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."
At the time of the audit, 51 full-time acquisition workers were managing hundreds of millions of dollars in contracts. Homeland Security Department spokesman Russ Knocke said yesterday that contracting officials are ramping up to handle the extra work and that the department's IG office has received additional funding to closely monitor Katrina contracts.
A FEMA spokesman said the agency "has extensive experience in acquiring the products and services required in disaster response and recovery operations." He said FEMA has already obligated about $9 billion for Katrina relief efforts.
Some of the agency's approximately 2,500 full-time employees think the reliance on contractors is driving away the agency's best talent. Last year, Pleasant Mann, then-president of the union representing FEMA headquarters workers, wrote a letter to congressional leaders warning that the nation was becoming more vulnerable. "The ability of FEMA to manage emergencies and disasters is being seriously eroded," he wrote. "Our professional staff are being systematically replaced by politically connected novices and contractors who have now 'burrowed in' to civil service jobs."
FEMA insiders said a no-bid Rand Corp. contract to help the Homeland Security Department develop the definitive plan for how the nation would respond to an emergency illustrates just how pervasive the contractors' role has become. The National Response Plan was mandated by the White House after the Sept. 11, 2001, attacks.
Rather than turn to FEMA employees to craft the new document, according to those familiar with the process, the agency tapped Rand for the work. But the contractor's first draft was rejected by state and local emergency responders who thought Rand had not incorporated lessons from previous disasters.
"There were a lot of things not considered. And I think that was from the fact that the contractor was not a practitioner [of emergency response]," said Dewayne West, president of the International Association of Emergency Managers, a group of local first responders. "So they kind of said, 'We're going to can this one. Let's start over.' "
Bruce Don, a Rand senior researcher who worked on the project, called the experience "frustrating" and said government officials were resistant to change.
Rand's role was subsequently reduced, and government officials wrote the final document. It became the basis for the government's efforts to manage Katrina.
Whether the lackluster response to Katrina was because of the plan or in spite of it will undoubtedly be the subject of numerous reviews, government officials said. So, too, will the issue of contractor performance.
Thousands of people went for days without adequate food and water at the Superdome, at the New Orleans convention center and on rooftops throughout the flooded region, according to news reports, though it is unclear who was to blame.
On the Friday before Katrina hit, Lipsey Mountain Spring Water, FEMA's bottled water supplier, got a call from the Army Corps of Engineers and began shipping truckloads to the region, according to President Joe Lipsey III. The contract calls for the Norcross, Ga., company to get water to sites within 24 hours, and Lipsey said he has developed a nationwide network of 170 suppliers.
The first trucks headed toward Pensacola, Fla., he said. But when the storm turned west, the corps directed Lipsey's deliveries to three federal installations in Mississippi and one in Louisiana. From those staging areas, he said, corps officials direct where it is delivered. So far Lipsey's network has delivered the equivalent of 198 million half-liter bottles of water, compared with 140 million in the nine-week period last year when four hurricanes hit Florida, he said.
Lipsey, a Louisiana native, said despite the criticism, the agency and the corps "are doing an incredible job," especially given the flooding and breaks in the bridge and highway system.
Sen. Joseph I. Lieberman (D-Conn.), the ranking minority member on the Senate committee overseeing FEMA, said last night that he has discussed with Collins the idea of a special IG to monitor Katrina spending. "Congress has to be very aggressive in making sure that in our haste to help we aren't wasting an enormous amount of public money, or worse, having it used in a way that's corrupt," he said.
Staff writer Renae Merle contributed to this report.