Row erupts over Katrina clean-up contracts awarded without bidding

MAJOR contracts for the Hurricane Katrina clean-up have been awarded without bidding or with limited competition, prompting controversy in the United States.

The storm created contracts worth over $1.5 billion (1.24bn) awarded by the Federal Emergency Management Agency (FEMA) alone. Most are for the clearing of debris, trees and shattered homes across the ravaged Gulf coast. But over 80% of those awarded by FEMA were reportedly handed out with limited competition.

Two companies in particular have raised questions the Shaw Group and Kellogg, Brown & Root, a subsidiary of Halliburton, formerly headed by Vice-President Dick Cheney.

Inspector general of the Department of Homeland Security, Richard Skinner, said: "When you do something like this, you do increase the vulnerability for fraud, plain waste, abuse and mismanagement. We are very apprehensive about what we are seeing."

He said many deals seem to have been clinched with little more than a handshake and that shortcuts may have resulted in a lot of waste.

Industry and government officials have questioned the costs of debris-removal contracts, claiming that the Army Corps of Engineers allowed too high a rate, the New York Times reported.

It cites government records which show more than 15 contracts exceed $100 million (€83m), including five of $500m (€415m) or more.

It also notes considerable price disparities, for example trailers costing anything between $15,000 (€12,445) and $23,000 (€19,000) and house inspection services that could cost $15-$81 (€12.45-€67.20) a home.

Several companies awarded valuable contracts have attracted controversy for similar work elsewhere.

Kellogg, Brown & Root which has been given contracts worth $60m (€50m) was rebuked by auditors for unsubstantiated billing for reconstruction work in Iraq.

The company will perform more than $45m (€37m) in repairs to levees in New Orleans and military facilities in the region. A spokesperson was unavailable for comment.

Some politicians said more of the bigger contracts should have been awarded to smaller, local companies.

Greg Rothwell, chief procurement officer at the Department of Homeland Security, said contracts were handed out quickly because of the crisis situation.

"We will be looking at every invoice we get to make sure we were not paying extraordinary prices," he said.

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