Companies covet Katrina cleanup plum

ATLANTA — The U.S. Army Corps of Engineers is expected to announce today in its Memphis office what amounts to a dump truck-and-backhoe bonanza: the awarding of $2 billion in the form of four $500 million contracts for cleanup operations in the areas affected by Hurricane Katrina.

While it's only a slice of the $62 billion Congress has appropriated so far for the disaster recovery, the bids being awarded today for a variety of debris removal, demolition and cleanup projects represent, in business terms, one of the recovery's most attractive morsels.

In disasters, they say, the good money is on the front end.

"The folks who make money in these disasters are the guys who clean up. The rebuilding part of it is slow and arduous, and doled out in little bits," said former Georgia state Sen. Steve Langford, who owns a company that does insurance restoration work in seven cities.

Only a few companies — with specialized equipment, good connections and the patience to wait for disasters — compete on such jobs. They are likely to come under closer scrutiny as federal auditors, spurred by reports of Bush administration connections with companies already involved in the relief effort, attempt to get a handle on Katrina-related spending.

In this competitive field, goodwill gestures and campaign contributions come with the territory. Several of the companies already profiting from the relief effort have ties to Joe Allbaugh, former Federal Emergency Management Agency director and Bush's chief of staff when he was governor of Texas. They include a subsidiary of Halliburton, Vice President Dick Cheney's former employer.

One of the companies competing for a share of the cleanup business is MLU Services, a disaster recovery company based in Athens. According to a story in The Hill, a Washington newspaper, the company, which has contributed $50,000 in bottled water to the relief effort in Biloxi, Miss., is represented in Washington by Diane Allbaugh, Allbaugh's wife.

Attempts to reach representatives of MLU Services were unsuccessful Wednesday. According to a database operated by the Center for Responsive Politics, company President Marcia Ulm, Billy Ulm and William Ulm Sr. have given more than $160,000 to Republican candidates and committees in the 2004 and 2006 contribution cycles.

The Allbaughs' lobbying firm also represents Shaw Environmental Group, based in Baton Rouge, La., which has been awarded a major housing contract.

The size of cleanup contracts and the administration's connections with the firms that are getting them leave the White House open to charges of cronyism, said Rep. Lynn Westmoreland (R-Ga.), one of only 10 House members to vote against a $52 billion measure that was the major part of the relief outlay.

"The natural tendency, when you have something like this happen, is to call somebody you know and say, 'Hey, man, I need some help.' And you end up paying X amount of money to them, and it just looks funny," Westmoreland said.

He said he believes the key to containing the costs of the disaster is to handle costs "in increments." But when it comes to cleanup operations, that can be tricky.

Because it can be hard to estimate how much time it will take to clean up and haul away debris, the Federal Emergency Management Agency uses a process in which it pays for the hours involved in a cleanup through a pre-arranged contractor, rather than attempting to find the lowest bidder. And big as they are, bid announcements being made today in Memphis represent only the cleanup jobs that contractors already employed by FEMA can't get to.

"Because of the magnitude of the work, they're having to issue additional contracts," said Army Corps spokeswoman Amanda Ellison.

Westmoreland said he has had calls from contractors frustrated with the process for signing up to do subcontracting work with FEMA. In the confusion after the storm, contractors have complained they've had difficulty making direct contact with the FEMA officials responsible for directing them toward work.

Langford — who began his legislative career as a Democrat and ended it as a Republican — said the unpredictable nature of disasters dictates the system of negotiated bids among a few, specialized players.

"There's not much other way to do it. But do I think these bids tend to go toward certain folks? Yes," he said.

While he said he has no direct knowledge of how political connections work in the cleanup business, Landford added, "I feel like it's probably an integral part of it."

Though it's "the plum," in Langford's words, the cleanup money is only the beginning of a massive federal spending program unprecedented not only in its size but the speed in which the money is being spent.

"It's awfully easy to be compassionate with somebody else's money," Westmoreland said.

Tom Baxter writes for The Atlanta Journal-Constitution. E-mail: tbaxter@ajc.com