Windfalls of Disaster: Information on Reconstruction Contracts

"The Bush administration is importing many of the contracting practices blamed for spending abuses in Iraq as it begins the largest and costliest rebuilding effort in U.S. history. ... The first large-scale contracts related to Hurricane Katrina, as in Iraq, were awarded without competitive bidding, and using so-called cost-plus provisions that guarantee contractors a certain profit regardless of how much they spend." -- WSJ, 9/12/05

NEW (2/28/06): The Gulf Coast Commission on Reconstruction Equity released a report assessing the contracts after 6 months.

Contractors looking to bid have been directed to this site, which directs those interested in bidding on subcontracts in LA and MS to Ashbritt. and Phillips & Jordan (AL).

According to The Hill, the companies were selected by the Army Corps of Engineers before Katrina landed to lead the cleanup effort. The 6,300 inquiries that the Corps received from potential contractors will be directed to these two primary contractors. Ashbritt has close ties to top D.C. lobbyists, including Mississippi Governor Haley Barbour's former lobbying firm, Barbour, Griffith & Rogers, which helped foremer FEMA head Joseph Allbaugh set up New Bridge Strategies, a company set up to help corporations get contracts in Iraq. Barbour helped Ashbritt seek reimbursement for work it had done in the aftermath of hurricanes in Florida, according to former Louisiana Rep. Johnny Hayes (D), who is currently a lobbyist for Ashbritt in Washington. Allbaugh is a lobbyist for Halliburton and consults for at least one other contractor, Shaw.

FEMA has not only been criticized for its slow response to Katrina, but is widely understood to be ill-prepared to manage a massive reconstruction program. The agency is farming out its procurement to Acquisition Solutions Inc. "It's an unmitigated disaster that the United States federal government lacks the fundamental capacity to do its own contracting," says Steven Schooner, a government-procurement specialist at George Washington University Law School.

Companies with FEMA Contracts to Build Housing:

Bechtel (also worked in Iraq)
Fluor (also worked in Iraq) Fluor has also paid millions of dollars to settle federal government lawsuits ó including one that accused it of overbilling for 1989 hurricane cleanup work.
Shaw (a client of former FEMA director Joe Allbaugh, Shaw also worked in Iraq). The company is being investigated by the SEC.
CH2MHill (also worked in Iraq)

Other FEMA Contractors

Dewberry
Kenyon International

Databases of Contractors:
Taxpayers for Common Sense has begun to compile information on the contractors.
The Project on Government Oversight is also tracking the Katrina contracts and related issues.

The Army Corps of Engineers listed companies that had contracts as of 9/16 here
Reports also suggest that Dutch engineering firms Smit Internationale and Mammoet are also under contract to the Army Corps.

Others

Halliburton received a cleanup order from the Navy under a previously obtained contract.
Segovia (Air National Guard)
Blackwater, a private military contractor that has worked in Iraq, is also in New Orleans providing security for FEMA contractors.

Loosening of Procurement Policies

Federal procurement rules were largely suspended right after Katrina. In addition to no or limited-bid contracts, the administration used the emergency to enact certain exemptions, many of which are unnecessary and counterproductive.

For example, shortly after Katrina, the decision was made to change procurement standards to exempt any purchase up to $250,000 from normal federal procurement requirements such as competitive bidding, a certain incentive for the same kinds of waste, fraud and abuse seen in Iraq, as contractors and government employees using the government-issued credit cards can charge up to that amount at once, thereby avoid cost-comparisons and competitive bidding among subcontractors. (For a critique of this policy see testimony of Prof. Christopher Yukins.) On September 13, David Safavian (the Office of Procurement Policy chief who would soon be indicted in association with the Abramoff investigation) issued guidelines for the new spending authority, which it says will go only to select individuals, and many purchases will require prior approval. Two weeks later, responding to criticism and warnings of fraud, OMB lowered the limit back down to 2,500.

In addition, Bush signed an order that allows contractors to profit at the expense of workers by lifting prevailing wage requirementsfor contractors under the Davis-Bacon Act. (Related CNN story.). A Congressional Research Service report revealed by the Federation of American Scientists suggests the policy may be illegal. The same policy was introduced in a related bill (HR 3684) by Rep. Flake, and was originally proposed in this Heritage Foundation paper.

