The New Orleans City Council is poised to rehire the same two consultants that have served for over three decades as the council’s advisors to help regulate Entergy New Orleans — Dentons law firm and technical advisor Legend Consulting Firm.
The two contracts are the most lucrative handed out by the City Council, worth a combined maximum of $5.7 million per year.
Councilman and utility chair JP Morrell said at a Tuesday utility committee meeting that the council was ultimately forced to stick with the same companies after its year-long efforts to attract new firms garnered zero new responses. The council also received zero responses to a public bid to hire a headhunter to attract more potential consultants.
“We did not quite get the responses that we liked,” Morrell said. “But we’re going to move forward with the people that did respond and that’s what we’re doing today.”
The contracts will almost certainly get final approval from the full City Council after the utility committee voted on Tuesday to advance the measures to the council’s next consent agenda, which allows the council to take a bulk vote on a large number of typically non-controversial items with no discussion.
Morrell blamed the lack of competition for the contract on the nature of the firms that do this type of consulting work. He said the expertise needed in these positions usually comes from large national or multi-national firms.
“Basically you have these massive firms that do this type of work and they basically agree not to compete with each other,” Morrell said. “They just don’t compete because everyone kind of has their regional market.”
The council’s ambition to move away from its long-time utility consultants has been a years-long effort. In 2019, The Lens reported on how the council had become almost entirely reliant on outside advisors to fulfill its responsibility to regulate Entergy New Orleans, and how a small group of consultants had been able to hold onto those lucrative contracts for three decades in part due to political connections and contributions.
Soon after that, Councilwoman and then-utility chair Helena Moreno announced that the council would overhaul its regulatory process to move away from its reliance on consultants and start building in-house capacity through its Council Utilities Regulatory Office, or CURO.
Since then, the council and CURO Director Erin Spears have made strides in that direction.
“We started this process of building up the CURO office about three or four years ago,” Moreno said on Tuesday. “When Erin came in, she was the only person in the office. Everything else was consultant reliant. … They did every little piece of the work.”
CURO now has seven budgeted positions, and plans to increase that to 10 next year. Spears said on Tuesday that she estimated the city was already saving about $1 million every year due to the beefed up staff.
Still, CURO isn’t yet big enough to eliminate the need for significant help from outside consultants, and the council has continued to hire Dentons and Legend year after year.
Earlier this year, Councilman JP Morrell came into office and took over as chair of the utility committee. He said he wanted to continue the work of building up CURO while diversifying the outside consultants. In February, the council decided once again to rehire Dentons and Legend, but Morrell said it was a “stopgap” measure and simultaneously launched a new effort to move away from the two firms.
Morrell said his goal was for the council to have a roster of outside consultants that the council could call upon for specific projects, rather than issuing the blanket utility consultant contracts it has right now.
“Ideally I’d have a slate of law firms that are all qualified to do the legal piece, and a slate of groups that are qualified to do the technical piece, and you make sure none of this work is centralized in a single organization ever again,” Morrell told The Lens in February.
But Morrell said that the city didn’t typically get many responses to its consultant public bids because the existing consultants have held the contracts for so long that other firms may have assumed that “the fix was kind of in and it wasn’t worth it.”
That’s why Morrell and the council decided to put out a public bid in February to hire a “headhunter” recruitment firm that would go out and encourage new firms to apply for the advisor contracts. But the council received zero responses to that bid.
So in October, the council released a public bid for new utility consultants without the help of a headhunter. But that public bid also failed to attract any new responses and left the council with only one option — rehire Dentons and Legend.
Jesse George, New Orleans policy director for the Alliance for Affordable Energy and frequent critic of the consultants, gave the council credit on Tuesday for making a real effort at moving away from Dentons and Legend.
“I actually just wanted to commend the council,” George said. “You did really try to solicit bids for these contracts. We were disappointed, as I know you were, in the results of those efforts. But we’re encouraged by the expansion of the Council Utilities Regulatory Office this year.”
Morrell said that at this point, it appeared that the only way to break the city’s reliance on Dentons and Legend was to continue the council’s mission to expand its in-house expertise in CURO.
“The only way you’re ever going to disrupt this is to train people to be able to do that work,” Morrell said. “As we grow CURO in the long term, what we’ll see for our New Orleans City Council with a robust and massive CURO office is that it will save us a tremendous amount of money because in-house is cheaper than doing it via contracts.”
Councilman Oliver Thomas noted that the long-term consultant team no longer included as many minority and local businesses as it used to. The long-time consulting team used to include a third firm along with Legends and Dentons — a local and Black-owned law firm run by Walter Wilkerson. Wilkerson, however, passed away in 2018 and his firm no longer works on the consulting team.
Thomas asked what the council was doing to fix the lack of local minority work. Spears said that Dentons was starting a partnership with the historically Black Southern University to provide internships.
Morrell added that through the CURO office, the city would be training a new generation of utility regulation experts who could eventually go on to found their own firms.
“Those individuals who learn that expertise at CURO, who learn about the regulatory efforts from a municipal level and perspective, future people from that office can then go out… and compete for the work locally because they’ll have been taught locally,” Morrell said.