Already at $1 billion, the tally for Hurricane Katrina waste will balloon next year

Katrina fraud may balloon past $1b

WASHINGTON (AP) - Already at $1 billion, the tally for Hurricane Katrina waste will balloon next year as investigators shift their attention from fraudulent aid to the lucrative government contracts awarded with little competition.

Several of the contracts were hastily given to politically connected firms in the aftermath of the 2005 storm and were extended without warning months later. Critics say the arrangements promote waste and unfairly hurt small companies.

In January, federal investigators will release the first of several audits examining abuse in more than $12 billion in Katrina contracts. The charges range from political favoritism to limited opportunities for small and minority-owned firms, which initially got only 1.5 percent of the total work.

Currently, half of the government's contracts valued at $500,000 or greater are no-bid.

"Based on their track record, it wouldn't surprise me if we saw another billion more in waste," said Clark Kent Ervin, the Homeland Security Department's inspector general from 2003-2004. "I don't think sufficient progress has been made."

He called it inexcusable that the Bush administration would still have so many no-bid contracts, noting that auditors and Federal Emergency Management Agency director David Paulison himself have said they are prime areas for waste.

"It's a combination of laziness, ineptitude and it may well be nefarious," Ervin said. >>>cont