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QUESTIONABLE BILLING

August 16th, 2006

photo: Andrew Stern

Robert Boh of Boh Brothers says accounting was tricky in the early days following the storm. He says he didn’t know how many people worked on those early projects or how much it really cost, because his company’s headquarters were under several feet of water. Everything was recorded on paper.

The urgency of the situation can explain away some discrepancies or vagueness in some of the bookkeeping, but not all.

In some cases the invoices just aren’t adding up. On numerous FEMA spreadsheets, the description fields corresponding to many of the cost line-items are left blank. Other times, as in the case of Kenyon billing the state thousands for beef jerky, a DVD player, and model cars, it is perfectly clear what the tax dollars are going to, just not why. (Louisiana Department of Health and Hospitals spokesman Robert Johannessen says Kenyon’s charges are being audited and only approved expenses will ultimately be reimbursed). (25)

In another case, FEMA awarded a 30-day contract to Emergency Disaster Services (EDS) of Lexington, Kentucky to provide three meals per day for 200 to 400 emergency personnel, at a cost of $3.6 million. (26) Dissecting the numbers reveals that, depending on how many people actually showed up to be fed, the meals cost between $100 and $279 apiece.

On Sept. 17, 2005, that contract was extended for another 30 days, although the price had dropped to $2.6 million for the same number of people and for the same timeframe. By the time the contract was extended for a third time for the same number of people, the price had dropped to $1.6 million. The FEMA spreadsheet enumerating the costs does not indicate whether lobster was replaced by meatloaf, or if the diminishing urgency forced the company to reduce its prices.

EDS also secured a $329,989 contract for renting six shower trailers for a month, and on March 15, 2006, another contract was granted for $86,536, although FEMA left the space reserved for describing the nature of the goods or services provided blank. (27)

And then there’s Clearbrook, LLC, a Mobile, Alabama-based company. The firm won an $80 million contract to build seven camps for emergency personnel, and billed FEMA $5 million for food and lodging before the contract was even in effect.

Auditors found another $3 million in “mathematically inaccurate” overcharges, and temporarily suspended payments to the company. Clearbrook has won more that $145 million in Katrina-related contracts, most of them competitively bid. (28) A Washington Post analysis of existing Katrina contracts found that contractors inflated their actual costs from 40 percent to 1,700 percent when billing the government.

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