NEW ORLEANS (WVUE) – A report from the Louisiana State Auditor General found that city government dysfunction, bureaucracy and oversight issues prevent the City of New Orleans from consistently paying its outside vendors on time.
The problem has been discussed sporadically, but the August 7 report highlighted suppliers’ problems in receiving their payments on time.
“The negative experiences were definitely not imaginary. They were real from the beginning,” said Andre Kelly, vice president of Louisiana Associated General Contractors.
Kelly’s association represents a number of contractors across the state, including some responsible for completing projects under the overarching Joint Infrastructure Recovery Request (JIRR) program.
JIRR is a $2.3 billion package of over 200 urban projects, most of which are funded by FEMA.
Since JIRR launched more than five years ago, projects in New Orleans have been hampered by late payments and misunderstandings between suppliers and the city, according to Kelly.
“It was one hurdle after another,” he said. “The payment problem was pervasive and had been a headache for the city for a long time.”
“It’s not just about speed. Contractors can rely on it and plan their business accordingly.”
The problems with JIRR have caused contractors involved in any aspect of the program to be hesitant to approach city projects, Kelly said.
However, he added that the situation had improved significantly in recent months.
“To the city’s credit, they have recently slowed down the awarding of many projects,” Kelly said. “They are not awarding as much as we would like, but the ones that are awarded are doing better as far as the regular payment application process goes.”
The City Council asked the Auditor’s Office to investigate the issue after hearing directly from the providers.
“This all started about a year ago when I and other council members started receiving a lot of complaints from various vendors that they were not being paid on time,” said City Council President Helena Moreno. “And it really became a big problem because we were hearing from vendors who no longer wanted to work with the City of New Orleans because of it.”
Moreno expressed her hope that the city had worked to correct some of the mistakes of the past.
“Now we have a plan of what needs to be done to fix the problem. Now it’s about making sure it gets done,” she said.
The city tracks and pays vendor invoices using an application called BRASS (Budget, Requisition and Accounting Services System). According to the auditor’s report, between July 1, 2019, and April 18, 2024, the city paid 138,022 (or 84.7%) of 163,000 invoices within 30 days of vendors uploading the invoice to BRASS.
“In most cases, we found that they pay within 30 days,” said Kristen Jacobs, a senior performance auditor in the Legislature’s office of the auditor. “But our audit also found that a lot of work goes into the process before a vendor enters an invoice into the system. Sometimes delays occur either because the contracting process is too slow, because you have to have a signed contract or a purchase order to be able to upload an invoice into the system.”
The state auditors came to the following conclusion:
- The city cannot determine exactly how long it will take to pay suppliers
- The City’s Accounts Payable department may delete unprocessed invoices, limiting the City’s ability to determine overall timeliness.
- Delays in contract conclusions and orders prevent suppliers from sending invoices to BRASS
- The city should improve its communication with suppliers about the invoicing process
“We found several cases where it took over 200 days after the contract started to actually execute,” Jacobs said. “So providers sometimes couldn’t bill for services until a year after the contract started. So they’re working on a report to extract that information from the BRASS system so they can better identify when that happens.”
Problems with making timely payments to suppliers could prevent smaller companies from bidding for city contracts.
“Yes, absolutely. It will discourage some vendors from doing business in the city at all, that’s what the report says,” Moreno said. “But the other major point is about the big vendors, the big construction companies. Those big construction companies may be able to survive by not getting paid on time. But their (subcontractors) can’t. So they’re the ones who suffer the most.”
The city’s finance office said in a statement: “This performance audit addressed process sensitivities and barriers that we have continually reviewed and improved. We have accepted all recommendations from the Louisiana Legislative Auditor’s Office. The administration has implemented some recommendations within the audit period … to enable timely payment. The other recommendations are currently undergoing cost analysis with our system providers to ensure they are implementable.”
According to Moreno, taxpayers suffer when vendors are hesitant to do business with the city or increase their bids.
“To completely eradicate this problem, I hope this government will work quickly on it and fix it,” she said. “And of course they have the recommendations. But if not, a new government will come into power in a year and a half and I think they will have a roadmap to move aggressively and fix the problem quickly.”
She said the council will monitor what the administration does to resolve the problems.
“Now it’s about making sure that gets done,” Moreno said. “And now there are actually different steps that need to be taken so that the council can now say, ‘Where are you on all these different things? What’s the situation?’ So that we can finally resolve this whole issue for good.”
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