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Friday, August 25, 2006

Katrina Contracts: One Year and $8.75 Billion Shy

Yesterday, the U.S. House Government Reform Committee’s Minority Staff Special Investigation Division released a report on waste, fraud and abuse in procurement spending in response to Hurricane Katrina.

The report, requested by Reps. Henry A. Waxman, Dennis A. Cardoza, David R. Obey, John S. Tanner, Eleanor Holmes Norton, and John F. Tierney, examines 19 Katrina contracts, collectively worth $8.75 billion, with significant overcharges, wasteful spending, or mismanagement.

According to the report, only 30 percent of these contracts were awarded with full and open competition and over 47 percent were awarded on a sole-source basis.

The highlights:

• Full and Open Competition is the Exception, Not the Rule. As of June 30, 2006, over $10.6 billion has been awarded to private contractors for Gulf Coast recovery and reconstruction. Nearly all of this amount ($10.1 billion) was awarded in 1,237 contracts valued at $500,000 or more. Only 30% of these contracts were awarded with full and open competition.
  
• Contract Mismanagement Is Widespread.Hurricane Katrina contracts have been accompanied by pervasive mismanagement. Mistakes were made in virtually every step of the contracting process: from pre-contract planning through contract award and oversight. Compounding this problem, there were not enough trained contract officials to oversee contract spending in the Gulf Coast.
  
• The Costs to the Taxpayer Are Enormous. This report identifies 19 Katrina contracts collectively worth $8.75 billion that have been plagued by waste, fraud, abuse, or mismanagement. In the case of each of these 19 contracts, reports from the Government Accountability Office, Pentagon auditors, agency inspectors general, or other government investigators have linked the contracts to major problems in administration or performance.

What has the Administration learned in the year since Bush praised Brownie? The report provides this clue:

"Earlier this month, the Federal Emergency Management Agency awarded new contracts worth over $1 billion to several of the same companies implicated in the wasteful Hurricane Katrina response."