WASHINGTON, Sept. 10, 2008
FEMA Wasted Millions In Katrina Recovery
Audit Finds No-Bid Contracts Exemplified Mismanagement In Hurricane Recovery Effort
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A report by the Homeland Security Department's office of inspector general, obtained Wednesday by The Associated Press, is the latest to detail mismanagement in the multibillion-dollar Katrina hurricane recovery effort, which investigators have said wasted at least $1 billion.
The review examined temporary housing contracts awarded without competition to Shaw Group Inc., Bechtel Group Inc., CH2M Hill Companies Ltd. and Fluor Corp. in the days immediately before and after the August 2005 storm that smashed into the U.S. Gulf Coast.
It found that FEMA wasted at least $45.9 million on the four contracts that together were initially worth $400 million. FEMA subsequently raised the total amounts for the four contracts twice, both times without competition, to $2 billion and then $3 billion.
FEMA did not always properly review the invoices submitted by the four companies, exposing taxpayers to significant waste and fraud, investigators wrote. In many cases, the agency also issued open-ended contract instructions for months without clear guidelines on what work was needed to be done and the appropriate charges.
"We question how FEMA determined that the amounts invoiced were allowable and reasonable," the IG report states, warning that its review was limited in scope so that additional waste and fraud might yet to be found.
Responding, FEMA said it generally agreed with the IG report and would further investigate the $45.9 million in questioned costs and recoup the money as necessary. FEMA said it has taken several steps to improve its disaster response since the 2005 storm, such as requiring a standard invoice form and better tracking inventory.
The agency also noted that the four no-bid contracts were rebid on a competitive basis in August 2006. The contracts were subsequently awarded to six companies, including Shaw, Bechtel, CH2M Hill and Fluor, which received the original no-bid agreements.
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"As FEMA works toward refining its programs, the office of inspector general's independent analysis of program performance greatly benefits our ability to continuously improve our activities," wrote Marko Bourne, director of FEMA's office of policy and program analysis.
Once again, we discover that FEMA has wasted tens of millions of taxpayer dollars on noncompetitive contracts and then failed to properly oversee the performance of those contracts.
Rep. Bennie Thompson, D-Miss.According to the report, FEMA tasked Fluor with arranging a "base camp" to house up to 300,000 Katrina evacuees as the hurricane neared the Gulf Coast. FEMA's request required Fluor to conduct a site inspection before ordering tents, but Fluor did not do so and FEMA subsequently found the site to be unusable.
Still, Fluor charged FEMA $20 million for the tents, which FEMA paid. The IG said that figure included $8.7 million to cancel the lease and for other questionable expenses despite Fluor's failure to perform its obligations. The report questioned FEMA's decision to pay the $8.7 million without further review.
Other findings:
Sean Clancy, spokesman for the Baton Rouge, La.-based Shaw Group, said the company could not comment until it had received a copy of the audit and had "an opportunity to conduct our own review."
Fluor and Bechtel representatives did not have immediate comment Wednesday. A spokesman for CH2M Hill did not immediately return a request for comment.
In the months after Katrina, FEMA came under criticism for awarding the no-bid contracts to Shaw, Bechtel, CH2M Hill and Fluor, prompting a promise from FEMA Director David Paulison to rebid them.
Since then, FEMA competitively awarded portions of the no-bid contracts to small and minority-owned firms. But it also extended contracts for Shaw, Bechtel, CH2M Hill and Fluor. Those four companies, which have strong government and political ties, also were deemed among the most suitable for future disaster work.
Rep. Bennie Thompson, D-Miss., who chairs the House Homeland Security Committee, said the contract waste was unacceptable.
"Once again, we discover that FEMA has wasted tens of millions of taxpayer dollars on noncompetitive contracts and then failed to properly oversee the performance of those contracts," he said. "In human terms, this huge amount of money could have been used to provide safe and decent temporary housing for thousands of displaced people."
© MMVIII The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.
Add a Comment See all 17 Comments
- The real waste is the rebuilding a city that has flooded 27 times in it''s history and is doomed to flood again being below sea level, to beieve that it won''t flood again is nieve and will cost tax payers billions if not trillions in the future. That is waste. Throwing money at N.O. will not stop mother nature in her furry.
- Reply to this comment
- At the time of this major disaster how in the world can the government stop recovery efforts to take weeks or months to go through the bidding process. Response time was slow but it would have come to a complete grinding halt waiting for bids. The critisim the government got for the recovery effort was valid, just think what people would have said then and now if we had to wait for the bidding process. This story is flat out ridiculous
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- Even if McSame arrives with clean hands and good intentions, he''s not going to be able to clean up the corruption. It''s pervasive in every single agency. The present appointees won''t even have to resign or retire, and no investigations or grand juries will be launched. The evildoers will have won.
- Reply to this comment
- A Vote for McCain is a VOTE to issue Pardons!
- Reply to this comment
- Ya think?????????!!!!!!!!!!!!!!!!!!!!!!
Thanks George, he got where he is because of certain corporations and now it is payback time.
He was a worthless govenor when I lived there, what makes anyone think he would be a stand up guy now.
Gosh people, open your eyes, he will go down as the worst president in this country''s history.
ARGHHHHHHHHHH
pathetic.... - Reply to this comment
- As long as the government is involved, there will be waste.
Smaller government = smaller waste.
vote smaller. - Reply to this comment
- *YAWN* This is old news. But has anything been done about it? No. Will anything be done about it? Probably not. And now, like was said earlier, our tax dollars are stretched sooooooo thin from Afghanistan, Iraq, Fannie Mae, Freddie Mac, foreclosure bailout, Bear Stearns, etc.
If the next cabinet doesn''t do something to combat this type of governing, the USA will collapse inward on itself and our tax dollars won''t be worth the paper they''re written on. The government is made for governing, not volunteering our income at the drop of a hat. - Reply to this comment
- Another Bush government scandal, more tax dollars pocketed by his friends.
Bush to FEMA - "Brownie, you are doing a great job making my buddies rich. Keep it up, and don''t worry to much about the people in New Orleans. We will get to them later"...
At least the Bush administration is consistent - consistently *** Americans. - Reply to this comment
- this is the same gov many of you want to put in charge of health care.
don''t expect anything different - Reply to this comment
- I''m not surprised at this story, but I am disgusted. Isn''t there an honest bone in the body of one politician? We are in deep doo doo no matter who is elected.
- Reply to this comment
- Just keep on comdoning with your vote this kind of gov. and thats all you can expect.
Posted by dennisam01
Please define the word, "comdoning." - Reply to this comment
- And you''re surprised at this why??
- Reply to this comment
- Old news,everyone knows whatever the Gov,is involved in ,it''s loaded with corruption,whats new? Pork barrels,Haliburton,OIL,RR,fear not ,they''re taking over Freddie Mac and the other one,with your $$$,that will go to hell.
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- They did not wasted our tax $$ money,they put our dollars into their pockets, fug them.government, they are just a bunch of corrupted thugs, namely...Bush...Cheney...Rice...
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- Why didn''t - doesn''t the Government go after these companies for Fraud and try to get tax dollars back?????? USELESS GOV WORKERS
- Reply to this comment
- I''m John Mccain and I approved this message
- Reply to this comment
- So whats new from fema to this oil scandal to the DOJ, AG, CIA, enron Katrina , the lsit just goes on and on but you all keep right on supporting BUsh/ Mccain with your heads up your butts . Just keep on comdoning with your vote this kind of gov. and thats all you can expect.
- Reply to this comment
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