Only a fraction of the $2.5 billion in federal contracts signed so far to help rebuild Hurricane Katrina-ravaged communities is going to Gulf Coast businesses.
The rush to provide federal assistance has produced unprecedented windfalls for hundreds of federal contractors around the nation. Indiana and Georgia, home to several mobile-home manufacturers, leads the nation in Katrina-related contracts, according to a Scripps Howard News Service review of the contracts.
Only a quarter of the money allocated so far has been spent after competitive bidding by businesses. Most of the rest _ including some of the largest contracts ever signed by the Federal Emergency Management Agency _ was spent following limited competition between contractors or without any effort to obtain multiple bids for goods and services.
Federal agencies have announced more than 1,250 contract deals to clean up debris, rebuild roofs on public buildings, remove human bodies, decontaminate water supplies, and provide hotel rooms for hurricane victims and rescue workers.
FEMA’s largest deals, according to the Scripps Howard review, were two contracts totaling $521 million with Gulf Stream Coach of Nappanee, Ind., to build thousands of air-conditioned travel trailers with sleeping quarters for up to six adults each. The company hired hundreds of additional workers so it could build 3,000 trailers in the first four weeks after Katrina hit.
“That was the largest contract we ever had. It was a pretty unique situation,” said company spokesman Kyle Martin.
FEMA, which signed the first contract on Sept. 2 just four days after Katrina hit New Orleans, described the deal as the result of a “limited competition” bidding system among manufactured home builders.
“There were multiple competitors,” Martin said. “Gulf Stream received a request for a bid, they were offered a bid and received the bid.”
Only $708 million has been spent using the “full and open” bidding generally required for federal purchase of goods and services. More than $1.1 billion was spent using “limited competition” while $663 million was spent either under “non-competitive” standards or under contracts that have not yet been defined by FEMA and other agencies.
Government watchdog groups say the large number of deals being made under emergency circumstances is cause for concern.
“There are always going to be some mistakes under these kinds of urgent circumstances,” said Scott Amey, general counsel for the Washington-based Project on Government Oversight. “We also have to weigh the question of whether all of this is fair? When the urgent needs wear off, can we open some of these contracts back up for competitive bidding?”
The extraordinary number of no-bid contracts follow public clamor for a more rapid federal response to the hurricane, and officials at the Department of Homeland Security, which includes FEMA, have conceded that it has created “an unprecedented opportunity for fraud and mismanagement.”
“We plan to maintain proactive and aggressive audit oversight,” Homeland Security Inspector General Richard Skinner promised members of Congress last week. “Our auditors will review the award and administration of all major contracts. Particular emphasis will be placed on no-bid and limited competition contracts.”
So far, the spending patterns on Hurricane Katrina relief have produced some unexpected winners among federal contractors. Mobile- and motor-home purchases have boosted Indiana contractors to the top with $578.8 million followed by Georgia contractors with $407.5 million.
Georgia’s biggest deal to date was a $287.5 million mobile home contract with Circle B Enterprises of Ocilla, Ga., although this is under review following charges that the firm is not licensed to build manufactured homes in some states.
In third place are Florida contracts totaling $324.7 million, including contracts for $28 million for emergency pre-packaged food by GA Food Services of Pinellas County. Texas contracts came in fourth at $314 million including a $257.8 million deal with Morgan Building and Spas, a mobile home builder based in Garland, Texas.
Louisiana and Mississippi contractors came in eighth and ninth among the states with contracts totaling $66.9 million and $56.6 million, respectively. These totals represent only 5 percent of the Katrina-related contracts announced so far.
(Contact Thomas Hargrove at HargroveT(at)shns.com)