Re-Bid Process for Hurricane Recovery Delayed

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Bush administration officials promised last month to re-bid four no-bid contracts issued after Hurricanes Katrina and Rita. Now they say it will be at least February before new awards are made. And in a little-noticed change, the Federal Emergency Management Agency has greatly expanded the value of the existing no-bid contracts.


This is MORNING EDITION from NPR News. I'm Steve Inskeep.


And I'm Renee Montagne.

Questions are still being raised about the reopening of four no-bid contracts issued after hurricanes Katrina and Rita. Administration officials promised last month to rebid the contracts, but they now say it will be at least February before new awards are made. And in a little notice change, the Federal Emergency Management Agency has greatly expanded the value of the existing no-bid contracts. NPR's Pam Fessler reports.

PAM FESSLER reporting:

Acting FEMA director, David Paulison, made news last month when he appeared before the Senate Homeland Security Committee and said he was no fan of no-bid government contracts. Lawmakers were complaining that too much work had gone to a few large companies and they were pleased with Paulison's response.

Mr. DAVID PAULISON (Acting Director, FEMA): All of those no-bid contracts we are going to go back and rebid. We're in the process of rebidding them already.

FESSLER: But it turns out that wasn't exactly the case. After his testimony, Paulison and his aides explained that not all no-bid hurricane contracts would be rebid. He said he was referring instead to four of the largest contracts valued at a hundred million dollars each. A Homeland Security spokesman confirmed to NPR, though, that the ceiling on those contracts had already been raised at the time Paulison spoke to $500 million apiece because of the overwhelming amount of hurricane recovery work. And, in fact, the contracts, held by Bechtel, the Shaw Group, Fluor and CH2M HILL, were not then in the process of being rebid. That process is just now beginning and will take months to complete.

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Senator SUSAN COLLINS (Republican, Maine): It's simply unacceptable to have very large no-bid contracts continue in place.

FESSLER: Maine Republican, Susan Collins, heads the committee before which Paulison appeared. She and ranking member, Joseph Lieberman of Connecticut sent a letter to Paulison this past Thursday expressing their dismay.

Sen. COLLINS: I had gotten the impression from his testimony that he was committed to remedying that problem very soon.

FESSLER: But officials at the Homeland Security Department, which includes FEMA, say the process takes time, that the agency needs to solicit bids, then review them before an award can be made. Greg Rothwell, the agency's chief procurement officer, told the Senate Small Business Committee that it will take at least until February.

Mr. GREG ROTHWELL (Chief Procurement Officer, FEMA): It's between doing urgently as it was done before and doing it under the normal process, which would take a long time for a $1.5 billion program. We're trying to get it done in a hundred days.

FESSLER: And Rothwell explained that the contracts aren't so much being rebid as being supplemented. FEMA plans first to award $1.5 billion to 15 small or disadvantaged companies to maintain and dismantle evacuee housing. The agency will then seek bids for additional contracts to cover future recovery work. While all this is going on the existing contractors will continue their work providing temporary housing. The companies say they've already sheltered tens of thousands of evacuees and that much of that work has been subcontracted to small and local firms. A Bechtel spokesman says most of what his company expects to do should be completed by February. Chris Yukins, a government contracting expert at George Washington University Law School, says it's not necessarily bad that FEMA's taking its time with the new awards.

Mr. CHRIS YUKINS (Government Contracting Expert, George Washington University Law School): These are extremely complex contracts, and at the end of the day, the government wants to be slow and deliberate to ensure that the government gets the best deal.

FESSLER: But he does worry about the structure of the new contracts because there's so much money involved and so little direction from Congress on how it should be spent.

Mr. YUKINS: That suggests that we should use contracting vehicles that allow us as taxpayers to see how the money's being spent. And that's just not the case.

FESSLER: Yukins also questions why only 15 small and disadvantaged firms will be allowed to split the $1.5 billion in initial contracts. He suspects one reason is that it's just easier to administer fewer deals. He notes that there's a shortage of government contracting specialists. And that shortage is about to get bigger. Greg Rothwell, the top Homeland Security official overseeing the hurricane contracting, plans to retire at the end of next week. Pam Fessler, NPR News, Washington.

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