[Senate Hearing 109-743]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 109-743

                  KATRINA AND CONTRACTING: BLUE ROOF,
                     DEBRIS REMOVAL, TRAVEL TRAILER
                              CASE STUDIES

=======================================================================

                                HEARING

                               before the

                FEDERAL FINANCIAL MANAGEMENT, GOVERNMENT
                     INFORMATION, AND INTERNATIONAL
                         SECURITY SUBCOMMITTEE

                                 of the

                              COMMITTEE ON
                         HOMELAND SECURITY AND
                          GOVERNMENTAL AFFAIRS
                          UNITED STATES SENATE


                       ONE HUNDRED NINTH CONGRESS

                             SECOND SESSION

                               __________

                    FIELD HEARING IN NEW ORLEANS, LA

                               __________

                             APRIL 10, 2006

                               __________


       Printed for the use of the Committee on Homeland Security
                        and Governmental Affairs

                              _______



                    U.S. GOVERNMENT PRINTING OFFICE

28-237 PDF                  WASHINGTON : 2007
------------------------------------------------------------------
For sale by Superintendent of Documents, U.S. Government Printing 
Office Internet: bookstore.gpo.gov  Phone: toll free (866) 512-1800;
DC area (202) 512-1800 Fax:  (202) 512-2250. Mail:  Stop SSOP, 
Washington, DC 20402-0001
















        COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS

                   SUSAN M. COLLINS, Maine, Chairman
TED STEVENS, Alaska                  JOSEPH I. LIEBERMAN, Connecticut
GEORGE V. VOINOVICH, Ohio            CARL LEVIN, Michigan
NORM COLEMAN, Minnesota              DANIEL K. AKAKA, Hawaii
TOM COBURN, Oklahoma                 THOMAS R. CARPER, Delaware
LINCOLN D. CHAFEE, Rhode Island      MARK DAYTON, Minnesota
ROBERT F. BENNETT, Utah              FRANK LAUTENBERG, New Jersey
PETE V. DOMENICI, New Mexico         MARK PRYOR, Arkansas
JOHN W. WARNER, Virginia

           Michael D. Bopp, Staff Director and Chief Counsel
   Joyce A. Rechtschaffen, Minority Staff Director and Chief Counsel
                  Trina Driessnack Tyrer, Chief Clerk


FEDERAL FINANCIAL MANAGEMENT, GOVERNMENT INFORMATION, AND INTERNATIONAL 
                         SECURITY SUBCOMMITTEE

                     TOM COBURN, Oklahoma, Chairman
TED STEVENS, Alaska                  THOMAS CARPER, Delaware
GEORGE V. VOINOVICH, Ohio            CARL LEVIN, Michigan
LINCOLN D. CHAFEE, Rhode Island      DANIEL K. AKAKA, Hawaii
ROBERT F. BENNETT, Utah              MARK DAYTON, Minnesota
PETE V. DOMENICI, New Mexico         FRANK LAUTENBERG, New Jersey
JOHN W. WARNER, Virginia             MARK PRYOR, Arkansas

                      Katy French, Staff Director
                 Sheila Murphy, Minority Staff Director
            John Kilvington, Minority Deputy Staff Director
                       Liz Scranton, Chief Clerk































                            C O N T E N T S

                                 ------                                
Opening statements:
                                                                   Page
    Senator Coburn...............................................     1
    Senator Carper...............................................     4

                               WITNESSES
                         Monday, April 10, 2006

Tina Burnette, Deputy Director Acquisitions for Katrina, 
  Department of Homeland Security................................     5
Lieutenant General Carl A. Strock, Chief of Engineers, U.S. Army 
  Corps of Engineers.............................................     7
Matthew Jadacki, Inspector General of Hurricane Katrina 
  Oversight, Department of Homeland Security.....................     9
Patrick J. Fitzgerald, Auditor General, U.S. Army Audit Agency...    11
Thomas F. Gimble, Principal Deputy Inspector General, Department 
  of Defense.....................................................    12
Hon. David Vitter, a U.S. Senator from the State of Louisiana....    17
Hon. Mary L. Landrieu, a U.S. Senator from the State of Louisiana    19
Hon. Bobby Jindal, a Representative in Congress from the State of 
  Louisiana......................................................    20
Hon. Steve Scalise, Representative, Louisiana State Legislature..    30
Bill Woods, Director of Acquisition and Sourcing Management Team, 
  U.S. Government Accountability Office..........................    32
Derrell Cohoon, Chief Executive Officer, Louisiana Associated 
  General Contractors............................................    34
Kevin Davis, President, St. Tammany Parish.......................    35

                     Alphabetical List of Witnesses

Burnette, Tina:
    Testimony....................................................     5
    Prepared statement...........................................    51
Cohoon, Derrell:
    Testimony....................................................    54
    Prepared statement...........................................   113
Davis, Kevin:
    Testimony....................................................    35
Fitzgerald, Patrick J.:
    Testimony....................................................    11
    Prepared statement...........................................    69
Gimble, Thomas F.:
    Testimony....................................................    12
    Prepared statement with an attachment........................    73
Jadacki, Matthew:
    Testimony....................................................     9
    Prepared statement...........................................    59
Jindal, Hon. Bobby:
    Testimony....................................................    20
    Prepared statement with attachments..........................    97
Landrieu, Hon. Mary L.:
    Testimony....................................................    19
Scalise, Hon. Steve:
    Testimony....................................................    30
Strock, Lieutenant General Carl A.:
    Testimony....................................................     7
    Prepared statement...........................................    55
Vitter, Hon. David:
    Testimony....................................................    17
    Prepared statement with attachments..........................    80
Woods, Bill:
    Testimony....................................................    32
    Prepared statement...........................................   103

                                APPENDIX

Charts and pictures submitted by Senator Coburn for the Record:
    ``Hurricane-Related Spending,'' Source: Senate Budget 
      Committee..................................................    47
    ``Costs of Legislative Response to Domestic Emergencies,'' 
      Source: Senate Budget Committee............................    48
    Picture of trash being loaded submitted by Senator Coburn....    49
    Picture of Wrangler trailer submitted by Senator Coburn......    50
Questions and responses for the Record from:
    Ms. Burnette.................................................   120
    Lt. Gen. Strock..............................................   132
    Mr. Jadacki..................................................   140
Letter from CRS, dated March 29, 2006, submitted by Senator 
  Coburn.........................................................   143
























 
KATRINA AND CONTRACTING: BLUE ROOF, DEBRIS REMOVAL, TRAVEL TRAILER CASE 
                                STUDIES

                              ----------                              


                         MONDAY, APRIL 10, 2006

                                       U.S. Senate,
            Subcommittee on Federal Financial Management,  
        Government Information, and International Security,
                            of the Committee on Homeland Security  
                                          and Governmental Affairs,
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 11:30 a.m., at 
the Louisiana Supreme Court Building, 400 Royal Street, New 
Orleans, Louisiana, Hon. Tom Coburn, Chairman of the 
Subcommittee, presiding.
    Present: Senators Coburn, and Carper.
    Also Present: Senators Vitter, Landrieu, and Representative 
Jindal.

              OPENING STATEMENT OF SENATOR COBURN

    Senator Coburn. The Subcommittee on Federal Financial 
Management, Government Information, and International Security 
will come to order. We will dispense with opening statements 
other than that I will summarize, and I think Senator Carper 
will, and I ask unanimous consent that my opening statement be 
made a part of the record, as well as other members of the 
panel. We're here not to put blame on any individual. We 
recognize the hard work of most of the people involved in the 
Hurricane Katrina and Rita disasters and we praise your effort 
and your dedication. What we are here to find out is what went 
wrong, why it cost more than it should, what can we change so 
we know what to do in the future so that we're more responsive 
or more efficient with our responsiveness and accountability 
that can be tracked at every level.
    We have in front of us today, in our first panel, Tina 
Burnette, Deputy Director of Acquisitions for Hurricanes 
Katrina and Rita at the Federal Emergency Management 
Association (FEMA). Previously Ms. Burnette served as the 
Deputy Assistant Commissioner of Commercial Acquisitions at the 
General Services Administration's Federal Supply Services.
    Lieutenant General Carl Strock is Commander in Chief of 
Engineers at the U.S. Army Corps of Engineers. Previously, 
Lieutenant General Strock served as Director of Civil Works at 
the U.S. Army Corps headquarters.
    Matthew Jadacki is the Special Inspector General for the 
Gulf Coast Recovery of the Department of Homeland Security. He 
has previously served as the Chief Financial Officer for the 
National Weather Service and before that, he was acting CFO 
with FEMA.
    Patrick Fitzgerald is Auditor General of the U.S. Army 
Audit Agency. Mr. Fitzgerald joined the Army Audit in 1980 and 
has held a variety of key positions in the agency field offices 
and operations.
    Thomas Gimble is the principal Inspector General of the 
Department of Defense. He began his Federal civilian career 
with the Air Force Audit Agency when it was created in 1976. 
Since then, he has worked in several key positions within the 
Department of Defense.
    I might note that Senator Carper and myself, along with 
Senator Obama, asked the President or Chief Financial Officer 
when this occurred. We were not successful in that. My 
hindsight is 20/20 and now says we should have had that because 
the effect of not receiving it means that the tracing of the 
accountability and responsibility is going to be more 
difficult. We are now looking at things after the fact instead 
of before we signed the check or signed the contract.
    [The prepared statement of Senator Coburn follows:]
                  PREPARED STATEMENT OF SENATOR COBURN
    Last August, Hurricane Katrina wreaked havoc upon the Gulf Coast. A 
few short months later, Hurricane Rita pounded the Gulf Coast, 
exacerbating the challenges of reconstruction. As you can see from the 
chart Congress has already appropriated $100.9 billion for the recovery 
efforts. Between recent approval of $3 billion by the Senate and a 
request by the President of $20 billion, we are looking at $123 billion 
dollars to date. As you can see from the graph, the money spent on this 
recovery effort is the most expensive rebuilding effort of all-time. To 
put this into perspective, Hurricane Katrina recovery funding will be 
over eight times the amount of Federal hurricane recovery aid for the 
entire 2004 hurricane season. Now, perhaps, Katrina was eight times 
worse than the previous year's season. There's a valid argument to be 
made. But with this level of disaster, it is all the more important 
that the money Americans have provided for their neighbors in the Gulf 
Coast not be wasted.
    The Congress has held extensive hearings on Hurricane Katrina back 
in Washington. We're not here to assign blame and reconstructed a 
minute-by-minute account of failure. Rather, we're dealing here with a 
few case studies of financial management that I believe are symptomatic 
of government's inherent limitations. A Federal bureaucracy based in 
Washington is always going to come up short when it is trying to watch 
billions of dollars far from Washington. But the nature of this 
disaster is that the Federal Government will be spending money here for 
years to come.
    So let's take a look at a few specific cases and see if we can 
learn something that we might apply not only across the rest of the 
recovery effort, but across other disasters in the future. Today, we 
will explore Federal contracting and management of three programs: The 
``Blue Roof'' Program, debris removal, and the travel trailer program. 
While the audits of these programs have only just begun, initial 
reports from the media, the Government Accountability Office, and local 
officials paint a disappointing picture. We've heard about unreasonably 
inflated prices, excessive layers of subcontracting, and inadequate 
oversight for these three programs.
    Last year, Senator Carper and I introduced with Senator Obama, a 
bill that would have created an independent chief financial officer. 
This CFO would be in charge of every penny that goes out the door. With 
the huge opportunity costs associated with wasted tax dollars, I know 
the American public and the people of the Gulf Coast deserve no less. 
The CFO would have been responsible for the efficient and effective use 
of Federal funds in all activities relating to the recovery from 
Hurricane Katrina. Unlike an inspector general which audits money after 
it has been spent, the CFO would have been responsible for preventing 
problems. Unlike the so-called ``IG Council'' that was put in charge of 
financial management for recovery, a CFO would have been a single 
accountable point of reference. In other words, the CFO's motto would 
be ``the buck stops here.''
    We were promised that a CFO wasn't necessary. We were promised that 
every dollar would be tracked. When the Senate was presented with the 
first supplemental appropriations request for tens of billions of 
dollars, we were assured that the expenditure of this money would be 
accountable and responsible and the American people would not be 
embarrassed. After months of hearings and investigation, it seems that 
we had the oh-so-predictable waste and fraud that always accompanies 
huge money rolling out fast and unwatched by Washington.
    As reported in recent news articles, there are cases where the 
price for putting a blue tarp on a roof costs close to the price of 
hiring a roofing company to install a new roof. We also hear reports of 
travel trailers that retail around $16,000 to $20,000 costing FEMA up 
to $60,000 for purchasing, hauling, installing, and removing. Two 
thirds overhead seems awfully high to me. There are reports of FEMA 
spending up to $400,000 to prepare lots for these travel trailers only 
to find out after the fact that local authorities either did not give 
authorization to build at those locations or communities weren't 
properly consulted. With debris removal, there are cases where top 
contractors are reportedly charging up to $30 per cubic yard while five 
sub-contractors deep, the workers actually doing the work receives 
sometimes as little as $6 per cubic yard.
    Some may argue that inflated prices and multi-layering of contracts 
is to be expected due to the downsizing of Federal procurement staff. 
They say that it takes five layers of middle-men, each taking his cut, 
in order to get money from Washington to Biloxi. I'm not buying it. And 
Americans shouldn't stand for it.
    The Government Accountability Office--that's Congress' 
investigation operation--has recently issued a report highlighting the 
systematic failures that are creating these types of problems: 
Inadequate planning and preparation, lack of clearly communicated 
responsibilities, and insufficient numbers and inadequate deployment of 
personnel. FEMA is only at 73 percent of its authorized staffing 
levels. In addition, FEMA still does not have a permanent director, 
four of the ten division chiefs and four of the ten regional directors 
are serving in an acting capacity. In another example, GAO reports that 
a contract worth $120 million was tasked to the General Services 
Administration by FEMA, and it took FEMA three weeks to pinpoint the 
person responsible for oversight on the contract.
    There have been all kinds of new task forces, councils, and 
coordination models that have been born as reports of problems keep 
surfacing, but the problem with each is the same. You can't fix it 
after the fact. As former Secretary of State Colin Powell famously 
noted with respect to recovery of devastated regions: ``You break it, 
you buy it.'' He wasn't talking about domestic disaster recovery, but 
the principle is the same. When we have funneled money through a broken 
system, Americans are on the hook to pay for the consequences of that 
system throughout the life of the reconstruction. But it's not just 
today's taxpayers who are on that hook. We have mortgaged this recovery 
on the backs of our children and grandchildren. Their future quality of 
life is in further jeopardy every time we fritter away another dollar.
    Today we'll be looking at the following questions:

      How extensive is the problem of mismanagement and waste 
that is reported both by GAO and the media?

      What steps are FEMA and the U.S. Army Corps of 
Engineering taking for current and future contracts to ensure 
reasonable prices before a contract is signed?

      Is it possible to cut out some of the layers of sub-
contracting that, in some cases, is over six levels deep?

      Is the Federal Government getting the oversight and 
management out of the prime contractors that we are paying for?

      What are we to expect from the Inspector General 
community regarding ongoing audits of the blue roof, debris removal, 
and the travel trailer program?

      Is the Inspector General community receiving adequate 
funding to handle the burden of the additional Katrina audits as well 
as audits for normal agency programs?

    I want to thank all the witnesses for being with us here today, 
some of them taking time away from tireless and thankless work to 
answer our questions. I know that good people with good hearts are 
running these operations and we are not here to question anyone's 
motives. Thank you very much for your service to the region's recovery 
and to our country.

    Senator Coburn. Senator Carper.

