Government contracts for flood relief investigated



WASHINGTON (AP)—During the summer’s Midwest floods, government emergency contracts were awarded so haphazardly that companies could land business with a simple phone call and agencies sometimes paid far more than prevailing rates, a review of contracts shows.

Disaster agencies, scrambling to help flood victims, hastily signed off on millions of dollars worth of contracts for urgently needed items from generators to bottled water.

When Des Moines, Iowa, lost its water plant, for example, the government rented portable toilets from a Kansas company for $600 a month each even though others closer to home offered them for far less—one for as little as $130 each.

To shore up strained levees, an Army Corps of Engineers office in Illinois bought millions of sandbags—at 38 cents each, more than double what some companies charged.

Federal agencies lacked information about the prices and availability of some essential services, The Associated Press found in a review of $24.6 million in emergency contracts awarded by the Corps and the Federal Emergency Management Agency.

Amid the chaos of such a vast disaster, federal officials readily acknowledged they chose convenience over frugality.

Some federal contracting officers flipped through the Yellow Pages to find emergency services. Others used agency lists of preferred contractors that have more to do with a company’s initiative than best prices.

At least seven companies got on those lists and received contracts ranging from $100,000 to more than $2 million by simply contacting the government to tout their services—some long before the flood started, others in its early days.

‘‘You contact the proper people and get your name out there. That part is not that hard,’‘ said Dave Farber, whose Iowa company got on the list years ago by calling. His company got the most sandbag business even though it charged at least nine cents per bag more than any other provider.

Federal officials say they try to anticipate needs but in the frenzy of a disaster have little time to do extensive comparison shopping.

‘‘The most important thing is the delivery date and the quantity. Cost is really the last thing,’‘ said Tom Bales, an Army Corps official in Illinois.

Critics say the government could save taxpayers money if disaster planning included a more comprehensive effort to nail down the best prices.

‘‘The Army Corps of Engineers and FEMA didn’t or don’t have an emergency response plan. … They didn’t have a clue,’‘ said Dave Bandauski, co-owner of Portable John in Monee, Ill., which supplied about 500 portable toilets to the government for $281 each.

Jerry Ostendorf, Iowa’s disaster coordinator, agreed federal agencies had inadequate information about some supplies and recommended the government create a database of services with specific prices.

Larry Zensinger, head of FEMA’s interagency planning office in Washington, said the government keeps extensive information on services like debris removal and construction and for specialty items, such as water purifiers used to take salt out of water.

But lists are not as complete for such common items as portable toilets and diapers, he said.

Congress plans to review flood contracting early next year. But few want to criticize the disaster agencies for hasty contracting, since Congress pressed them to respond faster following hurricanes Andrew and Hugo.

‘‘We would not be terribly surprised if there were instances where the agency has played fast and loose with the rules,’‘ said Jack Wells, chief of staff for the House subcommittee that oversees FEMA.

The AP reviewed emergency spending contracts awarded by FEMA and the Corps through the end of August, when the worst flooding subsided. Through October, FEMA had spent $288 million on the flood.

The AP surveyed contractors’ prices nationwide for various emergency services. The review found that the government paid about average for many products, from bottled water to mobile homes.

Some contractors reported the Corps was a tough bargainer. The owner of Sully Transport Inc. in Sully, Iowa, said the prices the Corps negotiated for his tankers full of drinking water were 10 to 15 percent below his normal.

During disasters, federal agencies do not have to follow the usual competitive bidding process for contracts. The primary guideline FEMA gives the agencies working is that priority be given to local companies before contracting out of region.

But even that didn’t always happen, the AP review found.

A $630,000 contract to oversee the relatively simple task of distributing drinking water in Des Moines was awarded to a construction company that specializes in bridge rebuilding. The Hardaway Co., located more than 1,000 miles away in Columbus, Ga., put its managers up in Iowa hotels and hired 200 local workers to hand out water.

The firm got the contract because it showed up on a preferred contractors list for doing cleanup work after Hurricane Andrew, federal and company officials said.

The Corps spent more than $5 million on sandbags, and many came from outside the flood region—including Utah, California and North Carolina.

But the AP found two Iowa sandbag-makers, Commercial Bag and Textile in Des Moines and Gierke-Robinson Co. in Davenport, that said the government never approached them.

‘‘You’re going to miss some people, like the small suppliers,’‘ said Col. Bruce Tripp, FEMA’s liaison with the Army. Tripp suggested those companies contact the government themselves and ‘‘get on board.’‘

In one contract with Deffenbaugh Industries Inc. of Shawnee, Kan., the Army Corps’ office in Rock Island, Ill. rented 1,500 portable toilets for 10 days at $600 each for Des Moines residents.

But the AP found hundreds of toilets available from one Iowa company and five contractors in nearby Illinois, many at a better price.

The Corps’ Bales defended the contract, saying other bidders were unable to meet an urgent delivery date.

But John Spot, a company southwest of Chicago, bid $130 per toilet and promised to have 100 toilets in Des Moines in less than 12 hours, company board member Jim Kristich said. The government never called back.

The Iowa attorney general’s office is now investigating the $900,000 contract to Deffenbaugh as part of a broader inquiry. ‘‘We want to serve notice that we’re watching for price gouging,’‘ spokesman Bob Brammer said.

Bob Lehr, corporate counsel for Deffenbaugh, said the charges were negotiated with the Corps and were high because the company had to transport the toilets long distances and house workers in Iowa for 10 days.