$400 Million FEMA Contracts Now Total $3.4 Billion

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By Spencer S. Hsu
Washington Post Staff Writer
Wednesday, August 9, 2006

Four no-bid contracts awarded by the Federal Emergency Management Agency to house Hurricane Katrina evacuees have ballooned in value from $400 million to about $3.4 billion, prompting renewed scrutiny from Congress and federal auditors about the disaster agency's management of the aftermath of the storm.

The Department of Homeland Security's inspector general is, for at least a second time, reviewing the contracts with construction and engineering firms Bechtel Corp., CH2M Hill Inc., Fluor Corp. and the Shaw Group Inc. to provide 150,000 trailers for hurricane victims, even as FEMA expects to competitively award at least $1 billion for similar work in future contingencies within days.

A review is underway into how the contracts were awarded, the parties involved and their documentary support, according to Marta Metelko, spokeswoman for Inspector General Richard L. Skinner. She cited the "dollars and risk associated with sole source contracts."

The contracts, which were quickly awarded as Katrina approached and hit the Gulf Coast, have been repeatedly faulted by Skinner's office, congressional auditors and a Senate investigation for poor safeguards and high costs. FEMA valued the contracts at $2 billion last fall and winter, but the agency has raised the limit for each firm over the past several months.

FEMA Director R. David Paulison and Homeland Security Secretary Michael Chertoff promised Congress last October to re-bid the pacts and spun off $3.6 billion in maintenance and future dismantling of the trailers to 36 small and minority-owned firms in March. But the agency's critics say that has not addressed the entire problem.

Members of Congress say FEMA is unresponsive to complaints and warnings of mismanagement. Outside analysts say that the Department of Homeland Security's staffing shortages and increasing dependence on larger contracts to handle complex new missions feeds an unhealthy cycle, in which firms vying for an ever-growing flow of taxpayer dollars raid agency staff for expertise, weakening FEMA's ability to independently carry out its missions.

Coast Guard Vice Adm. Harvey E. Johnson Jr., FEMA's deputy director since April, said he tracks reports every week of how quickly FEMA is hiring and filling contract management jobs, and said the contracts are large and extremely complex. "I understand . . . how complex [the issues] are, and how many contracts our small staff is asked to complete," he said. "I see nothing that indicates there is any favoritism whatsoever."

FEMA deputy operations director Deidre Lee said the contracts' growth was justified "given the scope of Katrina. We ended up putting over 150,000 trailers and this for all the work, hauling, installing, prepping and set-up."

Spokesmen for Bechtel, which has its headquarters in San Francisco; CH2M Hill, of Englewood, Colo.; Fluor, of Irving, Tex.; and Shaw, of Baton Rouge, La., said they had received no information or requests from the DHS inspector general's office about a review, but routinely cooperate with audits by the office.

"We have delivered on every task they asked us to perform," CH2M Hill spokesman John Corsi said.

Shaw spokesman Chris D. Sammons said: "We are confident that our activities are fully in compliance with respect to all of those [federal and state] regulations."

In May, numerous protests of inflated prices and awards to a Fluor subsidiary led Sens. Byron L. Dorgan (D-N.D.) and Mary Landrieu (D-La.) to call on Skinner to begin another inquiry.


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