The two entities vying for a lucrative, long-term contract to power LSU’s energy systems both lack a contractor's license, the Louisiana State Licensing Board for Contractors said Tuesday, dealing another setback to the LSU Board of Supervisors, which has already missed a self-imposed deadline to sign a deal within 90 days of a late summer meeting.
The executive director of the contractor board said Tuesday that neither Tiger Energy Partners — a joint venture between Bernhard Energy Solutions and Johnson Controls, Inc. — nor the Canadian company Enwave Energy Corp. has a license "in accordance with its legal entity name.” Those two companies have been the only options on the table to provide LSU energy services since last year, when the Board of Supervisors decided that it would negotiate directly with the two entities for a massive energy deal whose value is pegged at more than $800 million over decades.
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The choice to negotiate directly with those two companies has largely shut the public out of the process. LSU has not released the solicitation for the energy deal, so it's unclear if LSU specified that the companies must have Louisiana contractor's licenses to perform the work.
But Michael McDuff, the executive director of the State Licensing Board for Contractors, indicated Tuesday that having a Louisiana contractor’s license is important. He emailed Board of Supervisors members on Tuesday morning saying that he had received formal complaints about the process.
"Whomever eventually constructs the facilities as outlined in the LSU proposal, of which we have not received or reviewed, most likely would require a contractor license according to our statutes," McDuff wrote. "The decision as to the contractor selection is not within the authority of this office and must be determined by the awarding authority."
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McDuff added that he has found no reason to issue citations to either company so far. But he said the board will continue to monitor the energy project as it moves forward to ensure compliance with licensing laws.
Tiger Energy Partners — which Bernhard and Johnson Controls formed specifically to work on the LSU project — filed a complaint about Enwave's lack of a Louisiana license late last year. The move might have cleared the field for them. But it didn’t quite work out that way: While Bernhard LLC and Johnson Controls each separately have licenses from the state licensing board, their new joint venture does not.
Bernhard Energy principal Jim Bernhard, who sits atop a sprawling network of companies under Bernhard Capital, is among the most influential Democratic political donors in the state. Bernhard is a major supporter of Gov. John Bel Edwards, who sought to appoint him to an open Board of Supervisors seat six months ago.
Bernhard declined the position without explanation, but the position would have sidelined his companies from receiving contracts like the energy deal.
Two months later, LSU started negotiating with both companies, despite advice consultants from KPMG gave at a September 2020 board meeting that the university should go through a standard public bid process. KPMG had drummed up interest from many companies that were in a position to bid, and warned that without putting the project out for bid, LSU could wind up with a bad deal.
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“Could you make a deal?” asked Iain Tester, one of the KPMG consultants advising the board. “The short answer is yes, if you just roll over and accept the proposal on the table.”
Despite KPMG’s advice, the Board of Supervisors voted to embark on a 90-day negotiation period with the two companies, both of which already had existing cooperative endeavor agreements with LSU.
Enwave provides energy services to the LSU Health Sciences Center in New Orleans. Another Bernhard and Johnson Controls joint venture, called Louisiana Energy Partners, provides energy services to the Shaw Center for the Arts and other state buildings.
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“If we can’t get a deal done in 90 days, then we automatically revert to the public procurement process,” said LSU board member and New Orleans attorney James Williams during the September meeting.
That hasn’t happened — LSU has neither hatched a deal, nor reverted to a public bid process after passing the 90-day period, which expired earlier this month. Gov. John Bel Edwards recently held a private meeting with some board members to discuss the negotiations, a spokeswoman confirmed. Edwards reiterated “what he has always told them which is to do what is in the best interest of the university and the state,” said his communications director, Shauna Sanford.
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“The 90 days has expired, but the process is longer and more complicated than we thought,” said Robert Dampf, the board’s chairman.
Consultants and LSU staffers warned board members at the September meeting that if they were unable to come up with a deal through direct negotiations, they risked “chilling the market” if they later chose to go out to public bid.