Iglesia del convento de la Magdalena Medina del Campo.

Mr. RENTROP. Thank you for allowing me to be here today and

speak with you all. I really appreciate it.

I am here today to describe my experiences in working with the Corps of Engineers two times. First was in 2006. I chartered a tug- boat to go to work on a Corps project in New Orleans.

And the way we do business in the private sector is if Sid wants to hire me he will call me and hire me and I will go to work. If I do a bad job, he will fire me.

But in any case, I have put a tug to work over there and I got paid for the first month’s worth of work but then the second month’s worth of work I did not get paid, $120,000.

Now, this was not my boat. This was Sid’s boat. I paid Sid for his boat. I took the hit. The job disappeared. The corporation dis- appeared. I found out later the corporation was formed 30 days prior to the letting of the contract and now they are gone.

Somewhat of a similar situation is happening now where we have a contractor who is not a contractor but is made a contractor and he got a $68 million contract from the Corps.

This contract was fatally flawed from the start. It should never have been allowed to proceed. But I was just so proud to put my tug boats to work rebuilding the levees around New Orleans. It meant so much to me that I would probably have went in there blindly, and I guess I did in retrospect.

But in any case, I will tell you a little bit about it, and this is a 15-minute informational package that I am going to try to squeeze into four.

We mobilized the project on January 4 of 2010. Our equipment sat there on payroll for approximately 90 days before we were in- structed to begin the project.

Now, we were called there for inspection purposes only. We sat there truly crewed, full barges, everything ready to go. We did not get paid $439,000 and a change.

We started moving clay on March 6 and we moved all the way from March 6 to June 4. I have invoiced a total of $557,000 to my contractor. I have been paid $195 and change; the total outstanding $311,000.

The project barges, I do not own barges. I chartered them from some people in New Orleans. I currently still owe them $38,000. These barges at the end of this project had to be cleaned, surveyed, repaired, and return to their owner.

I was not contractually responsible for that, but as I was the charterer of the barges, the responsibility was left to me. I still owe those people that clean these barges $133,000, and they are from New Orleans.

I also chartered to inland deck barges in which to put the exca- vators on top of for offloading. We started the operation. During

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the offload operation, the barges were basically damage to a point of—anyway they were damaged $214,000 in which the owner of the barges looks to me to pay. Excuse me.

My contractor was terminated on June 3. The prime approached me to continue the project. I agreed to continue the project and went on a day-rate basis only. You paying me for my equipment on a per-day basis.

At the end of nine days, I requested to get paid because I could not pay my captains and deckhands anymore. He refused to pay me. I left the job. That cost $149,000.

The Corps terminated the marine portion of the project on or about August 5 of 2010. The project owes Tiger Tugz to date $1,400,000. There are also a first-tier sub and a second-tier sub that are about at the same level of debt.

The Corps classified this contract as a supply contract, and this is not a supply contract. A supply contract is the provision of paper clips or glasses, from my point of view.

All civil projects and construction projects are bonded. So if we do not get paid, we go lien the bond and we have an avenue to get paid. There is no bond here. I do not know why it was classified as a supply contract. Obviously, they were not supplying paper clips. This was a major, major construction project. It was worth $68 million. That is what the contract was let for.

The prime contract in this case, like we spoke of earlier, is an attorney from North Louisiana. He has never been a contractor, does not own a piece of equipment. How could you manage a $68 million contract?

There is a settlement proposal that we put together according to Federal Acquisition Regulations, we put it together. In fact, my other second-tier subcontractor with me, the offloader, submitted a settlement proposal directly to the Corps last week and they sum- marily rejected it.

So, we are going through the proper procedures but still the Corps, and I can go back and talk about it. We have begged and pleaded and knocked on doors, and we even had meetings and it is a stone wall act. It is a complete stonewall.

There are procedures that can be followed. But General Davis’s statement, no, they cannot get involved, they cannot get involved. But they can get involved.

The difference between what the General said and my case is that this case involves a termination for the government’s conven- ience. It is not a normal circumstance; and under FAR 49.108–7, it says that the contracting officer may get involved to settle prob- lems between the prime and the sub.

So, it is in writing. It is prefaced by case law. I have it here. There are not specific regulatory procedures allowing the Corps of Engineers to come in and get involved in settling these things. And so far to date, the Corps is refusing to do so.

Last in closing, I am way over and I apologize. I thank you all for providing me this forum and this opportunity to voice what happens to small business and this happens in south Louisiana a lot, and I do not know why.

Perhaps this testimony can be a catalyst that can lead to more small business contracting opportunities with our government and

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bring about a change in the Corps practices regarding the con- tracting of small businesses.

Just right quick before I end, when I took this project, I had four tugs and employed about 32 people. I had my fifth tug, brand-new tug being built. I was going to employ six to eight more people. That would have brought me up to 38 people.

At present, and in large part due to this contract, I have three tugs and I work 16 people because I am having to liquidate my as- sets just to stay in business and to pay the people I owe. Like I mentioned earlier, I owe from this project and it is a total of $693,000 that I owe in the process of executing my work for the government.

And I brought along two examples of what happens when you cannot pay. Two lawsuits. I am being sued professionally and per- sonally. And I thank you all very much.

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Chair LANDRIEU. Mr. Rentrop, we are so sorry for what has hap-

pened here, and Senator Snowe and I are going to do everything we can to not only fix your situation as quickly as we can do but to make sure this never happens again to legitimate contractors such as yourself doing more than an honest days work, having le- gitimately been in business doing work that is desperately needed.

It is a shame and a tragedy, and I personally am going to get involved to help you with your situation and any others similarly situated. I am aware of a few others, actually a dozen or more con- tractors, while the Corps is listening, and while FEMA is listening, out of Livingston Parish that do not have the amount of money on the line that you do, were engaged in different kind of work.

It was a debris removal contract as opposed to a construction, levee construction contract. But I bet in my office alone I have a half a dozen sort of similar situations. We are going to work through each one, and we are going to see what the law allows and what the agency will do and absolutely see why legal actions can be brought against a prime contractor that has obviously not oper- ated in good faith.

Go ahead, Ms. Nunez Airhart.

STATEMENT OF MINDY NUNEZ AIRHART, MARKETING DIREC-