Wednesday, December 27, 2006

Republicans STILL believe government spending must be wasteful, so they are STILL trying to make it so.

Last March, I wrote a post entitled, Republicans believe that government spending is wasteful. And they're certainly proving themselves right about how contractors that the government had hired for Katrina cleanup-- generally politically well-connected firms like Bechtel and Fluor-- used to getting fat on government contracts-- had taken a cut from the contracts and shuffled the job off to subcontractors, who in turn had shuffled it off through layers and layers of subcontractors until it got to the people who actually did the work, for a tiny fraction of the cost.

Well, it turns out that things haven't gotten better. An audit came out today showing contractors are still bilking us out of billions, all legally because the Bush administration apparently did nothing after this first came out in March.

WASHINGTON (AP) -- The tally for Hurricane Katrina waste could top $2 billion next year because half of the lucrative government contracts valued at $500,000 or greater for cleanup work are being awarded with little competition.

Federal investigators have already determined the Bush administration squandered $1 billion on fraudulent disaster aid to individuals after the 2005 storm.

Now they are shifting their attention to the multimillion dollar contracts to politically connected firms that critics have long said are a prime area for abuse.

In January, investigators will release the first of several audits examining more than $12 billion in Katrina contracts. The charges range from political favoritism to limited opportunities for small and minority-owned firms, which initially got only 1.5 percent of the total work.

"Based on their track record, it wouldn't surprise me if we saw another billion more in waste," said Clark Kent Ervin, the Homeland Security Department's inspector general from 2003-2004. "I don't think sufficient progress has been made."

He called it inexcusable that the Bush administration would still have so many no-bid contracts. Under pressure last year, Federal Emergency Management Agency director David Paulison pledged to rebid many of the agreements, only to backtrack months later and reopen only a portion.

Investigators are now examining whether some of the agreements -- which in some cases were extended without warning rather than rebid -- are still unfairly benefiting large firms.

"It's a combination of laziness, ineptitude and it may well be nefarious," Ervin said.

This is however not a surprise. There is a history that this administration will fix a problem only when a spotlight is shone on it, and as soon as the spotlight moves on to something else, they go right back to their old way of doing things.

The real losers in all of this are the people of Louisiana. Thousands are still living as refugees, almost a year and a half since Katrina, the work is progressing slowly, and sooner or later people's appetite for investing more money in this will wane-- and the money that has been invested will almost all be sitting in someone's bank account who did none of the actual work.

I would propose a simple solution for this. According to the article in March, the overcharges ranged up to 1700%.

Certainly it is tempting to suggest that the government simply nationalize the contracts, send the Corps of Engineers out there to do cleanup, and if they hired a subcontractor it would be a local subcontractor who could not themselves subcontract out any of the work.

But I have a suggestion which might even appeal to conservatives and would still get a handle on the problem: I would suggest that the amount of 'cut' that could be taken out of such a contract to all levels of subcontractors would be limited to, say, 20% of the total overall contract. That means that if, for example, a company like Bechtel, Flour or Shaw gets a government contract to do cleanup anyplace (not just for Katrina) the sweetest deal they could cut would be to pay subcontractors 80% of the overall contract-- and that only if that contractor agreed that their organization would specifically and personally do all the work. Or, Bechtel or Fluor could keep 10% and dump it off to someone else who could take 10% of the original contract and then still pay 80% to whoever was actually doing the work.

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