              OPENING STATEMENT OF SENATOR CARPER

    Senator Carper. Thanks Mr. Chairman. Let me just say to our 
witnesses welcome, it's nice to see some of you again and to 
see others for the first time. We want to express our thanks to 
the staff here at this facility for the warm welcome that's 
been extended to us. It's great to be with our colleagues 
Senator Landrieu and Senator Vitter, and we thank you and your 
staff for your hospitality.
    I have a statement I'd like to ask to be entered into the 
record. Let me just say very briefly when Senator Coburn and I 
hold hearings in Washington or actually around the country, and 
we do a fair amount of that, what we're looking for is not so 
much to pin blame or to assign blame, we're looking to find out 
how to learn from whatever mistakes we're making and to make 
sure that we won't make the same mistakes over and over and 
over again.
    We all know that Katrina was well telegraphed and is not 
the last hurricane we're going to see in our country and 
certainly this part of the country and we need to be prepared 
whether, it's in New Orleans or some other place, Pensacola, or 
Corpus Christi. We need to be prepared for it to make sure that 
when we turn to the taxpayer and ask them to pay large sums of 
money to help those communities get back on their feet that 
they know their dollars are being well spent. So we look 
forward to learning a lot here and the other thing we look 
forward to doing is learning some lessons so that when this 
happens again, hopefully not here but some other place, we 
won't make the same mistakes. Thank you.
    [The prepared statement of Senator Carper follows:]
                  PREPARED STATEMENT OF SENATOR CARPER
    Thank you, Mr. Chairman, for taking the time to focus on these 
issues.
    More importantly, thank you for holding this hearing in New Orleans 
so that we can see first hand the progress that has been made and the 
work still to be done in bringing this city back.
    I'll start off by saying that I truly believe that FEMA and the 
agencies and contractors on the ground here and in Mississippi and 
Alabama following Hurricane Katrina worked as hard as they possibly 
could to provide goods and services to those in need following the 
storm. Anyone who turned on their television set the week of the storm, 
however, could see that the Federal Government's overall response to 
Katrina was confused and ineffective.
    Poor planning at FEMA and elsewhere before the storm contributed, 
in all likelihood, to a tragic loss of life and property. While there 
are still audits and investigations underway, it's clear from the 
evidence before us today that poor planning contributed to a tragic 
waste of taxpayer dollars as well.
    The people of New Orleans and the other communities affected by 
Katrina deserve every penny we've provided them as they've worked to 
pick up the pieces. At the same time, however, they also deserve to 
know that the money coming down here is spent appropriately and 
effectively.
    I believe it's been a little over 7 months now since Katrina made 
landfall. The 2006 hurricane season is now right around the corner. 
we're going to learn a lot more today about what went wrong post-
Katrina but, as a Senator from a State that's seen its fair share of 
hurricanes in the past, I'm also interested in learning what FEMA and 
the other agencies involved have done to set things right.
    I believe this is the third time in the past year or so that we've 
heard testimony about FEMA waste. The full Committee held hearings 
following a 2004 hurricane in Florida and again during its Katrina 
investigation showing that the agency lacked the basic internal 
controls necessary to ensure that its post-disaster assistance funding 
goes only to those who are eligible to receive it.
    Now we hear that, while residents of New Orleans and other 
communities are still struggling to find the resources to get their 
lives and their business back together, FEMA and the Corps have been 
wasting money on needless bureaucracy and to compensate for the fact 
that they just didn't plan ahead.
    I look forward to hearing from our witnesses and from our 
colleagues from Louisiana about how we can do things better next time.

    Senator Coburn. Before we get started, Ms. Burnette I noted 
that we didn't get your testimony until 5 p.m. Friday. I have a 
routine habit of hoping that we can expect compliance out of 
agencies. That undermines our effectiveness because I didn't 
get to read your testimony until this morning and I hope that 
would be communicated again to OMB because I know those 
testimonies have to go through them and if you would send that 
signal, I'd very much appreciate it. Each of you will be given 
5 minutes. Your complete statement will be made a part of the 
record and then we'll have questions from both ourselves, 
Senator Vitter, and Senator Landrieu. Ms. Burnette.

TESTIMONY OF TINA BURNETTE,\1\ DEPUTY DIRECTOR ACQUISITIONS FOR 
            KATRINA, DEPARTMENT OF HOMELAND SECURITY

    Ms. Burnette. I apologize for that. Mr. Chairman and 
Members of the Subcommittee, My name is Tina Burnette and I've 
been the Deputy Director of Acquisitions for Gulf Coast 
Recovery of FEMA since January of this year. Thank you for the 
opportunity to appear here today to discuss the successes of 
the Agency as well as the challenges and response to Hurricane 
Katrina. Prior to being named to my current position, I spent 
90 days in Louisiana as the On Site Acquisition Support to the 
Katrina Recovery Office headed by Vice Admiral Thad Allen. I'm 
a career Federal executive and spent 16 years of Federal 
service in the procurement profession. As the Deputy Director, 
I supply oversight and support for those acquisitions issued in 
support of the Gulf Coast Recovery. In the days immediately 
following the disaster, the primary goal was meeting urgent and 
humanitarian needs. Clearly, an equally important 
responsibility in our office then and now is to stewardship of 
taxpayer dollars and insure integrity of the contracting 
process.
---------------------------------------------------------------------------
    \1\ The prepared statement of Ms. Burnette appears in the Appendix 
on page 51.
---------------------------------------------------------------------------
    To insure integrity and transparency, the Department of 
Homeland Security established an Oversight Board which is 
chaired by the Under Secretary for Management and oversees 
hurricane funding that the Department receives. The Board 
recently established an Oversight group responsible for 
reviewing high risk Katrina contract actions which includes 
verifying what was purchased, the reasonableness of the price, 
and the extent of competition. Special attention is being paid 
to the individual assistants technical assistance contracts 
that were sole sourced to four companies: Fluor, Shaw, 
CH2MHill, and Bechtel. FEMA is preparing for the next hurricane 
season and has established a priority list of acquisitions that 
will enable a more responsive ordering process for the goods 
and services while ensuring a fair and reasonable price. FEMA 
is also working with the Defense Logistics Agency on assisting 
with commodity contracts and with the General Services 
Administration on the better utilization of their Agency's 
services. I know that there has been much stated about the 
recompeted of the IA-TAC. Let me be clear. It is being 
recompeted.
    First, maintenance and deactivation of the temporary 
housing units will be assumed by approximately 36 small and 
small disadvantaged businesses, some of which have already been 
awarded. Other efforts are also being recompeted such as group 
site maintenance and infrastructure support. The new IA-TAC for 
the upcoming hurricane season will be awarded competitively on 
a national basis. We have already sent out for this requirement 
and a request for proposal will be issued very soon. FEMA is 
also in the process of increasing its Acquisition Corps to 
handle post-Katrina work by adding 60 positions that will 
include procurement and program management personnel. As of 
last week, we have hired 45.
    I know that you're particularly interested in debris 
removal, the Blue Roof Program, and temporary housing. FEMA 
supports debris removal through the mission assignment issued 
to the U.S. Army Corps of Engineers, and also reimburses State 
and local government that contract with local debris 
contractors through the public assistance grants program. The 
Blue Roof Program is also supported through the U.S. Army 
Corps. FEMA's primary support of the program last year was 
through the purchase of blue tarps awards that were made to 
multiple vendors that could meet our required delivery date and 
the prices were consistent with past purchases. To provide 
timing housing assistance and meet one of FEMA's top mission 
goals of moving applicants out of shelters and into houses, we 
purchased temporary housing units from manufacturers and from 
dealer inventories. We purchased over 140,000 temporary housing 
units and expended approximately $2.7 million dollars. These 
costs included delivery to the logistical staging area but they 
do not include installation. We anticipate that 151,000 
temporary housing units will be installed by the time this 
effort is complete. Currently, we have over 110,000 that are 
either occupied or are ready to be occupied. We've established 
a Program Management Office to ensure that funds are being 
expended appropriately and we use the Defense Contract Audit 
Agency to review proposals and make recommendations prior to 
final negotiations. Sub-contractual relationships are an 
integral part of this effort and are good for local businesses 
and for small businesses. As a result of these sub-contracts, 
FEMA now has a much larger pool of highly qualified small 
businesses that can compete directly for future disaster 
response efforts.
    Mr. Chairman, in the days immediately following Hurricane 
Katrina, the primary focus of FEMA's procurement office and of 
the entire procurement community was to act as quickly as 
possible within the parameters of acquisition law and 
regulation and to obtain the materials and support desperately 
needed in the devastated areas. FEMA procurement professionals 
also recognize their responsibility and worked within the 
system to ensure that contracts were awarded correctly. 
Currently, DHS is reviewing transactions to ensure that proper 
procedures were followed and that appropriate decisions were 
made. We are using the reviews, the results of those reviews, 
to help us understand how to do better next time.
    Thank you Mr. Chairman and I look forward to the 
Subcommittee's questions.

  TESTIMONY OF LIEUTENANT GENERAL CARL A. STROCK,\1\ CHIEF OF 
            ENGINEERS, U.S. ARMY CORPS OF ENGINEERS

    General Strock. Mr. Chairman and Members of the 
Subcommittee, I'm Lieutenant General Carl A. Strock. I'm the 
Chief of Engineers. I thank you for the opportunity to testify 
before you today concerning the Corps' disaster relief contact 
procedures. With your permission, I'll summarize my statement 
here and provide my full statement for the record.
---------------------------------------------------------------------------
    \1\ The prepared statement of General Strock appears in the 
Appendix on page 55.
---------------------------------------------------------------------------
    Senator Coburn. Without objection.
    General Strock. Under the National Response Plan, the Corps 
is assigned as the coordinator for Emergency Support Function 
or ESF-3, Public Works and Engineering. During disasters, the 
Corps is the primary agency for response activities such as 
ice, water, and temporary power. FEMA is the primary agency for 
ESF-3 recovery activities and assigns the Corps to assist in 
the execution of debris missions. The Corps is also a support 
agency to other ESFs such as ESF-6, which is mass care and 
housing by executing missions to provide temporary roofs. The 
Corps has started a program called the Advance Contracting 
Initiative or ACI under which we competitively award contracts 
for future use in the areas of water, ice, power, temporary 
roofing, and debris removal. Having these contracts in place 
allows the Corps to rapidly respond to emergency situations. We 
did, in fact, use our ACI contracts to support the Hurricane 
Katrina recovery and also in those areas impacted by Hurricanes 
Rita and Wilma. The Federal procurement system is based on the 
principle of full and open competition. Congress also realized 
that emergency situations sometimes require emergency actions. 
The Federal Acquisition Regulation known as the FAR is the 
implementing regulation for government-wide procurement. In 
most cases, the FAR mandates a 15-day advertising period and a 
30-day proposal period. If you follow these usual rules for 
full and open competition, we would not have been able to award 
the contract to get the flood waters out of New Orleans until 
the end of October. The FAR allowed us to considerably shorten 
the time period for the award under the urgency exception and a 
contract was awarded on September 2, 2005.
    The scope of the damage of Hurricanes Katrina, Rita, and 
Wilma was unprecedented with 90 thousand square miles of land 
significantly impacted. That's greater than the area of Great 
Britain. There is over 100 million cubic yards of debris that 
is eligible for Federal assistance. Tremendous progress has 
been made in removing debris over the last 7 months. The Corps 
is responsible for the removal and disposal of debris in 54 
counties and parishes in four States totaling about 60 million 
cubic yards. In the first 7 months, 45 million cubic yards of 
this debris were removed. Due to the unprecedented and 
widespread devastation, the Corps needed to award additional 
debris removal contracts. We awarded four additional contracts 
for debris removal in Mississippi and Louisiana. Each contract 
valued at $500 million has a $500 million dollar option. This 
was open to any company and the Corps received 22 proposals. 
The contracts were awarded on the basis of the best value to 
the government. The Army Audit Agency is currently reviewing 
the award and the administration of these four contracts.
    The hurricanes of 2005 also had an enormous impact on homes 
to include damages to thousands of roofs. FEMA tasked the Corps 
to provide temporary roofs for over 194,000 homes in Florida, 
Louisiana, Mississippi, and Texas. This tremendous undertaking 
was completed over a few months and allowed thousands of 
disaster victims to return to their homes. The temporary roofs 
should not be confused with self-help tarps that are provided 
to homeowners. The temporary roofs installed by the Corps use 
sturdy plastic sheets, professionally installed and securely 
fastened, to provide an important degree of protection from the 
elements. Before plastic can be installed, roofs usually 
require some repair to roof the structure. There may also be a 
requirement to furnish and install joists and rafters. The 
Corps awarded several ACI contracts for temporary roofs in the 
Gulf region. Given the magnitude of the damage during the 2005 
hurricane season, four additional contracts were awarded under 
urgency procedures utilizing the ranked proposals of the 
original competition. The Corps makes extensive use of standard 
authorities granted to us under the various small business set 
aside programs, especially in the area of the Small Business 
Administration registered 8(a) firms. We have instituted high 
goals for small business sub-contracting and include a 
reporting requirement that keeps focus on achieving results in 
these areas. We have been following an acquisition strategy for 
the continued mission from FEMA that includes opportunities at 
the prime level for local disadvantaged companies and a 
geographic set aside for the unrestricted portion of the 
strategy. Competition was limited to Mississippi companies for 
the Mississippi aspect of the mission and will be limited to 
Louisiana for the Louisiana mission.
    The Corps of Engineers takes great pride in being a 
learning organization and every event is different. Mistakes 
can and do occur. There is also opportunity for unscrupulous 
individuals to take advantage of the system and we work hard to 
strike a balance between expeditiously providing relief to 
those in need while doing so in the most efficient and 
effective manner. One solution is to immediately deploy Corps 
internal auditors, teamed with the Defense Contract Audit 
Agency and the U.S. Army Criminal Investigation Command, to 
oversee all emergency response efforts to note actual or 
potential mistakes, help mission managers comply with their 
fiscal stewardship responsibilities, and to detect instances of 
fraud, waste, and abuse. Corrective actions are implemented 
immediately.
    I welcome the reviews conducted by the external audit and 
investigative activities as they are also a valuable tool for 
us to identify potential vulnerabilities and weaknesses in the 
processes and procedures. Several years ago, the Corps 
instituted a formal procedure, our Remedial Action Program, to 
capture lessons learned and to adjust our processes for future 
events.
    To close, I'd like to thank you again Mr. Chairman for 
allowing the Corps of Engineers the opportunity to appear 
before this Subcommittee to discuss contracting procedures 
during times of emergencies. Many Corps personnel have served 
our Nation by helping in the response to natural disasters in 
Texas, Louisiana, Mississippi, Alabama, and Florida, or 
elsewhere in the Nation and the world. We are proud to do so 
and I'd be happy to answer any questions the Members of the 
Subcommittee may have. Thank you.
    Senator Coburn. Thank you, General.

