[StBernard] Protests force Corps of Engineers to overhaul hurricane protection contracts

[Westley Annis]

Protests force Corps of Engineers to overhaul hurricane protection contracts
Published: Sunday, September 12, 2010, 7:00 AM 
 Sheila Grissett, The Times -Picayune 
 
Six times in the past 11 months, losing bidders have protested Army Corps of
Engineers awards of four hurricane protection contracts worth more than $600
million -- each time successfully arguing that the corps botched its
advertising for the work or its selection of the winners.

The state's construction lobby calls the number of protests mostly a sign of
tough economic times as contractors scrap for jobs in work-rich southeast
Louisiana, where a $14.6 billion repair and expansion of the levee system --
the largest civil works initiative in corps history -- is hitting its stride
five years after Katrina.

But the protests also have merit, according to the Government Accountability
Office, the arbiter of complaints about federal procurement. They have
caused the corps to cancel and rebid two large levee system construction
contracts, and on both do-overs, the new awards went to companies that
didn't win the first time around. In other cases, corps managers agreed to
rethink their initial decisions, make adjustments and re-examine all bid
proposals in light of the challenges, GAO records show.

Officially, GAO "dismissed" all six protests, but that doesn't mean they
were groundless. In fact, the corps admitted problems in every case and
agreed to take corrective action, provide protesting contractors some
financial relief or both, according to agency records.

St. Bernard floodwalls

In the largest contract protest, a GAO hearing officer held that by not
following its own source selection guidelines, the corps might have
improperly awarded a $237 million contract to Cajun Constructors in February
to build nine miles of new floodwalls in St. Bernard Parish. The corps'
"best value" source selection guidelines are supposed to tell potential
bidders how much relative weight the government agency will give to price
quotations, past company performance and other technical measures.

"We couldn't say the award was proper because it wasn't consistent with what
the corps told proposers it would do," said Ralph White, GAO's managing
associate general counsel for procurement law.

But after the corps argued that Chalmette Loop floodwall construction
shouldn't be disrupted, the GAO decided not to push for issuance of new
contract. Instead, it held that the corps should reimburse the two
protesting companies their cost of challenging the corps' decision-making.
Further, in a break with standard procedure, GAO said the corps also should
reimburse the pair what they spent trying to win the contract in the first
place.

"It's rare for the GAO to recommend reimbursement of protest costs and bid
costs ... and we only do it when no other relief seems appropriate in a
particular protest case," White said.

"Proposers write their offers based on what the federal government
specifically tells them what they that want," he said. "And government is
required to then evaluate those proposals the way they said they would. It's
fundamental: Tell the competitors how you're going to make a selection, and
do it that way.

"That didn't happen in this case ... and we felt that these two companies
were due the costs of writing proposals that weren't properly evaluated, as
well as the costs of challenging the (corps') failure to follow its own
stated criteria," he said.

Almost 300 contracts

On the advice of their attorneys, corps officials would not discuss protests
details. Instead, Ken Holder, public affairs chief for the New Orleans
division of the corps, on Friday issued this statement noting the record
pace of contract awards since Katrina:

"The contracting process can be complex and difficult. Even in that
environment, the corps has awarded almost 300 hurricane and storm damage
risk-reduction system contracts with a relatively small number of protests
filed. Although there are delays associated with any protest, we are working
to keep schedules on track to the extent possible. The contracting process
works. The corps is driving hard to have physical features in place to
defend against the effects of a 100-year storm by June 2011."

Corps representatives also confirmed that they are reviewing cost claims
filed by Odebrecht-Baker Joint Venture and St. Bernard Levee Partners, LLC,
the losing bidders that protested the corps' February award of the floodwall
contract known as LPV-148.2 to Cajun.

It's impossible for the GAO to estimate the size of the reimbursements to
the two companies, but White said protest costs alone can occasionally
spiral into six figures. He said individual reimbursement size depends on
the complexity of each protest, fees for lawyers and expert witnesses and
the size of the protesting contractor. Congress caps legal fees at $150 an
hour for large contractors, but there's no ceiling for small businesses.