Contractors are also seeking liability shields according to a Washington Post report, which suggests that cleanup contractors also want Congress to limit any lawsuits or damage claims arising from their work. Rep. Gary Miller (R) and others support the proposal.

In addition, the Civilian Agency Acquisition Council issued a letter on 9/7 which exempted purchases of up to $15,000 from acquisition set-aside requirements.

The Department of Labor's Office of Federal Contract Compliance Programs (OFCCP) also waived affirmative action plan requirements for three months. See "Contractors Get Affirmative Action Exemption," Jonathan D. Glater, NYTimes (9/20/05)
Meanwhile, despite assertions by FEMA that 9% of contracts put out as of 9/23 went to minority-owned businesses, reports suggest that no-bid contracts given to well-connected firms has resulted in complaints by a "growing number of minority business owners across the Gulf Coast who say they're being shut out of the first wave of Kartrina-related contracts. "They're just giving the contracts out without a competition. But they won't give a contract to a minority firm," one contractor told the Wall Street Journal. "It's like they're turning back the clock." After hearing reports that FEMA gave out just 1.5% (instead of the required 5%) of $1.6 billion in contracts to minority-owned businesses, Sen. Olympia Snowe, R-Maine, and Rep. Donald Manzullo, R-Ill., asked the Government Accountability Office to investigate. For more see this piece (Chicago Sun-Times, 10/5/05)

Other Regulatory Waivers

OMB watch is tracking questionable regulatory waivers sought by the federal government.

House Government Reform Committee Chair Tom Davis (R-Va.) and Rep. Kenny Marchant (R-Texas) have introduced a bill (HR 3766) that POGO says will waive meaningful taxpayer protections and competition in contracting whenever Congress or the President declares a national emergency or disaster. The provision is expected to be included in a managerís amendment to the next Katrina relief bill. "The Disaster Profiteering Act", as it has been called creates many "possibilities for abuse -- lots of big ones," says Joshua I. Schwartz, co-director of the government procurement law program at George Washington University. "This is not a finely honed instrument or a tweak. This is Tom Davis saying all our procurement could be done under other-than-competitive procedures."

Rep. Inhofe introduced S. 1708, which expands from 180 days to 5 years the term of the any emergency/major disaster lease and it expands who has authority to declare any such emergency/major disaster from the Pres. to the Pres. and the head of a federal agency. 5 years seems way too long and any lease associated with terrorism could be included. E.g. on September 22, the President extended the national emergency with respect to terrorism.

Oversight: DHS Inspector General
The DHS Inspector General sent a team of 30 investigators to monitor reconstruction contract work in LA, MS and AL.
Matthew Jadacki, a former acting chief financial officer at FEMA, is expected to head the Office for Hurricane Katrina Oversight within the DHS IG's office to "focus on preventing problems through a proactive program of internal control reviews and contract audits to ensure disaster assistance funds are being spent wisely." He will oversee a staff of 150.

Although many members of Congress are expecting the Inspectors General to provide tough oversight of the Katrina contracts, we should remember that the IGs that oversaw the Iraq contracts were partisan appointees that were soft on Halliburton and other companies.

Oversight: Congress
House Committee on Energy and Commerce hearings on guarding against post-Katrina waste fraud and abuse
Senate Committee on Homeland Security and Government Affairs Katrina page, 10/6 hearing on FEMA.

Dubious Contracts: Examples

1) Akina Bernie Thompson (D-MS) has called for a federal investigation into this Alaska-based company's $40 million no-bid Homeland Security Department contract to repair hurricane-battered schools in Mississippi. The company "has no experience supplying portable classrooms for the federal government." The company's lobbyists are Blank Rome, a top lobbying firm whose CEO, David Girard-diCarlo, was former Homeland Security Secretary Tom Ridge's fundraiser when Ridge was governor of Pennsylvania. Other ex-DHS employees at Blank Rome include lobbyist Mark Holman,and Ashley Davis, who worked for Ridge.

2)
Carnival Cruise Lines FEMA gave the company a $236 million agreement for three ships that "bob more than half empty in the Mississippi River and Mobile Bay." To view the contracts go to the MSC Reading Room. Also see Rep. Waxman's objections in this 10/20 letter to DHS Secretary Chertoff.

