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US: 600 People Monitoring Hurricane Contracts

by Charles R. BabcockWashington Post
January 13th, 2006

The federal government has sent nearly 600 auditors and investigators to the Gulf Coast region to monitor $8.3 billion in contracts awarded to help victims of last year's hurricanes, according to year-end figures released by the Department of Homeland Security.

The task force of federal inspectors general had opened 330 investigations by Dec. 30 and was reviewing contracts covering 45 percent of the spending, said a summary posted this week on the department's Web site.

The year-end figures represent an update of the task force's first report to Congress, which was released yesterday by Rep. Edward Whitfield (R-Ky.), chairman of the House Energy and Commerce subcommittee on investigations. He noted that the $60 billion Congress has appropriated for Hurricane Katrina relief "now accounts for fully 40 percent of all funds that have been appropriated for the disaster relief fund over the past 30 years."

The Bush administration set up the task force in early September after Katrina because of concerns that waste and abuse might accompany the rapid spending of billions of dollars to help the hundreds of thousands of people displaced by the hurricane that ravaged New Orleans and the rest of the Gulf Coast.

The report noted that routine contract rules were bypassed to get companies to work quickly to bring aid to the victims. It mentioned several major contracts being audited, including one that hired cruise ships to house people and ones that were used to get ice, water and blue tarps to be used as roofs to victims, as well as $41 million in spending on government purchase cards, after Congress raised the "micro-purchase" limit from $2,500 to $250,000.

While the brunt of the audit work is being handled by the Homeland Security and Defense departments' inspectors general, several other agencies also are monitoring contracts. The Department of Transportation, for example, is assessing the internal controls on $300 million in contracts to Landstar Express America for air and land transport services and "determining the reasonableness" of a $47 million contract for providing bus services in New Orleans and Baton Rouge. And the Department of Health and Human Services is evaluating the performance of CareFlite Inc. in carrying out a $21 million contract to transport evacuees who needed medical assistance.

A few cases have already resulted in criminal indictments and convictions, but most of those have focused on individuals filing false claims to obtain money for damaged homes -- homes where they did not live or that did not exist. The Pentagon began investigations of three hotline tips dealing with bribery, kickbacks and possible product substitution, the report said.

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