Rebuilding New Orleans: Fairness in Contracting Post-Katrina
Posted by Suzanne Nossel
Call me paranoid, but if Iraq is any indication, there's good reason to be concerned to ensure that the devastation of New Orleans does not wind up simply lining the pockets of contractors with deep connections to the Bush Administration.
For the reconstruction of Iraq, exigencies like the need for speed and the lack of security on the ground were used to justify granting massive, long-term no bid contracts to firms with tight ties to senior members of the Administration. The principal beneficiary was, of course, Halliburton, where Dick Cheney was CEO prior to becoming Vice President.
Rep. Henry Waxman has revealed that Halliburton and its subsidiaries have been awarded more than $10 billion in contracts for providing logistical support to US troops in Iraq and helping to rebuild that country's oil infrastructure. This is despite the fact that government auditors had, as of the end of last year, issued nine reports criticizing Halliburton for mismanagement and waste. This prompted a series of criminal investigations into fraud and kickbacks by Halliburton, at least one of which has apparently led to the indictment of a former Halliburton official. Auditors recommendations that a portion of Halliburton's payments be withheld pending more complete expense accounting were rejected by the Administration.
A laundry of egregious revelations is included in this memo from Waxman's office. They include scrapping $85,000 trucks due to flat tires, manipulating contracting practices to avoid bidding requirements, and charges of $45 per case of soda and $100 per 15-pound bag of washing.
The problems are not limited to Halliburton - the facts on the multiple investigations, the hundreds of billions of dollars of overcharges to US taxpayers, the political interference in contracting and the cover-ups are all here.
Rather than crack down on such abuses, the Bush Administration has punished the whistleblowers, including a top Army procurement official who tried to call attention to the cheating.
Ten billion dollars have already been appropriated by Congress for the relief and reconstruction of New Orleans. Billions more will follow. Halliburton's already in on the action - under an existing $500 million contract with the navy they are rebuilding a Gulf Coast naval base.
It's not hard to imagine the justifications that will be given for simply awarding billions more in post-Katrina recovery deals to Halliburton and its kin: the company is located in nearby Texas; they've got lots of experience with similar government contracts (natch); they're so enormous that they can get people on the ground quickly; and they're so profitable that they can afford to pay experts. And with New Orleans literally under water, whose got time for competitive bidding?
There are several reasons why this must not happen:
- - The people of New Orleans deserve better. We all know by now what the people of New Orleans, and particularly the city's poor, have gone through. There will be those who profit from New Orleans' tragedy. But we should make sure to the extent possible that it is local business owners and citizens who will, in turn, invest those proceeds into rebuilding New Orleans. Contracting practices should require eligible companies to employ local people, and should favor companies that are locally owned and controlled.
- We have time. Sad to say, it will take months of pumping and demolition before any kind of rebuilding can begin. While there is urgency to the former, there is lead-time on the latter. During the intervening months, responsible federal, state and local authorities should conduct a competitive bidding process so that the majority of the contracts which are not highly time-sensitive can be awarded fairly.
- The public should not be cheated again. The American public is already awakening to the fact that the massive bill we will pay to bail out New Orleans is the result of shoddy planning and bad decision-making, including the de-funding of projects aimed to fortify the city's levees. We have no choice but to eat those costs, but that is no excuse to further pile on.
- Cronyism is already being fingered for the inadequate initial response to Katrina. FEMA head Michael ("Brownie") Brown ascended to the post after being ousted as a judges and standards of the International Arabian Horse Association. His primary qualification was apparently being a buddy of Joseph Allbaugh, the former head of FEMA, whose own primary qualification for the country's top emergency management post was having been Bush's 2000 campaign manager. From blaming the victims to being way to slow with aid, Brown's inexperience is showing. We cannot afford more of the same when it comes to the reconstruction effort - we need the very best people in charge.
- It's bad politics - Whereas the fraud and waste underway in Iraq seem remote to most Americans, the same won't be true on the Gulf Coast. Katrina will be an inflection point on a range of issues. The reconstruction process will either be viewed as part of the problem or part of the solution.
What should happen?
- Competitive bidding for everything, or for everything but the work that must happen over the next few weeks;
- Zero-tolerance for shoddy accounting and over-billing - in Iraq we may have few alternatives, here there are many;
- Strict GAO and Congressional oversight of the reconstruction process from the get-go;
- Immediate planning for how to involve the local community and maximize opportunities for area companies, for skilled people and for the unemployed/unskilled labor;
- Close media scrutiny of the bail-out and reconstruction process as it unfolds - this story will have legs for years to come as either a tale of redemption or a chronicle of abuses piled on other abuses.