A nonprofit arm of the University of New Orleans flouted federal contract policies in its awarding of millions of dollars in repair work at the lakefront school after Hurricane Katrina, the Inspector General’s Office for the U.S. Department of Homeland Security said in a report issued Wednesday. The report said the UNO Research and Technology Foundation did not follow federal procurement policies requiring “open and free competition” in awarding contracting work that totaled $9.6 million. Rather than publicly advertise the work, the foundation notified selected contractors and invited them to a required pre-bid conference.
The foundation “did not provide open and free competition and did not take required steps to ensure the use of small businesses, minority-owned firms and women’s business enterprises whenever possible,” the report said.
The state and the foundation both dispute many of the report’s conclusions, officials said Wednesday.
Officials at the foundation said they did not limit competition to only contractors they contacted but to those who attended the pre-bid conference — a distinction the IG’s Office did not find satisfying.
In addition, the report said, the foundation was originally awarded $12 million in federal emergency money but the price tag rose by $7 million due to cost overruns, which were allowed without needed approvals from the Federal Emergency Management Agency.
It also noted that of the more than $19 million the nonprofit received, it has submitted proper claims for only about $5.3 million worth of work.
Though auditors recommended in the report that the $9.6 million of disaster-related costs should not be eligible for federal money, they acknowledged FEMA’s general practice of allowing costs that are considered reasonable even if the contracts did not comply with federal procurement regulations — a stance the IG’s Office said it disagreed with.
The foundation told the IG’s Office that the issues occurred because “their priority was to reopen the buildings quickly, and their insurance company paid the invoices.”
The IG’s report also blamed Louisiana officials, who were awarded the money and then dispersed it to the foundation. The report said contract and cost issues happened largely because the state “did not effectively execute its grantee responsibilities.”
“Hurricane Katrina occurred almost nine years ago,” the report said. “It is too late to correct the contracting mistakes that subgrantees made back then. All Louisiana can do is try to prevent those same mistakes from occurring again and try to correct them when they do.”
The foundation’s head said in a statement Wednesday that the group is “vigorously disputing” the audit’s findings and expressed confidence that procedures followed in Katrina’s aftermath were “fiscally sound and complied with both federal and state regulations.”
“We acted according to the guidelines of FEMA and the State of Louisiana in every instance,” foundation President and CEO Eileen Kennedy Bryne said. “We are shocked that the Inspector General’s Office has now made the determination that conditions in New Orleans had returned to normal as of Nov. 1, 2005. It is extremely troubling that the inspector general refuses to recognize the extraordinary widespread devastation following Hurricane Katrina.”
Bryne said federal auditors had held the foundation to different standards than were used to evaluate how federal money was spent by other local institutions in the storm’s wake, and she called the alleged inconsistencies “alarming.”
“They are criticizing us for the very same things they recognized as legitimate considerations in two other situations,” she said.
Mike Steele, a spokesman for the Governor’s Office of Homeland Security and Emergency Preparedness, said the state disagrees with the audit’s findings. “We don’t feel there should be any deobligation of the money,” he said.
Steele said state officials are working with the foundation to resolve issues raised in the audit and that he doesn’t expect the state will have to repay any money.
“It’s not uncommon for a report to come out like this and no deobligation ever happens,” he said.
The foundation’s aim is to support UNO programs and facilities, according to official filings. The fund had almost $72 million in net assets in 2012, the most recent year such filings were available.
Follow Richard Thompson on Twitter, @rthompsonMSY.