The chief executive of Woodward Design + Build, the large New Orleans construction firm under investigation after some minority- and women-owned businesses it hired funneled most of their work to firms not owned by minorities or women, says Woodward’s work on its next major project will be gaffe-free.
That project, a city-approved plan to turn the former World Trade Center building at 2 Canal St. into a Four Seasons Hotel, will have carefully planned inclusion of, and support for, minority businesses, Woodward Chief Executive and President Paul Flower and other project backers said.
What will likely do the most to prevent a similar pass-through scenario, however, are new city restrictions on how much work a minority firm may subcontract on city contracts.
However, neither the city’s nor Flower’s safeguards may be enough to put to rest all questions about Woodward’s past dealings, which arose after the Housing Authority of New Orleans began a probe into the $600 million Iberville housing complex redevelopment.
HANO is examining whether master developer HRI Properties LLC, general contractor Woodward and subcontractors Nolmar Corp. and Strategic Planning Associates LLC violated HANO’s minority- and women-owned participation requirements after Nolmar and Strategic passed on most of their Iberville work to firms that don’t qualify as either.
Two firms to which Nolmar passed work are Woodward subsidiaries. Woodward also has owned a stake in Nolmar, an arrangement that ended in January after Nolmar paid a debt to Woodward.
Flower has said that HANO’s previous federally designated director — the agency returned to local control just last year — took no issue with his firm’s methods or its stake in Nolmar.
HANO is expected to announce a final decision on the matter within weeks.
Meanwhile, Woodward’s work on the $364 million World Trade Center deal continues. It has partnered with developer Carpenter & Co. and a team of equity investors to turn the vacant 33-story office tower into a Four Seasons Hotel with 350 guest rooms, 76 hotel-serviced residences and public amenities including a cultural museum and observation deck.
As part of the deal, a disadvantaged business enterprise committee will “identify the issues that the city is having and that Woodward is having in identifying viable (DBE) subcontractors,” said Bill Hoffman, Woodward’s senior vice president for corporate planning and development. Disadvantaged business enterprises, or DBEs, are minority-owned or otherwise socially or economically disadvantaged companies. The city has an overall DBE participation goal of 35 percent.
Flower and Hoffman said the DBE committee meets monthly with city officials to track progress. It includes Henry Coaxum, of Coaxum Enterprises; Flower; Hoffman; Lee Jackson, of Jackson Offshore Operators in Harvey; and Earl Robinson, of RLMcCall Capital. Coaxum, Flower, Jackson and Robinson also are equity investors in the project.
The Four Seasons team is calling for project contractors to partner with DBEs upfront — rather than pledging to recruit them later — and to divide the project into manageable-sized parts for those businesses to handle. It’s planning a credit line to assist DBEs that have trouble making payroll and will provide formal and informal mentoring programs.
But Woodward is also setting up a program to help DBEs get bond insurance, often a daunting requirement for DBEs that land major projects, committee members said last week.
It also is opening up its ledgers to an outside monitor. A third party will track progress toward fulfilling the firms’ DBE strategy, in addition to oversight from the city’s Office of Supplier Diversity, the entity tasked with monitoring DBE participation on city contracts.
The office also is tasked with enforcing new city rules that essentially ban the use of DBEs as pass-throughs. The rules state that DBEs themselves must perform 51 percent of the work assigned to them, and work they don’t perform is counted toward DBE participation goals only when it is done by another DBE.
Flower and other team members said they haven’t yet chosen DBE subcontractors for the World Trade Center project, though city officials said last month that Nolmar was listed among the DBEs Woodward is considering.
Flower said he views Woodward’s additional oversight layer as “a collaboration with a bunch of entities working together to reach a goal, rather than people looking over other people’s shoulder.”
Asked whether the Iberville controversy has tainted public perception about Woodward’s role in the World Trade Center project, Flower said the Iberville project had unique challenges and the World Trade Center deal’s ownership group will provide the resources to ensure adequate DBE participation.
Hoffman said the public perception has been “negative, unfortunate and unjust.”
However, he said, “What we want to do is learn from all the experiences everybody in our community has had with DBE programs and working with smaller firms, and build a better mousetrap.”
Follow Jessica Williams on Twitter, @jwilliamsNOLA.