TESTIMONY OF MATTHEW JADACKI,\1\ INSPECTOR GENERAL OF HURRICANE 
       KATRINA OVERSIGHT, DEPARTMENT OF HOMELAND SECURITY

    Mr. Jadacki. Good morning Mr. Chairman, Members of the 
Subcommittee, and guests. Thank you for the opportunity to be 
here today to discuss our overseeing of Federal pre-disaster 
planning and contract management issues in response and 
recovery efforts after Hurricane Katrina. In the aftermath of a 
major disaster such as Hurricane Katrina, the Federal 
Government is obligated to ensure that immediate steps are 
taken to protect the lives and property of its citizens and to 
mitigate any further damage or harm, to make sure that roads 
are clear of debris to allow emergency workers access to 
affected areas, to provide temporary shelter or housing to 
disaster victims who lose their homes, and to provide interim 
repair to buildings to enable victims to remain or return to 
their homes and prevent further damage.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Jadacki appears in the Appendix 
on page 59.
---------------------------------------------------------------------------
    As my testimony indicates, there are many weaknesses in the 
Federal Government's pre-disaster planning and contract 
management oversight efforts. We are still in the process of 
fully evaluating the overall contracting efforts related to 
Hurricane Katrina, however, our work thus far has disclosed 
that FEMA either purchased supplies, commodities, equipment, or 
other resources to support emergency and disasters response 
efforts in insufficient quantities or over purchased 
commodities because of requirement planning prior to Katrina 
was inadequate. The government, in many instances, did not pay 
reasonable prices for goods and services because competition 
was limited or non-existent and costs and prices were not 
always controlled because of the government's contract 
oversight and monitoring was inadequate. FEMA's core mission is 
to respond to emergencies and procure emergency supplies and 
equipment on a recurring basis. Therefore, planning for these 
procurements would represent sound business practice. Because 
of the unpredictable nature of emergency operations, such 
planning cannot always be used to select specific sources in 
advance of disasters. However, for each major type of 
procurement pre-disaster planning can address the following: 
Identify prospective sources of supplies and services, 
delineate how competition will be sought, promoted, and 
sustained during emergency operations, describe how Stafford 
Act requirements for preferences of firms affected by the 
disaster will be made, lay out source selection procedures for 
each type of procurement, and establish communications systems 
and processes and publicize them in order to have prospective 
sources know how to contact FEMA procurement personnel. The 
above pre-disaster planning did not take place, therefore FEMA 
found itself in an untenable position and hastily entered in 
contracts with little to no contract competition for disaster 
commodities.
    We are currently reviewing the entire process for 
accountability for the travel trailers from additional orders 
received by FEMA to final delivery to an evacuee. We have 
reviewed various reports all with the different sets of numbers 
as to what has been ordered, received, and occupied. These 
discrepancies suggest that FEMA and its contractors did not 
have sufficient controls or systems in place for the trailers 
and their ultimate disposition. Under the Stafford Act, States 
have the option of either using the Corps of Engineers to 
provide debris removal or enter into direct contracts and get 
reimbursed through the Public Assistance Program under the 
Stafford Act. We are in the process of auditing debris removal 
contracts awarded to the States. In the past, we have waited 
until all or most of the work has been completed before 
starting our reviews. The amount of destruction and resulting 
debris from Hurricanes Katrina, Rita, and Wilma created 
unprecedented debris removal operations estimated at several 
billion dollars. As a result of this massive effort, we 
initiated audits of a number of debris removal grants with the 
goal of identifying and preventing problems before they occur. 
Specifically, we're looking at the reasonableness of debris 
removal contracts, types of awards, and terms and conditions. 
In the past, we've found cases of price gouging, non-arms 
length transactions, bribery, and false or padded billings. 
Some of our work resulted in arrests and convictions, other 
work identified significant, ineligible, or questionable costs 
that required reimbursement to the government.
    The Blue Roof Program provides roof tarps to homes that 
sustained some but not major roof damage. Additionally, FEMA 
asked the Corps of Engineers to install the roofs in mission 
assignments under a Presidential Disaster Declaration. FEMA 
purchases and stockpiles the tarps using its specifications for 
grade and quality. The Corps of Engineers is responsible for 
hire crews for tarp installation. I would like to note some of 
the activities of the Inspectors General. As a community, the 
Inspectors General throughout the Federal Government have 
committed to providing effective contract oversight and 
established a Hurricane Katrina contract audit task force to 
coordinate those efforts under my office. This group includes 
auditors from DHS, GAO, and the Department of Defense, 
including the service-oriented agencies from the Army and Navy, 
HUD, HHS, the Department of Energy, GSA, and the Environmental 
Protection Agency. One of the objectives of the contract audit 
task force is to provide consistent contract oversight across 
all government agencies involved Katrina.
    In closing, through our oversight efforts, we have learned 
the following: FEMA scrambled to purchase supplies, 
commodities, and equipment and other resources to support 
emergency and disaster response efforts from numerous vendors 
because requirement planning prior to Katrina was inadequate. 
In many instances, the government did not pay a reasonable 
price for its purchases because competition was limited and the 
government's contract oversight and monitoring was inadequate 
resulting in cost and price variations. Because of the nature 
of disaster operations, we understand that acquisition planning 
has to be sufficiently flexible to address the impact of the 
disaster and the production capabilities and available onsite 
inventory. However, pre-disaster acquisition planning can 
balance the capabilities of distributors, wholesalers, 
retailers, and manufacturers, and call or standby contracts 
with pre-negotiated prices, quantities, terms and conditions, 
and specifications could have greatly facilitated procurement 
operations.
    As I pointed out, there are many weaknesses in the Federal 
Government's pre-disaster planning and contract management 
efforts. We hope that the lessons learned from our findings 
will help address weaknesses and be better prepared for future 
disasters. Mr. Chairman, this concludes my prepared remarks. 
I'll be happy to answer any questions.
    Senator Coburn. Thank you General. We look forward to your 
report.

 TESTIMONY OF PATRICK J. FITZGERALD,\1\ AUDITOR GENERAL, U.S. 
                       ARMY AUDIT AGENCY

    Mr. Fitzgerald. Mr. Chairman and distinguished Members, 
thank you for the opportunity to be here today to discuss with 
you our oversight work related to the Hurricane. As the Army's 
Auditor General, I'm responsible for the worldwide operations 
of the U.S. Army Audit Agency. Army Audit is the internal audit 
organization and we provide objective, independent audit 
services to the Army and to the Corps of Engineers in its 
disaster relief role.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Fitzgerald appears in the 
Appendix on page 69.
---------------------------------------------------------------------------
    After Hurricane Katrina, we met with the DOD and the GAO to 
design a plan to provide oversight for DOD funds for relief and 
recovery efforts. As part of the plan, we assumed the 
responsibility for the Corps' mission assignments for debris 
removal, demolition, and repair of hurricane protection 
systems. Today I'm going to focus my statement on debris 
removal and our audit results to date.
    We began field work last October and are nearing completion 
of our initial audits. The scope coverage is debris contracts 
and the pending solicitations for the demolition contracts. In 
response to Hurricane Katrina, FEMA provided the Corps with the 
mission assignment of debris removal. The Corps has contracts 
in Mississippi and Louisiana. The first contract was awarded in 
November 2002 as an ACI contract. However, immediately after 
the hurricane, the Corps officially recognized that this 
contract did not have the capacity to handle the widespread 
destruction and cleanup. Within days, the Corps, prepared 
solicitations to award four indefinite delivery and indefinite 
quantity contracts, each with a $500 million limit and an 
option for an additional $500 million. The Corps awarded four 
contracts on September 15, 2005 and as of March 28, 2006, the 
Corps has obligated about $1.6 billion. The Corps' decision to 
award four large contracts of $500 million each led to multiple 
tiers of subcontractors. The private contractors did very 
little debris hauling. As a result, they sub-contracted a large 
majority of their work with most sub-contracts going to small 
and disadvantaged businesses located in the hurricane affected 
areas. We reviewed the costs proposals submitted by the private 
contractors that showed markups for management, overhead, and 
profit ranging from about 17 to 47 percent of the 
subcontractor's costs. During the audit, we recommended that 
the Corps award future contracts in smaller amounts. The Corps 
has agreed and has scaled back the scope of the new contracts 
for the demolition work to $150 million or less. Another area 
we reviewed was contract pricing. Although fixed price 
contracts were awarded, the Corps contracting officials 
negotiated higher prices for most of the tasks orders issued 
under three of the four contracts. Our analysis of the 
individual task orders showed that the negotiated prices were 
higher than both the initial bids and the government's 
independent estimate. We recommended, and the Corps has agreed, 
that the Defense Contracting Audit Agency review these 
negotiated task orders to determine the reasonableness of the 
prices. If defective pricing is found, the government would 
have an opportunity to recoup any overstated costs. We also 
looked at the Corps process for monitoring contractor 
performance. Although we found it adequate, we did identify 
some quality control practices that could be done more 
efficiently. We recommended that the Corps standardize its 
quality control requirements that it made with the contractors 
and that the Corps' quality assurance plans be fully developed 
and synchronized for both existing contracts and implemented 
for all future debris and demolition contracts. In conclusion, 
we have been working closely with the Corps to develop 
solutions to these issues. The Corps' management has addressed 
our concerns promptly and has been very responsive to our 
recommendations.
    I appreciate the opportunity to testify before you today 
and will be glad to respond to any of your questions. Thank 
you.
    Senator Coburn. Thank you Mr. Fitzgerald. Mr. Gimble.

 TESTIMONY OF THOMAS F. GIMBLE,\1\ PRINCIPAL DEPUTY INSPECTOR 
                 GENERAL, DEPARTMENT OF DEFENSE

    Mr. Gimble. Mr. Chairman and distinguished Members, thanks 
for the opportunity to appear before the Subcommittee today to 
address our ongoing oversight work regarding Operation Blue 
Roof. My testimony today also describes the oversight 
activities within the Department of Defense regarding hurricane 
relief and recovery efforts. I should also note that I'm 
working in close coordination with other Federal inspectors 
general to ensure effective use of DOD resources in the relief 
and recovery efforts.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Gimble appears in the Appendix on 
page 73.
---------------------------------------------------------------------------
    In total, my office, the service audit agencies, the 
Defense Contract Audit Agency and the defense criminal 
investigative organizations have employed a cadre of about 150 
investigators, auditors, and inspectors to provide oversight of 
the contracts and operations. The DOD office of Inspector 
General also provided the facilities and personnel to stand up 
the hurricane fraud hotline. My office has currently 11 ongoing 
audits related to Hurricane Katrina. The service audit agencies 
have 14 additional ongoing audits projects. The audit projects 
are listed in the appendix of my prepared statement and cover 
the following areas: Contracting, contract data reporting, 
purchase card transactions, effects on information technology 
in the areas affected, accounting and oversight of obligations 
and expenditures, and use of DOD's resources supporting 
recovery and relief efforts. In addition, my investigators from 
the Defense Criminal Investigative Service (DCIS) received 21 
criminal allegations related to Hurricane Katrina. At this 
time, the DCIS has opened six cases involving bribery, 
kickbacks, and possible product substitution. Three of those 
relate to debris removal and one relates to blue roofs.
    The Defense Contract Audit Agency (DCAA) is supporting both 
FEMA and the Corps of Engineers in their Hurricane Katrina 
recovery efforts. The DCAA has assisted the Corps with the blue 
roof and debris missions by verifying contractor compliance 
with terms and conditions of the contract. Regarding the blue 
roof mission. DCAA findings included a lack of initial 
estimates on Right of Entry forms, claimed quantities in excess 
of the actual physical roof area, incomplete certified payroll 
records, and safety violations. Regarding the debris mission, 
the DCAA findings included the need for improved observation 
tower locations at the dump sites, a lack of standard 
procedures for determining the amount of debris hauled to the 
dump sites, a lack of controls over the billing process and 
safety violations. The Corps of Engineers has taken or is in 
the process of taking corrective actions with responsible 
contractors.
    Operation Blue Roof is a priority mission managed by the 
Corps of Engineers for FEMA. The program provides free 
temporary roofing for residential structures, schools, daycare 
centers, and all publicly owned facilities. On November 9, 
2005, we announced an audit of the Army Corps of Engineers 
Operation Blue Roof Project. This audit is in response to a 
request we received from the House Committee on Homeland 
Security and also the Senate Committee on Homeland Security and 
Governmental Affairs. The objective of the audit is to 
determine whether the Corps properly awarded and administered 
the contracts for Operation Blue Roof. We're currently 
reviewing all seven contracts with 29 delivery orders for a 
total obligated dollar value of $277.5 million for temporary 
roofing work done in Louisiana and Mississippi. We plan to 
issue a draft audit report in June 2006.
    Also, in preparation for the 2006 hurricane season, the 
Corps is planning to award new Operation Blue Roof contracts. 
On November 30, the Corps Mobile District posted a solicitation 
for Indefinite Delivery/Indefinite Quality (IDIQ) contracts for 
temporary roof repairs in 10 Gulf and East Coast States. The 
responses are currently in and are going through the source 
selection process. It is our understanding that the Corps plans 
to make multiple contract awards, both unrestricted and set-
aside.
    This June, in response to concerns related to 
subcontracting and contract pricing for Hurricane Katrina 
relief and recovery efforts, we plan to initiate an audit of 
the Corp's Blue Roof Mission to examine the costs contractors 
used to establish pricing, the percent of contract cost for 
overhead, and how many layers of subcontractors were used.
    This concludes my statement and I'll be happy to answer any 
questions.
    Senator Coburn. Mr. Gimble, thank you very much. We'll 
start out with a round of questions of 5 minutes apiece.
    Ms. Burnette, what limits on overhead will be on the new 
recompeted contracts and can you document for this Subcommittee 
a reason ability analysis you perform before signing those new 
contracts?
    Ms. Burnette. I'm sorry Mr. Chairman, are you referring to 
the recent maintenance and deactivation contracts?
    Senator Coburn. Yes.
    Ms. Burnette. The maintenance and deactivation contracts 
were a competitive acquisition and the majority of the work 
that was competed under them were from fixed price. And so in 
those situations you don't typically negotiate overhead or you 
do an elements of cost-type breakdown. It's just based on a 
scenario.
    Senator Coburn. And how about the contracts that had no 
bids that are to be rebid?
    Ms. Burnette. Mr. Chairman, we are in process of working 
with DCAA to ensure that the overhead costs are consistent with 
their best business practices that they charge to other 
customers. We have put a provision in each of the task orders 
that states that no final negotiated contracts, no final 
negotiated prices will be allowable until after DCAA has 
confirmed that both their overhead rates and their general 
administrative fees are confirmed to be reasonable.
    Senator Coburn. General Strock, I know you're here on one 
of your days off. I appreciate your being here. Thank you. It 
is my understanding that the Army Corps offers local parishes 
two choices in Louisiana: One, allow the Army Corps to do the 
debris removal or, two, allow the parishes to do the work but 
pay 10 percent of the cost while the Army Corps pays 90 percent 
of the cost. Tell me why it's set up that way. What are the 
laws? Do we need to change something under the Stafford Act? 
What is it that we should be doing so that we can have more of 
the work done? My understanding is that we have a large number 
of community contractors in place that were not available for 
some of this contracting.
    General Strock. Sir, it was previously the policy that we 
would charge 90 percent Federal and ten percent local if locals 
went their own way on that. That has now been changed and FEMA 
no longer follows that process. They do go to a 90/10 percent 
cost share at some point following a disaster but when that 
kicks in, it will apply to both the work done by the Corps as 
well as by the locals.
    Senator Coburn. So there wasn't necessarily an inhibitant 
10 percent fee that we weren't working under that or we were 
but we changed our mind?
    General Strock. Sir, it was that way for a time. That was 
the understanding but given the magnitude of this disaster, 
that policy was changed so everything that is judged to be 100 
percent Federal will be applied whether you do it locally or 
with the Corps of Engineers responsible.
    Senator Coburn. I'd like to ask consent from the 
Subcommittee to introduce into the record a letter we received 
from the Congressional Research Service \1\ on the Corp's 
contracting with the major contractors on debris removal and 
the fact that many of them were told not to give interviews, 
not to divulge their pricing. Is there any contract that the 
people of this country should not know what we're paying for 
and where the money went? Other than defense intelligence and 
national security issues, is there a reason why somebody should 
not have their contract exposed to sunshine as to what they're 
getting paid, what the details of the contract are?
---------------------------------------------------------------------------
    \1\ Letter from CRS, dated March 29, 2006, submitted by Senator 
Coburn appears in the Appendix on page 143.
---------------------------------------------------------------------------
    General Strock. Sir, I think there are some situations in 
which there are proprietary processes involved and the cost of 
which give that contract a competitive advantage and they're 
reluctant to divulge those.
    Senator Coburn. In debris removal?
    General Strock. Sir, I don't know to answer to that, 
whether the specific cost breakdown in the contract is 
something we can share. I don't believe we can. I think that's 
proprietary information but we can certainly share the 
overall----
    Senator Coburn. That's something I assure you we're going 
to change. The people of this country have the right to know 
what we're paying and what we're getting. The fact that we 
would in the Federal Government contract then say we can't tell 
the American people what we're paying, or have an assessment of 
how we value it, has got to change. We cannot get what your 
actual contract's were when we talk to local contractors, and 
we can't find out whether or not they could have competitively 
bid it. We have anywhere from $27 to $32 per cubic yard and if 
you have 100 million cubic yards, you're talking $3.2 billion 
dollars. That ought to be in the sunshine. People ought to 
know. They ought to be able to see what we're paying and what 
we're getting and I would hope, I would think the Members of 
this panel would agree with that and that if we need to change 
some type of legislation, then that's what we will do here. 
That's one of the things that creates a competitive equality 
out there. Is there a law somewhere or a regulation that says 
you can't do that or is that part of your contract agreement 
that you won't?
    General Strock. No, it's certainly contained in the Federal 
Acquisition Regulation and I'm not sure whether that's 
statutory or policy. Perhaps I could get a head nod. It is the 
policy, sir.
    Senator Coburn. It's the policy and not statutory? All 
right, thank you.
    General Strock. Sir, if I may comment also on the statement 
that some of our people were told not to talk and not to be 
interviewed. If that did occur, that's absolutely contrary to 
our policy. We believe in talking to anybody and explaining 
anything that they want to talk about.
    Senator Coburn. It was not your people. The Corps of 
Engineers asked ECC not to give interviews. This is a direct 
quote from the CRS bulletin, page 4 issued to us March 29, 
2006.
    General Strock. Then I'll need to look into that, sir, 
because that's certainly something we wouldn't do, normally.
    Senator Coburn. Thank you. Senator Carper.
    Senator Carper. When I was a kid growing up, my father used 
to say to my sister and me, we have a job to do and we wouldn't 
do it very well. He was always saying if a job is worth doing, 
it's worth doing well. He was an old Chief Petty Officer in the 
Navy. We must have screwed up a lot because he said it a lot. 
My father would also say to my sister and me if we did some 
bone-headed stunt, he'd say just use some common sense. Just 
use some common sense. Everything I do, I know I can do better. 
I suspect the same is true with you in the jobs that you lead 
and the people you work with.
    I want to ask you to be thinking. I think what is a real 
value to me is a hearing like this. We have a lot of smart 
people here who thought and worked hard on a problem and see 
where you agree some things we ought to be doing differently. 
That's what I'm going to be asking. Where is some consensus on 
this panel to things we should be doing differently through 
legislation, through regulation, or just through policy that's 
within your own job.
    While you're thinking about that, let me go back to the 
issue the Chairman touched upon and that's debris removal 
stuff. I understand the States have the option of working with 
the local contractors themselves and then getting reimbursed by 
the Federal Government. It seems that States have the incentive 
to go with the Army Corps contractors because the Federal 
Government picks up 100 percent of the cost. As a recovering 
governor, if I could get somebody else to pick up 100 percent 
as opposed to 80 or 70 percent, I'd look for 100 percent.
    It seems there's an incentive that we have for States to go 
with the Army contracts because of this 100 percent policy and 
there's no State to match when the work is done in that way. In 
instances where the State is doing their own debris removal, do 
we see fewer of these multi tiered contracts? And, second, is 
the work done more cost effectively?
    General Strock. Sir, I can't comment directly on layers of 
tiering and local contracts. I don't know the answer to that 
but I can probably find out for the record, if you let me do 
that. In terms of the costs, I think intuitively there is a 
higher cost when you bring in our oversight. It's for many 
reasons. We have, well I hate to characterize us as more 
rigorous or stringent than locals in terms of things like 
safety or quantity. In audits, we bring in a full sweep of 
auditors and checkers when we come to the table. So I don't 
know that I can categorically state that our costs are higher 
but intuitively they may be a bit higher. We also had to bring 
in people from outside. We had over 3,000 people in the Corps 
of Engineers that had to come in from around the country and 
other agencies that responded so the rates we pay to our people 
are probably a bit higher than local people overseeing local 
work. But what we do bring is the ability to take that burden 
off the local population as they are trying to recover, that we 
can get the job done for them. They don't need to be subjected 
to audits and they don't need to worry about the safety of the 
operations. They can focus on other things and hand it off to 
us and certainly there was an incentive in the past when if 
locals did it, after a point they would pick up 10 percent of 
the cost so there are many incentives to using us. I think you 
have to look at all of that to make a full determination about 
the efficiency and effectiveness of the rates that the Corps 
charges.
    Senator Carper. Let me go back to my other question and 
that is where do you think you might agree as a panel on some 
things that we ought to do differently in terms of legislation, 
in terms of regulation, and just in terms of policies that you 
are aware of, and I'll just start here with Mr. Gimble because 
I like your first hand.
    Mr. Gimble. Thank you, Senator. I think what we have going, 
the body work we have going to do the ideas--we're in the 
process--I think we're in the position if you take this and 
look at, if you're talking about overall contracting 
procedures, we probably have some ideas on that but when you 
look at a disaster of this degree and you look at all the 
things that we've done, I think when we get to look at the 
lessons learned, what I think we are going to be doing is that 
we will come up with some recommendations to increase 
competition, to improve oversight, probably will be some pre-
planning that everybody said can be improved. So I guess I'm 
not really ready to comment on legislation----
    Senator Carper. When might you be?
    Mr. Gimble. Probably at the end of the summer.
    Senator Carper. End of when?
    Mr. Gimble. August time frame. As I said earlier, we have 
11 audits ongoing dealing with contract issues and among other 
things, we've actually survived the audit's contract issues. We 
think it's going to give us a good basis to overall contracting 
and then some specific like ice water and the blue roof issue. 
We have some specific contracts on this. We ought to have a 
good array of what we think went wrong in terms of just overall 
contracting, contract negotiation, and pre-planning. At this 
point, based on just what happened with Hurricanes Katrina and 
Rita, we were not really firmed up on what the issues will end 
up being at this point.
    Senator Carper. And you won't be in a position to do that 
until the end of the summer?
    Mr. Gimble. Well, we'll be, in the August time-frame.
    Senator Carper. My time is expired. Will we come back for a 
second round?
    Senator Coburn. We'll try and do that. Senator Vitter.

