NEW ORLEANS - A newly released audit by the Inspector General’s Office finds that the city paid significantly more money post-Katrina per trash pickup location, despite a dramatic drop in pickup locations.
Inspector General Edouard Quatrevaux released his audit of the city's Department of Sanitation contract, revealing also that the department did not exercise proper oversight over the contracts with Metro, Richard's and SDT.
After Hurricane Katrina, the city signed contracts with three sanitation companies to pick up curbside trash: Richard's Disposal, Metro Disposal and SDT Waste & Debris and paid the three companies more than $55 million over a two-year period.
Among the findings, the audit revealed that the sanitation contractors did not develop an initial list of likely serviced locations as required by the contracts.
The Office of Inspector General looked at the billing records for 2007 and 2008 and found that the city's Sanitation Department did a poor job in monitoring compliance and oversight of those contracts.
The OIG contends that the city paid for services without really knowing exactly how many locations it was paying for, saying the city allowed the sanitation companies to use projections of locations instead of the companies required monthly record of actual serviced houses.
And the audit revealed that these listings contained numerous duplicate and ineligble locations.
City Councilwoman Stacy Head said the report echoes what she’s been saying for some time.
“I don’t know if there is something unturned going on or if there is just an inability by the administration to manage contracts," she said. "This is not the only department that fails miserably in that regard. This is one that stands out because it’s such a huge dollar figure.”
According to the Inspector General, Waste Management collected garbage at approximately 167,738 locations at a cost of approximately $8.83 per location, averaging $13,605,688 annually pre-Katrina.
However, post-Katrina, the audit shows that 106,500 locations, while average monthly cost after Katrina was approximately $22 per serviced location for Richards, $ 18.15 for Metro and ranging from $18.75 to $34 for SDT, according to the audit.
The price increase resulted in 106 to 149 percent over pre-Katrina unit costs, according to the audit, despite a large population loss.
According to the audit, city officials responded to the discrepancy, saying, “The earlier and later contract performance requirements differed significantly,” which alludes to the new trash cans mandated and new garbage trucks for pick up.
The OIG's report also says the city didnt do a good job of documenting the work of other contractors.
A company, PFM, Public Financial Management was paid a quarter of a million dollars in 2008 to assess the number of curbside locations the three companies serviced, but the report says PFM didn't itemize its costs and that some locations were uninhabitable and ineligible, yet the city got a bill for them month after month.
The city's response was that there's less than 100 houses involved and the number of errors are small relative to the entire service area.
SDT owner Sidney Torres said the PFM assessment of the number of homes is costing him money too.
“It is crazy that the city paid off of that PFM report,” he said. “It is absolutely wrong. We’ve been fighting with them, telling them that it’s wrong. They’ve been under paying us since this report came out.”
And then there's MWH Americas, an engineering contractor, being paid by the city's sanitation department since 1997. The OIG report says the MWH invoices were too vague for appropriate review. And that during the two year report, the city overpaid MWH $41,000.
The city responded by saying that finding warrants further review and that if the city determines MWH violated the contract, it will seek legal recourse.
"In conclusion the audit revealed that the Department of Sanitation did not exercise proper oversight, as described in this report, over the Sanitation Contracts with Metro, Richard’s and SDT nor with other Contractors, MWH Americas, Inc. (MWH) and Public Financial Management, Inc.," said the audit.
The attorney for Richard's and Metro Disposal responded, saying his companies have not breached any city contract and that two independent audits reveal the companies have been underpaid by the city.
