House committee rips lack of oversight in Katrina contracting

Agencies pledge to use better discretion, say more contingency deals have been awarded.

Government agencies responsible for disaster preparedness and recovery need to enlist more local workers, exercise more discretion to ensure contracts are being adequately fulfilled and expand the number of bids gathered, House Government Reform Committee members said at a hearing Thursday.

Lawmakers from both parties criticized officials from the Homeland Security Department, Army Corps of Engineers, General Services Administration and Federal Emergency Management Agency for contracting problems in the aftermath of Hurricane Katrina, including widespread fraud, unused trailers for evacuees and excessive overcharging by contractors charged with cleaning up.

At one point, Rep. Henry Waxman, D-Calif., read from an Army Corps auditor's report detailing how contractors being paid to remove debris would arrive at the federal dumping site, check in and drive away -- only to return later with the same truckload, and receive double payment.

"They didn't unload at all," Waxman said. "This isn't an isolated occurrence. Everywhere the auditors looked, it seemed the taxpayers were losing out."

Army Corps auditors logged thousands of complaints about fraudulent contracting, and revoked payments in some instances. The auditors continue to pursue allegations, said Maj. Gen. Don Riley, the Corps' director of civil works.

"There have been indictments," Riley said.

Waxman and other legislators ripped agencies for waiting until after the storm to engage companies in contracts for ice, water, transportation, trailers and tarps.

"The planning was not where it needed to be," said William Woods, the Government Accountability Office's acquisition and sourcing management director, in testimony.

The agencies responsible for awarding contracts must work to create more "stand-by" or "call" contracts -- ones that are established before an emergency strikes, lawmakers said. That echoes comments by former FEMA Director James Lee Witt, who headed the agency under the Clinton administration, in a recent interview with reporters.

While just a handful of stand-by contracts were in place before Hurricane Katrina struck, there now are more than 70 completed in anticipation of the next disaster, said Elaine Duke, chief procurement officer at DHS.

Lawmakers also were critical of the billions of dollars issued via no-bid or single-bid contracts. Deals made with local suppliers and laborers, instead of national ones, would have saved the government time and millions of dollars, committee members said.

"Many people are capable of getting the job done besides Halliburton," said Rep. Carolyn Maloney, D-N.Y.

Committee chairman Rep. Tom Davis, R-Va., said while helping local organizations back onto their feet is key immediately following a disaster, agencies also should have considered the generosity of some larger companies when the hastily assembled cleanup project began. He cited Home Depot and Wal-Mart as two companies that had undamaged outlets locally and enough materials to fulfill some of the contracts.

The hearing comes on the heels of a Senate Homeland Security and Governmental Affairs report that recommended much more stringent oversight of contract awards.