OPENING STATEMENT OF HON. DAVID VITTER,\1\ A U.S. SENATOR FROM 
                     THE STATE OF LOUISIANA

    Senator Vitter. Thank you Mr. Chairman. I want to thank you 
and the Ranking Member, Senator Carper, for bringing this field 
hearing to Louisiana. It's very important. We share your 
frustration with costs that are much higher than they have to 
be, waste of U.S. taxpayer dollars. In addition, we have two 
Louisiana frustrations. One, in the midst of this process, far 
fewer Louisiana firms are being used that could otherwise be 
used and that would help to do it differently and would help 
with our recovery, and two, it's really frustrating that all of 
this money, including this waste, is still being counted 
against us even though we're not seeing results or that waste 
here on the ground, so thank you for this hearing.
---------------------------------------------------------------------------
    \1\ The prepared statement of Senator Vitter with attachments 
appears in the Appendix on page 80.
---------------------------------------------------------------------------
    Ms. Burnette, I'm convinced from looking at this for months 
that the fundamental problem is the overall model which is used 
which is basically very large contracts under which grow layer 
upon layer upon layer of subcontractors. Blue roof contracts 
are the perfect example the prime getting between $150 to $175 
per square foot and then six, seven, eight layers of subs 
underneath them and the person putting on the blue roof getting 
10 cents or less per square foot. As you re-bid these contracts 
and move forward, what is going to change with regard to that 
basic model?
    Ms. Burnette. Thank you, Senator Vitter. The IA-TAC which 
is in the process of being re-computed that will be used during 
the upcoming hurricane season. We're implementing a different 
type of strategy that I think will alleviate some of your 
concerns. The initial strategy is to go out on a full and open 
competition and allow all companies to bid on it because we 
recognize that under an urgent situation, you may need a 
contractor that has a lot of experience in those areas. The 
idea is that once the contractors come in and they kind of get 
the situation under control, we're also setting up regional 
BPAs and we're doing this through our partnership with GSA and 
they will be mostly made up of small businesses in different 
regions. So each region, depending on where the disaster 
happens, will be offered an opportunity to participate through 
a blanket purchase agreement. And last, the last phase of the 
strategy is once we can isolate the problem, which is what 
we've done recently where we went out and re-computed the 
maintenance and the deactivation and we had local firms and I 
mean to date we've had 36 awards that we're in the process of 
awarding and 28 of them are from the affected States. It will 
be a similar situation.
    Senator Vitter. But you're still talking about very large 
prime contracts, correct?
    Ms. Burnette. Initially we're talking about very large 
prime contracts. Senator Vitter, we had 487 subcontractors, 
which equated to over 10,000 people.
    Senator Vitter. Let me throw this idea out in terms of 
further reform. Rather than a big traditional prime contract, 
why shouldn't we replace that with a project management 
contract so that the prime contractor gets a far smaller price 
to manage a lot of smaller subcontractors, including local 
contractors underneath them and has an incentive built in to 
save the government money? Right now, that prime has an 
enormous incentive to cut costs below him because he keeps all 
of that money. Under the new model, the government could keep 
most of that money.
    Ms. Burnette. I think that's an interesting concept and I'd 
like to explore that further with my colleagues back in 
Washington.
    Senator Vitter. General, I want to go back to this idea of 
the price of prime debris removal contracts because local 
government in this area has been trying to understand what you 
all are paying the primes for months and has done everything 
under the sun, including FOIA requests to get that information 
and still hasn't gotten it. Why can't the Corps release the 
basic contract prices? What could possibly be confidential 
about the basic contract price that you are paying to the 
prime?
    General Strock. You're speaking the price per cubic yard, 
sir?
    Senator Vitter. Correct.
    General Strock. Sir, I don't know that. I know that we have 
published on occasion what those prices are. I'm not sure which 
the Congress before you request, but typically here in 
Louisiana and local parishes we're paying $25 to $26 per cubic 
yard. I'm not sure why we wouldn't divulge that.
    Senator Coburn. Senator Landrieu.

OPENING STATEMENT OF HON. MARY L. LANDRIEU, A U.S. SENATOR FROM 
                     THE STATE OF LOUISIANA

    Senator Landrieu. Thank you Mr. Chairman. Let me join my 
colleagues in thanking both of you all, you and Senator Carper, 
for conducting this hearing because it has been such a 
tremendous source of frustration as we try to do our best in 
really a unprecedented disaster in terms of our delegation and 
local officials to understand the Federal rules and regulations 
regarding the recovery and trying to manage through all of the 
different layers of challenges that you can imagine, not just 
with debris clean-up and blue roofs but re-building, building 
levees, re-building lives, building dreams, churches, business, 
homes, etc. It's been extremely frustrating, as Senator Vitter 
pointed out, to not only have that work well but also to have 
it charged against us when it doesn't and it truly is really 
the shortcomings of the Federal policies and Federal rules that 
are causing a lot of this money to be spent with very little to 
show for it, so I want to thank you for focusing on this, 
Senator, because I think there will be a great deal of good 
that comes out of this hearing and changes.
    Let me just follow up with the debris removal in this. I am 
very pleased to see that policy has been changed. It just has 
been a tremendous source of aggravation to our 19 coastal 
parishes and others throughout the State that had the challenge 
of this debris removal so I'm pleased that policy, General 
Strock, has been changed. I think it would be great to carry 
that policy on in the future so that 100 percent of the clean-
up can be done by the local parish officials and their 
contractors that routinely are involved in clean-up, even 
without these large storms. We have all sorts of other smaller 
storms and problems that occur and they have local contractors 
that they are very used to working with that do good work and 
can do it for less so I want to encourage that.
    Second, I want to support Senator Vitter's suggestion for 
this project manager. He and I have talked a great deal about 
this, he's done a lot of good work on it and as we see the 
incentives as he's outlined, that adds to our frustration. So a 
project manager approach for some of this would be terrific.
    We've talked a lot about blue roofs and debris removal but 
maybe Ms. Burnette or Mr. Jadacki of Homeland Security, we had 
a policy on trailers, could you describe what it is and how we 
are evolving to a better policy on trailers relative to not 
just ordering but where they are going to be used, how we work 
with our local officials to provide adequate housing? Just be 
as short in your answer as you can. What have we learned and 
what are we changing right now about that?
    Mr. Jadacki. Well as far as the purchases are concerned, 
when we did our work we found that a lot of purchases--because 
there was no pre-disaster planning for temporary housing, there 
was really no idea how many travel trailers were really needed. 
We understand that people were told to buy until you're told to 
stop buying. I understand they bought about 120,000 travel 
trailers and they're still being used extensively. However, 
there are some manufacturers that providing the travel trailers 
that were purchased, but there were shortages. There was, I 
think, over 300 vendors contacted at some point. What do you 
have on your lot, what can you provide us, can you meet these 
specs? As a result the prices varied considerably between the 
price from the manufacturer versus the ones on the lots.
    Senator Landrieu. Can I ask you one thing?
    Mr. Jadacki. Sure.
    Senator Landrieu. Are you aware that there was a project, 
Operation PAM, conducted just 6 months before the storm where 
it was estimated that ``X'' number of people would be without 
homes? When that information got to Washington, did anybody 
read it?
    Senator Landrieu. I actually attended the Hurricane PAM 
exercise as my role as the FEMA CFO and I know specifically 
some of the scary scenarios that were described there such as 
60,000 people possibly dying, hundreds of thousands of people, 
that would be homeless or displaced. I know that message did 
get back to Washington. I know for years FEMA had discussed the 
notion of catastrophic planning initiatives over the years and 
for whatever reason they just never followed it through to 
fruition. FEMA's been in and out of the travel trailer business 
and mobile home business for a number of years and it's just 
something that seems to reappear after every major disaster.
    Senator Landrieu. Well, Mr. Chairman, my time is short and 
it's expired. Just for the record, that operation predicted 
tens of thousands of people losing their lives and hundreds of 
thousands of people homeless 6 months before the hurricane and 
to think that when the hurricane hit there was no plan for 
shelter either in hotels, temporary housing, or trailers is 
something that I hope your Subcommittee will focus on. Thank 
you.
    Senator Coburn. I want to welcome Congressman Bobby Jindal 
to be here with us and we're going to afford you your time to 
do this. We're happy you're here and you have 5 minutes.

