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Study: Contractors Double-Billed Government for Hurricane Katrina Cleanup

Contractors who were paid billions of dollars for post-Hurricane Katrina cleanup double-billed the government for debris removal, overstated mileage claims to get extra fees and inflated prices by improperly mixing debris, a Democratic study revealed Thursday.

Rep. Henry Waxman, ranking Democrat on the House Government Reform Committee, compiled the report and blamed the U.S. Corps of Engineers for lax oversight of contractors.

The Corps' director of civil works, Maj. Gen. Don Riley, defended his agency's performance, telling a committee hearing that the Corps deployed the auditors who found the problems and are trying to recoup the money.

The report said contractors sometimes billed twice for removing the same debris and, in other cases, took advantage of extra payments of $2 per cubic yard for debris carried more than 15 miles. Auditors found mileage was overstated in more than 50 percent of the 303 trips they examined.

Contractors fraudulently mixed green waste with construction and demolition debris to inflate their billings by $2.84 per cubic yard, the report said.

Other instances of fraud found by auditors, Waxman's report said, included double billing for housing trailers and abuse of government-issued credit cards.

In blaming the Corps, the report said the Army's officials "regularly credited contractors with hauling more debris to dumps than they actually carried." Auditors found that the Corps' assessments of contractor performance were "overly generous," "unusually high," "more on the liberal side," "often very liberal" and "consistently on the high side."

The Corps also was blamed for allowing inflated charges in more than $300 million in contracts for temporary roof repairs using blue plastic sheeting.

Riley, of the Corps, said such problems were "exactly what I asked our auditors to find." He said payments were withheld until the charges could be verified and the government has indicted several contractors on fraud charges.

Waxman asked Matt Jadacki, special inspector general for Gulf Coast Hurricane Recovery, whether Corps officials were doing their jobs to prevent fraud.

"We found some cases where there were no monitors," Jadacki said.

Committee Chairman Tom Davis, R-Va., said that Congress approved more than $63 billion for disaster relief, and ultimate recovery expenses may top $200 billion.

Davis said many of the contracts were awarded without competition, but government officials at the hearing said these contracts are being replaced with competitive awards.

Davis said the sole-source contracts allowed an "unprecedented opportunity for fraud and mismanagement."