Katrina clean-up contracts spark controversy

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

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

The devastating storm created contracts worth more than $1.5bn 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 more than 80% of those awarded by FEMA were reportedly handed out with limited competition.

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

“When you do something like this, you do increase the vulnerability for fraud, plain waste, abuse and mismanagement,” Richard Skinner, inspector general for the Department of Homeland Security, told the New York Times.

“We are very apprehensive about what we are seeing.”

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

Various industry and government officials have questioned the costs of debris-removal contracts, claiming that the Army Corps of Engineers allowed a rate that was too high, the newspaper reports.

It cites government records which show that more than 15 contracts exceed $100m, including five of $500m or more.

Congressional investigators are reportedly investigating the $568m awarded to AshBritt, a Florida-based company that was a client of the former lobbying firm of Republican Mississippi Governor Haley Barbour.

It also notes considerable price disparities, for example trailers costing anything between $15,000 and $23,000 and house inspection services that could cost $15 to $81 per home.

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

Among them, Kellogg, Brown & Root – which has been given contracts worth $60m – was rebuked by auditors for unsubstantiated billing for reconstruction work in Iraq .

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

Some politicians have complained that 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 told the newspaper.

All companies have publicly defended their performance.

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