Why does New Orleans often fail to fix roads, infrastructure? What a new report says.

New Orleans’ system for paying City Hall contractors is plagued by deficiencies that have delayed payments and may be deterring companies from doing business with the city, Louisiana’s Legislative Auditor said in a new report.

While many vendor invoices appear to be paid within a mandated 30-day window, the audit found that, in general, the city cannot accurately say how long it takes to pay vendors. The city may be deleting and re-submitting some invoices in order to meet the 30-day window, auditors said. And delays in drawing up contracts prevent firms from submitting invoices once they’ve performed work for the city, leading to delays in paying them.

The audit, which stemmed from a resolution passed by the City Council at the request of Council President Helena Moreno, drew from city data as well as interviews with vendors and city employees.

It offers new insights into a problem that, anecdotally, has long frustrated good-government groups, elected officials and vendors themselves, who note that delays in processing contracts can hamstring the delivery of important services.

In a statement Monday, Moreno called the audit’s findings indicative of “a multi-tiered failure.”

“Ultimately, it’s the people of the city who suffer most because work and projects are then delayed, and we’re already learning of vendors who do not want to work with the City anymore because of delayed payments, which means those who are still willing, will cost taxpayers more,” Moreno said.

The audit included recommendations that the city adopt new tools to track the process, identify why payments have become delayed and stop deleting unprocessed invoices.

In an Aug. 1 letter, Mayor LaToya Cantrell said she agreed with all of the report’s recommendations. She identified a number of steps she said the city has already taken to start implementing the suggestions.

She thanked the Legislative Auditor for capturing “the process sensitivities and roadblocks that we have continually reviewed and were in the midst of enhancing.” 

New Orleans law, under an ordinance approved in April, requires the city to pay vendors within 30 days once a vendor uploads an invoice into the city’s Budget, Requisition, and Accounting Services System.

State law also puts municipalities on the hook for interest payments once reimbursement to vendors exceeds 45 days.

The Legislative Auditor identified several areas where layers of bureaucracy further delay payments to vendors in New Orleans. For instances, some invoices must be approved by the originating city department before vendors can submit the invoices into the accounting system, or BRASS. However, the city does not capture or monitor the timeliness of these approvals, the report says.

The audit cautions that payment issues can ultimately cause a delay in services — road work, repairs to city buildings, inspection services and more.

“Not paying vendors timely can result in fewer vendors that choose to conduct business with the city and bid on city projects, potentially affecting the quality, timeliness, and price of goods and services,” the audit says.

Those concerns received close attention a year ago, when infrastructure failures plagued the New Orleans Police Department headquarters and other city government buildings during a stretch of extreme heat. 

At the time, multiple city officials said long-running inefficiencies with the city’s procurement and contracting processes had snarled City Hall’s response.

A top city official said during that crisis that New Orleans’ Department of Property Management had struggled to develop new contracts after a 2021 report by the city’s inspector general found that the department had improperly used an expedited contractor approval process for non-emergency situations. 

Staff writer Sophie Kasakove contributed to this report.