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Study: Millions wasted in Katrina contracts

The government awarded 70 percent of its contracts for Hurricane Katrina work without full competition, wasting hundreds of millions of taxpayer dollars, says a House study released Thursday by Democrats.
Workers swing sledge hammers during the construction on a monument to victims of Hurricane Katrina in New Orleans
Construction workers build a monument to victims of Hurricane Katrina in the Lower Ninth Ward of New Orleans on Wednesday.Lee Celano / Reuters file

The government awarded 70 percent of its contracts for Hurricane Katrina work without full competition, wasting hundreds of millions of taxpayer dollars in the process, says a House study released Thursday by Democrats.

The report, a comprehensive overview of government audits on Katrina contracting, found that out of $10.6 billion in contracts awarded after the storm last year, more than $7.4 billion were handed out with limited or no competitive bidding.

In addition, 19 contracts worth $8.75 billion were found to have wasted taxpayer money at least in part, costing taxpayers hundreds of millions of dollars, according to the report. It cited numerous instances of double-billing by contractors and cases of trailers meant as emergency housing sitting empty in Arkansas.

Aaron Walker, a national spokesman for the Homeland Security Department’s Federal Emergency Management Agency, the primary agency for awarding hurricane contracts, said FEMA was already working to improve its contracting process based on “previously issued, non-politicized, reports.”

“This report has no new revelations,” he said. “At the height of hurricane season, it is a disservice to FEMA employees, who are working around the clock to continue retooling this agency.”

In their report, Democrats acknowledged that some no-bid contracts were necessary to provide quick aid in the immediate aftermath of the August 29, 2005, storm. But they noted that while 51 percent of Katrina contracts awarded in September were limited or no-bid, that percentage increased to 93 percent in October.

Last December, FEMA was still awarding 57 percent of the total dollar value of contracts without full bidding.

'Truth squad' highlighting Katrina costs
The report came as House Democrats announced a new six-member “truth squad” they said would highlight the problems before the November congressional elections.

“It is apparent that taxpayers and the residents of the Gulf Coast are paying a steep price for the failure to stop waste, fraud and abuse in federal contracting,” said Rep. Henry Waxman, D-Calif., the top Democrat on the House Government Reform Committee and a member of the new panel.

He said the new panel, made up of six House Democrats, was needed because the Republican-controlled Congress has resisted probing such allegations against the Bush administration.

In the House report, Democrats faulted FEMA for recently awarding new $400 million temporary housing contracts for future disaster work to Shaw Environmental & Infrastructure, Bechtel National, CH2M Hill Inc. and Fluor Enterprises Inc.

Those four companies have previously been criticized by lawmakers for receiving no-bid Katrina contracts. Three of them — Bechtel, CH2M Hill and Fluor — were found by government auditors to have wasted money in the hurricane effort.

The Shaw Group Inc.’s lobbyist, Joe Allbaugh, is a former FEMA director and a longtime friend of President Bush, while Bechtel CEO Riley Bechtel served on Bush’s Export Council from 2003-2004. CH2M Hill Inc. and Fluor Corp. have done extensive previous work for the government. The companies have denied that political or government connections played a factor.

FEMA has defended the latest contracts, which were awarded earlier this month after a full bidding process, as the best among 13 proposals submitted based on quality of plans, price and resource capacity.