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KATRINA: Trailer deals go to Fluor ally

Giant firm mentors pint-size winner

by James VarneyTimes-Picayune
May 9th, 2006

Through a partnership with a smaller, minority-owned company, a sprawling multinational firm whose federal contract for travel trailers was up for rebidding has landed four new deals that could be worth $400 million, federal records show.

Del-Jen Industries, a wholly owned subsidiary of disaster relief giant Fluor Corp., is involved in a joint venture with PRI Inc., an Asian-American owned San Diego company, qualifying under the terms of a federal mentoring program for disadvantaged businesses. The parent Fluor Corp. is a massive services corporation based in California that has handled extensive disaster relief work in the past for the Federal Emergency Management Agency. Fluor's campaign contributions, the lion's share of which have gone to Republican committees and candidates, top $930,000 since 2000, according to a post-Katrina contracting Web page maintained by Taxpayers for Common Sense.

Fluor, whose stock has risen 65 percent since Hurricane Katrina slammed ashore in August, originally held a mammoth, nationwide contract with FEMA as the prime contractor in relief work following natural catastrophes. That contract was up for rebidding last summer when Katrina made landfall and, faced with an unprecedented crisis, FEMA simply broke it up and awarded four, $500 million deals for temporary housing work.

It was those contracts that FEMA, under considerable pressure, agreed to rebid last year. The announcement this month that PRI/DJI had enjoyed such success in the rebidding angered some competitors, who said it was outrageous one partnership -- let alone one linked to a serious player in FEMA's universe -- would win four contracts of the 36 being awarded, when no other company appears to have landed two. It also comes in the wake of steps taken by Congress last week to improve the competitive climate surrounding FEMA jobs, which several elected federal officials said need improvement.

The braying against PRI/DJI was particularly loud from business people who lost out entirely in the $3.6 billion travel trailer sweepstakes. Several of them already have launched a campaign against the process, which they contend has failed to honor its explicit guidelines to favor in-state small entities.

"What I think when I see this going on is that someone has connections to someone in the right place," said Moshiu Knox, who heads The Knox Group, an African-American company based in Mississippi that FEMA said bid too high a price.

"It seems like that's the only way a true small business is going to get in: hook up with a bigger company and then someone can pull strings and pull them on your behalf," he said.

FEMA defends process

FEMA insisted the process has been aboveboard throughout. PRI/DJI met all the necessary criteria, FEMA spokesman Aaron Walker said.

"As long as they have less than $30 million in annual revenues, it is within the bounds of the (request for proposals) and the Small Business Administration," he said. "And if this company meets the standards and illustrates it has the capabilities and can handle the work, then it is eligible."

What's more, despite formal protests filed with the Government Accountability Office against some of the rebid contracts doled out in Louisiana and Mississippi -- complaints that typically carry with them an automatic suspension of the job in question -- the work on travel trailers will continue in order to meet the region's desperate needs, FEMA said.

"The paperwork to continue the work was signed this morning," Walker said. "We are not going to stop the work, because families depend on our support."

PRI officers in San Diego did not return phone calls Monday.

Last month, indications from FEMA were that PRI/DJI would win three contracts: two in Mississippi and one in Louisiana. At that point, a formal protest by a losing bidder was lodged in Mississippi against the joint venture's status as a small business. The complainant, Tim White of White Haul Transport in McComb, also raised the issue in an April 27 letter sent to four U.S. senators. His protest was made moot by PRI/DJI's status in the mentor program, a status that extends for nine years.

White learned Monday that PRI/DJI could now command $400 million in new work, since each of the 36 contracts being awarded is capped at $100 million. He labeled both the process and the duration a small business is allowed to have a mentor as "a joke."

"When I saw that they got a fourth, I figured they must be laughing at us for complaining they'd got three," White said. "Nine years. It kind of defeats the whole meaning of having a small-business set-aside."

White's reference was to explicit FEMA guidelines set last year that said the rebidding would favor local small businesses and attach, for evaluation purposes, a 30 percent surcharge to all out-of-state bids. Despite those steps, several Louisiana and Mississippi companies have complained that winners' lists still are heavily weighted in favor of out-of-state firms.

Doing the work?

Although Walker of FEMA acknowledged that the agency requires each contract to have its own administrative staff, he said it was not farfetched to think a small business could provide four such teams. If each unit comprises five people, Walker said, many small businesses could easily meet that burden.

White said that is true "if you don't do the work." Barbara Sonnier, a consultant who helped some companies prepare their travel trailer bids, said Walker's reasoning is specious at best, especially in light of bid specifications that asked for prices on managing 6,700 trailers per contract.

"You're telling me a small business is going to manage more than 12,000 trailers in two states with independent crews and call centers being staffed and paid 24/7?" she said. "The mentor is supposed to provide advice and capital, some management, while the other half is expected to bid as an intact company. The mentor isn't supposed to do all the work."

As a statistician, Sonnier said it is practically impossible for one company to enjoy such success in a process that reportedly elicited hundreds of responses.

"This is horrible," she said. "The spirit of this whole project -- and I go back to the Q and A at FEMA's pre-bid conferences in Louisiana and Mississippi last year -- was to enable small businesses to participate in the rebuilding of the Gulf Coast."





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