Posted by The Crux |
At the grocery store yesterday, I saw an intriguing Time Magazine cover (August 13) with a photo of an anemic-looking floodwall and the following words (spaced as below):
"Two years after Katrina, this floodwall
is all that stands between New Orleans and the next hurricane.
It's pathetic.
How a perfect storm of big-money politics,
shoddy engineering and
environmental ignorance is setting up the city for another catastrophe."
Wow! Them's fighting words, but they don't surprise anyone here at BN-Politics, given what we've learned about the federal government's experiences with contractors (see examples at our Govt. Contractors & Waste section).
Time's Michael Grunwald did an in-depth story ("The Threatening Storm: Two Years After Katrina") that the cover summarizes pretty well. Apparently, the story ruffled feathers: the Army Corps wrote a response, stating that the story contains many errors and misrepresentations (PR Newswire). Maybe so, maybe not. I don't know.
What I do know is that the House Oversight Committee published a report in August 2006 (a year after Katrina) based on audits and investigations, titled "Waste, Fraud and Abuse in Hurricane Katrina Contracts." Below are some of the unsettling examples.
The report states that 19 contracts worth almost $9 billion were "plagued by waste, fraud, abuse or mismanagement," and most problems stemmed from contract administration or performance. The audits found management problems largely with FEMA and the Army Corps of Engineers, the two agencies responsible for the bulk of the post-Katrina recovery.
Among those problems, the agencies kept handing out contracts without accepting competitive bids from multiple contractors. In other words, the lucky contractors got to name their prices. This was expected in the first month or so after Hurricane Katrina, because timing was so important. However, by June 2006 (9 months after Katrina), about 70% of the contracting dollars went to contractors without competitive bidding (House Report, pp. 2-3).
Another cost-inflating problem involved multiple layers of subcontractors, i.e., more middlemen taking more shares of the contracting dollars (House Report, p 5). One example of inflated costs: the taxpayers spent about $2,500 per job for roof work that should have cost less than $300 per job.
Causing problems from the outset, agencies didn't assess their needs or plan well. For example, FEMA paid $3 million for 4,000 "camp beds" that were never used. That's $750 per "camp bed" -- almost as much as I paid for my Beauty Rest pillow top with memory foam (House Report, p 4). Hmm.
Most surprising to me were odd purchases and credit card abuse (agencies have credit cards to buy small items without red tape), including the following examples (House Report, p6):
* $8,000 for 63-inch plasma TV
* $63,000 for 20,000 pairs of dog booties
* $??? for 20 boats (at twice retail price); FEMA has only 8 of them in its records.
It's no wonder that more than 1,300 cases of procurement fraud and abuse were under investigation in August 2006,(including bribery-related schemes (House Report, p 6-7).
Some of the tricksters deserve snaps for creativity, at least. For example, four contractors were paid $500 million each to remove debris from New Orleans: some contractors were seen "fraudulently being paid for the same load" by exiting dump sites "without completely unloading the debris from its truck bed" (House Report, p 7).
Here's the worst part: as mentioned above, the government has a longstanding habit of falling prey to contractor waste or fraud. See any of the following BN-Politics postings for examples:
* Embassy in Iraq: Waste, Bad Planning, or Contractor Fraud?
* Gov. Contractors: Driving up War's Costs?
* How the Energy Department Incinerated Tax Dollars
* Defense Dept. Rewarding Bad Contractor Performance?
* Contractors: Driving up Healthcare Costs
* Contractors Offering Bribes to Army Personnel?
* How DOD Flushes Tax Dollars Down Latrine
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