The Federal Emergency Management Agency will receive most of the $62 billion Congress has approved for Hurricane Katrina relief efforts, setting up a major test of the agency's ability to distribute the cash and monitor the private contractors who will do much of the work.
FEMA's track record in managing much smaller amounts of money has raised concerns. It made millions of dollars in questionable payments to South Florida residents after Hurricane Frances last year, investigators found, in part because the agency's contractors had hired inspectors who lacked training or oversight. A recent audit by the Homeland Security Department's inspector general questioned whether FEMA's acquisition workforce was qualified.
The agency has already begun awarding hundreds of millions of dollars in no-bid Katrina contracts under loosened government rules designed to get relief and rebuilding efforts underway quickly. As the money begins to flow, some fear the agency could become overwhelmed. "They've never spent anything even remotely on this scale. So the real question is going to be what kind of controls are in place," said Bill Jenkins, who monitors FEMA for the Government Accountability Office. "There are going to be fraudsters coming out of the woodwork."
Sen. Susan Collins (R-Maine), chair of the Senate's Homeland Security Committee, said through an aide yesterday that she is considering creating a special inspector general to oversee and audit Katrina-related spending.
The last time the government spent a massive amount of money under emergency conditions, for the war in Iraq, it set off a frenzy among contractors jockeying for work. Investigators with the special inspector general's office set up to oversee Iraq spending later found numerous cases of questionable costs.
Contractors are already lining up for Katrina money. Yesterday, the Army Corps of Engineers said that, on FEMA's behalf, it would award $1.5 billion in contracts for debris removal this week. Also yesterday, Blackwater USA, known for its work supporting military operations in Iraq, said it would provide 164 armed guards to help provide security at FEMA sites in Louisiana.
Last week FEMA gave out hundreds of millions of dollars worth of contracts to engineering and construction firms to build an estimated 300,000 temporary housing units. Those contracts were awarded without competition under rules that allow agencies to bypass normal procedures during an emergency. Several went to companies that have been major financial supporters of the Bush administration. One firm, Shaw Group Inc., of Baton Rouge, is on the client list of lobbyist and former FEMA director Joe M. Allbaugh, though he has said he does not get involved with contracts.
Shaw also was picked last week by the corps for a $100 million contract, with one of its first tasks to pump floodwater out of New Orleans. The agency contacted two other companies to generate competition for the work, a corps contracting official said yesterday, but only Shaw responded.
At FEMA, outsourcing to the private sector is nothing new. The agency has long made contractors a central part of its emergency plans on the thinking that it is not a good use of tax dollars to maintain a large staff for sporadic work. When disaster strikes, the agency, with help from the Corps of Engineers, has contracts that can be activated to bring in food, water and manpower.
But FEMA insiders and some who have worked with the agency say it has grown increasingly reliant on contractors in recent years not just for help in responding to disasters, but for planning and policymaking as well. It is a trend that has been augmented, they say, by the departure of FEMA's top civil servants and the arrival of political appointees with little disaster management experience.
"Some of the best and the brightest high-level technocrats are at the contracting firms," said Claire B. Rubin, a researcher at George Washington University who has studied disasters for decades. "They used to work for FEMA. And now FEMA needs them back."
Last spring, the Homeland Security Department's inspector general's office audited the FEMA staff that manages its contracts and found it "impossible to determine whether the acquisition personnel met training, education, and experience requirements." As a result, the auditors concluded, "FEMA may be at risk that its acquisition workforce is not qualified."
