FEMA breaks promise on Katrina contracts

updated 7:56 p.m. ET March 24, 2006

WASHINGTON - FEMA has broken its promise to reopen four multimillion-dollar no-bid contracts for Hurricane Katrina work, including three that federal auditors say wasted significant amounts of money.

Officials said they awarded the four contracts last October to speed recovery efforts that might have been slowed by competitive bidding. Some critics, however, suggested they were rewards for politically connected firms.

Acting FEMA Director R. David Paulison pledged last fall to rebid the contracts, which were awarded to Shaw Group Inc., Bechtel Corp., CH2M Hill Inc. and Fluor Corp. Later, the agency acknowledged the rebidding wouldn’t happen until February.

This week, FEMA said the contracts wouldn’t be rebid after all. In fact, they have been extended, in part because of good performance, said Michael Widomski, a spokesman for the Federal Emergency Management Agency.

“They are continuing the work,” Widomski said, and the agency is now focused on competitive bids for disaster relief contracts for the next hurricane season beginning June 1.

“We looked at the lessons learned from Katrina,” Widomski said. “We’re painstakingly looking at what best fits the needs of disaster victims and taking bids for future work.”

Promised $1.5 billion yet to be given
An additional $1.5 billion in work promised to small businesses also has yet to be awarded.

A review by the Government Accountability Office of 13 major contracts said last week the government had wasted millions of dollars, due mostly to poor planning by FEMA. Among the 13 were three of the four no-bid contracts for temporary housing, worth up to $500 million each, that went to three major firms with extensive government ties.

The preliminary review did not address the validity of no-bid contracts issued right after the Aug. 29 storm. The fourth housing contractor, the Shaw Group, was not included in the audit.

The Shaw Group’s lobbyist, Joe Allbaugh, is a former FEMA director and friend of President Bush. Bechtel CEO Riley Bechtel served on Bush’s Export Council from 2003-2004, and CH2M Hill Inc. and Fluor Corp. have done extensive previous work for the government.

Dennis Cook / AP file As acting FEMA director, David Paulison promised to rebid four multimillion-dollar no-bid contracts.

The companies have denied political connections played a factor.

“Our work was awarded based on performance,” said Brad Jones, spokesman for CH2M Hill, which is based in Englewood, Colo.

The latest disclosure has brought complaints from some lawmakers, who say the Bush administration has not done enough for small businesses. Democrats, in particular, have urged limits on no-bid contracts, which they say are unfairly handed to large companies with political connections.

A House panel chaired by Republican Rep. Tom Davis of Virginia plans to hold at least one hearing next month on Katrina contracting. That was announced after the GAO’s audit results were released.

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