Former state Sen. Larry Bankston should have mentioned a possible conflict before he rendered a legal opinion that wound up disqualifying the two top bidders for a mammoth contract to manage Louisiana’s $1.6 billion flood-recovery program, according to one of the spurned bidders and an expert in legal ethics.
Bankston, the attorney for the State Licensing Board for Contractors, told the board that companies vying for the contract needed to have a residential contractor’s license — something that three of the five bidders did not have. The board agreed with him.
Bankston, who went to federal prison for racketeering in 1997, did not disclose to the board that his son, Ben, works for an affiliate of the bidder ranked No. 3. When the top two bidders were thrown out, that company suddenly was poised to get the work, at a price tag of perhaps $350 million.
However, officials in Gov. John Bel Edwards’ administration instead opted last week to restart the process, which is aimed at helping victims of 2016’s catastrophic floods. A new bid solicitation was issued Wednesday.
The confusion around the effort to pick a contractor — and the suspicion of chicanery — has led to a round of finger-pointing and recrimination.
Already, IEM, the North Carolina-based firm that had the top-ranked bid and was initially awarded the contract, has filed a lawsuit in state court in Baton Rouge challenging the licensing board’s decision.
Robert Bruno, a lawyer for IEM, said the whole episode “makes Louisiana look terrible.” He said he worries that the contract will become bogged down in litigation as weary homeowners wait for help fixing their flooded houses.
The second-ranked bidder, PDRM, isn’t thrilled either. Its manager, Tim Barfield, who formerly was secretary of the state’s Revenue Department, was the one who filed paperwork with the contractor board challenging IEM’s qualifications.
Unlike IEM, PDRM had a commercial contractor’s license. The joint venture’s managers assumed that would be sufficient, given that state officials last year had decreed that was the license needed to bid on Louisiana’s Shelter at Home program, likewise aimed at helping flood victims.
Instead, Bankston rendered an opinion saying that a residential contractor’s license was needed. Neither IEM nor PDRM had one when the proposals were due in late February. Another bidder, HGI, also lacked such a license.
Barfield said the differing rulings on necessary licenses showed some “inconsistency on some very similar scope issues” on the part of the state. “I give Larry the benefit of the doubt, but after the fact it sure looks bad,” Barfield said.
All of the bidders have since gotten the necessary licenses.
The No. 3-ranked proposal came from a joint venture called Rebuild Louisiana Now, led by a firm called SLS. That is owned by three Texas brothers — Todd, Billy and John Sullivan — who since last year also have owned DRC Emergency Services, where Ben Bankston works as a regional manager.
Larry Bankston said he was unaware that his son's firm — which is not named in the bid package — had a relationship to any of the bidding companies when he wrote his opinion. He also noted that he provided the opinion in response to a request from a bidder — and not the bidder affiliated with his son’s firm.
Dane Ciolino, a Loyola Law School professor and an expert on legal ethics, said Bankston definitely should have disclosed the possible conflict to his client. Under American Bar Association ethics rules, a lawyer should make a client aware of any situation in which his representation could be affected by a “personal interest.”
In this case, Ciolino said, “there is a substantial risk that his advice to this client would be affected by his son’s interest.”
Ciolino noted that it’s the lawyer’s job to alert the client of a conflict; the client can then decide to waive it by giving “informed consent” in writing.
Bankston said he learned about the potential conflict only after issuing the opinion. He said his son told him he wasn't even aware of the bid by the affiliated company.
Billy Sullivan, one of the owners of SLS and DRC, told The Advocate in an interview that DRC and Ben Bankston would not have any involvement with the construction management contract for the state. "Ben Bankston would have no financial gain from this at all," Sullivan said.
Larry Bankston said that had he known about the relationship between DRC and the bidding company, he would have told his clients about it. "I would have disclosed the issue, but the opinion was already written," he said.
Lee Mallett, chairman of the state contracting board, whose 15 members are appointed by the governor, said he retains full confidence in Bankston. Bankston was hired in early 2016 by a board composed of appointees of Gov. Bobby Jindal.
Mallett characterized the dust-up as sour grapes and said IEM’s officials have only themselves to blame for not lining up the correct licenses before submitting their bid.
Sullivan, of SLS, said he was disappointed his company was being dragged into what he characterized as a fake controversy.
"Clearly, the only reason we got thrown into it is because IEM and PDRM were disqualified, and all of a sudden we're next in line," he said. "Some of the competitors are looking for a story where there really is none."
SLS also filed a protest to the bid process, but only after PDRM did.
Sullivan said his firm will be competing for the contract again. He said he agreed with the licensing board's decision to disqualify the original winner.
"SLS had a commercial license and a residential license," he said. "We respect the state's decision."
Bruno, the lawyer for IEM, does not, criticizing the decision to throw out such a giant contract over what he said is a technicality.
The person who will be hurt, he predicted, is “Joe Citizen of Denham Springs, whose house is rotting” while lawyers and business owners fight over a job he said his firm fairly won.
How long the rebidding will take is unclear, but it could wind up resulting in a better deal for taxpayers.
Matthew Block, the governor’s executive counsel, said one reason administration officials decided to redo the bidding was that they were disappointed with the prices received the first time around. In the next round, the bids will be scored slightly differently, with more weight given to price than in the first round.
Responses to the new solicitation are due April 7, with the winning bidder to be chosen by April 13.
Jacques Berry of the Division of Administration, which is overseeing the process, said state officials do not believe the decision to restart the bid process will significantly delay progress, in part because the federal money that will pay for the program isn’t yet available to the state.