Zurik: Contractor cries foul as Plaq. school construction costs skyrocket

Zurik: Contractor cries foul as Plaq. school construction costs skyrocket
Some of the files HOV Services allowed us to see
Some of the files HOV Services allowed us to see
Some of the hourly rates HOV is charging for its project management services
Some of the hourly rates HOV is charging for its project management services
Contractor Pete Vicari
Contractor Pete Vicari
Plaquemines School Superintendent Denis Rousselle
Plaquemines School Superintendent Denis Rousselle

BELLE CHASSE, LA (WVUE) - A West Bank contractor says taxpayers have been ripped off. This story involves a company headquartered in India that has been working in Louisiana since Hurricane Katrina. One contract in particular has made them millions, as you'll find out in this new investigation .

"I'm in the wrong business," says Pete Vicari, a general contractor based in metro New Orleans. "I mean, that's actually… waste at its best. Government waste at its best."

Vicari was reacting to our finding that the company in question, HOV Services will be paid well over $20 million for its work on school construction in Plaquemines Parish.

"I am kind of at a loss of words," Vicari told us. "I wasn't prepared for those kinds of numbers you told me."

Vicari has been in the construction business since 1980. His company's building the new Belle Chasse Primary Pre K-1 School in Plaquemines parish.

His work has been overseen by HOV Services. The parish school board hired them as construction manager on the post-Katrina project. That means they oversee the architects and contractors.

"No doubt about it, they have made a lot of money," says Denis Rousselle, superintendent of the Plaquemines Parish Public School System.

Pay for construction managers is usually based on a percentage of construction costs. Construction on Plaquemines Parish Schools has cost $151 million. And of that, HOV already has been paid $19,574,185, about 12 percent of overall construction costs. And the school board expects that to increase, up to 14 percent.

But compare that to St. Bernard Parish - instead of 14 percent, they paid their construction manager 2.5 percent of overall costs on a project to build 13 new schools and facilities and renovate an additional 10 buildings, following their severe damage from 2005's Hurricane Katrina.

In Jefferson Parish, school officials report the project manager made 4.5 percent of the overall construction costs.

The firm RSMeans produces a book each year on construction costs. FEMA often uses it. The RSMeans book estimates a construction manager would earn between 2.5 and 4 percent of the construction costs.

"That's what it's worth," confirms Vicari. "That's the norm in the industry – two or three, max."

Again, HOV will make around 14 percent.

But there's more. HOV bills the school board on an hourly basis - each employee is assigned a pay rate and the company reports how many hours they worked each month. HOV bills 185 dollars an hour for a project manager.

"Normally, my project manager's [paid] about 55 to 60 dollars an hour," Vicari tells us.

HOV's rate for a scheduler: $180 an hour. An administrative assistant: $120 an hour - that works out to $249,600 a year.

We ask Rousselle how much administrative assistants are paid at his office. He says, "Well, not near that. You know, I don't even know if I make that…

"It's not up to me," Rousselle reminds us. "What they make is what jobs they were doing that have been approved by GOHSEP and FEMA. I'm an educator. You know, I hire lawyers myself, and they get paid quite a bit of money."

We remind him that HOV's rates are comparable to lawyers' rates and he says, "Yeah, definitely."

In fact, the school board hired a few outside attorneys for work this year. About half of the hours were billed at rate of $125 an hour. Another attorney billed at $150 an hour. Compare that rate to what the school board paid an administrative assistant and scheduler.

"I couldn't get away with that," Vicari says. "Not a contractor in the city could charge those rates and get away with that."

HOV has to account for each hour billed. FEMA gives them different duties they can bill for; one is to "prepare and maintain detailed project files."

All totaled, HOV has billed $4,926,372.50 since June 2009 to prepare and maintain those project files. For just one project, the school Vicari's company is building, HOV has billed $720,105 for preparing and maintaining files.

When we ask Vicari how much his filing costs amount to, he says, "Through the whole life of the job? $20,000."

What would $5 million worth of filing look like? "Guess about a 20,000-sq. ft. building," Vicari suggests, "filled with… I don't know. Just sounds like a lot of excess billing to me."

HOV Services officials declined an on-camera interview. But we did show up to their office, and they allowed us to look at some of the files. We found about 500 boxes; many weren't fully filled.

In 2012, the administrative assistant billed $228,000 for working on files. In that same year, another employee, a document controls manager, billed $455,000.

Compare the costs again to those of St. Bernard Parish. St. Bernard paid their construction manager $10.3 million for the entire project. Plaquemines spent half of that on filing – money that ultimately comes from taxpayers.

The school board has no explanation for the high cost. "It's a great concern, it's a concern for sure," Rousselle says.

The board says everything HOV has billed has been approved by federal emergency managers.

"We believe that the costs that they charge are fair," says Mike Womack, who directs FEMA's Louisiana Recovery Office.

FEMA did say it could re-evaluate invoices and rates, such as that $120/hour rate HOV charges for an administrative assistant.

"It does seem to be fairly high," Womack acknowledges.

"This is crazy," Vicari calls it.

We reviewed a recent HOV invoice with Vicari and looked at HOV's billings for his project. A number of people on the job for HOV on that list have never been seen by Vicari and his staff - that includes the scheduler who billed 37 hours of work on one school in one month.

"Patricia Dunn?" we ask Vicari.

"No," he says. "She's not been on our site.

That may be because Patricia Dunn, the scheduler, doesn't even live in the state.

Plaquemines Schools Finance Director Ronald White says he doesn't know where the scheduler lives.

"I think she is outside of this area," White says, "but the things are all done electronically with her."

That's $180 an hour for a scheduler who doesn't even live in Louisiana.

"Well, she doesn't have to live on site," White insists.

Vicari says, in his 35 years in construction, he's never seen rates this out of line.

"My gut's about ready to open up," he tells us. "I'm sick to see the government… this waste."

For an athletic maintenance storage facility in Buras, the actual construction cost was $1,655,128. HOV billed $634,556 to oversee the work - 38 percent of the cost.

For a new wing at Belle Chasse Middle School, construction costs were $3,167,620. To oversee the work, HOV billed $1,261,361 - about 40 percent of the construction cost.

"How could this, in this day and age with all the people that are supposed to be checking everybody… How can they be allowed to charge this?" Vicari wonders.

Vicari says his project is behind schedule, and he blames HOV. 'That's what they want," he says, "they want this to drag on, if they can charge those rates."

Those rates, Vicari says, allowed HOV to earn about $14 million more than what's necessary what's considered the industry standard.

"Somebody needs to come in and stop this," Vicari says. "This is our federal tax dollars at its best waste, you know? You want to buy another $25,000 toilet seat? That's what it boils down too."

HOV says it is company policy not to do on-camera interviews. They did send us an email saying that work on the files included research, development, review and approval of documents. They say the total archive has grown to 1.5 million pages.

They also added that the reason costs on some jobs were higher, as in Buras and the middle school wing, is that - even though the construction contract value was less than other projects - the construction management personnel and effort is similar.

So, who approved this contract? The school system bid the contract, but it had to, in the end, be approved by FEMA. In fact, HOV's initial bid had a fixed fee attached to it, about 9 percent of the construction costs. FEMA didn't want a fixed fee for this project - they wanted HOV to bill hourly, which they said would allow better oversight.

That move ended up costing taxpayers a lot of money.

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