       OPENING STATEMENT OF HON. BOBBY JINDAL,\1\ A U.S. 
           REPRESENTATIVE FROM THE STATE OF LOUISIANA

    Mr. Jindal. Thank you very much, Mr. Chairman. Senator 
Carper I want to thank you and Senators Vitter and Landrieu for 
not only coming but allowing me the privilege of sitting on 
this panel with you. If there are no objections, I have written 
a statement that I'd like to read.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Jindal with attachments appears 
in the Appendix on page 97.
---------------------------------------------------------------------------
    Senator Coburn. Without objection it may be made part of 
the record.
    Mr. Jindal. Thank you Mr. Chairman. Several of my 
colleagues have made several of the points I wanted to make. I 
know my time is going to run out before I get to ask all of my 
questions. I will tell the panelist that many of my questions 
are contained in two letters that I sent to the Department of 
Homeland Security. The first, on October 11 of last year, 
talked about Section 307 in preferences of contracting with 
local businesses. The second, March 27 of this year, with some 
suggestions on how we might save taxpayer money and help those 
dollars go further on the ground. I have not received a reply 
to either letter.
    As Senator Vitter said, we have two very strong reasons for 
being very concerned about the stories we've heard today and 
heard before today about not getting the best bang for the tax 
dollars being spent. First, not only as taxpayer but also as 
representatives many of our colleagues feel like almost $100 
billion has been approved, they don't realize that there hasn't 
been $100 billion of relief on the ground and I think for every 
dollar that's not being spent effectively is another dollar 
that could have gone to help a family here in Louisiana or on 
the Gulf Coast.
    The second reason for concern is that June 1 is right 
around the corner. The next hurricane season is about to be 
upon us. We want to make sure that whatever lessons need to be 
learned are learned before the next hurricane season. Now, I've 
got several questions and I want to focus on one area that 
hasn't been touched upon. If we have a second round of 
questions, I will certainly come back to debris removal. I want 
to focus on the trailers for just a second. My understanding is 
that FEMA may have spent as much as $3 million on 4,000 base 
camp beds that were never used, $10 million dollars to renovate 
and furnish 240 rooms in Alabama that housed only six evacuees 
before that was closed. My understanding is that we're 
spending, as taxpayers, between $60,000, and maybe as much as 
$77,000, for each mobile home, for each travel trailer, to 
provide about 18 months of temporary housing. I also understand 
that there are at least 10,000 trailers in Arkansas and maybe 
as many 20,000 that have currently been purchased and haven't 
actually reached the residents who they're intended to help.
    If you look at the cost and look at the money that we've 
spent, it seems pretty self-evident that if you would have 
taken that money and been more flexible. For example, the local 
media reported that money could have easily paid for more than 
18 months of rent, could have easily help owners repair their 
homes, and could easily paid for what are being called Katrina 
cottages and are more durable forms of housing. My question is 
two-fold. I guess I'll address it to Ms. Burnette to begin 
with. First, would you agree that if Congress were to change 
the regulations in the Stafford Act specifically to allow more 
flexibility to help residents use some of the money spent on 
their behalf to repair their homes instead of limiting those 
dollars to trailers, would you agree that the money would 
actually go further and maybe help more people? Second, would 
you explore the flexibilities you think you currently have to 
help break down the costs of those trailers so we're not 
spending that much money? What flexibilities do you think you 
currently have to help people either with more permanent 
housing or repairs to their housing?
    Ms. Burnette. Congressman Jindal, I actually, because of my 
experience and because of my background is in procurement, that 
is a policy question that does need to be debated and I 
understand that it is being debated amongst the senior 
leadership. Right now the way the legislation does read is that 
FEMA is to provide temporary housing for applicants or evacuees 
when a catastrophic disaster hits.
    Mr. Jindal. Within temporary housing, do you think you have 
the ability to work with HUD, for example, instead of doing 
trailers if there were no other forms of temporary housing 
available? It's not that it has to be trailers. I mean, if 
there were more cost effective alternatives.
    Ms. Burnette. I think the idea that we've recently explored 
with just the apartments, where we've started to put people 
into apartments, I think that has been very favorable. I know 
in Houston that we're working to move 35,000 households out of 
the hotels and into those apartments and it is, in my mind, 
probably a better alternative. I certainly would prefer to be 
in an apartment rather than a trailer and it's certainly more 
of a long term solution.
    Mr. Jindal. And I would certainly encourage my colleagues 
for us to change the law. I would encourage FEMA to take as an 
expansive a view of the word temporary as possible? Again, I've 
got to reiterate for our constituents I strongly believe if 
they have access to those dollars they can make it go much 
further. If we gave them even a fraction of the $80,000 that is 
now being spent for 18 months--I believe and I'm certainly 
encouraged that if we bought these trailers that they would be 
used.
    Gentleman, I know my time has run out. I'll just make one 
comment on debris removal. I won't ask you a question, it 
wouldn't be fair to do that as my time runs out. I know that 
we've got a Parish President and other local officials here. I 
certainly appreciate that we would not have been able to move 
as much debris as we removed without the Corps' tremendous 
help. The point I do want to make is that not only the cost is 
a strain but the paperwork requirements is quite onerous for 
local officials, when they're told that if you use a local 
contractor you may be audited, you may not be reimbursed in 
addition to the cost versus if you let us handle it you don't 
have to worry about the paperwork, you don't have to worry 
about the audit. Many of them said simply out of fear that they 
chose the later approach and some believe if they have control, 
as I said to FEMA, if individuals felt like they had control 
over the dollars spent for housing that those dollars would go 
farther, many local officials feel like if they have greater 
control over the money spent on debris removal in their 
parishes and their communities, they could have certainly made 
those dollars go farther. I'm not asking a question because my 
time has run out but I'll simply say it's not just the cost, 
but the paperwork requirements are also very daunting for local 
officials. Thank you.
    Senator Coburn. Ms. Burnette, why do you all contract with 
the Corps? Why do you go through the Corps? Why have that extra 
layer? You all can't issue four contracts, five contracts, 
global contracts for debris removal and what are we paying for 
the Corps to do that?
    Ms. Burnette. The Corps, we believe that the Corps just as 
we partner with other Federal agencies, to support catastrophic 
events such as this. We believe that they have the requisite 
experience that we don't have internally at FEMA. FEMA is much 
smaller in size than other government agencies so we rely on 
our partnerships to support those efforts.
    Senator Coburn. FEMA is a big agency as far as I'm 
concerned. I still don't understand why you have to have the 
Corps to contract for debris removal, tarps, and everything 
else, and also I'm interested in something General Strock said 
is because the local governments are inadequately prepared for 
safety and oversight. I'm not sure that's the case. As a matter 
of fact, I think we're ill-prepared for oversight. As a matter 
of fact, this hearing actually, and the testimony of the 
Inspectors General that we've had, says that we're ill-prepared 
for oversight. So I'm going to come back again. What is the 
rationale for FEMA contracting with the Corps, creating a layer 
of bureaucracy, rather than contracting directly with these 
major national contractors which we contract almost everything? 
The Corps contracts almost everything through these people all 
the time, whether it's through FEMA or through the EPA for 
cleanups or whatever. Why is it we have to have the Corps do 
that and why should we pay for an additional layer of 
bureaucracy to get it done?
    Ms. Burnette. Mr. Chairman, we believe that there are 
advantages because of the expertise level that they bring to 
the table that we don't have. But we have recently started to 
explore what kinds of things would be better established with 
other agencies. Certainly housing, and the retooling issues 
that Secretary Chertoff has provided. He's looking at HUD as a 
possible alternative for providing housing which goes back to 
Congressman Jindal's question about apartments and partnering 
with them. So we are looking at those other alternatives.
    Senator Coburn. Let me go back again to Senator Vitter 
talking to you about project manager. Isn't that what the Corps 
is for you? That's why you're contracting--they're not actually 
doing direct cleanup work. Aren't they a project manager? So if 
that's the case, why do we need those huge super large 
contracts that end up four, five, six, seven, eight tiers down 
and what do we get for that? Again, if the Corps is the 
contract manager for the project, then why do we need the 
massive, large national companies to do that and why don't we 
go direct to the regional contractors, regional subcontractors, 
or local contractors? Why add the two layers? If you're going 
to use the Corps, then why does the Corps have to use the 
national contractors?
    Ms. Burnette. I, again, would go back to that we believe 
that the Corps has the requisite experience to do that. I think 
that the program management office is an interesting idea and 
is certainly something that we could explore.
    Senator Coburn. You have a program manager. That's the 
Corps.
    Ms. Burnette. Yes we do.
    Senator Coburn. You have a program manager. So, again, my 
question is why is it necessary, if the Corps is the program 
manager, for them to then contract with a significant higher 
overhead to the larger national companies rather than regional 
companies?
    Ms. Burnette. I think it's the staff that is involved in 
administering these contracts appropriately that is integral to 
ensure that it is done properly and meets all regulatory 
requirements and we believe that the Army Corps has the staff 
and the knowledge that they bring to the table to support this 
effort that we don't have internal to FEMA.
    Senator Coburn. What you will find if you talk to the local 
contractors around here is the national companies came in and 
got the big piles, got paid the big bucks. They left when all 
the profit was taken out. Now they're going to give it to the 
small companies here in Louisiana and give them the hard work 
and not give them an opportunity to make any money at it so the 
vast majority of the money got swept out of town, not into the 
local economy, and the details of the small debris removal is 
now left to the people to not make any money on it and to me, 
you can rationalize it. I don't think there's a 
rationalization. Either the Corps is the project manager and if 
they are, you don't need to pay a large corporation to do that. 
If they're not the project manager, then you don't need them.
    Senator Carper. I'm going to go back to my earlier question 
as far as Mr. Gimble who basically said that he thought he 
would be able to answer the question at the end of the summer. 
What I'm looking for from each of your guys and I would like to 
go to Mr. Fitzgerald next. When you look at the statues we have 
in place and when you look at some of the regulations that are 
in place at the relevant agencies and when you look at the 
policies that they are following, just in terms of common 
sense, saving money, what are a couple of major changes that 
you would bring to our attention for us as legislatures for the 
agencies themselves?
    Mr. Fitzgerald. Senator, I don't know if I have statutory 
changes to recommend but one of the lessons learned, I think we 
saw was when we awarded these contracts----
    Senator Carper. I don't know that we can legislate common 
sense?
    Mr. Fitzgerald. The Corps awarded these debris contracts as 
firm fixed price competitively awarded contracts. The Corps 
then negotiated task orders after the initial bids were in. 
That is an area we took issue with from our standpoint in the 
sense that we got bids that were competitive bids but then 
subsequent to that, we had to negotiate higher prices for those 
task orders because of some unknowns. Documentation wasn't 
available to show how exactly we got from the initial bid or 
the independent government estimate to the higher bid. Without 
that support in the contract files, there's really no way to 
determine whether those prices that we paid were justified. 
There are some explanations we got during our audit about why 
those things happened but we really think it's important that 
it is supported and documented exactly why we went from a 
competitively bid price to a negotiated bid price and why the 
increase was justified or needed. That's why we made a 
recommendation for the Defense Contract and Audit Agency to 
come in and look at the pricing to make sure that the increase 
pricing was totally justified. So the lesson learned, I think, 
is to make sure that we have the support and justification for 
negotiating higher prices than what was initially bid or cited 
in the independent government estimate. That's the lesson 
learned.
    Senator Carper. Mr. Jadacki, same question.
    Mr. Jadacki. There was over 4,000 contracts that were let 
for over $5 billion dollars after the disaster occurred so the 
fact that there were a lot of negotiations going on and getting 
bids going in and out and lack of documentation makes it more 
difficult to contain costs. We're going to recommend that call 
or stand-by contracts. I agree with Ms. Burnette that the need 
for regional and possible local level are in place before these 
disasters occur. I know there's a lot of concern about June 1 
is coming up and we're tracking, we're working closely with the 
DHS procurement folks about how they are coming along on some 
of these contracts. We're pleased to see that some of the local 
awards were made on some of the travel trailer maintenance and 
deactivation were made, but a lot more needs to be done before 
hurricane season which is quickly coming towards us.
    I also agree with Congressman Jindal about the cost of a 
travel trailer, the life cycle. We actually did some work in 
that and it does cost $50,000 to $70,000 to provide temporary 
housing for 18 months. Unfortunately, FEMA's hands are tied by 
the Stafford Act because they're not allowed to go out and 
build structures and things like that which could be cheaper. 
So, I think exploring some of those types of changes that would 
allow more flexibility would be something we should consider.
    Senator Carper. General Strock.
    General Strock. Certainly pre-planning needs to be 
improved. If I could just comment a bit on these negotiated 
prices. Certainly we do need to do a better job of documenting 
our decisions so we can follow that trail but this is a tough 
one when you have an advance contracting initiative. For 
example, it's based on--if it's for a region. You take the 
lowest labor price, in that demanded labor prices, in that 
region and you base your price on that. Then you get into a 
crisis situation and in a different part of the country you 
have to use different labor rates and that automatically drives 
the price up. We have things like hauling conditions. The 
contractor will bid on a general sense of what he's going to 
have to face and then you get into a situation where New 
Orleans is under water, and you're in tight streets where the 
work is much more difficult, than we should grant them the 
ability to come in and negotiate prices. In the early days, in 
response to New Orleans, every worker had to wear a tie-back 
suit because we weren't certain about the nature of the 
contaminants and so forth and that drives the prices up. So we 
have a mechanism that we can negotiate these prices and given 
the catastrophic nature of this disaster, the prices generally 
went up when we did that negotiation. But we did not document 
it as well as we could have and certainly we're working on 
that. Thank you.
    Senator Coburn. Senator Vitter.
    Senator Vitter. Thank you Mr. Chairman. Ms. Burnette, I 
want to go back to your answer about what's going to be 
different this next round because I'm not sure I understood it. 
I think one of the things you said is you're identifying local 
subcontractors ahead of time and having pools of those 
available or something like that. Are they still going to be 
employed under a mega--prime and if not, what will be the 
different arrangement?
    Ms. Burnette. Actually no, they're not going to be 
underneath a mega--prime. They are going to be their own prime 
contractor. What we will do is with GSA, we will identify 
companies in different areas because we don't know where the 
next catastrophic event will happen and we'll have contractors 
come in and tell us their expertise. They'll basically compete 
on a technical and price situation response plan and then they 
will have agreements with us so that when a catastrophic 
disaster happens in that particular region, we will have a pool 
of qualified contractors that can respond to it.
    Senator Vitter. And a negotiated price already?
    Ms. Burnette. That is correct, under negotiated prices. Now 
the disaster could vary but so the pricing that's established 
will be based on what we know today not by some of what will 
happen in the future.
    Senator Vitter. I also want to go back to Senator Coburn's 
question about the role of the Corps. What money does the Corps 
get to play the role that you're referring to in terms of these 
contracts which are ultimately FEMA's responsibility?
    Ms. Burnette. They have, they are participants in 
accordance with the National Response Plan. They participate 
with us and they are our partners in the disaster and they 
receive an overhead for the amount of contracts that they put 
in place for those different supplies and services that we ask 
them to accomplish in accordance with the National Response 
Plan.
    Senator Vitter. And how much is that?
    Ms. Burnette. I am not a technical person and since this is 
not a procurement issue, we're not procuring with another 
contractor, we'll have to get back to you Senator.
    Senator Vitter. And so it's a percentage of everything they 
put out?
    Ms. Burnette. It's my understanding that it's a percentage 
of the dollars that they award and we are looking at that 
Senator.
    Senator Vitter. OK. I think we would all like to know what 
the Corps makes by playing this role in the process, 
particularly when, from my vantage point, in the great majority 
of time they don't do significant work in that role, they push 
it on to mega--national contractors who essentially do that. So 
I think we would all like to know what the Corps makes in terms 
of dollars.
    Chairman, I also want to go back to the debris removal 
issue. I am very glad also that this disparity between the 90 
percent reimbursement and 100 percent if locals use your 
contracts has been done away with but I think it's still not an 
even playing field and the reason it's not is that, as you 
know, it's fine to say you're going to be reimbursed 100 
percent but when that happens after reams of paperwork, or 
doing it three or four times, or a year after the fact, that's 
a major cost and a major risk to local government so I still 
think we've got further to go to have a true even playing 
field. Let me also back up and say that I disagree with any 
suggestion that the Corps brings higher standards to the table. 
I think the ultimate, and I know you didn't mean to denigrate 
local government, but I think the ultimate test there is the 
fact that locals actually live in those communities day in and 
day out. They have every incentive in the world to make sure 
it's done right, quickly, and safely. I think that is far more 
powerful than the reams of Federal regulations. What would be 
wrong in telling local government you can do it either way? You 
could use us, you could use your own locals. If you do it 
yourself, you're not only reimbursed 100 percent, but every 
dollar you save compared to our price, you get to keep 20 
percent.
    General Strock. Sir, that's certainly a policy call. It 
would be out of my lane to comment on that but that could be 
done. Sir, may I comment a bit on what the Corps brings to this 
thing. We have what are called Planning and Response Teams. 
These are pre-trained and ready teams that are ready to flow 
in. And as I mentioned on this thing of quality and safety and 
so forth, I said I'm reluctant to make any statements along 
those lines. We can flow, in fact, trained professionals into 
an area. We've flown over 3,000 people into this area when this 
disaster happened. They simply don't have the capacity at the 
local level. Where they do, then it should certainly be used. 
The State of Florida does not use the Corps for debris removal 
because they have a standing capacity. The way FEMA's or the 
National Response Plan works, locals use their capacity to the 
degree possible and then, and only then, turn to the Federal 
Government for assistance. So, really, it's in our best 
interests as an agency to help work with the locals to build 
their capacities so we're not required. But I think that the 
big challenge here was the catastrophic nature of this disaster 
and the need for a massive response. But we have professionals 
trained and ready to move it----
    Senator Vitter. Let me say that I certainly agree that in 
this case all of the work could not have been done by purely 
local contractors but I still think its incumbent on us to go 
further to even the playing field.
    General Strock. Yes, sir, I agree with you that it should 
be local first and only as a last resort that the Feds are 
called in.
    Senator Coburn. If that's the case, why do you need Bechtel 
and CM2HILL? Why do you need them?
    General Strock. Sir, you need them, I think, because they 
expand the capacity. In the Federal Government, we're 
prohibited from competing or having the capability that can be 
provided by the private sector and our job, as professionals, 
is to leverage the capabilities of the private sector. So we go 
to them for our work.
    Senator Coburn. But they're going out and doing sub-
contracting for 95 percent of this stuff so why can't you do 
it? If you have the professionals to do it, why do we need 
Bechtel?
    General Strock. We can do it when the situation allows 
that, sir, and we do that. In this case, we recognized the need 
for a massive mobilization of resources. There is no one 
contractor that can bring all of the capabilities to bear in a 
rapid way so we go to the larger ones that have industry 
connections that could quickly build alliances and 
relationships that certainly sometimes run many tiers but they 
actually pull together teams to get the work done. And it's 
done with competitive pricing, best value in mind.
    Senator Coburn. I think we're going to find that when we're 
through the cost of debris removal was too high, the cost of 
blue roofing was too high, and the cost of trailers and their 
installation was too high compared to what common sense would 
dictate. I think that's what we're going to find. I'm not sure 
we're there yet, but I think that's where we're going. I've 
read all of the Inspector General's reports and that's where it 
looks like we're going to. So, if that's the case, then we 
didn't get good value. We may have got their services, we 
didn't get good value. Senator Landrieu.
    Senator Landrieu. Mr. Chairman, you have been so gracious. 
I'm going to submit my questions for the record because I'm 
anxious to hear the next panel and I thank you.
    Senator Coburn. Congressman Jindal.
    Mr. Jindal. Thank you Mr. Chairman. I want to just review 
because I haven't heard anyone dispute these facts. I want to 
review them and make some recommendations and see if the panel 
agrees with them. The numbers I want to submit for the record 
is that it is true that, and again, I'd love to be corrected. 
Is it true that FEMA spent $3 million dollars on 4,000 base 
camp beds that were never used? Is it true that FEMA spent $10 
million dollars to renovate 240 rooms in Alabama that housed 
only six evacuees?
    I've heard confirmation we are spending $50,000 to $75,000 
per trailer. I've heard confirmation that there may be as many 
as 20,000 trailers not currently being used. I've heard that we 
spent $175 per foot to put the blue plastic on roofs and yet in 
some cases, after five layers of subcontractors, only $2 is 
actually given to the front-line contractors, in some cases, 
$10, and some cases as little as $2. One of the numbers that 
troubles me is that I'm hearing that within FEMA, and this is 
not something maybe Ms. Burnette can actually answer, but 
within FEMA there are only 55 acquisitions staff members and of 
those only 36 are being filled whereas some think we need as 
many as 172 to oversee the contract work. One estimate says 
that there were over 1,000 contracts valued in excess of half a 
million dollars but only half were awarded under full and open 
competition, which may be part of the explanation for some of 
the numbers that I read before. One of the most disturbing 
numbers is $175 per square foot for the blue plastic and we 
have local workers saying they could have put up permanent 
roofs with the money that has been spending. It goes back to my 
previous point that with the $50,000 to $75,000, we could have 
made permanent repairs to people's homes and let them come back 
permanently.
    And the reason I emphasize that is housing is so critical 
to get people back into the greater New Orleans and Gulf Coast 
area and all of Louisiana. It's so critical to get our economy, 
our health care, and our education systems back and so I have 
focused quite a bit on housing. Those are some of the things 
that concern me greatly. As the Chairman said, I don't think 
that when the record is written on this that we will have 
gotten great value. I think if you survey local residents, 
local officials, they'll tell you over and over they could have 
done so much more with the money that's being spent down here.
    My suggestion is that as we go forward to June 1 and as we 
continue to recover from Hurricanes Katrina and Rita, is that 
we absolutely have greater financial transparency. Along with 
the Chairman, I don't understand why we wouldn't want taxpayers 
to know what they're paying. It took quite a lot for the local 
contractors to figure out what was being paid to put the blue 
plastic on roofs. It took a lot of effort to get those numbers 
out there.
    Second, let's explicitly limit the number of layers of 
subcontractors to reduce the overhead costs and let's publicly 
report how much is being spent at each layer of sub-
contracting.
    Third, I understand the need right after a storm to spend 
more than market rates to respond in the middle of a disaster 
but certainly after the initial emergency period expires, 
there's no reason for us to be spending, at the most, 25 
percent above the market value or it could even be better than 
that, and yet we have many reports where we're paying much 
above market rates long after the storm had passed and long 
after the emergency period had passed.
    Fourth, the point I made earlier, I certainly hope that we 
have greater flexibility as we spend these dollars. Given 
whether it's FEMA or the local homeowners greater flexibility 
on how the money is spent on their behalf.
    And, fifth, one thing we've not talked about as much and, 
again, it's not something that I expect Ms. Burnette to respond 
to, it's something I'd like FEMA to respond to, we'd like to 
have less turnover in the personnel on the ground. One of the 
things that is very frustrating to local officials and others 
is that as soon as a certain policy guidance is established, 
often times somebody new will come in and the person will 
rotate out and have to start all over again. And as Senator 
Vitter references when it came to debris removal, many local 
officials feel like after they've worked out the procedures for 
reimburse for using local contractors, as soon as a new local 
official shows up, they have to start back from square one.
    And then finally something that's been hinted at, certainly 
I think we need to do a better job before June 1 in terms of 
pre-positioning and partnering with the private sector. Knowing 
that this is going to be a busier than normal hurricane season. 
I don't think there was an excuse last year and I don't think 
there will be any excuse at all after Hurricanes Katrina and 
Rita for us to be unprepared next year.
    I know my time is short. I leave those suggestions with the 
panel. I've documented those in two letters.\1\ The first 
letter, which I think is still very important is the use of 
Louisiana contractors. I know the Stafford Act 307 requires 
that. I don't know the record has gotten better as time has 
gotten further away from the storm. I still don't think we're 
doing as well as we could. I'd like us to do more to keep those 
dollars in the economy to keep people working here. It's not 
fair to ask how we respond to so many suggestions in such a 
short period of time. I would ask you to take a look at those 
letters. If there are things that you can do administratively, 
I'd encourage you to do them. There's certainly no reason to 
have 20,000 trailers out there when people need housing but 
there are things that we need to do to statutorily to amend the 
Stafford Act. I hope you'll support those changes and report 
back to us and we can pursue those changes in a bipartisan 
manner. Thank you Mr. Chairman.
---------------------------------------------------------------------------
    \1\ The letters referred to appears in the Appendix on page 98.
---------------------------------------------------------------------------
    Senator Coburn. Well, Congressman, you just demonstrated 
you know how to be a senator because you took 5 minutes and 
didn't ask a question. I want to thank our panelists. You will 
receive multiple questions from us. From the time that you 
receive those, we would like those back in 2 weeks if you can. 
And I would emphasize again what is it that we didn't do right, 
what have we learned from it, when all these reports are coming 
out in the summer what do we change. You have an obligation to 
communicate with us what will make you more effective, more 
efficient, and also more transparent to the American people. So 
I want to thank you for your time that you have given today and 
General Strock I know you took time out from your own vacation 
to be here. I appreciate that. It certainly shows a level of 
dedication that is admirable and we will dismiss this panel and 
look forward to your replies from our written questions.
    The second panel can take seats, please. Our second panel 
consist of Steve Scalise. He's a third term Louisiana State 
Representative from the 82nd District of Louisiana. He was born 
and raised in the New Orleans area and serves on several 
committees including the Appropriations and Budget Committees. 
Welcome Representative Scalise.
    William Woods is Director with the Acquisition and Sourcing 
Management at the U.S. Government Accountability Office. Prior 
to assuming his current position, Mr. Woods served as Assistant 
General Counsel in GAO's Office of General Counsel.
    Derrell Cohoon is the CEO of Louisiana Associated General 
Contractors, welcome. And next is Kevin Davis who is the 
President of St. Tammany Parish. Hurricane Katrina's 
destruction to his parish includes 8 million cubic yards of 
debris, 3,000 miles of clogged drainage and 48,792 destroyed 
homes.
    Each of your statements will be made a part of the record. 
You're recognized for 5 minutes. We would appreciate it if you 
could stay within that time.

