Many Contracts for Storm Work Raise Questions

By ERIC LIPTON and RON NIXON
Published: September 26, 2005

WASHINGTON, Sept. 25 - Topping the federal government's list of costs related to Hurricane Katrina is the $568 million in contracts for debris removal landed by a Florida company with ties to Mississippi's Republican governor. Near the bottom is an $89.95 bill for a pair of brown steel-toe shoes bought by an Environmental Protection Agency worker in Baton Rouge, La.

The first detailed tally of commitments from federal agencies since Hurricane Katrina hit the Gulf Coast four weeks ago shows that more than 15 contracts exceed $100 million, including 5 of $500 million or more. Most of those were for clearing away the trees, homes and cars strewn across the region; purchasing trailers and mobile homes; or providing trucks, ships, buses and planes.

More than 80 percent of the $1.5 billion in contracts signed by the Federal Emergency Management Agency alone were awarded without bidding or with limited competition, government records show, provoking concerns among auditors and government officials about the potential for favoritism or abuse.

Already, questions have been raised about the political connections of two major contractors - the Shaw Group and Kellogg, Brown & Root, a subsidiary of Halliburton - that have been represented by the lobbyist Joe M. Allbaugh, President Bush's former campaign manager and a former leader of FEMA.

"When you do something like this, you do increase the vulnerability for fraud, plain waste, abuse and mismanagement," said Richard L. Skinner, the inspector general for the Department of Homeland Security, who said 60 members of his staff were examining Hurricane Katrina contracts. "We are very apprehensive about what we are seeing."

Bills have come in for deals that apparently were clinched with a handshake, with no documentation to back them up, said Mr. Skinner, who declined to provide details.

"Most, if not all, of these people down there were trying to do the right thing," he said. "They were under a lot of pressure and they took a lot of shortcuts that may have resulted in a lot of waste."

Congress appropriated $62.3 billion in emergency financing after Hurricane Katrina struck. So far, a total of $15.8 billion has been allocated from a FEMA-managed disaster relief fund, of which $11.6 billion has been committed through contracts, direct aid to individuals or work performed by government agencies.

An examination of the contracts granted to date and interviews with state and federal officials raised concerns about some of the awards.

Some industry and government officials questioned the costs of the debris-removal contracts, saying the Army Corps of Engineers had allowed a rate that was too high. And Congressional investigators are looking into the $568 million awarded to AshBritt, a Pompano Beach, Fla., company that was a client of the former lobbying firm of Gov. Haley Barbour of Mississippi.

The investigators are asking how much money AshBritt will collect and, in turn, what it will pay subcontractors performing the work, said a House investigator who did not want her name used because she was not authorized to speak publicly about the matter.

The contracts also show considerable price disparities: travel trailers costing $15,000 to $23,000, housing inspection services that documents suggest could cost $15 to $81 per home, and ferries and ships being used for temporary housing that cost $13 million to $70 million for six months.

For some smaller companies, the recovery work will be an extraordinary test. For example, Aduddell Roofing and Sheet Metal, an Oklahoma City business run by a former steer wrestler, shares with a partner a $60 million contract to install temporary roofing on houses in Mississippi. Aduddell's single biggest contract before this was for $5 million, company executives said.

Some businesses awarded large contracts have long records of performing similar work, but they also have had some problems. CH2M Hill and the Fluor Corporation, two global engineering companies awarded a total of $250 million in contracts, were previously cited by regulators for safety violations at a weapons plant cleanup.

The Bechtel Corporation, awarded a contract that could be worth $100 million, is under scrutiny for its oversight of the "Big Dig" construction project in Boston. And Kellogg, Brown & Root, which was given $60 million in contracts, was rebuked by federal auditors for unsubstantiated billing from the Iraq reconstruction and criticized for bills like $100-per-bag laundry service. All of the companies have publicly defended their performance.

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