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KATRINA: Complaints put FEMA trailer contracts on hold

Questions mount over winning bids

Times-Picayune
May 5th, 2006

A batch of lucrative federal travel trailer contracts along the Gulf Coast has been put on hold, and other contracts could be in jeopardy, after three companies that lost a rebidding process lodged formal protests with the Government Accountability Office, according to federal attorneys handling the complaints.

The trio of protests, which the GAO must resolve within 100 calendar days, were filed in April, and since then turmoil has continued to engulf FEMA's contracting processes in the post-Katrina landscape. On Thursday, a House committee in Washington delved into federal contracting and spending, while in recent weeks new questions have surfaced about whether some of the companies that won in the rebidding comply with FEMA's explicit guidelines.

Overarching Thursday's hearing and the intricacies of rebidding $3.6 billion in contracts for maintaining and disposing of thousands of travel trailers is the mounting anger among Louisiana and Mississippi companies that believe they have been excluded from the reconstruction work. Although President Bush and FEMA insist they are trying to funnel more jobs and money to companies long based in the storm-tossed zones, the winning contract announcements trickling out of FEMA reflect a preponderance of out-of-state companies.

"Whatever FEMA does, they don't do it to help local people," said Rep. Charlie Melancon, D-Napoleonville, who attended Thursday's hearing and has questioned Bush administration officials about the rebidding process. "I don't want to be too critical, but I keep hearing these words from the president and I don't see the follow-up on the ground. We're not helping our people, and the government is not doing its job."

The most recent job at hand involves the Federal Emergency Management Agency trying to break up four massive temporary housing contracts handed out as Katrina spent its fury on the Gulf Coast. The agency planned to divide the maintenance and disposal of tens of thousands of manufactured homes and trailers into 36 contracts of as much as $100 million each. Of that total, 16 contracts were to be awarded in Louisiana -- eight to small businesses and eight to minority or disadvantaged businesses -- with preference given to local companies. The remaining 20 contracts were to be split among Mississippi, Alabama and Texas.

Controversy has dogged the rebidding. The latest twist came Thursday when GAO attorneys said they were told by FEMA officials that work has been halted on the five contracts awarded to minority contractors in Mississippi. Federal regulations require suspension of work when a bid protest is made. However, the company making the Mississippi 8A complaint, Integrated Management Services, said it is unsure the work-suspension rule is being followed.

Questionable qualifications

In addition, new questions emerged about some of the other winning companies, some of which the losing bidders said do not comply with explicit guidelines FEMA laid down during pre-bid conferences in New Orleans and elsewhere last year. In general, the questions concern the qualifications that companies were required to meet, as well as some of the winning bids themselves, which the losing companies regard as suspiciously low.

FEMA, which so far has refused to make public the specifics of the winning bids, did not reply to questions about its actions. In total, there are three separate complaints that have been lodged by losing companies: two in Mississippi, concerning both the small-business and 8A minority business portions of the work, and one in Louisiana regarding the eight contracts that were to go to small businesses.

An attorney representing Madison Services Inc., the Mississippi company protesting the small-business awards in that state, was unavailable, while the Washington lawyer representing Phoenix Engineering LLC, which is formally protesting the small-business awards in Louisiana, could not be reached for comment.

But John D. Calhoun, Integrated's CEO, said his client's complaint about the process is clear.

"We're supposed to be talking about the best value for the government, and that's what we were told was the main criteria when the bid solicitations were made," he said. "But when you're talking about accounting firms getting contracts, and contracts going to companies that have no experience in this kind of work, then you don't have that."

While FEMA maintained its silence Thursday, it did respond recently to questions submitted in mid-April about the rebidding process. On April 25, spokesman James McIntyre e-mailed some brief remarks about what companies were qualified to land the work, and about how FEMA decided whether a company was local or not. Under the Stafford Act, which guides FEMA's actions, preference is supposed to be given whenever possible to local companies, and the travel trailer bid specifications that FEMA issued last year note that out-of-state bids would be subject to a 30 percent markup during evaluations.

McIntyre's responses indicate some of the winning firms should have been ineligible. He acknowledged a company must be listed in the Central Contractor Registration when it lands a contract. But as of Thursday, neither Smith Research Corporation nor DC Recovery Services -- two Louisiana companies announced as minority-owned, or 8A, contract winners -- were included in the CCR. DC Recovery Services is not listed in the Louisiana Secretary of State's corporation database and does not have a phone listing at the address used by FEMA.

