A Flood of Money
In the Gulf, a gold rush for government funds
Relationships. This doesn't mean that connections don't count, however. Joe Allbaugh, a former FEMA director and a campaign manager for President Bush's 2000 campaign, has advised both the Shaw Group and KBR on hurricane relief, though he has emphasized that he had no role in helping them close the deals. Ashbritt Environmental, a Florida company that won a $568 million Pentagon competitive contract to move debris in Mississippi, paid $40,000 to a lobbying firm founded by Mississippi Gov. Haley Barbour during the first five months of this year, according to Senate lobbyist filings. But overall, 4 out of 5 of FEMA's hurricane-related contracts were awarded with little or no competition.
The price tags on some of the contracts, some critics say, are also suspect. Clark Kent Ervin, a former inspector general at the Department of Homeland Security, says officials there are making some of the same mistakes as they did after the 9/11 attacks. "When they issue rapid-fire, no-bid contracts," Ervin says, "they're basically asking companies to gouge them." Carnival has said that the company is making no extra money from the FEMA deal for its three cruise ships, but staffers for Oklahoma Sen. Tom Coburn allege that an evacuee could take an all-amenities Caribbean cruise on a Carnival ship for less than half what the government is paying per person. In Mississippi, one community that opted out of the high-priced Ashbritt debris-removal contract signed up a smaller firm that is hauling its shattered housing stock and other materials for roughly $4 less per cubic yard.
Government spending for trailers and mobile homes is also being scrutinized. FEMA has issued more than $2 billion in contracts to buy more than 120,000 trailers, but a spokesman in the Louisiana governor's office told the New York Times that only 109 Louisiana families had been relocated to the temporary housing by late last week. FEMA has now frozen many of the trailer contracts.
DHS Secretary Michael Chertoff, a former prosecutor, vows an aggressive effort to keep tabs on all the money. Richard Skinner, the Homeland Security Department's inspector general, says he's working with a dozen IG s from other agencies to police both contracts and spending patterns. "They've got a very strong exhortation from me," Chertoff says, "to go out and make sure that they're scrubbing these [contracts]." If the government isn't getting the "best bang for the public buck," Chertoff continued, he will order contracts to be renegotiated.
Full plate. Skinner and his team of inspectors have their work cut out for them. This week, Skinner will welcome a new head for the Office of Hurricane Katrina Oversight. He has also set up satellite auditing offices in Baton Rouge; Montgomery, Ala., and Jackson, Miss. Auditors and investigators working for the Pentagon's acting inspector general, Thomas Gimble, will also help with the oversight effort. Apart from criminal inquiries, auditors will review how contracts are being awarded and whether proper controls are in place. Auditors also will evaluate how effectively the military and the Pentagon's civilian personnel are being used in supporting relief efforts. "We have a lot of people signed up on this thing," says one official. Adds another: "Things are moving fast and furious."