"We only require this when we can't fix the problem," White said of
reimbursing for both protest costs and bid costs. "We only do it when no
other relief seems appropriate in a particular protest case."

In this instance, the only other relief available through GAO's
administrative litigation process would have been to recommend scratching
Cajun's contract, making corrections and evaluating revised proposals.

But Cajun had already been on the job for three months when the GAO
conducted its "determination outcome" hearing in June, and GAO officials
were uncomfortable with the prospect of triggering a work stoppage in
post-Katrina southeast Louisiana.

"The corps made a representation to us that two presidents have promised the
city of New Orleans and the country that (hurricane levee system) contract
improvements will be done by June 1, 2011, and that there's no way that they
would hit that if they had to stop work ... and make a new award," White
said.

"We took that into account. We looked at what the impact would be if we made
such a recommendation. ... And then made the decision we thought was right
under the particular circumstances."

Contract already behind schedule

Clearly there was a sense of urgency because the contract already was behind
schedule. In fact, Cajun had won contract LPV-148.2 only after by
successfully challenging the corps' original decision to awarding it to
Odebrecht on Sept. 24.

Cajun came up victorious on the do-over, and that was the decision Odebrecht
and St. Bernard Partners targeted in their protests.

It wouldn't be Cajun and Odebrecht's last rodeo, however.

On Nov. 6, the corps awarded Kiewit Louisiana Co. a $195 million contract to
build floodwalls in Lake Pontchartrain to protect East Jefferson's four big
drainage pumping stations. Cajun protested, and again the corps terminated
its original contract and changed its request for proposals. A new contract
was awarded -- to Odebrecht.

GAO officially dismissed the protest as "academic" once the corps said it
would take corrective action and cover Cajun's protest costs. 

Seabrook gate complex

The GAO found similarly after Granite Construction Co.'s Nov. 16 challenge
of the corps' $155 million award to Alberici Constructors to build the
Seabrook gate complex in New Orleans. The protest was dismissed after the
corps agreed to re-evaluate technical and cost proposals "and take any other
steps necessary to assure that the evaluation process comports with the
solicitation evaluation criteria and the laws and regulation (and issue) a
new source selection decision," GAO documents show.

Again, the corps didn't object to paying Granite's challenge costs. But
because the protest was dismissed after the corps decided not to fight it,
GAO records don't reflect reimbursement costs.

Matt McBride, a mechanical engineer, corps critic and frequent blogger,
turned up records on a federal procurement website showing a $40,930 payment
to Cajun in its pumping station case and a $43,947 award to Granite in the
Seabrook challenge, but the corps would not confirm those amounts.

In the most recent case of challenged contracts, the Johnson Brothers-Gulf
Coast joint venture protested the July 29 award of a $39 million job to
Cajun to build the southern section of a new West Return Canal floodwall in
Kenner. In findings announced Friday, the GAO said the corps will
re-evaluate the proposals and make a new award decision.

If that results in the selection of contractor other than Cajun, the Cajun
contract will be terminated.

White said he doesn't anticipate that Cajun will get reimbursed for protest
costs, if they are even requested, because the corps promptly decided to
remedy problems.

"If the agency pulls the plug within 30 days so that the protestor doesn't
have to go to the extra expense of writing a responsive brief, then we don't
usually recommend (protest) costs," White said. "There might also be legal
fees if it was clear from the start that the corps was wrong and yet made
the loser litigate ... but we don't routinely recommend (cost)
reimbursements just because a protest was filed."

White doesn't speculate on how or why corps officials made any of the
questionable decisions.

"The fact that an agency's actions result in an improper award means they
made errors in following basic procurement law," he said. "It doesn't mean
that it's a criminal matter. We assume good faith; people make mistakes."

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