The Federal Emergency Management Agency wasted billions of dollars by awarding contracts for services to maintain and remove emergency trailers for people displaced by Hurricanes Katrina and Rita to politically well-connected and financially risky companies, according to an inspector general’s report released Monday.
But FEMA defended its actions, saying the contracts were awarded fairly.
The report, (PDF) requested by Sen. Byron L. Dorgan (D-N.D.) and Sen. Mary L. Landrieu (D-La.) found that FEMA awarded contracts to companies without determining whether the companies would be able to complete the work and accepted unrealistically low prices which then later ballooned to almost ten times the original ceiling.
In addition, several of the contract bidders posed “significant financial risk, including bidders with weak financial statements, incomplete and missing financial documentation, and negative net worth,” the report said. “FEMA allowed these contracts to go forward, in part because FEMA officials believed that the contract’s low minimum purchase requirement of $50,000 protected FEMA from contractor default or poor performance.”
Remember, these contracts were for companies to maintain, inspect and remove the trailers.
FEMA awarded no-bid contacts to four industry giants to install, maintain and then deactivate the units. The contracts originally had a ceiling of $400 million, but they quickly ballooned to roughly $3.4 billion. FEMA eventually re-competed a subset of the contracts with the awards going to six companies, including the original four.
Meanwhile, thousands of the trailers have never been used and sit idle at more than a dozen storage depots across the country. Among the waste was a $900 million purchase of 26,300 mobile and modular homes that FEMA later discovered could not be used in flood zones, where nearly all Katrina victims lived. — Government Executive
The 2005 storms, extensively covered here, submerged three-fourths of the city of New Orleans and displaced over 700,000 people. FEMA ordered 145,000 trailers for long-term housing, though thousands of them went unused and were left to rot.
In a report that will be made public later this week, the inspector general found that FEMA gave many of the contracts to politically connected firms -including Shaw Inc. of Baton Rouge. Shaw hired former FEMA Director Joe Allbaugh, one of President Bush’s friends, as its lobbyist. . . .
“(The inspector general’s report) suggests that taxpayers were victims and hurricane victims were victimized twice ‘ once by Katrina and once by FEMA,” Dorgan said.
Second District U.S. Rep. Bennie Thompson, the Democratic chairman of the House Homeland Security Committee, is investigating all aspects of contracts awarded by FEMA for procurement, maintenance and deactivation of hurricane trailers. — Jackson Clarion-Ledger
(The report was published late Monday after the Clarion-Ledger went to press.)
Oh well, a few billion here, a few billion there, who cares if the government wastes money. After all, the taxpayers will always give up more.