‘Smart cities’ contractors drop out of project as investigation intensifies

The consortium of businesses that the city selected for its contentious “smart cities” proposal — called Smart+Connected NOLA — is withdrawing from the project, it announced in a statement on Monday. 

“Today, the Smart+Connected NOLA consortium (the “SC Consortium”) notified the City of New Orleans (the “City”) of its intent to exit the public-private partnership opportunity to develop and implement advanced broadband and smart city systems in the City,” the statement said. “Regretfully, due to significant uncertainty surrounding the future of the Project, the SC Consortium is unable to continue to pursue the Project under these circumstances.”

The announcement comes as the City Council ramps up an investigation into contract-fixing allegations that have plagued the project for months. Councilwoman Helena Moreno said on Monday that the investigation would continue, despite Smart+Connected NOLA dropping out.

“We must ensure that a contract award of this magnitude was not rigged and that there was not any quid pro quo. The people of this city need and deserve accountability, fairness, and transparency when it comes to city contracting.”

Councilman JP Morrell noted it was positive that the consortium noted in its letter that it would “cooperate with requests for additional clarification” regarding the public bid process.

“The council appreciates the efforts of the Smart+Connected NOLA consortium to put a pause on this process, and especially their willingness to cooperate in the investigation dealing with how this contract was let,” Morrell said. 

Smart+Connected NOLA had been selected by a city purchasing committee through a public bid process nearly a year ago, with the intent of signing a multi-year agreement on a sprawling project to create a new private, but “city-directed” internet service to compete with existing providers, while installing thousands of “smart cities” devices to collect data to improve city services and generate new revenue. 

But the city never finalized and signed a contract, and it now appears likely that it never will. 

“To allow the City to freely pursue the Project or another preferred alternative, we believe it is in the best interest of all parties for the SC Consortium to withdraw from the Project,” the statement said.

The city did not respond to questions about whether it planned to abandon the project, issue a new public bid or award the project and begin negotiating a contract with the second place bidder in the original public bid process — Cox Communications.

Since last year, The Lens has been reporting about the project’s lack of details, as well as contract-fixing allegations from Cox that accused the city of conspiring with a “pro bono” consultant to give Smart+Connected NOLA an advantage in the bidding process. The city dismissed those allegations. 

Public scrutiny of the project intensified over the last month. Facing pressure from the Cantrell administration to get on board with the project and a lack of clarity on key details, the City Council subpoenaed the administration. Last week, in response to the subpoena, the city released hundreds of pages of emails and other documents that gave fresh insight into how Smart+Connected NOLA got involved in the project.

Also last week, new information emerged revealing that the city official in charge of the project — director of the Mayor’s Office of Utilities Jonathon Rhodes — ran two side businesses in the “smart cities” industry and even consulted for Qualcomm, one of the two firms leading Smart+Connected NOLA. (The other leading partner was JLC Infrastructure, an investment firm founded by NBA legend Earvin “Magic” Johnson and Chicago investment banker Jim Reynolds, Jr.) 

After the document release and the new revelations about Rhodes, the council announced it was elevating its fact-finding mission into a full-fledged investigation. This week, on Wednesday, Rhodes is set to appear before the council and answer questions under oath in order to fulfill the council’s subpoena from earlier this month. Councilwoman Helena Moreno said she would be inviting the city’s inspector general to observe the hearing.

The Lens has also obtained a letter that Moreno sent to Rhodes on Monday, asking him to collect and bring a wide range of documents with him to the Wednesday hearing, related to his side businesses and personal connections with the member firms of Smart+Connected NOLA. The letter said that if Rhodes does not produce the documents, the council will issue an additional subpoena for them.   

The consortium said in its Monday statement that it believes it followed the city’s public bid laws, and would cooperate with inquiries regarding that bid process moving forward.

“The SC Consortium believes it has fully complied with the RFP’s process requirements, including those established by the City to ensure a transparent and fair bid, scoring and selection process. As such, the SC Consortium will continue to cooperate with requests for additional clarification required by the City regarding the SC Consortium’s bid submission.”

The project had already fallen into doubt prior to Monday’s announcement. The project as originally pitched required a multiyear agreement, which requires City Council approval. But earlier this year, the Cantrell administration decided that it would attempt to enter a one year agreement with the consortium, which does not require council approval, while it continued to negotiate a long-term contract and convince the council to approve it.

But last week, along with opening up an official investigation, the council also passed a resolution saying that any agreement signed for the “smart cities” project needed to be a multiyear contract, and therefore needed council approval.