Documents Show Ousted Sandy Contractor Billed N.J. $51M in 8 Months

By Geoff Mulvihill | March 3, 2014

Newly released documents show a company hired to oversee applications for a New Jersey home-rebuilding program after Superstorm Sandy billed the state $51 million over eight months before an agreement to end the deal.

That meant that New Orleans-based Hammerman Gainer Inc. billed for three-fourths of the amount of its three-year, $68 million contract in just eight months.

The documents laying out financial aspects of the dispute were made public on Feb. 26 by Fair Share Housing Center, an advocacy group that obtained them through an open public records request with the state’s Treasury Department.

The company, its contract and work and the state’s dealings with it, have been a touchstone for storm victims angry over the state’s response to the devastating 2012 storm.

The housing program that HGI oversaw has had administrative problems as well as a funding issue: There is not enough money allocated in the federal government’s storm relief package to pay to rebuild all the homes damaged or destroyed in the storm.

The program gives grants to homeowners to cover costs up to $150,000 that are not picked up by insurance or other government programs.

HGI was hired last year to run the application process. In January, the state confirmed that the company was no longer on the job but did not say more.

Adam Gordon, a lawyer at Fair Share, is still critical of the state for not explaining exactly why HGI was ousted. “New Jersey’s unwillingness to be clear on what HGI did wrong makes it impossible for the public to be sure the problems have been resolved,” he said in a statement.

Last week, for the first time, Community Affairs Commissioner Richard Constable told a panel of lawmakers that the firm had performance problems, but he did not elaborate and did not mention how much the company billed in the first eight months of its deal. Constable said then that there could be litigation over how much the state owes the firm.

He also said the other bidder was seeking $190 million over three years to do the same work. The price difference was significant enough, he said, that it would have been “irresponsible” not to hire HGI.

On a radio show on Feb. 26, Gov. Chris Christie downplayed the company’s removal. “We had fundamental disagreements,” he said.

Constable’s office put out a statement on Feb. 26 reiterating that the state severed its dealings with HGI over performance-related issues.

The documents show HGI and the state agreed on Dec. 6 that the contract would end in one month with the option to extend the contract another two weeks to Jan. 20. The contract was later extended.

The agreement called for the state to pay the company $10.5 million. Constable said at the hearing before the state Senate legislative oversight committee last Monday that the payments were for work the company performed, not a buyout to end the contract.

The company says in the documents that New Jersey has not paid bills totaling $18 million. That sum is under arbitration.

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