Investigators to Monitor Katrina Contracts - Yahoo! News

By LARA JAKES JORDAN, Associated Press Writer
Tue Sep 13, 4:05 PM ET



A team of investigators is being sent to the Hurricane Katrina-ravaged Gulf Coast to follow the money — namely, billions of dollars in relief aid the federal government is pouring into the region without normal contracting safeguards.

The 30 Homeland Security Department investigators and auditors are part of what officials call an unprecedented effort to ensure federal funds are properly distributed in a rescue, relief and rebuilding process expected to exceed $100 billion.

The team is being dispatched to monitor government contractors' work in Alabama, Louisiana and Mississippi as critics call the spending deluge a disaster in waiting if not properly controlled.

"The message has gone out very clearly to everybody that we're going to be efficient, we're going to cut through red tape, but we're not going to cut though the laws," Homeland Security Secretary Michael Chertoff said Tuesday.

Yet many of the normal safeguards have been temporarily suspended in Katrina's wake to ensure emergency federal aid gets to victims as soon as possible. So far, Congress has approved spending $62 billion in Katrina-related relief efforts. Of $50 billion directed to the Federal Emergency Management Agency, an arm of Homeland Security, just over $9 billion has so far been spent, FEMA spokeswoman Natalie Rule said.

"It is entirely appropriate that the money go out just as quickly as possible to people whom we think need it, and to worthy contractors on a competitive basis," said former Homeland Security inspector general Clark Kent Ervin. "But in the rush to do it, there is real potential for waste and certainly for fraud as well."

Congress also let federal employees temporarily charge up to $250,000 on government credit cards for hurricane rescue and relief operations. Guidelines issued Tuesday by the White House budget office said the new spending authority will go only to select individuals, and many purchases will require prior approval.

Some contracts, including five with emergency housing and construction companies, were awarded hurriedly without undergoing normal competitive bidding processes. Meanwhile, the Bush administration has waived prevailing wage requirements that ensure government-contracted workers in disaster areas are fairly compensated.

Among the most controversial Katrina awards is one that the Homeland Security team cannot investigate: a $16.6 million contract with Kellogg, Brown & Root Services Inc. of Arlington, Va., for emergency repairs at Gulf Coast naval and Marine facilities. The money is part of a $500 million Navy contract that KBR won by competitive bid last July.

Because the Pentagon awarded the KBR contract, Homeland Security has no authority to audit it. But KBR, a subsidiary of Halliburton Co., has been at the center of scrutiny for receiving a five-year, no-bid contract to restore Iraqi oil fields shortly before the war began in 2003. Vice President Dick Cheney headed Halliburton from 1995 to 2000, and Democrats have questioned whether the company has gotten favorable treatment because of his connection.

"Congress is rightly spending billions of dollars to help the people and businesses of the Gulf Coast who have been devastated by Hurricane Katrina," House Democratic leader Nancy Pelosi said. Over the weekend she called for an independent commission to oversee relief contracts "to ensure taxpayers' money goes to those in need, not to fraudulent contractors."

The Homeland Security investigators are part of a $15 million effort by the department's inspector general that Congress approved last week to keep an eye on Katrina relief spending.

Department officials believe the money represents the first time emergency funds have been set aside for FEMA or Homeland Security's internal watchdogs to monitor relief spending. Even investigations into contracts after the Sept. 11, 2001, terror attacks were paid for out of FEMA's relatively meager budget for internal audits.

"However, Katrina costs will be far greater than those costs associated with the federal response/recovery for 9/11," said Homeland Security Inspector General Richard Skinner, who ran FEMA's internal watchdog unit after the terror attacks.

A spokesman for Bechtel Corp. said he did not know how much the San Francisco-based engineering and construction company won to provide emergency housing to hurricane victims in southern Mississippi. But he said Bechtel was still negotiating its contract with FEMA, even after it began relief efforts around Sept. 1.

Generally, Katrina contractors "will be given the benefit of the doubt," Senate Appropriations Committee Chairman Sen. Thad Cochran (news, bio, voting record), R-Miss., said.

FEMA spokesman James McIntyre put it more bluntly: "You had 200,000 people who were displaced, possibly more," he said Monday. "We needed to get families into housing, as soon as possible, and off the floor of the stadium. "We needed the contracts to hit the ground running to get that process up and running."

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