For More on Katrina and the contractors see:

"Gulf Firms Losing Cleanup Contracts" (Washingt post investigation revealing that 90 percent of initial $2 billion in contracts went to companies outside the 3 most affected states, 10/4/05)
"Gulf Firms Losing Katrina contracts," (90 percent of first batch of contracts went to out-of-state companies) Washington Post, 10/4/05
"$236 Million Cruise Ship Deal Criticized", Washington Post 9/28/05
"Big, Easy Iraqi-Style Contracts Flood New Orleans" by Pratap Chatterjee, CorpWatch, 9/20/05
"Contracts for recovery work raise controversy" USA Today, 9/14/05
"Post-disaster contracts lead to confusion,", by Kimberly Palmer, GoxExec.com (9/6/05)
"A Major Test for FEMA and Its Contracting Crew," by Griff Witte and Charles R. Babcock, Washington Post (9/13/05)
"Watch Who's Cleaning Up," by Charlie Cray (TomPaine.com)
"Corporations of the Whirlwind" by Tom Engelhardt and Nick Turse
Halliburtonwatch.org on lobbyist Joe Allbaugh
"No Bid Contracts Win Katrina Work," by Yochi J. Dreazen, Wall Stree Journal (9/12/05)
"Firms With White House Ties Get Katrina Contracts," Reuters 9/10
POGO also has a related page w/many useful articles.
"4 Firms Hired to Remove Debris in the Gulf," Washington Post (9/16/05)
"Not the New Deal," Paul Krugman (NYTimes, 9/16/05)
"Joe Allbaugh, Disaster Pimp" by Tim Noah (Slate, 9/7/05)
Steve Kelman: Media Asking Wrong Questions (former Office of Federal Procurement Policy administrator, 9/20/05)
"After Katrina, Republicans Back a Sea of Ideas," WSJ 9/15

David Safavian, the former head of the OMB Offive of Procurement Policy, was arrested on Monday, September 19 in association with an ongoing investigation into the affairs of lobbyist Jack Abramoff. Savavian had been working on Katrina contracts. Previously, he lobbied for Shaw Environmental, one of FEMA's contractors, also represented by Joe Allbaugh (former head of FEMA).

Global Warming and Katrina

"Katrina's real name is Global Warming," by Ross Gelbspan, Boston Globe, (8/30/05)
Katrina no more explains the link to global warming, as does Real Climate
Global Warming "Past the Point of No Return" Independent (UK) (9/16/05)
NRDC list of studies on global warming.
A Republican Study Committee report on budget offsets would eliminate various energy efficiency programs.
"Climate Loonies" deny the obvious: It's global warming, stupid

A Predicted and Predictable (and Partly Preventable) Disaster:

"Drowning New Orleans," Scientific American, October 2001
"Washing Away," (2002 5-part series in Times-Picayune)
National Geographic (October 2004)
Sydney Blumenthal
Will Bunch
"We Asked For It," by David Helvarg (LA Times, 9/11/05)
Is Bush to Blame? by FactCheck.org
Design Shortcomings Seen in New Orleans Flood Walls NYTimes (9/21/05)

Environmental Damage

SEEN is compiling useful links related to oil spills, environmental damage
Daily Kos has info on oil spills, damage too.
Oil Spills "Rival Exxon Valdez", Dallas Morning News (9/16/05)
Bush seeking to blame environmentalists for levee failure, article in Clarion Ledger (9/16/05)
EPA Expert: Toxic Water Could Make New Orleans Unsafe for a Decade The Independent (UK)
"Mother of All Toxic Cleanups" Business Week, 9/26/05
NIEHS info on environmental damage
OMB Watch has compiled a list of toxic sites in New Orleans and surrounding parishes.
NRDC: "Rebuilding for a Safer Future"

Other:

E and E TV
The Heritage Foundation has been pushing proposals in Congress
"Budgeting for Katrina" Center for American Progress report
The Republican Study Committee, a group of 100 conservative Republicans, has outlined a plan to offset the cost of rebuilding. See Operation Offset (and related stories in Counterpunch and The Hill).
First Gov (Federal Government Portal)
Wikipedia: Hurricane Katrina

Groups working with the communities affected:

ACORN
Gulf Coast Commission for Reconstruction Equity
Reconstruction Watch (NY) (NY Good Jobs First, post-9/11)
Katrina Information Network
Action Donation Katrina Page (list of relief organizations)
Green Relief
New Orleans Network
People's Hurricane Relief Fund
Justice for New Orleans
Common Ground
Four Directions Solidarity Network