In August, New Orleans dealt with historic flooding that damaged hundreds of properties and put the rest of the city on pause. With the approach of Tropical Storm Nate, Nola is in danger again. One of the primary causes of the flooding has been that the city’s already-infamous drainage problems are compounded by broken pumps. These issues were front and center long before the recent flooding, though. In fact, it was not that long ago when the Army Corps of Engineers entered into a $340M storm-proofing plan for New Orleans and Jefferson Parish.
We’ve also recently discussed flooding in Baton Rouge and West Virginia.
Corrupt Federal Contractor Was Hired to Fortify Pumps
Considering how heavily New Orleans relies on these pumps, surely the projects were put in good hands, right? Well…
One of the (many) contractors responsible for the storm proofing project was Benetech LLC. Benetech has been awarded over $50M in federal contracts in the New Orleans area since the 2000’s. One of these projects was to bolster New Orleans’ storm proofing efforts by fortifying 3 of the city’s pumping stations (including Pump Station No. 6) and adding backup generators.
On paper, New Orleans hired a local business led by a disabled veteran – great stuff! But Benetech has been less than a model citizen. The company’s founder attempted to bribe former New Orleans Mayor Ray Nagin back in ’07, and he was convicted of giving kickbacks to former Plaquemines Parish Sheriff Jiff Hingle. Also, the company was not actually run by a disabled veteran. The founder, Aaron Bennett, transferred the company to his father in order to obtain an advantage when applying for projects. While his father technically owned 51%, Bennett continued to operate the company.
Just as Bennett was pleading guilty to the bribery charges, he drained $600,000 in company funds obtained from the Nola pumps project. The funds were transferred to his wife’s film production company. The Army Corps of Engineers had paid those funds for work already completed, but emptying the coffers paralyzed Benetech and it’s partners. By taking the money intended to pay for New Orleans pump station upgrades, Bennett left Benetech unable to complete the project. Bennett’s father took over the company (in practice this time) when his son began serving time. The elder Bennett notified the Army Corps of Engineers that Benetech would have to abandon the project soon after. Luckily, the project was bonded as required by the Miller Act. But, unfortunately, it appears that the project, which was initiated over 7 years ago, is still largely incomplete.
Takeaway
The New Orleans pump system is massive and a fleet of contractors was hired by the Army Corps of Engineers to perform fortification and upgrades in the late 2000’s. So the blame for the floods cannot go to any one firm, even if one was corrupt or mishandling funds. If the project had been successful under a replacement contractor, this would be a great opportunity to show the importance of payment and performance bonds. I can see it now – “Because of the bonds, another contractor did the work and the whole thing was a rousing success!” Unfortunately, it doesn’t appear that the performance bonds resulted in a complete project in this case.
For more on construction payment, check out our construction payment resources for all 50 states.
