US: U.S. Paying a Premium to Cover Storm-Damaged Roofs

Across the hurricane ravaged Gulf Coast, thousands upon thousands of blue tarps are being nailed to wind-damaged roofs, a visible sign of government assistance.
Construction crews working with TJC Defense, out of Alabama, install a blue tarp on a home in Kenner, Louisiana. Ian McVea, Fort Worth Star-Telegram
The blue sheeting - a godsend to residents whose homes are threatened by rain - is rapidly becoming the largest roofing project in the nation's history.

It isn't coming cheap.

Knight Ridder has found that a lack of oversight, generous contracting deals and poor planning mean that government agencies are shelling out as much as 10 times what the temporary fix would normally cost.

The government is paying contractors an average of $2,480 for less than two hours of work to cover each damaged roof - even though it's also giving them endless supplies of blue sheeting for free.

"This is absolute highway robbery and it really does show that the agency doesn't have a clue in getting real value of contracts," said Keith Ashdown, vice president for Taxpayers for Common Sense, noting that he recently paid $3,500 for a new permanent roof. "I've done the math in my head 100 times and I don't know how they computed this cost."

As many as 300,000 homes in Louisiana alone may need roof repairs, and as the government attempts to cover every salvageable roof by the end of October, the bill could reach hundreds of millions of dollars.

The amount the government is paying to tack down blue tarps, which are designed to last three months, raises major questions about how little taxpayers may be getting for their money as contractors line up at the government trough for billions of dollars in repair and reconstruction contracts.

Steve Manser, the president of Simon Roofing and Sheet Metal of Youngstown, Ohio, which was awarded an initial $10 million contract to begin "Operation Blue Roof" in New Orleans, acknowledged that the price his company is charging to install blue tarps could pay for shingling an entire roof.

But Manser defended his company's contract, saying Hurricane Katrina damaged so many homes and wiped out so much infrastructure in and around New Orleans that it would be impossible to install permanent roofs quickly. The rapid response to the crisis, Manser said, required contractors to mobilize hundreds of construction crews, truck supplies halfway across the country and house and feed armies of workers - at a tremendous set-up cost.

Simon Roofing, the Shaw Group of Baton Rouge, La., and LJC Construction Co. of Dothan, Ala. - the government's three prime blue-roof contractors in Louisiana - have spent millions to lease hotels, hire catering companies and set up computer databases to track and bill the government for their work.

"When you have 400 or 500 people staying out of town, you're paying a whole lot more overhead than you normally do," Manser said. "I couldn't imagine being paid any less, well, scratch that, I guess I could. People will do a lot to get work."

Jim Pogue, a spokesman for the Army Corps of Engineers, said the agency strictly followed government contracting requirements and did all it could to get the best deal possible for the roofing work, given the magnitude of the task and the need to protect vulnerable homes as quickly as possible.

Pogue also said that the Federal Emergency Management Agency, which by statute is in charge of the program, asked the Corps to manage the program because FEMA's resources were spread thin.

Contractors watching from the sidelines, however, said they'd be happy to do the work for a fraction of what the government's paying.

Mike Lowery, an estimator with Pioneer Roof Systems in Austin, Texas, said that while he couldn't calculate how much it might be costing contractors to house and feed workers, even with astronomical overhead the companies would have plenty of room to make a profit.

In normal circumstances, Lowery said, his company would charge $300 to tarp a 2000-square-foot roof in Austin. For that same size job, the government is paying $2,980 to $3,500, or about 10 times as much, plus additional administrative fees that can't be readily calculated.

"It sounds to me like these people are probably making a stinking killing," Lowery said. "It's hard to imagine somebody asking that kind of money. ... It sure seems to me like somebody is getting taken advantage."

The government doesn't pay contractors per roof, but for every square foot of blue tarp its workers tack down, according to copies of the three contracts for the New Orleans area obtained by Knight Ridder.

The Shaw Group is getting paid the most for installing the tarps, $1.75 per square foot. Simon Roofing's contract calls for $1.72 per square foot and LJC Construction gets $1.49 per square foot.

Dick Taylor, the roofing mission manager for the Army Corps of Engineers, said the average repair to date has been about 1,500 square feet, meaning the companies have on average been getting $2,235 to $2,625 per house.

Contractors also are billing the government different amounts for administrative costs and other types of work, such as minor asphalt roof repair, the contracts show.

For minor roofing repairs to asphalt roofs, LJC gets $250 for each 50-square-foot job; Simon gets $600 for the same work. Shaw gets $350.

The hourly fee for an operations manager varies, too.

Shaw is billing the government $155.56 per hour for its operations manager. Simon is billing $150 an hour. LJC is charging the government $65 per hour, documents show.

LJC Vice President Allan Buchanan said his company has 300 to 400 workers in the New Orleans area and is completing nearly $900,000 worth of billable work daily.

The amount of work for the three companies is also increasing, Taylor said.

The agency is receiving more requests each day from residents to install blue roofs, more than 1,000 a day in the past week.

Under the square-foot rate, contractors provide the nails, tools and wood strips to hold down the blue sheeting, but they're also allowed to bill the government for any plywood used, at rates ranging from $2.26 per square foot to $3.50 per square foot.

On a shingle-stripped rooftop recently in Gretna, a suburb across the Mississippi River from New Orleans, a superintendent with the Shaw Group described the blue roof program as win-win as he supervised the repair of a rooftop gash - a job that usually takes 90 minutes or less.

Anthony Kearney, the superintendent, said that while the work is good for the company's bottom line, he also finds it rewarding because homeowners are so desperate to keep their belongings dry. "To us, it's a corporate money-maker," Kearney said, "but to these people, it's all they got."

Calls to Shaw's corporate headquarters weren't returned this week, but Kearney said he was proud of the work his company was doing. The roofs, he said, can hold up for many months. He noted that some residents in Florida towns hit by hurricanes last year still have them in place.

"It lasts," Kearney said. "We joked that if they had blue roofed the Superdome, it wouldn't have leaked."

Former government contract officials and private contracting experts charge that the Army Corps neglected to negotiate better rates when it had the chance before the hurricane season began. Once the storm hit and the vast amount of destruction became obvious, they say, the Corps failed to negotiate a lower rate for contractors, who could still make decent profits because of the sheer amount of work to be done.

Taylor of the Army Corps said the Shaw contract was one of many advance deals signed in July after the government was criticized for signing lucrative deals on the fly after hurricanes ravaged Florida last year.

But the advance deal the Corps negotiated with Shaw was for the same $1.75 per square foot rate that it was criticized for last year.

Angela Styles, a former Bush administration federal procurement policy chief, said that higher-than-normal prices are to be expected in emergencies, but Shaw's prices for installing the blue tarps seem excessive because the contract was negotiated before Katrina hit.

"The government should have gotten a much better deal negotiating when no storm was on the horizon," Styles said.

AMP Section Name:War & Disaster Profiteering
  • 21 Reconstruction
  • 185 Corruption

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