FEMA won't reopen big no-bid contracts

WASHINGTON — The Federal Emergency Management Agency has broken its promise to reopen four multimillion-dollar, no-bid contracts for Hurricane Katrina work, including three that federal auditors say wasted significant amounts of money.

Officials said they awarded the four contracts in October to speed recovery efforts that might have been slowed by competitive bidding. Some critics, however, suggested they were rewards for politically connected firms.

R. David Paulison, acting director of FEMA, pledged in the fall to rebid the contracts, which were awarded to Shaw Group, Bechtel, CH2M Hill and Fluor. The agency later acknowledged the rebidding wouldn't happen until February.

Last week, FEMA said the contracts wouldn't be rebid after all. Indeed, they have been extended, in part because of good performance, said Michael Widomski, a FEMA spokesman.

"They are continuing the work," Widomski said, and the agency is focused on competitive bids for disaster-relief contracts for the next hurricane season beginning June 1.

An additional $1.5 billion in work promised to small businesses also has yet to be awarded.

A review by the Government Accountability Office (GAO) of 13 major contracts said last week the government had wasted millions of dollars, due mostly to poor planning by FEMA. Among the 13 were three of the four no-bid contracts for temporary housing, worth up to $500 million each, that went to three major firms with extensive government ties.

The preliminary review did not address the validity of no-bid contracts issued right after the Aug. 29 storm. The fourth housing contractor, the Shaw Group, was not included in the audit.

The Shaw Group's lobbyist, Joe Allbaugh, is a former FEMA director and friend of President Bush. Bechtel Chief Executive Riley Bechtel served on Bush's Export Council in 2003-04, and CH2M Hill and Fluor have done extensive previous work for the government.

The companies have denied political connections were a factor.

A House committee chaired by Republican Rep. Tom Davis of Virginia plans to hold at least one hearing next month on Katrina contracting. That was announced after the GAO's audit results were released.

FEMA had promised in October to boost the number of contracts given to small and minority businesses, partly by setting aside up to $1.5 billion worth of work to maintain trailers housing Katrina evacuees. It said those contracts would be awarded by Feb. 1.

Yet those 15 contracts — eight of which are designated for minority-owned businesses — have yet to be awarded.