A HIGH-STAKES GAME WITH ALMOST NO RULES
The Department of Homeland Security (DHS), the umbrella organization established in 2002 under which the Federal Emergency Management Agency now operates, spends federal money faster and with fewer controls than any other segment of the government, according to a report issued last month by the United States House of Representatives Committee on Government Reform. The report, prepared for Congressmen Tom Davis and Henry Waxman, found that half of all DHS contracts are awarded without full and open competition, and that the $34.3 billion DHS has spent on private contracts since its inception has been "plagued by waste, abuse or mismanagement." The committee noted that DHS does not require ethics training for its procurement officers. Between 2003 and 2005, DHS spending exploded from $3.5 billion to $10.5 billion (that's 11 times the rate of increase for the entire remainder of the government), and at the same time the agency actually slashed staff to oversee its contracts. The report concluded by saying "the cumulative costs to the taxpayer are enormous." (4)
Pam Dashiell, 58, a resident of the Ninth Ward who lost her home in Katrina, has watched the process unfold as she waits for her hometown to rise from the ashes. She says New Orleans has become a "free-for-all for corporations."
"The big money, as usual, is reserved for the big corporations," Dashiell said. "The usual suspects, including Halliburton and the Shaw Group, are getting the big contracts from FEMA and the Army Corps of Engineers." (5)
The revolving door between Capitol Hill and Wall Street has created a cozy club for major contractors and the politicians who love them. For example, Joseph Allbaugh was George W Bush's presidential campaign manager, and later head of FEMA. Now a lobbyist, two of Allbaugh's clients were among the first to receive fat Katrina contracts. One, the Shaw Group, Inc. of Baton Rouge, won several no-bid contracts from FEMA, the Environmental Protection Agency, and the Army Corps of Engineers immediately following the storm, totaling $700 million (one $100 million contract has since been rescinded). (6)
Allbaugh's other client, Kellogg, Brown & Root (KBR is a subsidiary of Halliburton, where Vice President Dick Cheney was CEO), won a $30 million contract (now worth more than $60 million (7) to work on devastated military bases in the Gulf Coast as part of a $500 million naval contract cemented pre- Katrina in July 2004.
The naval contract was issued by the Naval Facilities Engineering Command, and is the company's second; the first included money for constructing prisons in Guantanamo Bay
In addition, $126.8 million in Department of Defense contracts were awarded to KBR, along with $41 million from the Army Corps of Engineers. (8)
Allbaugh denies pulling strings to secure contracts for his clients. He told the Washington Post, "I tell them how to best craft their pitch, to craft their technical expertise so everybody knows exactly what they do."
Allbaugh's website also advertises that the company offers "assistance to companies engaging the U.S. Government process to develop post-war opportunities."
"This is a perfect example of someone cashing in on a cozy political relationship," said Scott Amey, general counsel at the Project on Government Oversight, a Washington watchdog group. (9)
Knowing the right people can also, apparently, make up for past indiscretions. Before the Iraq war began, Allbaugh's client KBR secured a $7 billion non-competitive contract to repair Iraq's oil fields. (10) An audit by the Department of Defense disclosed in August 2004 that KBR had not adequately accounted for $1.8 billion it was given for work in Iraq and Kuwait. (11) The Defense Department paid the bill anyway.