NEW ORLEANS — An audit report released Monday by Louisiana Legislative Auditor Daryl G. Purpera found more than $6 million in questionable costs related to the Recovery School District’s construction of modular campuses following Hurricane Katrina beginning in 2007.
The total project, which involved nine school campuses on seven different site locations, cost more than $105 million.
With 60 change orders and contract amendments throughout the duration of the construction, the project’s original budget increased by close to $30 million, according to the audit.
The audit attributed the questionable costs to “inadequate project management practices.”
The modular campuses were intended to be built as quickly as possible in order to get returning students into classrooms. However, according to RSD Superintendent Patrick Dobard’s written response to the audit, “The Modular Project was plagued with poor construction project management by the RSD’s then-professional project management firm, and with errors and omissions in the design work by its Architect.”
While slated for completion in the fall of 2007, the project was not finished until 2009, “over two years late,” according to Dobard. The contracts were entered into during “a tumultuous post-Katrina environment, under the pressures of constructing temporary classroom facilities as soon as possible,” Dobard wrote. He also noted that the RSD was being required to provide seats immediately under state constitutional mandates and two federal court orders.
In the largest portion of the costs questioned, the audit found that the architectural and engineering firm Linfield, Hunter and Junius, Inc. billed the RSD about $3.5 million for “the same site work design services through increases in the cost curve and as additional services.”
But according to the written response from Linfield, the RSD still owes the firm more than $1 million. A spokesman for Linfield said in an email Monday that there were 500 additional pages of documentation supplied by Linfield and not included in the auditor’s report, and they have been made available online “in a desire to be as transparent as possible with the media.”
The response letter included in the report is 16 pages long.
The response letter also states that the audit report “woefully fails to provide any support of substantiation,” and has “many factual inaccuracies and misleading statements … the superficial approach utilized by your office to ‘audit’ the RSD is contrary to standard auditing practices and will irreparably damage LH&J’s reputation.”
The response letter concludes with a demand that many of the statements and all recommendations be retracted and removed from the report.
The audit recommended that the RSD seek approximately $3.5 million in reimbursement.
Other findings in the audit deal with contracts between the RSD and Arrighi-Simoneaux Construction. The audit found that the company billed the RSD $170,571 for fuel for generators but did not provide the fuel.
Other findings related to Arrighi-Simoneaux included about $40,000 for 16 light pole foundations that were not provided and two separate change orders of about $650,000 for the same general conditions in the same 77-day period. Dobard wrote that the RSD does not believe it was double-billed for that period.
The audit reported that the RSD spent more than $10 million through change orders that were based on unit prices not established through the public bid process, with more than $400,00 in unit pricing from Arrighi-Simoneaux that “may be unreasonable.”
An example given was charging the RSD a unit price of $110 per four-inch hole drilled into wooden floors. Allowing 10 minutes per hole, “the price per hour would be $660 which seems unreasonable for drilling holes,” according to the audit.
The auditor also recommended asking Arrighi-Simoneaux for reimbursement.
According to the response letter from Arrighi-Simoneaux, the audit is “incorrect at many levels” — factually and legally — and the devastated environment and expedited need for completion “required the construction team to proceed in a somewhat unconventional manner.”
All work was performed on a lump-sum basis, according to Arrighi-Simoueaux’s letter, and only after change orders were approved, with all cost estimates disclosed and approved prior to the work.
“If RSD had cost concerns, none were raised at the time of negotiation or execution,” the letter states.
On some work, the company lost money, according to the response letter.
The RSD, which started with “a very small staff” after Katrina, said it has made significant improvements in how construction is managed, with seven full-time employees employed on an internal project manager team.
The firm hired to manage the construction project in 2007 was terminated after Dobard wrote that “To its extreme disappointment, Alvarez and Marsal was unable to step up to the task.” A second firm, HOV/Meridian, a subcontractor of Alvarez and Marsal, was then hired, but the RSD let its contract expire after it failed to properly manage the project, Dobard wrote.
According to Dobard’s response letter, the RSD has already implemented several of the recommendations for increased oversight, and is “working aggressively to address your office’s recommendations.” Based on improvements, Dobard wrote that the RSD has a rate of change orders to open construction contracts of approximately 3 percent.
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