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Tow trucks begin hauling flooded cars off streets
Tuesday, June 20, 2006
By James Varney Staff writer

With the whir and clank of heavy machinery, Louisiana officials began dragging hurricane-wrecked cars out of New Orleans on Monday and toward a more permanent graveyard.

The program's launch comes on the heels of months of contractual wrangling, curious decisions and legislative hearings, but marked a welcome development in the state and city's efforts to scrub the landscape free of reminders of Hurricanes Katrina and Rita.

Under a contract let by the Department of Environmental Quality, an Alabama firm with an armada of Louisiana tow trucks will haul an estimated 100,000 vehicles and 50,000 boats off public land across southern Louisiana and into staging areas, pending their ultimate crushing, authorities said. That process is expected to be completed by Aug. 30, DEQ Assistant Secretary Chuck Brown said.

"I share the same frustration everyone else does," Brown said when asked about the long-awaited towing. "This is just the kickoff, though, and very soon the untrained eye will start to see some real progress here in New Orleans."

Brown made his comments under an Interstate 610 overpass near Elysian Fields Avenue, flanked by Mark Stafford, chief operating officer of DRC, Inc., the Mobile outfit whose $33 million bid won the job in May, and Fred Burkett, the executive director of the Towing & Recovery Professionals of Louisiana.

Their words were often drowned out by clattering traffic on the highway above, or the giant forklift and flatbed towers extracting cars from the sandy soil behind them. The cars, an estimated 20,000 for New Orleans alone, will be stored in a lot along Almonaster Boulevard, Brown said.

Towing gets tough

The apparent difficulty of extracting a car from under I-610, one of the main collection areas used by city tow teams after the storm, seemed to symbolize the problems that have dogged the towing issue for months. Initially, Mayor Ray Nagin's administration, after failing to pursue a Texas company's offer to buy the abandoned junkers for $100 a piece, tried to pay an engineering company more than $20 million for the same task. That strange maneuver collapsed, however, and the city then joined the state's towing contract.

But the state's first effort, a more than $60 million contract with a consortium made up of an obscure Georgia janitorial firm and a flooded 9th Ward contractor, unraveled when the companies failed to secure a bond. That mess prompted a hearing in Baton Rouge, called by Sen. Ken Hollis, R-Metairie, and some court action when the Georgia outfit, TruSource Facility Services, sought an injunction to stop the state from moving ahead on the towing. That motion was denied in the 19th Judicial District, and it was unclear whether TruSource was pursuing any other legal action, state officials said.

Another controversy swirled around DRC's bid last month, this time over its status as the second-lowest bidder. The low bidder, a company called Wastech, protested DRC's selection and, after their protest was first denied, appealed to a state commission overseeing the Office of Purchasing. The commission has missed its 14-day deadline to rule on the appeal, officials said, blaming the delay on the legislative session and said a ruling will come down this week.

Hurricane in Honduras

DRC is no stranger to controversy on post-hurricane work. The company, headed by Stafford and Bob Isakson, who spent about a decade as an FBI agent in New Orleans, was a primary contractor with the U.S. Agency for International Development in Honduras after it was ripped by Hurricane Mitch in 1998.

After Mitch, squads of American contractors descended on Tegucigalpa seeking rebuilding work, and within a couple of years, that effort triggered whispers of kickbacks and skullduggery among the expatriate community of the Honduran capital.

In September 2004, the Justice Department sued DRC in Washington D.C., in connection with its USAID work in Honduras. The lawsuit alleged that DRC misrepresented its personal and equipment assets, improperly subcontracted most of the work, and submitted false invoices totaling more than $12.6 million, of which DRC pocketed $5.2 million after paying subcontractors. Federal prosecutors are seeking triple that amount in damages plus other costs in the lawsuit, which continues to wend its way through the D.C. federal courts.

Stafford said the messy post-disaster work in which DRC specializes can also create its own litigious atmosphere, and blamed in part on what he said is a culture of corruption in Latin America. But he said DRC performed all its contractual work in a timely manner in Honduras, and rejected in to the lawsuit's arguments.

The government's action, he said, was triggered at least in part by an earlier lawsuit DRC filed because it hadn't been paid. A spokesman for the Justice Department said he was not familiar with the matter, and a USAID official in Washington did not return phone calls Monday.

"We stand on our record, and we've taken a very strong position against corruption," Stafford said. "Sometimes it's difficult to take that stance, particularly in a place like Honduras, where wrongdoing is an expected way of doing business."

The long haul

It remained unclear Monday whether the Federal Emergency Management Agency, which is meeting 100 percent of the towing costs in southern Louisiana, had any concerns about dealing with a company that is the subject of court proceedings in connection with hurricane cleanup work. FEMA officials said they are reviewing the matter.

Also unclear is exactly how much the contract will cost, how long it might take to complete and who will pay for it. Brown said DEQ can "draw down" on a $62 million account FEMA created for towing in March, which would seem to indicate the state has more than enough to pay for the estimated $33 million DRC arrangement plus another $1 million due a separate company that won a bid to monitor the issue.

But after June 30 -- a date by which Brown and all other players acknowledge the towing will not be finished -- the FEMA reimbursement formula requires that the state pick up 10 percent of the tab. It was not clear Monday whether FEMA will require state taxpayers to kick in money at that point.

Stafford said DRC is getting paid for each vehicle or vessel it tows, a cost officials fixed at $239. While that seems expensive when compared to the price a motorist might pay to have a broken-down car towed, DEQ officials and Stafford attributed the number to overhead, insurance, administrative costs, land-use costs and skyrocketing fuel bills.

Brown said the state hoped to tow 200 vehicles a day and complete the work by Aug. 30. But that timetable would be impossible given the estimates still in use by the State Police. If the state has 100,000 junkers, it would take more than a year and a half, or 500 days, to finish. Some of the tow truck operators involved in the contract said Tuesday the discrepancy comes not in the estimate, but in the state's overly low expectations.

Some of New Orleans' biggest towers, who were on the fringe of Monday's news conference, said drivers should be able to gross $1,000 a day per truck under the terms of the contract, a figure too lucrative to ignore. As more and more towers get on board, the scale of the work will escalate and within a month, operators predicted, they will be moving more than 1,000 a day, which would allow the work to be finished sometime this fall.

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James Varney can be reached at or (504) 826-3386.