What’s the connection with this consultant?

Governor Bobby Jindal just hired for $4.2 million, without public bid, the New York consulting firm of Alvarez and Marsal to find ways the state can save money.  Although the irony of this is quite self- evident, my immediate concern is directed towards the consulting firm itself.   Prior to Jindal’s latest hiring, this same firm was given the job of assessing the state’s tax structure, when Jindal started his push for elimination of the state income tax, which failed to gain support.  Just how much the firm was paid for these services is unclear, and whether this was another no bid contract is also unclear.

Apparently, Alvarez and Marsal have a long history with the state of Louisiana which spans different governors’ tenures.   I traced it as far back as June, 2005,  when the then State Superintendent of Education, Cecil Picard, demanded that the New Orleans Public School Board hire the consulting firm, Alvarez and Marsal, to restructure the financial and administrative operations of the 127 schools under its control.  Whether this was a no bid contract, or not, still remains a mystery.  However, this marked the beginning of a school system take-over plan, by the state, which Picard convinced, the then governor, Kathleen Blanco, was necessary to improve the schools in the city of New Orleans.

August, 2005, Katrina hit, and the consulting firm was elevated, without public bid, to the job of overseeing the renovating, repairing, and rebuilding of the New Orleans Public School System.  Part of this involved replacing the interim superintendent of the school system with an Alvarez and Marsal consultant who held a master’s degree in business administration.

Financially, 2005 was great year for Alvarez and Marsal for by the end of that year it was estimated that the consulting firm was paid more than $50 million with tax payers’ money, with billing fees ranging from $150 to $500 an hour.  What started out as basically accounting related responsibilities ballooned into a very lucrative enterprise after Katrina hit. 

The firm’s contracts continued, unchallenged,  for additional years despite the fact that one of its chief assignments after Katrina, the disposition of left-over NOPS real estate, was handled without the services of a single local architect, engineer, or construction expert.  It was estimated that this omission cost the city a year of progress in determining how and where to build damaged schools and jeopardized hundreds of millions of FEMA monies.  The total money paid to the firm for the New Orleans’ project is well hidden because of the different accounts utilized.

How this out of state firm, Alvarez and Marsal, first immerged on the scene, how many contracts it has received, and  how it continues to obtain lucrative, sometimes no bid contracts,  remain a mystery-one that certainly demands better investigation by the media.  Why is Louisiana continuing to export all this money out of state to this firm?