Post-Katrina Contractors in the Gulf Region
FARAI CHIDEYA reporting:
Black businesses are expected to reap some of the profits from the rebuilding of New Orleans, but the lion's share will go to companies that have become household names in Iraq. The best-known of these is Halliburton. Once headed by Vice President Dick Cheney, Halliburton has made more money in Iraq than any other contractor, about $10 billion. A rival firm, Bechtel, has brought in more than $3 billion. Both are among an elite group of multinationals that have received no-bid contracts to aid rebuilding New Orleans and the Gulf region. But several contractors in Iraq, including Halliburton, have been cited for cost overruns. Some have been accused of corruption.
Washington Post staff writer Griff Witte has been covering the private contracting business. He joins us from the nation's capital. Welcome.
Mr. GRIFF WITTE (The Washington Post): Thanks so much for having me.
CHIDEYA: So can you just make it clear, the connection between the firms that have been working in Iraq and the Katrina cleanup?
Mr. WITTE: It's interesting. You're seeing somewhat of a reunion. It's like the whole gang is in the Gulf Coast now. Halliburton had a pre-existing Navy contract, which was actually competitively bid that they're now using to do a lot of reconstruction work down there. Bechtel actually got a brand-new hundred-million dollar no-bid contract. They're trying to basically construct temporary housing for some of the people who have been displaced by the hurricane. Also, the--Blackwater USA is down in the Gulf Coast. You probably remember Blackwater from Iraq. They were the security company that had four of its security guards killed in Fallujah last year, and they were strung up from the bridge that spans the river there. And they are also a company that had a lot of business in Iraq, and now they're doing business in the Gulf Coast as well. They're basically securing FEMA facilities down there.
CHIDEYA: FEMA is going to be distributing at least $62 billion to help reconstruct the Gulf regions that were hit by Katrina. Who ultimately is responsible for making the decisions about who to hire, how much scrutiny they should have both initially and ongoing?
Mr. WITTE: Well, it's an interesting question because FEMA is an agency, obviously, that is under attack right now, very heavily criticized, and it's an agency that is being criticized in large part because the agency has been hollowed out, to a certain extent. A lot of its top civil servants have left in recent years. It's been left with a lot of political appointees who have been running the agency who don't necessarily have a background in disaster management. So you've had a void that's developed there. And actually, it's the case now that contractors are going to be helping out in managing these contracts. FEMA has hired a contractor essentially to help it with contract management because they don't have the number of people in-house to do it on their own with government employees.
CHIDEYA: In theory, Republicans have stood for a smaller government, Democrats for a somewhat larger government. As some commentators have noted, for example, David Brooks of The New York Times, the era of small government is over, and Republicans don't necessarily stand for small government. That said, what does the need to outsource so much of this effort say about the size of government and what's needed?
Mr. WITTE: If the Katrina recovery does not work out well, if it continues to flail, if it continues to be beset by the same kind of problems that you saw with the initial response, I think that you are going to be seeing a lot of people wondering was it a good decision to outsource so much of what government does, to contract that out? And remember that this is not a purely partisan movement. The outsourcing of government began in earnest really in the Clinton administration with the reinventing government initiatives of Vice President Al Gore. That was a major initiative of the Clinton administration. It was something that they took great pride in, that they were reducing the number of overall federal employees, that they were giving work to the private sector where it was warranted. That was something that was certainly--it was a trend that was certainly continued under President Bush when he took office, but it was not something that he began. And the big question now is is it working? Is it providing for effective services to the people who are paying taxes.
CHIDEYA: Last question, and briefly, who will step in if there seems to be overcharging or misappropriations of funds? Whose job is that?
Mr. WITTE: One of the lessons of Iraq, if you talk to the people who are now overseeing contracts in Iraq, is that you need oversight very early in the process. You need someone to step in immediately and say, `We're here to police business and we're here to make sure that no one is committing fraud, no one is wasting money,' and there's an open question about who's going to be doing that now. The Department of Homeland Security has an Inspector General's Office. They are on the ground, and they have said that they are going to be taking a lead in this.
But there are members of Congress who feel that the Department of Homeland Security's IG Office is in over its head on this one, and so there are a number of proposals out there. One is to create a new special Inspector General's Office that would just look at Iraq. Another is to expand the work of the special inspector general for Iraq and have it look at Gulf Coast work as well. There are proposals out there to create a bipartisan commission that would oversee all of these contracts and make sure that no funny business is going on. So it really is not entirely clear right now who is going to be doing the monitoring, but if you talk to people who are now overseeing the Iraq contracts, they'll tell you that regardless of who does it, someone needs to be doing it soon.
CHIDEYA: Griff Witte is a reporter from The Washington Post. He's been covering the private contracting business for the paper since February. Thank you so much.
Mr. WITTE: Thank you. It was my pleasure.
CHIDEYA: Farai Chideya, NPR News.
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