Iraq Contractors Snap Up No-Bid Hurricane Recovery Deals

by Pratap Chatterjee

(IPS) WASHINGTON -- The day Hurricane Katrina struck Louisiana, Robert Boh watched the dramatic pictures of the unfolding disaster on television at his in-laws' house in Jonesboro, Arkansas, where his family had taken shelter.

As president of the biggest construction company in New Orleans, he was confident that the hundreds of miles of levees that he and his rivals have built over the decades would hold. "It never occurred to me," he said, that the 17th Street canal would gave way. "I was shocked."

The next day the phones started ringing off the hook. One of the calls was offering work to repair the levees and drain the city from the Army Corps of Engineers, a federal agency run by the U.S military.

Unable to access his New Orleans offices, which had six feet of water on the first floor, Boh drove down to work in nearby Baton Rouge, to help save the city where his grandfather had founded a construction business 96 years before.

Military Blackhawk and Chinook helicopters dropped sandbags into the breached levees in New Orleans, as Boh Brothers crews worked around the clock for a week. The work was a financial boost for the civil engineering company that had been two million dollars in debt just over a year before, because the Army Corps of Engineers had no money to pay them for installing floodgates for New Orleans' Harvey Canal.

Today, state and federal money and contracts are flowing into the stricken area, and Boh Brothers is one of the key local beneficiaries. Right after completing the emergency repairs, Boh was subcontracted to help pump water from the flooded city by the Shaw Group, a politically well-connected contractor that had worked on reconstruction in Iraq.

Then the state of Louisiana awarded the company a new 30.9-million-dollar contract to fix the hurricane-damaged twin-span bridge that carries Interstate 10 traffic over Lake Pontchartrain.

Still, Boh's contract is tiny compared to the billions that will flow to the giants of the industry: Halliburton, Bechtel and Flor.

The Federal Emergency Management Agency and the Army have budgeted at least $62.5 billion in emergency aid for Alabama, Louisiana, and Mississippi -- not including rebuilding the levees -- creating a boom for construction companies.

"They are throwing money out, they are shoveling it out the door," James Albertine, a Washington lobbyist and past president of the American League of Lobbyists, told the New York Times.

"I'm sure every lobbyist's phone in Washington is ringing off the hook from his clients. Sixty-two billion dollars is a lot of money -- and it's only a down payment."

"You are likely to see the equivalent of war profiteering -- disaster profiteering," said Danielle Brian, director of the Project on Government Oversight, a non-profit government spending watchdog group.

She notes that Joseph Allbaugh, Pres. George W. Bush's former campaign manager and a former head of FEMA, is now a lobbyist and consultant to both the Shaw Group and Halliburton. (Melissa Norcross, a Halliburton spokeswoman, said Allbaugh has not, since he was hired, "consulted on any specific contracts that the company is considering pursuing, nor has he been tasked by the company with any lobbying responsibilities.")

Many, including Sen. Richard Durbin, "are worried because we hear about no-bid contracts in the Katrina areas going to the same companies that they went to in Iraq without the kind of accountability that we have to demand," the Illinois Democrat told a public radio network in the U.S.

In Iraq, limited accountability, corruption, massive cost overruns and devastating failures fed the chaotic mess that has followed the 2003 fall of Baghdad. Nonetheless, the largest Katrina contracts have been won by many of the same politically connected companies that oversaw that failed reconstruction.

And it is perhaps no coincidence, since many of the same people in the Army Corps of Engineers are awarding them -- and in much the same manner: as open-ended, no-bid or hastily bid contracts with guaranteed profit margins.

Corps commander Lt. Gen. Carl Strock and Brig. Gen. Robert Crear spent a good chunk of 2003 working on Project Restore Iraqi Oil (RIO), Halliburton's now-infamous no-bid contract.

Strock was one of the five people who voted at a Sept. 1, 2003 secret meeting in Baghdad to pay Halliburton $500 million out of Iraq's own funds for the RIO project. No Iraqis were present for the vote despite the fact that the money came from their own coffers.

As the chair of the Feb. 26, 2003 Pentagon meeting at which this contract was drawn up, Strock had attracted some notoriety. Less than three weeks after it was signed, he and Crear posed with Halliburton crews for photo-ops at the Al Zubair oil fields in southern Iraq.

When whistleblower Bunnatine Greenhouse revealed the details behind the no-bid contracts that Halliburton had won in Iraq, Strock arranged to have her demoted, despite a string of excellent performance reviews in her 23 years of service.

"Ms. Greenhouse's removal from the SES is based on her performance," Strock said, "and not in retaliation for any disclosures of alleged improprieties that she may have made."

(All told, Halliburton has earned more than $12 billion in Iraq. Pentagon audits released by the Democratic Party in June showed $1.03 billion in "questionable" costs and $422 million in "unsupported" costs for Halliburton's work in Iraq.)

Today, Strock and Crear are back in the saddle at the Corps, overseeing emergency contracts in the aftermath of Hurricane Katrina, in collaboration with the Federal Emergency Management Agency (FEMA) and the Navy.

Chief among these contractors are companies such as Halliburton and Bechtel, which have been awarded pre-bid, limited bid, and sometimes no-bid contracts to assess the damage, provide emergency shelters and fix the infrastructure.

Will we see the same overcharging and failed projects that characterized Corps projects in Iraq? Only time will tell, but on Sept. 15, an important step was taken to track the problem if it occurs: the creation of a special inspector general at the Department of Homeland Security to investigate corruption and fraud in post-Katrina contracts.

The same day, Senators Joseph Lieberman of Connecticut and Susan Collins of Maine introduced a bill in Congress that calls for the expansion of the special inspector general for Iraq reconstruction to include oversight of the spending in the Gulf Coast recovery. The two senators said using an existing office was preferable because the inquiry would be able to begin work quickly.

In a Sept. 15 speech to the nation, Bush said that U.S. citizens "have every right to expect a more effective response in a time of emergency."

But the track record of private contractors and federal agencies in Iraq and now in the Gulf states bodes ill for the likelihood that the public will enjoy that right. The Corps contracts and those awarded by FEMA replicate "the same flawed contracting strategy that produced disastrous results in Iraq," Congressman Steny Hoyer wrote to the Government Accountability Office.

"Where the train runs off the tracks is when politics become part of the decision-making process," says Joe Ballard, who ran the Corps from 1996 to 2000 and grew up in New Orleans.