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US: Auditors investigate Katrina contracts

Halliburton, Bechtel deals not clearly defined

by Hope YenAssociated Press
September 22nd, 2005

Government auditors are questioning whether several multimillion-dollar Katrina contracts” including one involving a subsidiary of Houston-based Halliburton Co.” invite abuse because they are open-ended and not clearly defined.

The contracts, for services such as levee repair and emergency housing, were granted to companies based on their pre-existing business relationships with the government. Critics say the arrangements foster cronyism because a few repeat players typically get the best deals. The Government Accountability Office and the Homeland Security Department, which has primary responsibility for reviewing the billions of dollars worth of Katrina contracts, said they will focus on agreements awarded with little or no competition.

They include "indefinite delivery-indefinite quantity" contracts such as those involving Halliburton Co. subsidiary KBR and Bechtel Corp. Both firms have strong ties to the Bush administration.

"We've been looking at all the contracts from day one," said Richard Skinner, the Homeland Security Department's inspector general. "One concern is whether you are getting the fair market value. The second is whether the people we are giving contracts to are the best qualified."

Of the 22 contracts awarded so far by the Army Corps of Engineers, 11 are so-called ID-IQs; so are several granted by the Federal Emergency Management Agency.

One such contract is a $16 million government work order given to the subsidiary of Halliburton, the company headed by Vice President Dick Cheney from 1995 to 2000 that has been accused of overcharging the government for work in Iraq. The deal, to plug levee breaches, was awarded as part of a Navy construction contract.

Previous government audits have cited these contracts as vulnerable to abuse because government officials and companies can exploit their broadly defined terms, such as services.

"We want to make sure agencies have processes and procedures in place to ensure contracts are performed as required," said Bill Woods, a director at the GAO, the investigative arm of Congress.

"Things can slip through the cracks."

Other targets include an agreement with Bechtel Corp. for short-term housing that was awarded without competition. The company, whose CEO Riley Bechtel served on President Bush's Export Council from 2003-04, began providing work even though a formal contract with cost and payment provisions has yet to be signed.

Bechtel spokesman Howard Menaker said the company was asked to provide an immediate supply of trailers and mobile homes in the Gulf Coast based on Bechtel's "long and accomplished history in emergency response."





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