Here's my story in today's paper on a new firm hired by Gov. Christie to handle Sandy recovery:
To devise a plan to distribute billions in federal money for Sandy relief, the Christie administration hired a company fired for poor management under a similar contract in the aftermath of Hurricane Ike in 2008.
"It was a complete nightmare," said Steve Greenberg, a former councilman in Galveston, Texas, who said CDM Smith failed to pay subcontractors and to deliver on its promises of home construction after the storm.
CDM Smith narrowly survived a dismissal vote from the Galveston City Council in 2011. The state intervened and moved to replace the company a year later. The new firm has turned things around, Greenberg said.
The Massachusetts-based CDM Smith is a global firm with an office in Edison, N.J., and a long history of engineering, construction, and consulting for public and private entities. It has contributed more than $100,000 to both political parties in New Jersey since the 1990s, and its post-Sandy contract is estimated to be worth $9.5 million for three years, state documents show.
CDM did not return calls Wednesday to its Massachusetts or Edison offices.
New Jersey Community Affairs Commissioner Richard Constable III said Wednesday that his office chose the company among six final bidders after a competitive, comprehensive process devoid of political influence. He would not comment on the Galveston situation, but he said he was confident in CDM's work after contacting its references in other states.
One of those references, Cindy Hemphill, the finance director in Minot, N.D., which saw an infusion of federal funds after a 2011 flood, said in an interview Wednesday that "CDM has been very responsive to our needs and works with us for whatever we want."
Greenberg, in Galveston, said he thought the firm was reputable but was "in over their head as far as this particular work."
A Galveston community activist, Joe Compian, said company representatives were hard to reach and did not understand basics of insurance. Because of extended delays in rebuilding, several people he knows were left homeless, he said. News reports indicate that other homeowners saw liens placed on their properties by contractors whom CDM did not pay and that the cost of correcting shoddy work by CDM subcontractors reached $30 million.
The scope of the work in Minot and Galveston is far smaller than what is expected of CDM in New Jersey, where it could end up administering as much as $6 billion worth of work.
CDM is due to give Constable an "action plan" by Feb. 18 that would guide spending of the first batch of that money, $1.8 billion. This will be the first of three rounds of funding from the federal Community Development Block Grant (CDBG) program and the start of the flow of money from the $50 billion Sandy relief package approved by Congress.
Of the $50 billion, $16 billion will be for CDBGs - the largest CDBG allocation in history. The money is intended to pay for repairs not otherwise covered by private insurance or the Federal Emergency Management Agency. Grants may be issued to support businesses, buy out property owners, fix infrastructure, elevate homes, and rebuild houses, schools and hospitals.
In the beginning, Gov. Christie said at a news conference Wednesday, the money will go to homeowners, small businesses, and a marketing campaign to let the country know the Shore is open for business. U.S. Housing and Urban Development Secretary Shaun Donovan, who funds the program, will appear with the governor Thursday in Sea Bright to discuss the funding.
"The reason we pushed so hard, [New York Gov. Andrew Cuomo] and I, for block grants is it gives us the maximum amount of responsibility to spend the money the way we see fit," Christie said.
That gives Kevin Walsh, associate director of the Fair Share Housing Center, pause. Walsh advocates for the housing needs of low-income New Jerseyans, and he said that although CDBGs are intended to benefit poor people, Christie failed to mention them Wednesday.
CDM's Galveston experience, he said, indicates a "questionable record" on "lower-income households affected by disaster."
Christie says more than 40,000 New Jersey families were still displaced because of Sandy. Walsh says many of those were renters in need of help, not just the property owners Christie spoke of Wednesday.
Walsh also worries that Christie and CDM can request waivers from the federal government to fund unrelated projects. CDBGs are known to be favorites of public officials because they are flexible and can be used for just about anything, from houses for poor people to fire trucks.
"The overwhelming majority of the money will be directed to Sandy-impacted areas, residences, and businesses," Constable said.
But Walsh pointed to Mississippi, where then-Gov. Haley Barbour redirected $600 million in Hurricane Katrina housing grants to a port expansion project.
Advocates filed suit, and a settlement brought $132 million back for affordable housing.
Although it is unclear whether CDM was involved in the port deal, CDM had a Katrina contract in Mississippi to screen CDBG applications and do other disaster relief projects, federal records show. That is similar to the work CDM was hired to do in New Jersey and Galveston.
And in 2007 Bloomberg News reported that Barbour's lobbying firm had CDM as a client. Barbour's nephew also lobbied for CDM after Katrina.
Barbour is a friend of Christie's, and his ties to the Christie administration are under scrutiny this week after the Newark Star-Ledger reported that Barbour's lobbying firm helped another disaster cleanup company, AshBritt, connect with political players in New Jersey.
Questions have been raised about whether AshBritt got a no-bid contract from the state - Christie says no - and about whether it is charging higher rates than competitors. Also, at the end of the month, Christie is to attend a fund-raising event for his gubernatorial campaign at an AshBritt lobbyist's home in Virginia.
Christie has rebutted the allegation that politics have played a role in awarding Sandy contracts, saying he spoke to Barbour about AshBritt only once. He said the controversy has derived from reporters' desperation for a story. He has pledged transparency, although he would not say whether he would set up a website detailing contracts.
Christie's opponent in the governor's race, State Sen. Barbara Buono (D., Middlesex), is calling for more disclosure. And an Assembly hearing on a bill that would require more legislative oversight on Sandy contracts is scheduled for Thursday. Christie's treasurer was invited but is not expected to attend.