A man works to clean up after Hurricane Katrina.
In the aftermath of Hurricane Katrina, the Bush Administration turned to private
contractors to provide relief and recovery services worth billions of dollars. Now,
one year later, it is apparent that taxpayers and the residents of the Gulf
Coast are paying a steep price for the failure to stop waste, fraud, and abuse
in federal contracting.
At the request of Reps. Waxman, Cardoza, Obey, Tanner, Norton, and Tierney,
this report examines procurement spending in response to Hurricane Katrina. The
report identifies 19 Katrina contracts, collectively worth $8.75 billion,
that have experienced significant overcharges, wasteful spending, or mismanagement.
There are indications that federal officials may repeat many of the same
mistakes in responding to future disasters. 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.
Key findings in the report include the following:
- 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.