TESTIMONY OF THE HON. STEVE SCALISE, REPRESENTATIVE, LOUISIANA 
                       STATE LEGISLATURE

    Mr. Scalise. Thank you, Mr. Chairman and Members, Senator 
Vitter, Congressman Jindal, and Senator Landrieu. I appreciate 
the opportunity as well as appreciate you coming down to New 
Orleans to hear this. For each of these three programs I would 
like to propose alternatives that could result in significant 
savings to the taxpayers while also providing better relief to 
the people that are most in need. Some of the things you've 
heard about already.
    On the Operation Blue Roof, the biggest problem that we've 
experienced is the multiple level of subcontractors and some of 
the numbers that they've thrown out are right where the top 
contractor would get $175 per square. Ultimately it works its 
way down to the person that's actually putting on the piece of 
blue tarp making about $2. By streamlining that process you can 
significantly reduce the savings while providing that same 
service. It's been pointed out as well that you can put a brand 
new roof on somebody's house for the price that has been spent 
by the taxpayer by putting a piece of blue vinyl on a house.
    For the public releasing of this information is also 
important because as we talk about the travel trailer program 
that's especially important to the State and local government 
because we are being asked to pay a percentage, a 10 percent 
match of the travel trailer program and it does have a lot of 
embedded cost. As we get into the overall cost. It's averaging 
about $75,000 of what we've been told a trailer to purchase, 
install and service. That housing alternative while the trailer 
itself costs about $20,000. The Federal Government is spending 
between $3,300 and $4,100 per month to keep a family in a 
trailer in front of their house or in a park. And obviously we 
feel that the taxpayer is not getting the best deal or the 
people that need temporary housing are not getting the best 
deal either for this expense.
    The coordination of subcontractors is also a big problem 
because too many times we hear complaints from people who have 
a trailer sitting in front of their house for months while 
they're waiting to either get electricity hooked up to get 
their key for the trailer. I've had calls to my office from 
people who have a trailer in front of their house for 2 months 
but couldn't get into it because they didn't have the key 
because it was a different subcontractor. So clearly that 
coordination needs to be worked a lot better too because that 
ends up becoming a bigger frustration than the devastation that 
the person has from the hurricane when they're trying to find 
relief and it's sitting there in front of them and they can't 
use it. Some alternatives may be to provide travel vouchers or 
credits to people who purchase their own. I've had a number of 
people who could not wait any longer for a FEMA trailer and 
they went out and bought their own and spent about $18,000, 
$20,000 hooked it up themselves instead of the $75,000 the 
Federal Government's spending yet they can't get any 
reimbursement. So they're out $20,000 whereas if they would 
have waited the Federal Government would have spent $75,000 for 
the same alternative. It just doesn't seem to make sense as 
well as the businesses could be allowed credits, too. A lot of 
businesses right after the storm stepped up to get their 
businesses back up and running but their big problem was they 
didn't have personnel. So many of them took it upon themselves 
to find ways to get their people back and if they were allowed 
to have some credits so that they could buy the trailers as 
long as it costs less than what the government was spending, I 
think you would have seen a much expedited manner of getting 
people back into their communities while also getting our 
economy back up and running by having businesses and that would 
help people get a sense of normalcy. Many people expressed that 
getting back and working was a big method of relief from all 
the devastation and yet some people still haven't come back 
because there is no housing. So if businesses would be involved 
in that process I think it would help us some, too.
    Regarding housing alternatives, modular housing, was 
brought up by Congressman Jindal. The Katrina cottages, I think 
you have a picture of one of those in your handouts that I gave 
you cost at most as much as FEMA is spending on trailers yet 
these are hurricane proof which the trailers are not and in 
many cases they can be made into permanent houses where you can 
actually turn them into a permanent house which provides a much 
better solution. There are some other alternatives that can be 
reviewed as well that would save money in this program, but 
also provide more relief because we're spending a lot of money 
on trailers and on hotels when there are other opportunities 
that are available.
    Finally, with debris removal the multiple layers of 
subcontracts are again a big problem. I am very encouraged to 
hear what General Strock mentioned about allowing the 
reimbursement because many local governments mayors have said 
they had a lower priced contractor to remove the debris yet 
because of the way that it was structured they had to go 
through the Corps of Engineers because of the 100 percent 
reimbursement because they simply could not afford to pay that 
10 percent cost when they were cash strapped. And many 
communities were in that problem.
    What I would suggest that if that is in fact the policy 
that those local governments that did go on their own at a 
lower cost to the government have that 10 percent fee waived 
because many are still being told that they have to make that 
10 percent payment and so hopefully we can get some of these 
improvements in place. I think your Subcommittee has started to 
point out and see some of the problems that we've been dealing 
with on the ground. I think there is a better way to do it. So 
I appreciate the opportunity to speak and would be happy to 
take any questions.
    Senator Coburn. I noticed that the Corps is still here. Is 
someone still here from FEMA?
    (No response.)
    Senator Coburn. Nobody's still here from FEMA to listen? 
No, General, you're not from FEMA, you're from the Corps.
    That's the problem. That is a big problem.
    Mr. Woods, you may proceed.

    TESTIMONY OF BILL WOODS,\1\ DIRECTOR OF ACQUISITION AND 
SOURCING MANAGEMENT TEAM, U.S. GOVERNMENT ACCOUNTABILITY OFFICE

    Mr. Woods. Good afternoon, Mr. Chairman, Members of the 
Subcommittee. Thank you for inviting me here this afternoon to 
represent the Government Accountability Office and its work in 
this area. Before I get to my specific findings I would like to 
just touch on three overall points. First, to describe the 
breath of the work that the Government Accountability Office 
has underway. Some of it completed, most still to be completed. 
A number of reports to be issued this year across a number of 
areas involving, for example flood insurance, the voucher 
program, we worked on the levees, healthcare, many issues that 
we've been involved in. General Walker recently testified 
before the full Committee of Homeland Security and Governmental 
Affairs and outlined some of our preliminary observations in 
that area.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Woods appears in the Appendix on 
page 103.
---------------------------------------------------------------------------
    The second general point is the extent of coordination that 
the Government Accountability Office has done with the rest of 
the oversight community. You heard reference to that in the 
first panel but particularly in the area of contracting we made 
an early and earnest effort to touch base with our colleagues 
in the oversight community to make sure that there was no 
duplication. To make sure we were doing the right work and that 
all of the work was being covered.
    In the area of contracting the division of labor, if you 
will, that we decided on early on was that the other components 
of the oversight community would be looking at in the area of 
contracting at the award process and at the pricing of 
government contracts. We on the other hand, would be looking at 
contract execution. Sort of the back end of Federal contracting 
and asking ourselves the question, is the government, are the 
taxpayers getting a good value for the money saved? We are 
looking at contract monitoring, contract oversight, those sort 
of issues and those are the issues that I'd like to discuss 
with you today.
    And the third sort of overall comment that I wanted to make 
is to recognize the extraordinary hard work and dedication of 
the responders at all levels. We sent several teams down to 
this area. This is my second trip and I've been impressed with 
the enormous dedication of responders at all levels, the local, 
the State and the Federal and that's by Federal employees as 
well as by Federal contractors. There were heroic efforts and I 
think we all need to recognize that. We certainly do.
    In terms of our specific findings, they fall into three 
categories. No. 1 is planning and preparation. That can't be 
understated. It is enormously important. The Corps of Engineers 
has a program that you heard about earlier called ``Their 
Advanced Contracting Initiative.'' That enabled them to get, 
they were up and running and off the ground very quickly and 
they had contracts in place. The Federal Emergency Management 
Agency has some contracts in place, but not nearly enough and 
that's an area where they need to improve. Let me give you just 
a concrete example of where the advance contracting lead or the 
lack of advanced contracting lead to some unfortunate results. 
As you know, the Federal Emergency Management Agency task other 
agencies with contracting on their behalf. One particular case 
that we looked at, FEMA turned to the Corps of Engineers and 
asked them to contract for portable classrooms in Mississippi. 
They did that, but unfortunately that was a tasking that 
occurred after the event and the Corps did not have the 
opportunity to call on their advanced contract initiative to 
call on contracts already in place. They had to enter a market 
where it had very little experience, was facing a very tight 
time frame and as a result paid more than it probably should 
have and could have under normal circumstances. So that's a 
case where advanced planning could have helped save the 
taxpayer money.
    Another area where advanced planning can be helpful--we've 
heard reference to the Stafford Act and the preference for 
local contractors. When we did our work and asked agencies how 
they were implementing that, all of the agencies that we talked 
to were aware of that requirement. Very few knew how to 
operationalize that. There's very little guidance in the 
Federal acquisition regulation about how to make that happen. 
We recently issued a protest decision where we had the State of 
Mississippi issuing a set aside under the Stafford Act. 
Contractors came in and said that's not permitted, we protest. 
Well, GAO took a look at that and decided yes, that's within 
the discretion of the Corps of Engineers in this case to have a 
set aside and to reserve contracts or just for firms that are 
either located or does their principle amount of business in 
Mississippi. That's the kind of guidance that was not in the 
Federal acquisition regulations. It took a protest and actually 
delayed proceedings.
    Senator Coburn. Mr. Woods, can you summarize?
    Mr. Woods. The third area that we found could be improved 
is in the number of oversight personnel. We found in a number 
of incidents looking at blue roofs for example where they 
didn't have all of the monitors that they needed. In looking at 
the travel trailers, another example where agencies, FEMA in 
this case did not have all of the contract monitors that they 
needed to have in place. So in summary, it's planning, it's 
communications and it's having an adequate work force. Those 
are the three key ingredients to successful contracting.
    Senator Coburn. Mr. Cohoon.

