NCPA - National Center for Policy Analysis


March 22, 2006

The government wasted millions of dollars in its award of post-Hurricane Katrina contracts for disaster relief, including at least $3 million for 4,000 beds that were never used, says Hope Yen of the Boston Globe.

Many of the 13 major contracts were awarded with limited or no competition, and waste and mismanagement were widespread due to poor planning and miscommunication, leading to money being paid for services -- such as housing and ice-- that were never used, says Yen.

According to a Government Accountability Office (GAO) report, the government's response to Hurricanes Katrina and Rita depended heavily on contractors and the Federal Emergency Management Agency (FEMA) did not adequately anticipate needs:

  • Nonexistent communication with local officials led to misjudgments on the need for temporary housing.
  • Poor coordination between FEMA and the Army Corps of Engineers contributed to waste in an Americold Logistics LLC's contract for ice.
  • Inadequate planning led to the award of a Mississippi contract for classrooms without competition.
  • FEMA had only 17 of the 27 monitors it deemed necessary to oversee the installation of temporary housing in four states, leading to inadequate controls.
  • Of more than 700 contracts valued at $500,000 or more, more than half were awarded without full competition or with open-ended terms.

In response, Democrats have called for limits on no-bid agreements, claiming that they have been awarded at the expense of a slow Gulf Coast rebuilding effort, says Yen.

Even though government agencies have been praised for their hard work in securing contracts after the disaster, millions still could have been saved if they had adopted previous recommendations to hire more people, prearrange contracts and improve staff training, says Yen.

Source: Hope Yen, "GAO says millions were wasted in awarding of Katrina contracts," Boston Globe, March 17, 2006; based upon: "Agency Management of Contractors Responding to Hurricanes Katrina and Rita," GAO Report, March 15, 2006.

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