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REBUILDING: AT WHAT COST AND IN WHOSE IMAGE?

by Rita J. KingSpecial to CorpWatch
August 16th, 2006

Most of the debris is gone. Homeowners and renters, including those who lived in housing projects and other low-income housing, wonder when they can come back, if they can rebuild, or if there will be an affordable place to call home.

Some of those lucky enough to have FEMA trailers have settled in for the long haul, building fences around them, decks on them, and flower gardens beside them. Even those who have bulldozed their homes and readied the land for new building are forced to wait for the city and the state to determine where new construction can begin and to what specifications.

The Bring New Orleans Back Commission was charged with coming up with a master plan for that city. The Louisiana Recovery Authority is shaping a statewide plan to lure back the diaspora. Mississippi is crafting its own new approach.

The Bring Back New Orleans Commission’s first stab at a comprehensive plan was vilified. It placed a building moratorium on 13 of the worst-hit areas in the greater metropolitan area, and justified the move by noting that many of the people in those neighborhoods died or fled the city altogether and have not come back. Would they, if the area was rebuilt?

Critics fumed that the plan was a thinly-veiled effort to fulfill the wishes of men like James J. Reiss, and drive the poor and minority populations out of the city for good under the guise of zoning laws, new flood maps, and stricter building specs. The plan was roundly rejected by the public.

With help at the state level and a $3.5 million grant from the Rockefeller Foundation, a new commission was formed. The Greater New Orleans Area Foundation, a board composed of members of the City Council, the mayor’s office, the Louisiana Recovery Authority, regional planners and the Bring New Orleans Back Commission will administer a program geared at allowing community input to drive the planning process under “one united effort.”

New Orleans Mayor Ray Nagin, who chartered the Bring New Orleans Back Commission, said it would be another six months before a “master planning document” is issued. The fate of the poorest neighborhoods has left some wondering what the future of New Orleans, and the Gulf Coast, will look like when the master plan is executed.

The US Department of Housing and Urban Development has announced plans to bulldoze half of New Orleans’ notoriously crime-ridden housing projects and replace them with lowincome housing mixed with other types of dwellings. Housing advocates say this is a not-so-subtle effort to permanently squeeze out the predominately poor, black New Orleanians who lived there.

It wasn’t as if the sentiment hadn’t been openly expressed before in Washington. US Congressman Richard Baker, a 10-term Republican from Baton Rouge, was overheard telling lobbyists on Sept. 9, 2005: “We finally cleaned up public housing in New Orleans. We couldn’t do it, but God did.”

The displaced say the government is acting in the interests of their corporate bedfellows, clearing out unprofitable dwellings and the decidedly poor demographic that filled them to make way for corporate mega-projects.

“Most people can’t fathom that it’s that intentional, but it is. This is economic warfare,” said Catherine Austin Fitts, who ran the Federal Housing Authority under the first Bush administration. “You’ve got financial predators moving in, and Katrina will be extremely profitable for those who win.”

TEMPORARY HOUSING

But before the developers come in, there’s a buck to be made in temporary housing.

DHS notoriously spent almost a billion dollars on mobile homes and travel trailers, including 10,000 which have been left sitting in an Arkansas field unused so long that FEMA had to pay $6 million to have gravel spread beneath them to keep them from sinking into the soft ground. It seems DHS ordered the trailers from countless manufacturers without realizing that federal laws prohibits locating them in a known flood plain, which constitutes a huge swath of the Gulf Coast. (66) According to the DHS, as of June 30, 2006, more than 102,500 people were still housed temporarily in 37,995 FEMAprovided travel trailers and mobile homes, including 3,242 units compliant with the Americans with Disabilities Act.

But some people were forced to leave the Gulf entirely when temporary housing just wasn’t made available in time. That has led to sharp criticism of the corporations tasked with delivering trailers and mobile homes, often under exorbitant contracts. Louisiana in particular has suffered for the failure, losing more than half of its population (and tax base) in the weeks and months following the storm.

Democratic Congressman Barney Frank, ranking member of the Financial Services Committee and co-sponsor of the bill, said, “The failure of the federal government to respond adequately to people’s housing needs was its own disaster.” CH2M Hill, Fluor, Shaw and Bechtel — all major donors to the Republican Party — were the first companies tapped to provide temporary housing in the region, and were awarded no-bid contracts initially worth about $400 million apiece.

FEMA determined the type of housing each victim would receive, and its contractors were to make sure they got it.  (Next summer, 18 months after the trailers and mobile homes first reached thousands of Gulf Coast residents, FEMA has said it will reclaim the trailers. That job, too, will probably fall to the same contractors.)

