Cash and 'Cat 5' Chaos; the Gold Rush: Contractors and Prospectors Are Flooding the Gulf Coast to Grab Their Piece of the Biggest Reconstruction Ever. If Only FEMA Could Stop Fumbling

By Naughton, Keith; Hosenball, Mark | Newsweek, September 26, 2005 | Go to article overview

Cash and 'Cat 5' Chaos; the Gold Rush: Contractors and Prospectors Are Flooding the Gulf Coast to Grab Their Piece of the Biggest Reconstruction Ever. If Only FEMA Could Stop Fumbling


Naughton, Keith, Hosenball, Mark, Newsweek


Byline: Keith Naughton and Mark Hosenball (With Michael Isikoff, Charles Gasparino, Arian Campo-Flores and T. Trent Gegax)

As his helicopter swoops low over rows of empty mobile homes destined for Katrina victims, Bob Spaulding looks worried. The man in charge of "dragging and dropping" tens of thousands of trailers all over Louisiana doesn't like what he sees below: Trailers trickling out of the decommissioned military base in Baton Rouge, La., that serves as the delivery depot for his housing stock. "There's not enough of'em," he grumbles, "and we need to move faster." It's been a tough morning for Spaulding, 56, a leathernecked veteran contractor who found it easier electrifying Iraq than housing Katrina's diaspora. In meetings beginning at 7 a.m., he's learned of poorly built trailers that are uninhabitable and that a nearby community outlawed his mobile homes. He's listened to his federal overseers lecture him on how to justify spending on "big-ticket items." Adding to his headache: the struggle to house his Fluor Corp. staff, who are living in a tent city near its makeshift Baton Rouge offices. "It's like we've got this big, gangly animal," he says, "and we're just trying to get it under control."

After the deluge, the Gulf Coast is being overwhelmed again. But this time it's with waves of contractors, prospectors and speculators looking to cash in on what President Bush calls "one of the largest reconstruction efforts the world has ever seen." The tsunami of spending, already budgeted at $62 billion, could top $200 billion--what the U.S. has spent in Iraq and Afghanistan. And then as now, those mopping up first are the politically well connected: Fluor, Bechtel and the Shaw Group, which each scored $100 million no-bid contracts before the flood waters began to recede. (Halliburton is benefiting from an existing $500 million contract to repair naval bases.) That has Democrats and Republicans howling over potential abuse. Even the president acknowledged the possibility of financial evil-doing when he dispatched inspectors to the Gulf Coast to monitor the money. That gesture, however, hasn't prevented accusations of cronyism, especially given that the president's former campaign manager Joe Allbaugh is a paid consultant to Shaw and Halliburton. Allbaugh and the companies deny he had anything to do with their contracts. "Anyone who says otherwise is making it up," Allbaugh told NEWSWEEK. (Allbaugh does, though, admit to contacting White House chief of staff Andrew Card to offer Katrina aid and to advising Shaw on how to set up its hurricane response team.) Adding to the controversy: The SEC is investigating Shaw for possible accounting irregularities, NEWSWEEK has learned. "Shaw has fully cooperated with the SEC," said company spokesman Chris Sammons. "There is no reason to believe that the informal inquiry will go further."

With so much at stake, and with FEMA still struggling to right itself, the reconstruction effort is beginning to feel as chaotic as the days immediately after Katrina. Reports of snafus are widespread:

With thousands of starving animals wandering New Orleans, the federal disaster agency placed an emergency $28,370 order with PetsMart for 970 wire pet crates on Sept. 9. The pet-supply chain jumped at the chance to help, even waiving delivery charges, a spokeswoman says. Over four days, FEMA first changed its order, canceled it, reinstated it, put it on hold and finally demanded it. But when the PetsMart truck arrived at a New Orleans naval base Friday, it was initially turned away. When the driver finally gained entry, he drove around the base all day, racking up 152 miles, to find someone to take delivery. The tail-chasing experience left PetsMart "frustrated and disappointed." FEMA admits "kinks" in the process, but says it was its first big pet rescue.

The day Katrina struck, Cool Express, a Wisconsin refrigerated-trucking line, was called on to haul ice for disaster relief. …

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