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Costliest Part of Gulf Rebuilding Yet to Come

"We will still have ample funds through approximately May of next year to accomplish all of the purposes that need to be accomplished with [the main Katrina fund], which includes the recovery, the relief, the debris cleanup, sustaining the evacuees and beginning the process of rebuilding the public infrastructure," White House budget director Joshua B. Bolten said at a briefing announcing the request. Bolten said the White House will seek additional money next year that could be used for nonfederal projects, but he did not say exactly when or how much.

Meanwhile, state and local officials -- particularly those in Louisiana -- say they are growing increasingly concerned that the federal government will not end up putting in the kind of money needed to rebuild the region. Louisiana earlier this month balked at a $3.7 billion bill that the federal government presented to it for the state's share of hurricane relief. State officials said the bill was excessive at a time when much of the tax base has fled and when lawmakers are already struggling to close a $1 billion shortfall in their $8 billion annual budget. With the major costs of reconstruction still looming, concern in the Gulf that the effort may be shortchanged is rising.

"We've always been a poor state, so this is something that can't be done without federal help," said Mark Drennen, president and chief executive of Greater New Orleans Inc., a regional economic development agency. "For local businesses to survive, there's got to be a basic infrastructure in place. And that infrastructure is gone."

Drennen recently led a delegation of local business leaders that visited Washington to appeal for help. The response, he said, was "polite" but hardly represented an outpouring of support from Capitol Hill. "The sense of urgency seems to have been lost," he said.

That has not stopped contractors from lining up for a piece of the action, however. The rebuilding may be costly for taxpayers, but it promises to be a boon to many of the companies that specialize in designing and building government infrastructure, according to contracting experts.

In the past two months, much of the contracting for the immediate hurricane response was handled by federal officials, but in the future state and local governments figure to play a much more prominent role in deciding who gets reconstruction deals. That's true no matter who funds the contracts, since federal money would probably be spent through grants to the state and local governments, according to Raymond Bjorklund, senior vice president of market research firm FSI.

"It becomes a very decentralized and dispersed process," Bjorklund said. "It's no longer a federal contract. It becomes a state or local contract, which is a whole different world."

Bjorklund said that even more so than with federal contracts, state and local deals are based on relationships between company executives and officials. That means local companies are expected to get a much more sizable share of the pie than they have in recent months, when many of the largest deals went to the largest national firms.

Those big firms -- including Halliburton Co., CH2M Hill Cos., Bechtel Corp., URS Corp. and Fairfax-based Dewberry -- have already been in high demand with the government for reconstruction work in Iraq and Afghanistan. Now the magnitude of the rebuilding task in the Gulf means that even if local firms get some of the contracts, they will probably have to partner with one of the larger firms to get the job done.

"The companies that were awarded the big contracts with Iraq, they're going to be getting contracts this time around, too," said Timothy Brett, who analyzes the architecture, construction and engineering industries for the research firm Input. "It's a big-boy club, and you need to get on one of their teams."


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