Audit: $7.8M Overpaid on (No-Bid) Katrina Contract

WASHINGTON - The government overpaid by 20 percent on a $39.5 million, no-bid Hurricane Katrina contract for portable classrooms because the Army Corps of Engineers passed up chances to negotiate a lower price, a federal audit says.

The draft Government Accountability Office report on the contract with Akima Site Operations LLC, a subsidiary of an Alaskan Native-owned firm, said the government wasted at least $7.8 million. It's the latest in a series of audits detailing waste of hundreds of millions of taxpayer dollars in the hurricane recovery effort.

It comes as several congressional panels plan hearings to examine fraud and waste in federal contracting, including the Katrina effort. On Friday, the Senate Homeland Security Committee is to examine FEMA housing waste in Hope, Ark., where auditors determined that 10,777 manufactured homes costing $301.7 million were sitting unused in runways and open fields.

"The Corps accepted Akima's proposed price of $39.5 million although they had information that the cost for the classrooms was significantly less than what Akima was charging," the report stated. "We believe the Corps could have, but failed to, negotiate a lower price."

http://news.yahoo.com/s/ap/20060420/ap_on_go_ot/katrina_contracts

Akima Site Operations
Profile Last Updated: October 3, 2005

Contract Value:
$39,539,347 through Army Corps for FEMA mission assignment

Type of Contract:
Unknown

Contract Details:
Army Corp awarded one contract to Akima Site Operations on Sept 20, 2005. for the purchase of 450 portable classrooms for Mississippi.
Source: USACE, “Hurricane Katrina Awarded Acquisitions 092305”

On Oct. 12th, a lawsuit was filed against Akima by Paul Adams of Adams Home Center in regards to this contract. The suit alleges that Akima breached a contract with Mr. Adams concerning the sale and set-up of the 450 portable classrooms Akima was contracted to provide by taking information gained from Mr. Adams and then cutting him out of the business deal. Furthermore, Adams alleges that Akima is overcharging the Army Corp for the provision and setting-up of the classrooms, and asks that an injunction on payment be instituted until the lawsuit is adjudicated.

Location:
Anchorage, AK; Kansas City, MO

http://www.taxpayer.net/budget/katrinaspending/contracts/akima.htm

Mississippi Classroom Contract Questioned

By Griff Witte
Friday, September 30, 2005

The senior Democrat on the House Homeland Security Committee said yesterday that the government is vastly overpaying for hundreds of portable classrooms purchased for Mississippi schools in the aftermath of Hurricane Katrina and that auditors should investigate.

Rep. Bennie Thompson (Miss.) charged in a letter to the Homeland Security Department's inspector general that the government is paying $88,000 per mobile classroom under a $39.5 million deal but that the classrooms should cost no more than $42,000 apiece. The contract is with Akima Site Operations LLC, a firm that does business as an Alaska Native Corporation. The designation allows the government more flexibility in giving it no-bid contracts. ... suggested in his letter that Akima "does not have any particular expertise in constructing or installing portable classrooms or other temporary structures."

Army Corps of Engineers spokesman Michael H. Logue said yesterday that Akima is getting the job done and that the price is reasonable. Logue said the lower price cited by Thompson does not take into account the difficult conditions and the speed needed. ...

http://www.washingtonpost.com/wp-dyn/content/article/2005/09/29/AR2005092902231_pf.html