A major Sandy contractor has been paid $36 million — more than half the value of its three-year contract with the state — despite being terminated for performance issues after just eight months, a member of Gov. Chris Christie's administration said Monday.
Community Affairs Commissioner Richard Constable said the administration severed ties with Hammerman & Gainer Inc., or HGI, in January after some storm victims' grant applications were lost or improperly rejected. Roughly 80 percent of rejected applications were deemed eligible on appeal.
Constable told the Assembly Budget Committee the administration is in discussions with the New Orleans-based HGI over an additional $22 million the company has billed the state. The contract called for HGI to be paid $68 million— $59 million in the first year — to oversee a home rebuilding grant program for three years that is being financed with federal Sandy recovery funds.
Because the severance is being negotiated, and could wind up in litigation, Constable declined to discuss details of the contract termination. But he did say the decision to end the agreement was mutual and followed months of attempts at corrective action.
Most of HGI's work has been absorbed by the state, he said.
He also told the panel it's not unusual for storm recovery firms to underperform. Few companies perform such work, he said.
There were two bidders for this contract; HGI's bid was $130 million less than its competitor for essentially the same work.
It now seems obvious that HGI underestimated the scope of the project, Assemblyman Anthony Bucco said.
Documents released by the Treasury Department to a housing advocacy group in February showed bills from HGI totaling $51 million, about three-fourths the total amount of the contract. Those documents showed $10.5 million had been paid and $18 million was outstanding. HGI submitted additional invoices since then, said Community Affairs spokeswoman Lisa Ryan.
Constable said Monday that HGI had distributed about $200 million out of $800 million available to homeowners in the first round of federal post-Sandy funds, leading Assemblyman Gary Schaer, the budget committee chairman, to note what he sees as a pressing need for legislative oversight of the distribution of Sandy aid.
The program gives grants to homeowners to cover costs up to $150,000 that are not picked up by insurance or other government programs.
Schaer, a Democrat, renewed his criticism of the Republican administration for a lack of information on storm recovery progress.
He said the administration has dragged its feet in hiring integrity monitors to oversee the largest Sandy aid contracts, which, in turn, has delayed the monitors from issuing progress reports on the largest contracts.
The first reports, due in July, will come from five monitors out of 14 that are supposed to be in place, Democrats say.
Constable declined to comment after the hearing, except to say the administration is complying with all applicable state laws.
Kevin Roberts, a spokesman for Christie, said the administration has controls in place to ensure accountability and oversight.
The second round of $1.4 billion in recovery funding is due to the state this spring.