Disaster Profiteering on the American Gulf Coast Fact Sheet
This fact sheet is compiled from the August 2006 report Big, Easy Money: Disaster Profiteering on the American Gulf Coast by Rita J. King.
The hurricanes that devastated the Gulf Coast in 2005 created a situation ripe for exploitation by corporations, a “free-for-all” maintained by government incompetence and corruption, especially by the Federal Emergency Management Agency (FEMA).
Amount appropriated by Congress for hurricane relief: $85 billion Amount received by FEMA’s Disaster Relief Fund: $38 billion Amount granted by FEMA in contracts so far: $6 billion
Contracts for small businesses made up only 13% of the net worth of all contracts granted by FEMA, and only 1.5% of all contracts went to minority-owned businesses. Only 16.6% of all contracts have been awarded to businesses headquartered in the three worst-hit states. Meanwhile, firms from Virginia alone have laid claim to more than 30% of FEMA’s largesse (again, in dollar value)
For example, the Department of Homeland Services (DHS) has paid out a combined worth of $3.4 billion to four companies, mostly for housing, or more than double their original value. The companies are Bechtel, CH2M Hill, Fluor and Shaw.
Under “Operation Blue Roof” these companies got almost $2,500 for each blue tarpaulin used to cover storm-damaged roofs in the worst-hit areas from FEMA — almost enough to pay for a new roof in many cases (and the tarps were only designed to last 3 months). The workers who actually tacked the tarp onto the roof (a two-hour job) were probably making closer to minimum wage.
Disaster profiteers in the Gulf Coast have used their friends in high places to secure uncompetitive contracts, and continue to try to evade responsibility for shoddy work and overcharge the federal government by millions of dollars. These are some of the worst corporate offenders (many of which first landed military contracts in Iraq): [more]