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KATRINA: Rage renewed as FEMA redoes bids

Local contractors feel locked out from deals

by James VarneyTimes-Picayune
April 12th, 2006

In a much anticipated rebidding of contracts to service travel trailers in Louisiana, the Federal Emergency Management Agency appears poised to dole out more than half the work to out-of-state companies, despite federal assurances that the process would favor local firms, FEMA documents show.

In addition, one of the companies listed by the agency as "an apparently successful offeror" is a joint venture from San Diego that includes a subsidiary of Fluor Corp., a major player in post-storm reconstruction that received one of the multimillion dollar trailer deals FEMA and the Bush administration vowed to rebid. And one of the Louisiana companies expected to land a contract does not appear to meet the definition of a local business that FEMA established when it requested proposals in November, records show.

The surprising results have infuriated some small Gulf Coast businesses, the same firms that federal officials and bid guidelines insisted would have an advantage in the contract derby, which was set off after cries of protest about FEMA awarding gargantuan awards to heavy-hitting companies almost before Katrina's last gusts had blown.

Louisiana's two U.S. senators said this week they also are bothered by the outcome of the rebidding the documents suggest, which they said would undermine repeated assurances FEMA has given them that more money would be funneled to businesses rooted in areas that absorbed the most ferocious hit from last year's hurricanes.

"This is not acceptable, and we're going to get to the bottom of this somehow," Sen. Mary Landrieu, D-La., said.

Ton of questions raised

As if the nuts and bolts of the rebidding weren't puzzling enough, the contracts are expected to run for five years, considerably longer than the 18-month clock for temporary housing that started ticking when Katrina roared ashore Aug. 29. FEMA officials declined to comment on whether the time frame reflects the agency's belief the trailer parks sprouting along the Gulf Coast will be more permanent than originally expected, but the vendors seeking the work said they have no doubt that was the intent and that they believe the contracts could run their full course.

FEMA has formally announced only a partial list of winners for contracts for "the maintenance and eventual deactivation" of tens of thousands of temporary trailers the agency has installed since Katrina, and it now has missed repeated deadlines for announcing its choices. At first, the results were expected on Feb. 1; FEMA then promised them last week, but the release still is pending.

Two weeks ago, FEMA representatives in Washington said 20 companies would split about $1.6 billion in work. Those numbers swelled to 36 contracts of about $100 million each during testimony Monday at a U.S. Senate subcommittee field hearing in New Orleans. A top FEMA official told subcommittee members that 28 of the 36 upcoming winners would be local firms.

On March 31, when FEMA confirmed the winners had been picked but did not identify them, the agency said Louisiana would include eight contracts to small businesses and another eight to small businesses federally certified as "8A" or disadvantaged. The agency has worked hard to make the process fair, and favorable to small and minority-owned firms, FEMA spokesman James McIntyre said.

"This competitive bid strategy is specifically designed to make successful bids a possibility for many smaller businesses based in the Gulf Coast," McIntrye wrote in an e-mail Tuesday evening.

McIntyre said FEMA was preparing additional responses to other questions that have surfaced in relation to the maintenance and deactivation of the trailers and hoped to have them ready today.

Fearing betrayal

Nevertheless, local contractors in Louisiana and Mississippi said they weren't reassured. They have heard the kind of promises uttered at the hearing and they remain skeptical.

"I don't believe FEMA is playing straight with me," said Moshiu Knox of the Knox Group Inc. in Mississippi. "They told us one thing and then went and did something else."

Knox, who was rejected in the trailer bidding process, pointed to FEMA's prebid guidelines for the trailer deals laid out in November. In them, FEMA stated, "this procurement is a 100% small business set-aside," and that "preference will be given to small business firms located in the State of Louisiana." In the smaller print, the agency offered an even more precise definition:

"Local small business contractors are defined as those small businesses who meet the small business size standard ($30 million) and who regularly conducted business in the State of Louisiana prior to the disaster event (August 29, 2005 for Hurricane Katrina)," the language read.

Sen. David Vitter, R-La., who like Landrieu attended Monday's subcommittee field hearing, said he considered those definitions too broad and said they perpetuate loopholes FEMA promised to close.

"This only underscores my continuing concern about their contracting operations," he said. "These contracts must be rebid properly."

In prebid meetings, FEMA officials stressed that price was not the sole consideration to award the contracts, but they did point to other clauses that showed companies not meeting the local small definition would be hit with a 30 percent price markup, presumably making their proposals less competitive.