But delivery was slow and unreliable, and criticism bloomed around the contracts that had been granted for what seemed, to many, to be poor work. FEMA promised to re-bid the four massive contracts after initial criticism of the process, but ended up extending and expanding them without new competition, despite a GAO audit found that millions had been wasted by the firms.
BOURGET’S OF THE SOUTH
The sudden demand for trailers and the seeming eagerness of the federal government to throw money at anyone who could provide them was an invitation to some very Louisianaesque corruption. In one case, a custom motorcycle dealership called Bourget’s of the South and owned by the uncle and father of a Louisiana state legislator miraculously won three no-bid FEMA contracts worth over $100 million to provide 6,400 trailers. The problem was, the dealership didn’t sell trailers, and didn’t even have a license to. It also didn’t have a franchise agreement from the manufacturers, also required under state law. Complaints for legitimate trailer dealers prompted an investigation. The Louisiana Recreational and Used Vehicle Commission fined Bourget’s $46,000, or $2,000 per day for 23 days of selling the trailers to FEMA without a license. The company may keep the proceeds from its FEMA contract.


In recent weeks the DHS Inspector General is once more investigating the four contracts, which have ballooned to a combined worth of $3.4 billion, or more than double their original value. Despite the ongoing controversy, FEMA on August 9 awarded the same four companies contingency contracts worth $250 million apiece to perform similar recovery work during future disasters. Those contracts were competitively bid, and last for two years.

CH2M HILL INC.

In January, the CH2M Hill was awarded a competitively bid contract from the City of New Orleans estimated to be worth $23 million to remove flooded cars from the city. It won despite the fact that the company’s bid was significantly higher than many of the local firms who applied. A meeting of the New Orleans City Council boiled with resentment from some Councilpersons.

“I’m just surprised that a national company that seems to be overwhelmed with trailers would get the job when so many local companies are looking for work,” Councilwoman Renee Gill Pratt said, garnering a smattering of applause from the Audience.

The company pulled out when criticism continued to mount, including from FEMA, who would have had to reimburse the city for the costs. Ultimately the state drew up a plan at a vastly reduced cost.

Like many of the corporations with the largest Gulf Coast contracts, CH2M Hill has enjoyed significant federal contract work in Iraq. This work includes a contract (a joint venture with Parsons, a major construction firm) worth $28.5 millionto oversee the construction of Iraq’s public water and electrical utilities by four other contractors (between them the corporations were spending an estimated $1.7 billion in taxpayer funds), including Fluor, which has drawn accusations of conflict of interest.

Congressional Democrats have asked if CH2M Hill can effectively monitor work performed by Fluor when the two firms have made billions together collaborating on high-dollar federal contract work in the past.

FLUOR

Fluor Corp. won one of the other controversial Gulf Coast temporary housing contracts that had been promised for rebidding but was instead ultimately extended and expanded sans competition. This, despite the fact the federal government fined the company $3.2 million in 1994 for “submitting heavily padded repair bills after Hurricane Hugo.” In 2005 it was determined that the company will also pay $12.5 million to settle allegations that it knowingly over-billed the Department of Energy and Defense from 1995 to 1998, according to the Corporate Crime Reporter.

Connections have helped Fluor score a landslide of deals, including $1.6 billion in reconstructive work in Iraq, according to the Los Angeles Times. Suzanne H. Woolsey, a “trustee of a little-known arms consulting group that had access to senior Pentagon leaders directing the Iraq war,” joined the board of Fluor Corp in 2004, shortly before the corporation started cleaning up in Iraq.

Woolsey’s husband, the former CIA director, R. James Woolsey, is a leading advocate for the war and also serves as a government policy adviser.

As recently as May and June of 2006, Fluor has continued to score seven-figure Katrina-related contracts, a CorpWatch review of FEMA records shows. From management and infrastructure support to hauling and installing, to time and materials, Fluor’s share of the total federal budget for bringing the Gulf Coast back is massive-an estimated $1.3 billion.

One of the means by which Fluor has laid claim to such a large portion is by exploiting federal law intended to set-aside contracts for minority-owned business. Fluor used a whollyowned subsidiary, Del-Jen Industries, to partner with a minority-owned firm called Project Resources, Inc. to win a $400 million contract to maintain and ultimately “deactivate” or remove travel trailers over the next 5 years.

“What I think when I see this going on is that someone has connections to someone in the right place,” Moshiu Knox, who heads the Knox Group, an African-American company based in Mississippi that lost the bidding war with PRI/DJI.

“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,” Knox told the Times-Picayune.

FEMA’s massive and expensive failures in its attempt to provide temporary housing prompted the White House to suggest designating the Department of Housing and Urban Development as the point agency for temporary shelters in future disasters.

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