The cleanup from Hurricane Katrina is massive, and is still going on. But, one year later, it’s being slowed down by all the people trying to grab a piece of the action.
They’ve seen it coming all along. Small business owners, looking for scraps of work from the few big companies that got big government contracts right after the storm – a process that should be shrouded in secrecy. One year later, small business owners say their worst fears have come true.
They’re on the front lines of the cleanup, but these subcontractors say, all too often, they’re not getting paid.
Rob Willis came here from Florida eight months ago. Now, he’s had it.
“I am pulling out," he said. "At the end of this month, I’m outta here. I am fed up with fighting these people for money. I am fed up.”
For every subcontractor clearing debris in New Orleans, there’s layer upon layer of contractors reaching all the way to the federal government, and the guys at the bottom of the food chain are getting eaten alive.
Try and follow the money and you being to see what the subcontractors are up against. The Army Corps of Engineers says it pays its bills on time every month. Payments were made to the Environmental Chemical Corporation, ECC, which won this one billion dollar cleanup contract from the corps – two weeks after the storm. When we called ECC in New Orleans they sent us back to the Army Corps of Engineers. The next step down the chain is in the same building as ECC, but Ameritech Construction sends us to ECC headquarters in California, which doesn’t return our calls.
Welcome to Rob Willis’ world. There are at least four layers of contractors between him and his money. It’s not at all clear what some of those layers are for, but everyone takes a cut. Debris removal contracted to Willis at $13 a yard; he's been paid as little as $4. Willis figures he is out close to $15,000, or the cost of equipping an entire crew.
The problem is all too common, says the head of the Senate Homeland Security Committee, who is pushing a law to make those prime contractors do more of the work themselves, cutting out all the middlemen.
“In general, what we are doing is making sure there are better controls in all of these programs”, said Sen. Susan Collins of the Homeland Security Committee.
But it's too late for many subcontractors. One year after Katrina, some have decided to just take their losses and leave. But these guys say for every one who does, there are more victims who’ll take their place doing the clean-up, while other clean up.
The Army Corps of Engineers Chief of Contracts here in New Orleans, Jean Todd, tells CNBC the Corps is actively encouraging those prime contractors to cut down on the layers of subcontractors. The Corps doesn’t get involved in disputes between subcontractors and contractors, but she says Katrina is anything but normal.
So now, some of those subcontractors are getting a little help in their collections from the Army.