Knox said it is his understanding the winning bids ranged from $35 million to roughly $240 million. McIntyre's e-mail confirmed that FEMA's selection was "not only based on local preference but also on cost effectiveness and technical ability to do the work," but in Knox's opinion the sums don't compute.

"That just doesn't make sense," he said, citing the bid's requirements: maintenance for five years on 6,700 trailers, with monthly visits and the creation of a call center. "There's no way you do that for $35 million." His own bid, Knox said, was north of $400 million.

Facing rejection


Equally curious about the results is Kenny Edmonds of River Parish RV's Inc., a Louisiana company for more than 20 years with about nine employees. He was stunned to receive a March 24 letter from FEMA contracting officer Chandra G. Lewis telling him he was out.

"Your offer was eliminated based on price," Lewis wrote. "Attached are the names and addresses of the apparently successful offerors."

Edmonds said his emotions spun from glum to outrage as he flipped the page and saw the list of eight winning companies. Four of them were clearly out of state: PRI/DJI, which listed a San Diego headquarters; RV Services LLC of New Ulm, Texas; C. Martin Company of North Las Vegas, Nev.; and 3D Disaster Services Inc. of Orlando, Fla.

"I was mad to put it mildly," Edmonds said. "I could not believe it, it seemed so ludicrous."

Closer examination of the documents shows Edmonds might have even more reasons to fret. For example, the first "apparently successful" firm listed was Agbayani Construction Corp. of Shreveport. But the Louisiana secretary of state's corporation database lists Agbayani as a "non-Louisiana" firm based in Daly City, Calif.

Also on the FEMA list was B&I Services Inc., with offices at 2701 Kingman St. in Metairie, but which does not appear on the state's corporation database. That building houses the politically connected Jefferson Parish engineering firm of Brown, Cunningham and Gannuch. During a visit there Tuesday, one employee was unaware of the existence of B&I, while another said it was "just getting set up."

B&I's record would appear to run afoul of the requirement FEMA established last year, namely that preferred companies must have "regularly conducted business in Louisiana prior to the disaster event." Ken Brown, identified by one of the Brown, Cunningham and Gannuch employees as a principal in both companies, did not return a phone call.

Raking in contracts

Questions about the FEMA bidding process are not confined to those companies with Louisiana listings. A spokesman for PRI/DJI confirmed that DJI refers to Del-Jen Industries, a wholly owned subsidiary of Fluor Corp. Fluor, a California-based behemoth in the engineering and contract management world with campaign contributions lopsidedly in favor of the Republican Party, has landed more than $220 million in Katrina-related contracts to date, according to Taxpayers for Common Sense's tracking of federal Katrina work.

The company spokesman, Bill Brown, declined to comment on PRI/DJI's exact work, saying the firm's understanding is that it has won a FEMA contract but that its scope remains unclear. He referred all questions about its selection to FEMA.

PRI/DJI's claimed uncertainty seems unlikely to be rectified by www.fedbizopps.gov, a government Web site listing details of contracts up for bids. The most recent information on Louisiana's deal for "maintenance and deactivation of manufactured homes and travel trailers" states the work is slated to be broken into eight parts. So far, the Web site shows, two contracts of up to $100 million have been awarded, neither of them to one of the eight companies mentioned by FEMA's Lewis.

The Web site says one of the contracts awarded to date went to Davis Professional Accounting Services LLC, which lists an address in a badly flooded zone of eastern New Orleans but which has established offices elsewhere, a secretary confirmed. The second contract went to Crown Roofing Services in Kenner. Officers at those businesses could not be reached for comment Tuesday evening.

But Edmonds pointed to two peculiar items on the announcements about the process. One is that both show "N/A" under the set-aside heading, which appears to contradict FEMA's Nov. 29 guidelines that called the process "a 100% small business set-aside." The other is the vague description of the contract's geography. It says, "Gulf Region (Louisiana, Mississippi, Alabama, and Texas)," although Edmonds and Knox both said their understanding going in was that bids and awards would be more specific.

Edmonds and Knox insist there are too many questions surrounding the process for them to believe it was fairly administered, and they are demanding that FEMA post the winning bids in their entirety so that they can be publicly scrutinized.

"I think FEMA grossly underestimated us, thinking we'd just roll over and play along because we were dumb hicks living on a bayou with no brains," Edmonds said. "Well, they're wrong."



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