   TESTIMONY OF DERRELL COHOON,\1\ CHIEF EXECUTIVE OFFICER, 
            LOUISIANA ASSOCIATED GENERAL CONTRACTORS

    Mr. Cohoon. Thank you very much, Mr. Chairman, for the 
opportunity to come and address you. Thank you Senator Carper, 
and certainly Senators Landrieu, Vitter, and Congressman 
Jindal, for your continued help with this, if you will. For the 
record, I'm Derrell Cohoon. I'm CEO of Louisiana Association of 
General Contractors. We appreciate you doing a look back with 
respect to this issue, too, because we see a lot of things that 
we think need to be changed. In fact, we feel like we've been 
living the writing of the textbook for the last 7 months. We 
call it the new normal. For your information, the Louisiana 
Association of General Contractors represents 700 firms in the 
State of Louisiana. We've been in operation here since 1949. We 
represent contractors in the commercial, heavy, highway, and 
municipal utility areas as well as subcontractors and material 
suppliers.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Cohoon appears in the Appendix on 
page 113.
---------------------------------------------------------------------------
    Needless to say, the devastation that has been brought is 
large and obviously we need help within the construction 
industry from outside. We admit to that. However, when there 
are opportunities for some Louisiana firms to participate as 
subcontractors other firms have not had that opportunity or 
they've been offered prices so low that they can't afford to 
take that kind of work, something's wrong with the system. I 
think a lot of it relates to the nature, these very large 
primary contracts. We're relegated as Louisiana contractors to 
participate in these subcontracts through the websites of these 
primary contractors. It's very disheartening to go onto that 
website and find out we're number 3,422 of 9,722 and we never 
hear a response either. It's very disheartening. The appearance 
to us has to be that the storm chasers, those who follow these 
primary contractors, have an in. Obviously, they ended up as 
the first tier, second tier, third tier, and then on, and the 
Louisiana experience has been from the sixth tier on down. 
That's unfortunate. Obviously the difference between a hauling 
contract at $27 a yard and the $6 a yard we experience as a 
sixth-tier subcontractor is great, is very large. We saw other 
instances where subcontractors really only acted as brokers 
under this system with this multitude of vertical tiers for 
subcontracts. The press has collectively termed this vertical 
nature of these subcontracts the fifth-tier subcontractors and 
that's us. That's essentially what we are. The process allows 
the cost to be driven up. Ineffective management by the prime, 
decreased productivity, possibility of some subs only acting as 
brokers for other subs and the slow payment of bills as they 
pass down through subcontractors.
    Compounding the problem is our perception of the Federal 
Miller Act. As you go down the tiers of subcontractors if 
you're not being paid by the prime in a timely manner. The 
Miller Act doesn't allow us to collect on a performance bond, 
which is of much concern to us. There are people who aren't 
being paid. The absolute irony is these very businesses, most 
of which are small businesses that we represent that are 
familiar with the area in the needs of local government and are 
supposed to be assisted through the Stafford Act are, in fact 
placed in areas that are not meaningful and certainly are not 
profitable.
    We have some recommendations for you in an effort to 
resolve some of the issues. First, is that FEMA, the Corps of 
Engineers, the State and local government, whomever, give 
strong consideration to use of the project delivery method, 
construction management at risk, but with variations. Under 
this method, the owner, the Corps, FEMA, or whomever will 
maintain a contract with the CM-at risk primary contractor as a 
professional service. CM-at risk is to provide essential pre-
construction services, over trade contract, take responsibility 
for the work and guarantee the construction cost and schedule. 
At the same time, strong consideration should be given to 
breaking these large contracts into smaller segments to afford 
more competition and they should be publicly bid. The Louisiana 
construction industry is accustomed to open competition and 
publicly bidding public contracts. We're comfortable with it. 
We should also consider requiring CM-at risk to break the 
subcontracts into horizontal tiers rather than vertical tiers. 
Again, vertical tiers make for people not being paid and 
inefficiency.
    Senator Coburn. I'm going to get you to summarize for me.
    Mr. Cohoon. Yes sir. Most importantly, the CM should be 
tasked in subcontracting debris removal, demolition, etc. on a 
horizontal basis rather than current vertical basis. That will 
afford open competition and thereby the use of Louisiana firms 
for disaster clean-up for that matter other firms.
    The system we're recommending certainly can be no worse 
than what we're experiencing today. In fact, we think it will 
assist you in better supporting taxpayers commitment to the 
reconstruction of Louisiana and certainly it would be more fair 
to the people who are trying to survive to participate in the 
rebuilding of the Louisiana that they built in the first place. 
I will be most pleased to answer any questions.
    Senator Coburn. Thank you, Mr. Davis.

