Cleaning Up on the Cleanup: Katrina Contracts

Tuesday, October 18, 2005

The New York Times recently ran an article detailing some of the contracts awarded for Katrina cleanup based on the first release of contract details from the government. The report shows that there was 15 contract that exceed $100 million with 5 of them exceeding $500 million. One alarming fact is that more than 80% of the contracts were awarded without competative bidding, on top of that the contracts are cost plus. For anyone who doesn't understand this type of contract, a cost plus contract means that the contractor bills the government for all it's costs plus a mark up which can balloon the original price of the contract.

AshBritt recieved a $586 million contract to collect and process debris. This company is based out of Pompano Beach, Florida and is a former client of a lobbying firm run by the current Governor of Mississippi. Senate filings show that AshBritt paid roughly $40,000 in 2005 to the Washington lobbying firm founded by Governor Haley Barbour of Mississippi. Mr. Barbour was also the former chairman of the Republican National Committee. The report shows that AshBritt is charging the government $15 per cubic yard to remove debris and also will be additionally reimbursed for it's costs to dispose of the materials. The problem with this is that three towns in Mississippi hired their own contractors and records show they paid between $10.64 and $18.25 a cubic yard to remove debris, which includes the cost of disposal. The New York Times article quotes Mike Carroll who is a municipal official in Orlando, Florida with much expierence in hurricane cleanups as saying: "Let me put it to you this way: If $15 was my best price, I would rebid it."

Richard Skinner is the inspector general for the Department of Homeland Security who is reviewing the Katrina contracts, told the New York Times: "We are very apprehensive about what we are seeing." He was also quoted saying that most of the deals had been sealed with no more than a handshake and no documentation.

The contracts show alarming differences in prices with trailers costing $15,000-$23,000, house inspections that cost between $15-$81 per home and ferries and ships that are being used as housing, costing between $13-$70 million for six months of use.

The question I ask is how many bad contracts and over-charging does it take before the government stops using certain companies? Betchel Corporation was awarded a contract of roughly $100 million and I can assure you from expirence that this company not only does a bad job they severely overcharge, take it from a person in Massachusetts who has seen them at work on the Big Dig. Another questionable company recieving contracts is Kellogg, Brown & Root which was awarded $60 million in contracts. This company is a subsidiary of Halliburton and I believe we all know of their stellar track record in Iraq.

All of us can agree that this work needs to be done, and it needs to be done as fast as possible, however you would not run a company in this manner and I believe it is no way to run a government. That is unless the government is trying to line the pockets of these big corporations. A simple solution to this problem as pointed out by the New York Times would be if FEMA and other government agencies simply entered into more "indefinite delivery or indefinite quantity" contracts. These contracts are awarded through open biding in advance of the need for services and would allow for quicker response in the case of emergencies.

2 comments:

I was thinking, all of us feudal serfs on the American land estate might as well hand over all our tax money to Halliburton and Bechtel. Let's cut out the middle man and turn our pockets inside out. That would be a far more efficient way of raping the populace to enrich the anti-free market corporations than the tax system. Would someone tell Curious George and his 12 apostles about my brilliant idea? They can pick up the check from my house.

paulsen said...

Man what a get over, everybody's greddy for money.

 
 
 
 
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