Friday, March 24, 2006

Republicans believe that government spending is wasteful. And they're certainly proving themselves right.

Last week it was reported (originally by the Washington Post) that layers and layers of subcontractors have been responsible for absorbing enormous amounts of federal money given under no-bid contracts for Katrina relief, even while the people actually doing the work-- who often themselves live in squalor and get paid peanuts, don't get even a fraction of what the government is paying the prime contractor.

(from the first linked article):

An article carried by The N&O portrays an unmanageable web of contractors called out to clean up after disasters. Besides being expensive, this so-called system has rewarded contractors for doing little to help other than paperwork. What happens is that federal agencies in charge of disaster-related contracts turn first to prime contractors large enough to carry the necessary insurance. The primes are legally free to hire subcontractors, and they do...

In fact, the Post found that the difference between the actual cost of Katrina cleanup jobs and the price charged to taxpayers ranged from 40 percent to 1,700 percent. That difference equals waste, pure and simple. It's waste the hurricane-ravaged areas can't afford. New Orleans, for example, needs $3 billion for levees strong enough to encourage displaced residents to rebuild devastated neighborhoods, but Congress has diverted half the money

Originally, the price tag for Katrina was pegged at $250 billion. But if we keep paying enormous sums of cash to contractors, who then use a fraction of it to hire other contractors (likely without even setting foot in New Orleans, just pocketing their big bucks and pawning off the job) who in turn hire more and more subcontractors until you get down to the guy with a pickup truck who will do it for very little money (remember there are a lot of desparate, unemployed people still down there), we will meet and exceed this total long before the work is done.

So, given what was reported, what did FEMA do about it? Here's what: announced today that they won't be reopening four no-bid contracts that they had earlier said that they would.

WASHINGTON - FEMA 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 last October to speed recovery efforts that might have been slowed by competitive bidding. Some critics, however, suggested they were rewards for politically connected firms.

Acting FEMA Director R. David Paulison pledged last fall to rebid the contracts, which were awarded to Shaw Group Inc., Bechtel Corp., CH2M Hill Inc. and Fluor Corp. Later, the agency acknowledged the rebidding wouldn’t happen until February.

This week, FEMA said the contracts wouldn’t be rebid after all. In fact, they have been extended, in part because of good performance, said Michael Widomski, a spokesman for the Federal Emergency Management Agency....

A review by the Government Accountability Office 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.

Whether it is the fault of the contractors or of FEMA (obviously the problems there went way beyond Michael Brown), this stinks to high heaven.

I've come to a conclusion about this. Republicans have always made it their mantra that the government can't do anything as efficiently as private industry, that the government is doomed to fail, and that it always wastes money when carrying out a large scale program like this. They believe that solutions involving the government will fail, they expect it to fail, in fact it would not even be too strong of a statement to say that there are at least some (not all, but I've met some) who want it to fail. So, believing that to be the case, they have given private contractors a blank check (not believing that this kind of waste could occur with it) and then mismanaged even their own areas of responsibility. Thus their mantra has become a self-fulfilling prophecy.


dorsano said...

This is a bit different but the underlying misconceptions are the same ...

I've worked in the private sector most of my life (almost 30 years) - from entry level positions to executive management - and as an independent management and technology consultant.

I've spent the last three years in the public sector and I was taken aback the first time I saw large sums of money wasted on gratutious privatizaton - a low-income health care program that was efficiently administered by county workers was turned over to private sector management - which could not administer it as effiently for a number of logistical reasons.

in the end, rather than increase taxes to cover the shortfall - the number of participants served by the program was reduced.


And I won't even get into the technology projects outsourced.

Eli Blake said...


What you are saying makes a lot of sense. Programs such as a low-income health program involve benefitting people who in general don't have the resources to pay what they are receiving. Therefore the mathematics of it is that you won't be able to run this kind of a program (or for that matter, providing free lunches to poor school kids or other programs designed to help people who don't have much) profitably.

And the other point you make, is also a good one. The people who administer government programs are often professionals who have been there for years. Most private companies experience significant rates of turnover (higher than the government which in general has a low rate of turnover) and when we get into the complexities of administering programs like these, experience is an asset that is hard to replace.

Karen said...

No surprise here with the bushies in power that this would happen...predictable.

Also, heard on the news yesterday the Red Cross has once again come under scrutiny for how they're spending the billions donated for Katrina by people like you and me.

dorsano said...

it is cronyism like that of Tammany Hall and it IS big government.

What's ironic is that Teddy Roosevelt, a liberal Republican and Fiorello LaGuardia (with the help of FDR) were in large part responsible for cripling the Tammany Hall Democratic party political machine.