Similarly, a company that won a small-business contract, ARS Inc., also is not listed in the CCR, and the state's corporation database lists it as an entity formed on April 21, just three days before FEMA announced its award.

Same company?

Another FEMA pre-bid requirement stated that a company had to be incorporated before Katrina hit to be considered local.

But there's an exception: Companies can earn local status if they "regularly performed work in the state prior to the disaster," McIntyre said.

In the case of ARS, a company called American Radiation Services shows the same address as ARS on both the CCR and with the Secretary of State's office. The company's president, Danny Coleman, did not return phone calls. A Baton Rouge attorney listed as the agent for ARS said the FEMA contract actually was with American Radiation Services. When asked why ARS was formed on April 21, and why FEMA lists "ARS" and not American Radiation Services as the winner, the attorney referred the questions to Coleman.

Those sort of odd details are one of the aspects of the process that bother other small businesses in Louisiana and Mississippi.

"The only purpose I can see to some of this would be to confuse the issue, to create more blind alleys, and eventually get it to a point where no one knew exactly what was going on," said Kenny Edmonds, owner of River Parish RVs in La Place, which FEMA said lost out because of price.

Edmonds and some other potential vendors expressed frustration about an apparent lack of interest from their congressional delegates. A Mississippi company, White Haul Transport, which filed complaints about the small-business classification of some of the successful bidders, is hoping for some support from its congressional delegation. To that end, White Haul owner Tim White routinely sends Mississippi's federal office holders copies of the documents related to his company's protests, but he has yet to hear a peep from them, he said.

Senators noticing

Yet indications surfaced Thursday that the pace of congressional involvement was quickening. Part of that was attributable to a letter White faxed last week to Sens. John Kerry, D-Mass., and Joe Lieberman, D-Conn., the ranking Democrats on small business and FEMA committees, respectively.

"To date, awards are being announced to out-of-state firms, companies with questionable political ties, large companies, . . . companies with absolutely no previous related experience in the manufactured homes or travel trailer business, and companies established after Hurricane Katrina," White wrote April 27.

"Bidders in Louisiana and Mississippi are filing challenges with FEMA over these awards, but the challenges have been to little or no avail," he said.

In particular, White singled out PRI/DJI, a joint venture of which the second part, Del-Jen Industries, is a subsidiary of Fluor Corp., one of the four behemoths that landed one of the original $500 million deals after Katrina.

Initially, FEMA indicated in a letter to River Parish RVs owner Edmonds that PRI/DJI had won a small-business contract. After White filed a complaint, FEMA announced it had awarded PRI/DJI not one, but two contracts of as much as $100 million each as an 8A company.

"We previously sent a letter to our Mississippi (Congress members), however we have heard nothing from them," White concluded. "We now turn to you for any help that you may be able to provide us. Would you give your attention to this out-of-control situation before these contracts are finalized?"

On Thursday, a Lieberman spokeswoman said the senator is "aware and troubled by these types of complaints, which he has heard about from other contractors." He plans to "seek additional information from FEMA in an effort to ensure that bidding for Gulf Coast reconstruction contracts is fair, open and by the book."

Edmonds said he has sensed a dilution of concern from Louisiana's federal representatives, particularly Sens. Mary Landrieu, D-La., and David Vitter, R-La. In April, Edmonds faxed Louisiana's federal elected officials a copy of the letter FEMA sent him, informing him River Parish RVs had been eliminated because of price and stating that five of the eight winning Louisiana small businesses were from out of state. Edmonds said only Melancon responded, faxing Edmonds a copy of a letter he sent to Donald Powell, President Bush's appointed hurricane czar, asking about the process.

"I have previously sent a letter of same concern to the White House and would like to bring to your attention my concern about companies coming into Louisiana getting contracts, while companies that are based and native to Louisiana are not," Melancon wrote April 19.

On Tuesday, a Landrieu staffer said the senator is seeking a briefing with FEMA officials about contracting and has co-sponsored a resolution, attached to the hurricane relief and war spending bills currently under congressional debate, that would require all single-source FEMA contracts over $500,000 to be reviewed by an outside agency. But no date has been set for the briefing, and the review clause has yet to pass muster and be inserted in the bill.

"What I feel has happened -- and it's just that, a feeling, I could be wrong -- is that for some reason everything has just clammed up here," Edmonds said. "I can't say the politicians aren't working on something, maybe they are, but when I call, none of them seem to have any idea what I'm talking about."



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