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December 26, 2006

Latest Katrina Disaster: Waste Estimate Doubles to $2 Billion

Turns out the Bush Administration´s handling of Katrina was even worse than we thought, which is saying something. The feds had previously put the amount of money wasted at $1 billion, which included money or other help provided to people who didn't qualify for help, such as tens of millions of dollars in fraudulently obtained housing assistance. But earlier this week the Government Accountability Office said its initial estimate of $1 billion was “likely understated,” citing continuing problems it has found with the ways the Federal Emergency Management Association has spent money on Katrina recovery.

Now the GAO is looking into a number of relief contracts that were hastily awarded to firms with strong political ties, including the big 4: Bechtel, Shaw Group, Flour Corp. and CH2M Hill, whose four no-bid contracts together worth $400 million are now being investigated by the Department of Homeland Security´s Inspector General.

Some $12 billion in relief contracts were awarded, and charges range from political favoritism to limited contract opportunities being afforded to small and minority-owned companies, which initially got only only 1.5% of the total work.

Says Clark Kent Ervin, former DHS inspector general, of the revelations: “Based on track record, it wouldn't surprise me if we saw another billion more in waste. It's a combination of laziness, ineptitude and it may well be nefarious.”