FEMA Awarding ‘No-Bid’ Contracts to Firms
After Hurricane Katrina blew through the Gulf Coast, leaving thousands homeless, Joe Shirey at CJ’s RV Town called federal disaster officials with a sales pitch for travel trailers.
According to USA Today, he e-mailed a list of every unit on his Hobe Sound, Fla., lot. Two days later, the response came back: a few items were crossed off and “they purchased the rest,” Shirey said. The total deal: 132 trailer homes for $2.3 million, as much as the dealership would normally sell in four months.
It was just part of a buying spree by the Federal Emergency Management Agency (FEMA), which snapped up travel trailers and prefab houses from dealers in Florida, Indiana, Georgia, Alabama and other states. The government has bought $4 billion in temporary housing for hurricane victims and relief workers.
Shirey’s recreational vehicle business, for example, reached out to FEMA because it had worked with the agency last year after Florida was hit by four damaging hurricanes. At least a dozen other Florida RV dealerships have sold travel trailers to FEMA since Katrina hit.
And as retailers have been clearing their lots, manufacturers have stepped up production to supply dealers. In addition, some of the major manufacturers are fulfilling limited competition contracts with FEMA, particularly those involved in manufactured housing.
USA Today reported that Nappanee, Ind.-based Gulf Stream Coach Inc. had received a limited competition contract for $521 million while Fleetwood Enterprises Inc., Riverside, Calif., is making 7,500 travel trailers and 3,000 manufactured homes for storm victims.
Housing is the most expensive item on a long shopping list that includes everything from satellite phones to body bags to diesel fuel.
For temporary roof repairs, FEMA went to All American Poly Corp., where it bought $6.6 million worth of blue tarps bearing the FEMA logo. The agency bought $28 million in ready-made meals from G.A. Food Service of St. Petersburg, Fla., and it went to the Danish firm Thrane & Thrane for $3.5 million in satellite phones.
The newspaper said that all of these contracts, along with many more, were awarded without the competitive bidding normally required for government purchases. It’s not unusual for such processes to be streamlined in disasters, but waiving safeguards raises the risk of fraud and waste, said Steven Schooner, a government contracts specialist at George Washington University Law School.
Congress has allocated $62.3 billion for hurricane relief, before the expensive work of reconstruction even begins. Of that amount, $15.8 billion had been spent as of last week. Some of the purchases are detailed in a list of contracts compiled by the federal agencies making them, but they represent only a fraction of the spending. The government also is sending weekly spending reports to Congress, but they offer less detail.
Schooner said another principle of prudent government buying is planning for disaster needs that can be anticipated, such as food, water, housing and emergency supplies. It’s not clear that always happened in the case of Katrina.
G.A. Food Service approached the agency about selling emergency meals. The company had never done business with FEMA. It mostly sells prepared meals for use in feeding programs for senior citizens. But it saw a potential market for its long shelf-life meals and is now providing the government with 60,000 or more three-meal packs per day.
“This has been a real education for everybody,” said G.A. Food marketing manager Bruce Boore. “The manufacturers were not prepared.”
Another major item on the government’s shopping list has been debris removal, largely handled through the Army Corps of Engineers. Among its contractors is the Florida company AshBritt, which was lined up on a contingency basis in 2002 to clear roads and clean up property. The longstanding contract was activated when Katrina struck, and AshBritt was authorized to do up to $500 million in work, with an option for another $500 million.
The company is a client of the lobbying firm founded by Mississippi’s Republican governor, Haley Barbour. AshBritt paid the firm Barbour Griffith & Rogers $40,000 in the first half of this year for “assistance and guidance with regard to disaster mitigation issues,” according to public records.