Monday, April 23, 2007
FEMA JUST BEING FEMA!
RV Business
Monday, April 23, 2007
FEMA exposed taxpayers to significant waste - and possibly violated federal law - by awarding $3.6 billion worth of Hurricane Katrina contracts to companies with poor credit histories and bad paperwork, investigators say.
According to the Associated Press, the new report by the Homeland Security Department's office of inspector general, set to be released later this week, examines the propriety of 36 contracts for trailer refurbishment designated for small and local businesses in the stricken Gulf Coast region following the 2005 storm.
It found a haphazard competitive bidding process in which the winning contract prices were both unreasonably low and high. Moreover, FEMA did not take adequate legal steps to ensure that companies were small and locally operated, resulting in a questionable contract award to a large firm with ties to the Republican Party.
"Based on our analysis, we concluded that FEMA contracting officials exposed the agency to an unacceptable level of risk," according to the report by the office of inspector general Richard Skinner.
The audit, one of several expected this year on Katrina contracting, is the latest to detail mismanagement in a multibillion-dollar hurricane recovery effort that investigators say has already wasted more than $1 billion.
In response, FEMA in the report disagreed that the wide price variations put taxpayers at risk. The agency contended that it was comfortable with bidders' financial viability based in part on past performance. In cases where contract prices appeared unreasonably high, those would be offset with lower payments later on subsequent work orders, FEMA officials said.
In the immediate aftermath of Katrina, FEMA handed out lucrative no-bid contracts for cleanup work to large, politically connected firms such as Shaw Group Inc., Bechtel Group Inc., CH2M Hill Companies Ltd., and Fluor Corp.
Following heavy criticism, FEMA director David Paulison pledged to rebid those large contracts. He ultimately reopened only a portion, awarding 36 contracts, which the agency said would be prioritized for small and local businesses.
"It's not what you know, what your expertise is. I don't even believe it's got much to do with price. It's who you know," contended Ken Edmonds, owner of River Parish RV Inc. in Louisiana, a company of nine people whose application was rejected.
Moreover, FEMA did not have formal criteria to determine whether a contractor should be considered local, did not require corroborating paperwork, and watered down requirements under federal law so that a company with only minimal Gulf Coast ties would be given special consideration, according to the audit.
Prices also varied greatly. Some were so high that investigators deemed them unreasonably excessive and wasteful; others were so unreasonably low that taxpayers faced "an unacceptable risk of poor performance."
For example, FEMA:
• Accepted bids as low as $74 and as high as $4,720 to completely refurbish used travel trailers. FEMA estimated this service should cost $295 per trailer.
• Accepted bids from companies with weak financial statements, incomplete and missing financial documentation, and negative net worth.
Monday, April 23, 2007
FEMA exposed taxpayers to significant waste - and possibly violated federal law - by awarding $3.6 billion worth of Hurricane Katrina contracts to companies with poor credit histories and bad paperwork, investigators say.
According to the Associated Press, the new report by the Homeland Security Department's office of inspector general, set to be released later this week, examines the propriety of 36 contracts for trailer refurbishment designated for small and local businesses in the stricken Gulf Coast region following the 2005 storm.
It found a haphazard competitive bidding process in which the winning contract prices were both unreasonably low and high. Moreover, FEMA did not take adequate legal steps to ensure that companies were small and locally operated, resulting in a questionable contract award to a large firm with ties to the Republican Party.
"Based on our analysis, we concluded that FEMA contracting officials exposed the agency to an unacceptable level of risk," according to the report by the office of inspector general Richard Skinner.
The audit, one of several expected this year on Katrina contracting, is the latest to detail mismanagement in a multibillion-dollar hurricane recovery effort that investigators say has already wasted more than $1 billion.
In response, FEMA in the report disagreed that the wide price variations put taxpayers at risk. The agency contended that it was comfortable with bidders' financial viability based in part on past performance. In cases where contract prices appeared unreasonably high, those would be offset with lower payments later on subsequent work orders, FEMA officials said.
In the immediate aftermath of Katrina, FEMA handed out lucrative no-bid contracts for cleanup work to large, politically connected firms such as Shaw Group Inc., Bechtel Group Inc., CH2M Hill Companies Ltd., and Fluor Corp.
Following heavy criticism, FEMA director David Paulison pledged to rebid those large contracts. He ultimately reopened only a portion, awarding 36 contracts, which the agency said would be prioritized for small and local businesses.
"It's not what you know, what your expertise is. I don't even believe it's got much to do with price. It's who you know," contended Ken Edmonds, owner of River Parish RV Inc. in Louisiana, a company of nine people whose application was rejected.
Moreover, FEMA did not have formal criteria to determine whether a contractor should be considered local, did not require corroborating paperwork, and watered down requirements under federal law so that a company with only minimal Gulf Coast ties would be given special consideration, according to the audit.
Prices also varied greatly. Some were so high that investigators deemed them unreasonably excessive and wasteful; others were so unreasonably low that taxpayers faced "an unacceptable risk of poor performance."
For example, FEMA:
• Accepted bids as low as $74 and as high as $4,720 to completely refurbish used travel trailers. FEMA estimated this service should cost $295 per trailer.
• Accepted bids from companies with weak financial statements, incomplete and missing financial documentation, and negative net worth.
