Alexa
  • Directory of Taiwan

Federal auditors: With $1 billion already wasted, more Katrina abuse yet to emerge

Federal auditors: With $1 billion already wasted, more Katrina abuse yet to emerge

The tally for Hurricane Katrina waste could top $2 billion next year because half of the lucrative government contracts valued at $500,000 (euro379,017)or greater for cleanup work are being awarded with little competition.
Federal investigators have already determined the Bush administration squandered $1 billion on fraudulent disaster aid to individuals after the 2005 storm. Now they are shifting their attention to the multimillion dollar contracts to politically connected firms that critics have long said are a prime area for abuse.
In January, federal investigators will release the first of several audits examining abuse in more than $12 billion (euro9.1 billion) in Katrina contracts. The charges range from political favoritism to limited opportunities for small and minority-owned firms, which initially got only 1.5 percent of the total work.
Katrina swept ashore on Aug. 29, 2005, in southern Louisiana, Mississippi and Alabama, leveling homes and businesses along the Gulf Coast. Its storm surge breached levees in New Orleans, unleashing a flood that inundated the city. The hurricane left more than 1,300 people dead, hundreds of thousands homeless and tens of billions of dollars worth of damage.
A series of government investigations in the storm's wake faulted the Bush administration for underestimating the threat and failing to prepare by pre-negotiating contracts for basic supplies in what has become the nation's costliest disaster.
Earlier this month, the Government Accountability Office said its initial estimate of $1 billion (euro0.76 billion) in disaster aid waste was "likely understated," citing continuing problems in which FEMA doled out tens of millions of dollars in fraudulent housing assistance.
"Based on their track record, it wouldn't surprise me if we saw another billion more in waste," said Clark Kent Ervin, the Homeland Security Department's inspector general from 2003-2004. "I don't think sufficient progress has been made."
He called it inexcusable that the Bush administration would still have so many no-bid contracts, noting that auditors and Federal Emergency Management Agency director David Paulison himself have said they are prime areas for waste.
"It's a combination of laziness, ineptitude and it may well be nefarious," Ervin said.
FEMA spokesman James McIntyre said the agency was working to fix its mistakes by awarding contracts for future disasters through competitive bidding. Paulison has said he welcomes additional oversight but cautioned against investigations that are not based on "new evidence and allegations."
"As always, FEMA will work with Congress in all aspects to ensure that we are carrying out the agency's responsibilities," McIntyre said.
Democrats in Congress called for more accountability. When they take over in January, at least seven committees plan hearings or other oversight _ from housing to disaster loans _ on how the $88 billion (euro66.71 billion) approved for Katrina relief is being spent.
A study earlier this year by Rep. Henry Waxman, a Democrat from California, estimates that hundreds of millions of dollars were likely wasted on contracting, citing instances of double-billing and thousands of trailers meant as emergency housing sitting empty in Arkansas.
Among the current investigations:
_ The propriety of four no-bid contracts together worth $400 million (euro303.21 million) to Shaw Group Inc., Bechtel Group Inc., CH2M Hill Companies Ltd., and Fluor Corp. that were awarded without competition.
The contracts drew immediate criticism because of the companies' extensive political and government ties, prompting a promise last year from Paulison to rebid them. Instead, FEMA rebid only a portion and then extended their contracts once, if not twice _ to $3.4 billion (euro2.58 billion) total _ so the firms could finish their remaining Katrina work.
The four companies, which have denied that connections played a factor, were among six that also won new contracts after open bidding in August. The latest contracts are worth up to $250 million (euro189.51 million) each for future disaster work.
_ The propriety of 36 trailer contract awards designated for small and local businesses as part of Paulison's promise to rebid large contracts.
Homeland Security Inspector General Richard Skinner is reviewing whether some small and local businesses were unfairly shut out in favor of winners such as joint venture PRI-DJI. DJI stands for Del-Jen Inc., a subsidiary of Fluor, which has donated more than $930,000 (euro704,972) to mostly Republican candidates since 2000.
"It's not what you know, what your expertise is. I don't even believe it's got much to do with price. It's who you know," contends Ken Edmonds, owner of River Parish RV Inc. in Louisiana, a company of 9 people whose application was rejected.
PRI, a minority-owned firm based in San Diego, said it is the "majority partner" with Del-Jen as part of a federal mentoring program offered by the Small Business Administration. The joint venture received four Katrina contracts worth up to $100 million (euro75.8 million) each based on price and "knowledge of work with the federal government," president Frank Loscavio said.
_ Whether small and minority-owned businesses were unfairly hurt after the Bush administration initially waived competition requirements.
For many weeks after the storm, minority firms received 1.5 percent of the total work _ less than one-third of the 5 percent normally required _ because they were not allowed to bid for many of the emergency contracts.
The National Black Chamber of Commerce called the figure appalling because of the disproportionate number of poor, black people in the stricken Gulf Coast, prompting Sen. Olympia Snowe, a Republican from Maine, and Rep. Donald Manzullo, a Republican from Illinois, to request the U.S. Government Accountability Office to investigate.
FEMA has since restored many of its competition rules, and the number of contracts given to minority firms is now about 8.8 percent, according to the agency.
Stephen Ellis, vice president of the watchdog group Taxpayers for Common Sense, said he has no doubt that new reports of significant waste have yet to emerge. The challenge now, he said, is to fight the urge to slacken oversight as Katrina recedes in people's minds.
"In business, people are like sharks _ they smell money in the water," Ellis said. "Companies will continue to swarm at this type of government spending. The incentive is still there to take advantage of free money."
___
On the Net:
A copy of the semiannual report on Katrina spending by the agencies' inspectors general:
http://www.dhs.gov/xoig/assets/katovrsght/OIG_pcie_sept06.pdf
Federal Emergency Management Agency:
http://www.fema.gov/
Government Accountability Office:
http://www.gao.gov/


Updated : 2021-07-27 05:11 GMT+08:00