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Controversy Continues over Post-Katrina Spending on Trailers

April 9, 2007 at 12:00 AM EDT
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JEFFREY KAYE, Reporter, KCET: Across southern Mississippi, some 27,000 trailers and mobile homes still house people displaced by Hurricane Katrina. The homes are a reminder, not only of the storm’s lingering impact, but of the continuing controversy over post-Katrina federal spending.

Complaints about costs began right after Katrina, when FEMA, the Federal Emergency Management Agency, paid billions of dollars to buy and install 150,000 trailers throughout the Gulf Coast. Now, there’s a new concern about the expense of maintaining trailers that are vacant.

MAYOR AARON LOTT, Lumberton, Mississippi: There’s one right back there.

JEFFREY KAYE: Aaron Lott, mayor of Lumberton, Mississippi, says three of the 27 FEMA trailers in his small town are deserted.

MAYOR AARON LOTT: The maintenance contractor for the last eight months has not bothered to call FEMA and say, “There’s no resident living in this camper.” It don’t even have water and power.

JEFFREY KAYE: There are at least 1,000 abandoned FEMA trailers in Mississippi, but there’s little financial incentive to haul them away quickly, because the companies that do the towing also get monthly maintenance fees.

BARRY BARIA, Former FEMA Inspector: It’s pretty easy to tell sometimes when the trailer’s abandoned, and they should report it, but they don’t, because they get paid per trailer.

JEFFREY KAYE: Until recently, Barry Baria worked as a FEMA inspector.

BARRY BARIA: … windows busted out in them. They’ve still got the preventative maintenance stuck in the door.

JEFFREY KAYE: Preventative maintenance what?

BARRY BARIA: That’s their form they fill out. Yes, they have to leave a copy of it in the door.

JEFFREY KAYE: To say that they actually did it?

BARRY BARIA: Right.

Bechtel trailer contract

JEFFREY KAYE: After Katrina, FEMA awarded no-bid trailer contracts to four well-connected companies. FEMA gave the Mississippi contract to the Bechtel Corporation, one of the largest engineering, construction and project management companies in the world.

REP. GENE TAYLOR (D), Mississippi: They did a crummy job, and they can't tell me otherwise because I'm from here.

JEFFREY KAYE: Democratic Congressman Gene Taylor is building a new house on the property in Bay St. Louis, Mississippi, where his old home, destroyed by Katrina, once stood. He's been a dogged critic of Bechtel.

REP. GENE TAYLOR: I know the people that were hurt by their lack of actions, and I know how much money they squandered that could have been done a heck of a lot cheaper, and they'll never convince me otherwise.

JEFFREY KAYE: Taylor says FEMA gave Bechtel a cost-plus contract, which pays for expenses and overruns and offers no motivation to minimize costs.

REP. GENE TAYLOR: The more money they spend, the more people they hire, the more needless layers of bureaucracy they put in there, they get paid a profit on top of every expenditure they run up.

CLIFF MUMM, Bechtel Corp.: Bottom line, we're absolutely proud of the work we do.

JEFFREY KAYE: Cliff Mumm is a Bechtel senior vice president based in Maryland. Bechtel's total bill came to nearly half a billion dollars. Mumm says FEMA approved all expenses.

CLIFF MUMM: We're paid based on supported and certified invoices; that is, we have to have timesheets and money spent. And, you know, and then we have to certify that it's correct.

JEFFREY KAYE: Many residents of Mississippi are thankful for the roofs over their heads.

SOLEDAD MOLINA, Hurricane Katrina Victim: To this day, I'm grateful. I can't really say we're not, because, you know, I'm absolutely sure that they tried the best they could.

Building the trailers

JEFFREY KAYE: But they wonder about the cost, saying they were surprised that Bechtel hired so many people.

SOLEDAD MOLINA: There was seven men to build these guys.

JEFFREY KAYE: Seven men to build these steps?

SOLEDAD MOLINA: Seven men. At each side, you would see seven men working at it.

JEFFREY KAYE: So how many do you figure this could haul?

Robert Jackson, Jr., hauled trailers for Bechtel subcontractors.

ROBERT JACKSON, Construction Worker: It was six or eight guys on that set-up, to set up a trailer. It don't take but two guys to set a trailer up. That's all it takes.

JEFFREY KAYE: In seven months, Bechtel set up some 35,000 trailers and a housing application system. The company employed 75 subcontractors; they, in turn, often took fees for hiring their own subs. Before he worked for FEMA, Baria was a trailer inspector for a subcontractor to a subcontractor.

