Editorial: Katrina contracts a riddle

Tuesday, March 28, 2006 | 6:50 a.m.

The Federal Emergency Management Agency came under criticism in September for having quickly granted no-bid contracts for recovery work in the Gulf States following Hurricane Katrina. Among the critics were members of Congress and advocates for small and minority-owned businesses.

The agency countered that in the early stages of a disaster no-bid contracts are standard and acceptable because of the urgency involved. Criticism continued, however, particularly against four large corporations that have a history of winning federal contracts.

Charges of favoritism against the four corporations gained such momentum that acting FEMA Director R. David Paulison, during an Oct. 6 congressional hearing, pledged to reopen the bidding for the work that had been granted to them.

All four companies - Bechtel National Inc., an affiliate of San Francisco-based Bechtel Group; Fluor Corp. of Aliso Viejo, Calif.; Shaw Group Inc. of Baton Rouge, La.; and CH2M Hill Inc. of Englewood, Colo. - have long records of receiving government contracts, including in Iraq.

Additionally, the lead lobbyist for the Shaw Group is Joe Allbaugh, who served as chief of staff to President Bush when he was governor of Texas. He also served as the president's 2000 campaign manager and as his first FEMA director. Bechtel's chairman, Riley Bechtel, served on the president's Export Council, which advises on trade issues, from February 2003 to December 2004.

Given the history of the companies' close ties to the government, we thought at the time that FEMA's pledge to reopen the contacts - worth hundreds of millions of dollars - was a good-faith effort to distance itself from any conflicts.

Subsequently, however, the Homeland Security Department, which oversees FEMA, announced that the contracts would remain in place until February. But nothing happened last month. And last week FEMA announced that the companies were doing such a good job that their contracts would be extended, not reopened.

We cannot believe that reneging on a pledge made before Congress is acceptable behavior for a government agency. Congress should convene a hearing and demand that Paulison and Homeland Security Director Michael Chertoff provide a full accounting of why the contracts awarded these four companies during the storm's immediate aftermath cannot now be shared with other companies, including small local firms and those headed by minorities.