    TESTIMONY OF KEVIN DAVIS, PRESIDENT, ST. TAMMANY PARISH

    Mr. Davis. Good afternoon. Thank you, Mr. Chairman and 
Members of the Subcommittee, I appreciate the opportunity to be 
here this afternoon.
    I want to just kind of go through a little bit of my 
statement for you so we can get to the questions and answers. 
Certainly I have to continue my dealings with the Corps and 
FEMA so they are going to be somewhat short in my discussion. 
But let me say from the outset that there are many fine people 
working for FEMA and I have had the opportunity to work with 
the JFO and others who I think are sincere and are really 
competent in trying to deal with the issues that we're dealing 
with. But there seems to be what I would call a great pillow in 
the middle from the top to those on the ground here with us.
    The FEMA employees and the FEMA contractors contract and in 
general they make our lives miserable, disrupt our attempts at 
recovery and ultimately require us to go to the FEMA managers 
that I just mentioned to get us moving again. Creativity and 
flexibility certainly are discouraged. And let me give you an 
example from the beginning. They commandeered fuel supplies 
that I had ordered from out-of-state; they commandeered 
generators donated by churches and faith-based organizations 
that I was able to get into my parish. Naturally FEMA was 
already frustrated in our efforts and our emotions before 
anyone from FEMA actually appeared on the scene to work with 
us.
    Debris: St. Tammany Parish is a large parish. It's 900 
square miles; 216,000 pre-storm population; 300,000 
approximately now. As of today we picked up over 6 million 
cubic yards of debris from roadways in the parish at a cost of 
$148 million. Our draining debris clean-up will be another $60 
million. Draining debris pick up is a major problem. First FEMA 
said we don't want to pick it up; then it was multi-agency 
jurisdiction on the same natural drainage ways.
    Marsh grass issues: Marsh grass for those who aren't 
familiar it's out in our marshes. It actually was brought in 
about four miles inland and now because 7 months later it 
somehow attached itself to the ground it's not qualifying as 
debris pick up. So how do I help those citizens get that picked 
up.
    Now we'll go past the June 100 percent funding deadline if 
I continue on this course. My probably only saving grace at 
this time with the debris and drainage ways is our drought 
because I'd probably have a larger population of flooding than 
Hurricanes Katrina or Rita.
    Roadway debris already contracted prior to the storm, I 
heard the gentleman earlier. We do that every year. We're very 
accustomed to it in St. Tammany Parish. I give out a contract 
on a public bid process. We do it every February on our clean 
up. We had to do some minor amendments and at first FEMA was 
fine so we moved forward. But then they questioned the 
contractor while at the same time bring in the Corps of 
Engineers into my office and suggesting that I cancel that 
contract and use the Corps. Well, I believe that I made the 
right decision and I kept those contractors busy and I also 
believe that we saved the Federal Government close to about $42 
million by using that contractor. Because our contractor's 
rates were $7 at the low end for C&D and $14 a yard on the high 
end for other debris. That's including hazardous materials. So 
it's $7 and $14.
    Finally let me say one of the most frustrating thing about 
dealing with FEMA is the constantly changing personnel. We all 
deal with that every day. They make a decision and then they 
change their mind. And I don't know whoever thought up the idea 
of requiring exact latitude and longitude of every tree stump 
in my parish and every leaner and hanger. While we went through 
that process I had five of my citizens die in St. Tammany from 
trees falling on them. This is 4 months after the storm. While 
we're going through this process of longitude and latitude on 
every leaner and hanger and every stump in my parish. I want to 
read to you today, I got a memo from one of my engineers, 
``Stumps should remain in the ground. If they are removed then 
they are considered ineligible, detached stumps.'' That's what 
FEMA tells us now. So now I can't pick them up if they got 
moved.
    Travel trailers: We've had over 70 percent of the housing 
stock damaged by Katrina and over 20,000 houses had enough 
damage to require residents to ask for housing assistance. I 
have about 8,000 trailers on the ground right now. The same can 
be said about debris for travel trailers.
    We actually tried some pilot program and maybe you'll ask 
me that question when we get to that point, but we believe, 
again, that the local national contractors the way it was done. 
And then also if you asked me the questions about changing 
rules for locals versus national firms, I'd be happy to answer 
those because I have specific details that I can express to 
you.
    It has been a pleasure to be here with you this afternoon. 
Thank you.
    Senator Coburn. Thank you, Mr. Davis. I wanted to do a 
little housekeeping just because I failed to mention earlier. I 
want to thank the Louisiana Supreme Court for all of their 
assistance and their staff today and also Senators Landrieu and 
Vitter for their aides and their help force. They've been very 
gracious and we're very appreciative.
    Representative Scalise, I've heard all the testimony of 
everybody that's come to the table for this hearing and I'm 
certain when everything's said and done and has been looked at 
by all the inspectors general and the Government Accountability 
Office. The Government Accountability Office said there was 
terrible pre-planning. There are no lines of responsibility and 
accountability and transparency. There's a lack of clearly 
communicated responsibility and insufficient people put on the 
ground to provide for effective contractor oversight.
    I'm certain that we paid too much for debris removal; we 
used some of the wrong people. I'm certain that we paid way too 
much for the blue roofing and I'm certain that the travel 
trailers cost us about twice as what they should have. When you 
talk to people here and mention the number that you did a 
minute ago, I can't remember what it was, but the average is 
somewhere between $60,000 and $70,000. The average true cost 
for the same on average home, travel home is less than $20,000. 
So we're spending anywhere from $40,000 to $50,000 contracting 
to get something set up and I know part of that is bringing 
power and sewer and everything else, to it. In Oklahoma we can 
build a nice, little home for $70,000 that's permanent and 
hurricane or tornado proof is what we call it. We don't have 
much trouble with hurricanes. Give me a summary of those three 
areas of what you're hearing again and what you would think we 
should do with them.
    Mr. Scalise. And unfortunately to many people in this 
region FEMA is viewed more as the problem than a solution and 
when you look at the amount of money that's been appropriated, 
$100 billion. To a lot of people in the country they think that 
the Federal Government, the taxpayers, have sent $100 billion 
down here to help us. When in fact, the vast majority of that 
money has not made its way to the ground to actually help the 
people that are most in need. So the frustration with people is 
they're seeing all this money being spent. They're also seeing 
the results of it to them and their neighborhoods and their 
communities where they need relief and they're not getting that 
relief.
    So it ends up creating more problems than it solves because 
to a lot of people the transparency is a big issue. We cannot 
get numbers. Our State Legislative auditor has tried to get 
numbers. We got a $156 million bill from FEMA. It was the size 
of a water bill. And it says you owe this money as your 
percentage match for the amount of relief that's been sent 
already. We asked for a break down of that and when I get a 
credit card bill they list everything that's on that item 
before I submit my check. We cannot get that detail breakdown 
and so the transparency, and you talked about the sunshine, 
it's been a big problem because we really can't get a grasp of 
what we're being asked to pay or what the taxpayers have paid 
for because much of that information is being disclosed.
    Senator Coburn. Mr. Davis, I'd like for you to spend just a 
minute and talk to us about if you have been able to do what 
you would want to do outside of the bound of restrictions that 
have been placed on you. I'm looking at your numbers versus $27 
to $32, which I can't find out for sure. As head of this 
Subcommittee, I can't find out what we contracted debris 
removal for, but I promise you I will find out. It sounds to me 
like you saved us about $10 a cubic yard, and if you can do 
it--and that goes back to Senator Vitter's point. We're not 
getting the value. We're getting charged for it but we're not 
getting the benefit of the dollars that are spent. What would 
you have us do?
    Mr. Davis. I think that's a great question. Your aides and 
I were discussing some of those issues about the brainstorming 
of storm and just FEMA and all these agencies. I know what we 
do. It's just like now what am I going to do with 10,000 
trailers in a flood plane. I've asked FEMA that question and I 
also asked if I would help you find a solution and we don't 
seem to get an answer. So we're going to have to deal with it 
on the local level and we do that through our brainstorming 
sessions and then find all the negatives and how we're going to 
fix them.
    All I can do is submit to you that we publicly bid it. We 
had numerous bidders from around the country and also local 
contractors. It happened to be a local contractor who was the 
low bidder, and it's $7 to $14 depending on the type of debris. 
And I'll have it all picked up because it's my goal--I think a 
senator or congressman stated we--I want to get done by June 
because I've got hurricane season. I don't want this to drag 
on. I don't want any more Federal funds or the Nation to have 
to send us more. I want to get it over with. There just seems 
to be a lot of lack of brainstorming on finding solutions to 
all these answers. As I was hearing this morning from your 
earlier panelists not being able to even answer some of your 
direct questions. Maybe I didn't answer your question, sir, I'm 
sorry.
    Senator Coburn. Senator Carper.
    Senator Carper. To each of you thank you. Thanks for 
joining us today and for your testimony. A question if I could 
for you Mr. Woods. And I might ask some of the other witnesses 
to comment too, but let me just direct these to you first. In 
your review were there any contracting practices that you or 
your folks might have observed at other agencies that could be 
used to improve contracting operations during disasters like 
Hurricane Katrina?
    Mr. Woods. We've done a little bit of work looking at that, 
Senator Carper, and what comes to mind first is the forest 
service. They deal with similar situations in that we know 
every year there's going to be forest fires. We don't know 
exactly where or what intensity, but we know that they're going 
to occur and in roughly what geographic area. They do a much 
better job it seems to me in preparing for those and having 
advanced contracts in place and in getting base camps up and 
running in a very short period of time.
    Senator Carper. Why do you suppose they do a better job?
    Mr. Woods. I think it's the advanced planning aspect. They 
do advanced contracting and they have capabilities. Usually in 
the western part of the country most predominately but they 
know that they're going to need certain capabilities and they 
plan for that?
    Senator Carper. Why would they do the advanced planning and 
contracting in those areas but we wouldn't do it in areas that 
we know we're going to have hurricanes?
    Mr. Woods. Some agencies do a better job of that than 
others. For example, when we look at the Corps of Engineers 
they seem to do a better job of advanced planning and advanced 
contracting than some of the other agencies that we've looked 
at.
    Senator Carper. What advice would you have for us as 
legislators to urge more of the kind of approach they're using 
in the forest area?
    Mr. Woods. To be honest, I'm not sure that it's a 
legislative issue quite frankly. Most of the issues that we 
identified come down to fundamental management issues and as 
you eluded to earlier you can't legislate common sense. But the 
deficiencies and weaknesses that we identified in the areas of 
advanced planning and better communication and a more capable 
and larger work force to monitor contracts. Those are not 
issues, in my judgment that are capable of being addressed 
legislatively, but are issues for the agencies to address 
greater management attention.
    Senator Carper. OK. I want to stick with you, if I could, 
Mr. Woods. Are there any contracting examples from other 
disasters where there were not as many levels of contractors, 
we've been talking about the nesting and the tiering. But, do 
you know of any other examples where there were not as many 
levels of contractors and subcontractors? They appear to have 
been with the Army Corps contracts I guess for the tarps and 
the debris removal and, if so, any idea if the work was done at 
a better price as a result?
    Mr. Woods. Well, just sticking with the area of Hurricane 
Katrina, the one contract that we looked at in some depth where 
we looked at the layering issue was the contract for the 
portable classrooms in Mississippi that I referenced earlier. 
And there too, we found the same sort of layering. Let me just 
give you a sketch of that. There was a prime contractor who was 
an Alaska native firm. That prime contractor had two 
subcontracts and just working down the tier of one of those 
subcontracts that was a Maryland based firm. That Maryland 
based firm subcontracted yet again with a Georgia firm for the 
classrooms and that Georgia firm then went to a Georgia 
manufacturer before actually getting the classrooms. So there's 
an example in Katrina where we have four layers. Now if you're 
looking at other disaster or contingency contracting 
situations, it struck us in doing our work that there were a 
lot of similarities to what happened with our contracting 
situation in Iraq where again there was a need for acting 
quickly and there we found that in a number of instances they 
did go to the larger contractors in order to get the work done.
    Senator Carper. I understand that GAO during the response 
to Hurricane Katrina that there was not always a clear 
understanding amongst the different agencies involved who is 
actually responsible for what. What kinds of problems did this 
lead to on the ground and I assume there is at least some 
discussion of agency responsibilities during a disaster and a 
National Response Plan. Does that document need to be changed 
in your view in some way so we have more clarity in this area?
    Mr. Woods. Well, I think across a broad range of issues 
we're going to have to look at the national response plan and 
to see whether it's adequate to address the many issues that 
we've identified. But if you're asking me for a specific 
instance and I would elude to one of the examples highlighted 
in my written statement that I haven't touched on yet and that 
is, the renovation of the barracks in Alabama where there was a 
total lack of communication between the FEMA officials in 
Washington who said let's renovate those barracks and the local 
FEMA officials who said, ``Hold off, we don't need it. That's 
going to be a waste of money.'' And it ended up that there were 
very few people who agreed to live in those renovated barracks 
and at the time they made the decision to close them there were 
only six people there.
    Senator Carper. Alright, thank you.
    Senator Coburn. Senator Vitter.
    Senator Vitter. Thank you, Mr. Chairman. Thank all of you 
for being here. Representative Scalise, thanks very much for 
your presentation. Just caught by one specific thing in your 
presentation I would like for you to quickly expound upon and 
that is the fact that in the present debris removal situation 
there really is no incentive to recycle recyclable material and 
actually save money in the process. Why don't you hit on that 
for a second.
    Mr. Scalise. Thank you. It's a good point because right now 
we're dealing with of course, we've had tons and tons, millions 
of tons of debris that have been deposited into local 
landfills. Because of Hurricane Katrina they've reopened some 
and it's a big NIVE issue. We have a limited space to place the 
debris and yet a lot of the recyclers, a lot of the debris 
haulers are carrying recyclable materials, steel, metal, even 
wood. I heard a story of a contractor that had a cypress stump 
that could have gotten a few thousand dollars on the market yet 
the way the policy works if they don't just go and haul it to 
the main site and they actually take the time and separate that 
material and take a separate trip to go somewhere where it's 
recyclable material, they have to turn over 100 percent of that 
money back over to FEMA.
    So it cost them money to separate the materials. It would 
reduce the load that they're actually dumping in the landfills 
so it would reduce the cost that you are paying as the Federal 
Government and yet because of the structure there is not only a 
disincentive for them to do it, but it would save money because 
if this was competitively bid they could factor that in, the 
fact that they could recycle. If that would not be remitted 
back to FEMA, they could build that savings into their price, 
charge a lower costs, they'll be putting less amount of debris 
in the landfills and then you get to recycle a lot of this 
material that's right now sitting in landfills being dumped. So 
it's a big issue and a big problem and as we run out of 
landfill space it only adds to that problem.
    Senator Vitter. Thank you. Mr. Cohoon, I wonder if you 
could outline a little bit more of your alternative model for 
the way we approach this work in general in terms of the 
structure of the contracting method?
    Mr. Cohoon. Certainly, I'd love to. Basically it's the same 
thing the Subcommittee has been talking about earlier today, a 
program manager. I don't care if it's the Corps of Engineers or 
one of these multi-national companies that are in here doing 
this stuff right now. The way it's working right now is an 
absolute travesty. When you have $500 million ceiling and 
they're trying to bump against it and folks down below are 
being driven down. What we would recommend is that this guy be 
a CM, a manager if you will, to oversee subcontracts but rather 
than a vertical structured subcontract method which ends up 
hurting the very people we're trying to help make all of them 
horizontal, publicly bid them which has the affect of driving 
down the costs to the taxpayers but also opening up competition 
for Louisiana companies and for that matter others. We can 
compete.
    Senator Vitter. Thank you. And President Davis, I really 
think the case of your parish with regard to debris removal 
gets to the core of this issue. Did you all take care of all of 
your needs within the parish with your pre-existing local 
contract?
    Mr. Davis. No, the problem was the debris in canals and 
drainage ways was not in the original bid package so then we 
had to go back to FEMA and we're in that process now of bidding 
those.
    Senator Vitter. Apart from canals and drainage ways was the 
capacity that your pre-existing local contract offered enough 
to get the job done in the parish?
    Mr. Davis. Yes sir. And we didn't pay every year.
    Senator Vitter. Right. And so in the case of your parish, 
and there was huge amounts of debris in your parish, you met 
your capacity need basically locally?
    Mr. Davis. Yes, sir. I didn't understand that when they 
were making recommendations I guess--I don't know why FEMA and 
others don't deal directly with parishes or counties chief 
executive officers. As you had stated elegantly earlier, we 
know the lay of the land, we publicly bid everything and I told 
that to the President of the United States in private meetings. 
I'll personally be responsible, send your auditing team with 
us, don't send all the other stuff that we have to deal with. 
I've requested $1 billion for my parish and I thought I could 
get everything done.
    Senator Vitter. In the case of your debris removal are you 
going to be stuck with the 10 percent bill for that period of 
time before they changed the policy?
    Mr. Davis. If I don't get it done by June. Again, the local 
guy, the pressure is on him to complete the project.
    Senator Vitter. But what about on the front end? In other 
words, they took a while until they changed that 10 percent 
match policy. Are you being forgiven that initial 10 percent?
    Mr. Davis. Yes, because I personally--And parish government 
didn't use the Corps of Engineers. So I didn't have that 
requirement. But I have about seven municipalities and five or 
six of them came to me and wanted me to help them get out of 
that contract.
    Senator Vitter. And the final question real quickly, am I 
to understand that there was a meeting at some point where the 
Federal agencies really pushed hard for you to abandon your 
pre-existing contract which ended up saving a lot of money and 
go with the Federal Government capability which by the way 
makes the Corps of Engineers money?
    Mr. Davis. Yes sir. And that was a very uncomfortable 
situation. I almost think that if that was to happen to any 
elected official you would want your legal department with you. 
I put them in two different rooms. We had publicly bid our 
contract. That's the numbers I have given you which I will 
submit as back up documents. Then FEMA came in with the Corps 
and they said we're not supposed to do this, but the Corps' 
with us and we'll let the Corps explain to you the process and 
they happened to have, if I may, the name was Cirus I believe, 
was the national contractor. They were in the other room and I 
said we already have our contract. And they said, ``Yes, but we 
can hire your local guys if you'll just give the contract to 
the Corps and I said I think we're getting into an area that's 
very gray and I don't want to be there.''
    Senator Vitter. Thank you very much.
    Senator Coburn. Senator Landrieu.
    Senator Landrieu. Thank you. President Davis, I just want 
to thank you for your steady leadership and your responsible 
management from the earliest days. We worked very closely with 
you as you have worked with all of our delegation and you've 
been admirably with your dealings with your parish and I think 
you've set a fine example.
    I want to pursue a bit about this canal debris and waterway 
clean up because you have obviously done a good job getting the 
debris off your roads and your land. So for the record speak 
again about what some of these complications are and for the 
senators not from our area and I think both of you, not maybe 
so much from Oklahoma, Senator Coburn, but surely the Senator 
from Delaware understands waterways, water management, canals--
--
    Senator Coburn. Hey, we have waterways, come on now.
    Senator Landrieu. You have some in Oklahoma, you got a few 
but maybe not as many as we have on the coast. But managing to 
keep those waterways open and clear of debris is absolutely 
critical for safety of the residents but also, Mr. Chairman, 
for the businesses. Our shrimpers need to get back into that 
water. Their nets. I mean, I don't have to explain all of this, 
but tell us for the record, Mr. Davis, just a minute more about 
how the overlapping of Federal agencies are hindering your 
ability to get those waterways cleared and we don't even know 
how much debris is there but we're estimating quite a bit.
    Mr. Davis. We're estimating about $60 million worth. At 
this point. I think--I get confused sometimes, we've been 
through 7 months of this, but I think it all goes back to the 
Stafford Act that creates a problem because that's where we get 
into this different agency and my understanding is, and I'm no 
expert, I'm just going by all these months of working with it, 
we have the NRCS who I want to tell you, and the Department of 
Agriculture, let them run this. Those folks have been super; 
NRCS, great; EPA, great; National Guard. Where we get into this 
conflict of these bayous and canals is, is it commercial, 
navigatable waterways because then FEMA says because of the 
Stafford Act another agency is tasked to do that. That would be 
the Coast Guard. But then you also have the Corps of Engineers; 
then we have NRCS who whenever I go to them they say, yes sir, 
we're going to take care of that. They have been great work. 
All of the other agencies can't figure out if it really is 
their responsibility.
    Senator Landrieu. So what your testimony is today for our 
panel, there seems to be some confusion about the jurisdiction 
of these canals based on the nature of what they are and if we 
can help you get this cleared up because your parish is very 
typical of many parishes in Louisiana that lie low have a lot 
of waterways in and around and surrounding them.
    One final question, Mr. Woods. You testified that you 
thought it wasn't necessarily the failing of the act or the law 
itself, but the management or lack of management therein that 
you have been finding as you investigate or look into. Would 
you elaborate on that? Did I misunderstand what you said 
because that's an issue I think this Subcommittee needs to look 
at. Being one thing, the law being insufficient or inadequate 
and the other is the law is fine, but the management is really 
short.
    Mr. Woods. I'm glad you gave me the opportunity to clarify. 
When I said that perhaps the law was sufficient in this area 
I'm referring to just in Federal contracting law and there we 
found that both the laws and the regulations provided 
sufficient flexibility for agencies to do the right thing.
    Senator Landrieu. But it's not being used?
    Mr. Woods. It was not being used appropriately. The 
existing law and existing regulations were not being used 
appropriately in many cases. But there's no question that the 
Stafford Act, the law generally that governs the Federal 
response in these areas is going to have to be looked at across 
a broad range of activities. My comment just referred to the 
contracting area that the Stafford Act really does not deal 
with. That's not a primary piece of legislation in the 
contracting area.
    Senator Landrieu. Thank you.
    Senator Coburn. Representative Jindal.
    Mr. Jindal. I promised the Chairman I'll be quick so I'll 
make two quick statements and ask to very targeted questions. 
Mr. Scalise, I want to thank you for your testimony and I think 
your suggestion are exactly right. If we went to residents and 
said you have a choice of getting a trailer or you can have 
this much money to spend on your behalf, I imagine they would 
be much more efficient at buying trailers, fixing their homes, 
renting apartments. I thank you for your very specific and 
helpful suggestions.
    Mr. Woods, I also want to thank you for being here. The 
comment that struck me the most out of the many good things you 
said was that you can't legislate common sense. That some of 
these come down to management issues and I know we have many 
bills that we need to vote on and amend the Stafford Act and at 
the end of the day we need better execution and I thank you for 
that perspective.
    Mr. Cohoon,, I've got a very quick question. I know one of 
the perceptions is that the government felt like it had to go 
to these large primary contractors. I believe they did a 
disservice to Louisiana contractors given their experience of 
handling large, industrial and other contracts even pre-
Katrina. You may have heard FEMA talk about instead of doing 
$500 million no bid contracts, doing $150 million contracts. If 
you have the number at this time, in your mind what would be an 
ideal target number for the government to say we're going to 
try to break down the contracts to be no larger than this 
number to allow more competitive bidding. What would that 
number be that would allow local contractors to participate?
    Mr. Cohoon. Congressman Jindal, from my perspective if 
you're utilizing the services of a program manager, whether 
it's $500 million or $150 million or for that matter $20 
million, it's irrelevant to me. What you've got to do is you've 
got to drive it down to the local level. Such as Mr. Davis said 
and you've got to bid it.
    Mr. Jindal. Thank you. And again I want to just reiterate 
we do have local contractors capable of doing very large 
projects. They built multi billion dollar plants. They're 
capable of doing this work.
    Mr. Davis, my last question of the day is for you and I'll 
ask you to be brief for the sake of the time of the panel. 
Thank you for the great work you've done. I know we worked hard 
to make sure you could use local contractors. We've worked hard 
on the waterways issue. My question is for you just to 
quickly--St. Tammany in terms of pre-contracting out some of 
this work versus what the Federal Government does is a great 
example. It's a contrast of black and white about how it should 
have been done and how it could have been done. Could you just 
quickly tell the panel what you all did even before the storms 
to get ready?
    Mr. Davis. From the debris standpoint?
    Mr. Jindal. Yes.
    Mr. Davis. As I heard someone say earlier wherever you live 
you are accustomed to some disasters that are pretty much going 
to happen and we know hurricanes. So when I took my 
administration 5 years ago we pre-bid everything. Publicly bid, 
as the gentleman said earlier. We advertised the bid and then 
the low bidder is awarded that. Then when a storm comes in the 
Gulf we go into emergency operations and at a certain latitude 
we call our contractors and we bring them in prior to the 
storm. So we can look at what their deployment abilities are 
going to be able to function for us and everything else and 
they're on standby. Then the storm comes through, they come 
meet with us within 24 hours because all that's in the bid and 
then we go out and start clearing roadways.
    Mr. Jindal. Thank you, Mr. Chairman.
    Senator Coburn. Let me thank each of you for spending the 
time here before us today. We will be submitting some 
additional questions if you will be so kind to respond to those 
within 2 weeks. The Subcommittee hearing is adjourned.
    [Whereupon, at 1:47 p.m., the Subcommittee was adjourned.]




                            A P P E N D I X

                              ----------                              

[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]




                                 