And you get left with what?

BARRY BARIA: Ten dollars a trailer.

JEFFREY KAYE: And for ten dollars a trailer to do preventative maintenance, was everyone actually doing that? Or were they paid...

BARRY BARIA: No, there were several instances where people were not doing the job. They would just forge peoples' names on documents, saying that they'd been to the trailer and not even go the trailer, so I'm not really sure. There was no system in place, really, to make sure that I was doing my job.

JEFFREY KAYE: Higher up the food chain, subcontractors for Bechtel say they also experienced inefficiency. Aaron Lott, a builder as well as a part-time mayor, is the business manager for a Bechtel subcontractor that installed just over 25 percent of the Mississippi trailers for Bechtel.

AARON LOTT, Hensley R. Lee Constructing: I think we wound up doing over about 9,000, total.

JEFFREY KAYE: Lott says, of the $15,000 a trailer FEMA paid Bechtel on average, Bechtel paid his company about $3,000 a trailer.

AARON LOTT: It seemed like every one of them had worked on a nuclear power project somewhere. So we went and met with them. Very, very courteous, generous folks, but they -- you know, I don't know how to build a nuclear power plant, and they don't know how to sell or set up campers. So we explained to them what to do, and we got the mission started.

CLIFF MUMM: We're used to mobilizing quickly and doing very diverse projects. But I think the proof of our value added, one thing is that this was the fastest -- not only our fastest mobilization, but this was the fastest delivery of homes and the fastest response in Mississippi in FEMA's entire history.

JEFFREY KAYE: Bechtel says that they put in trailers in record time. They'd never...

AARON LOTT: No, the subcontractors put in the trailers. The people that were used were already in place and had already done FEMA work.

JEFFREY KAYE: You're saying they're taking credit for work that you did?

AARON LOTT: That's correct.

FEMA's monitoring of contracts

JEFFREY KAYE: Government oversight officials have also criticized FEMA for failing to adequately monitor contractors. FEMA had just 17 staff people overseeing the $3.4 billion worth of trailer contracts and subcontracts throughout the Gulf Coast.

A top FEMA officially recently acknowledged the Bechtel contract was wrong and costly, but the agency's director of acquisition for Gulf Coast recovery, Tina Burnette, says Bechtel was paid a fair and reasonable price.

TINA BURNETTE, FEMA: I do not believe that there was waste. I have not uncovered waste. Do I think that we could do things better in the future in a competitive fashion? Of course.

JEFFREY KAYE: Burnette agrees FEMA had an insufficient number of monitors right after Katrina, but says the agency now has 40 contracting officers instead of 17.

TINA BURNETTE: We've since then set up a program management office in both the Gulf Coast, as well as Washington, D.C., for future disasters.

JEFFREY KAYE: In March 2006, the Bechtel contract wound down. And FEMA, stung by criticism of the no-bid contracts, changed its approach. It took competitive bids and, in Mississippi, awarded trailer contracts to nine companies instead of just one.

The firms are paid to maintain trailers and to decommission unneeded ones, to disconnect, clean, and haul them away. FEMA's new trailer contractors are, as Bechtel did, farming out much of the work to subcontractors, people such as Tara and James Burkhalter. The Burkhalters, like others at the bottom of the food chain, accuse those in the middle of profiteering.

TARA BURKHALTER, Hurricane Katrina Victim: This is what the de-act was, $350, and to clean the unit was $100.

JEFFREY KAYE: For each trailer "de-act," deactivation, which they did with their own equipment, the Burkhalters received $450. The contractors received between $1,000 and $1,200 per trailer.

JAMES BURKHALTER, Hurricane Katrina Victim: The general contractors were the ones that made the money. For faxing us a sheet of paper, they were making somewhere in the neighborhood of $700. All they've seen of the camper was a piece of paper that they faxed that cost 35 cents to fax.

JEFFREY KAYE: The U.S. Department of Labor says it is investigating six of the nine companies awarded deactivation contracts. It won't give details; FEMA says the investigations are routine.

With diminishing numbers of trailers to maintain and to haul off, FEMA is now re-competing the contracts and plans to pare 10 existing contracts down to five.

None of the current contractors would be interviewed on camera. Their work includes hauling thousands of used trailers to storage sites. FEMA says part of its planning for future disasters is to re-use these units.

The agency has also had competitive bidding for future temporary housing. Of the six contractors that won an initial competition, four were the same companies that received no-bid contracts right after Katrina. Among them, the Bechtel Corporation.