thousands of dollars in consulting fees upon his departure from city government.
St. Pierre, Meffert and Meffert's wife, Linda, are set to stand trial in September on 63 federal counts of bribery, money laundering, tax evasion and other alleged crimes.
Exactly what St. Pierre did for the city or how much he was paid was never a matter of public record because he was paid by the city's prime technology contractor, Ciber.
In 2005, a month after Hurricane Katrina, the City Council passed a non-binding resolution asking that contractors hired for rebuilding projects be made to submit affidavits listing everyone with a financial interest in their contracts, including subcontractors. Nagin's administration did not enforce that resolution.
Council versus Nagin
The council elected in 2006 often clashed with Nagin over contracting issues.
The council this year passed an ordinance prohibiting the city from awarding contracts to people convicted in the previous five years of felonies involving public corruption, including embezzlement, theft of public funds, bribery and falsification of public records.
Nagin vetoed the measure, saying the City Charter and the state's public bid law both require the city to award contracts to the "lowest responsible bidder," regardless of any felony convictions. In addition, he said, the ordinance would cost the city money by forcing it to give work to higher-priced bidders. The council overrode his veto in April.
A year earlier, the council had passed an ordinance to require the committees Nagin had created to evaluate firms seeking professional-services contracts to meet publicly, not behind closed doors, as they had been doing.
Nagin not only vetoed that measure but disbanded the committees and assumed sole control of the process of choosing professional contractors, rather than bow to what he called the City Council's illegal efforts to infringe on his authority.
The council and the mayor were on the same page in June 2009, when the council voted to codify in law the same goals Nagin had announced three years earlier for steering government contracts to "disadvantaged" businesses. In 2006, Nagin had issued an executive order setting "overall goals" that locally owned or controlled companies would get 50 percent of all public spending and "socially and economically disadvantaged businesses" would get 35 percent.
But Fielkow has frequently charged the administration with doing too little to enforce those goals.
In 2004, eager to combat the notion that Jefferson Parish politicians were leaning on parish vendors to hire officials' campaign donors or business associates as subcontractors, the Jefferson Parish Council passed an ordinance requiring all prime contractors to submit affidavits naming their subcontractors. Though the law did not bar firms from getting business based on their political connections or call for monitoring of subcontractors' work, the disclosure rule did allow the public to see who got tacked on to lucrative parish contracts.
Bruce Eggler can be reached at beggler@timespicayune.com or 504.826.3320.