Anatomy of a Katrina Cleanup Contract
By Eamon Javers
By any measure, AshBritt is a leader in its niche market of disaster recovery and debris removal. The Pompano Beach (Fla.) company's list of projects tracks every big hurricane to hit the U.S. all the way back to Andrew in 1992. But beyond its extensive field experience, AshBritt has enjoyed another asset to help wrangle billions of dollars in emergency government contracts: its inside-the-Beltway connections.
Indeed, on Sept. 1, just days after Hurricane Katrina unleashed its fury on New Orleans and the Gulf Coast, AshBritt hired former Mississippi lawmaker and ex-Army Corps of Engineers head Mike Parker as a lobbyist. The company listed his duties on federal disclosure forms as "federal affairs for debris removal after Hurricane Katrina."
Parker joined an AshBritt lobbying roster that already included former Louisiana Representative James Hayes (D) and the services of a Washington firm founded by Haley Barbour, former chairman of the Republican National Committee and now governor of Mississippi.
OUT OF LOCKSTEP.
Fourteen days after Parker came on the scene, the Army Corps awarded AshBritt a competitively bid contract worth $500 million to remove Katrina debris in Mississippi, with an option to increase the dollar amount to an even billion dollars. AshBritt had already been activated under a preexisting contingency contract for $56 million, rocketing it to the top of the list of Katrina contractors to date in a cleanup effort expected to total more than $100 billion.
Parker headed the Army Corps of Engineers from 2001 to early 2002, but was asked to resign by the Bush Administration after publicly questioning $2 billion in proposed budget cuts for his agency. Yet he was well-liked inside the Corps, where his stance won plaudits, according to several insiders.
While AshBritt vigorously insists that Parker had no role in securing the Army Corps contract, watchdog groups in Washington are citing his hiring as an example of how revolving-door government can lead to fat contracts for a favored few. With the Katrina cleanup, "we [Americans] may have hired a contractor that has a lot of political influence, but is one of the most expensive contractors in the business," argues Keith Ashdown of Taxpayers for Common Sense, a government waste-fighting group.
"BY THE PLAYBOOK."
Repeated phone calls to Parker for his side of the story weren't returned. But the man in charge of AshBritt, Randal Perkins, makes no apologies for AshBritt using experienced Washington hands to lobby government. "As long as you stay above the law and play by the playbook that's out there, there's nothing wrong with doing that," Perkins says. "Every state in the country has lobbying firms trying to win federal money -- political people and Big Business people understand that."
Perkins told BusinessWeek Online that Parker was hired only for his consulting expertise, not to lobby for more federal contracts. Asked if Parker took any steps to help secure the $500 million contract, Perkins says, "Absolutely not. With all due respect to Mike Parker, he doesn't have that type of influence."
Instead, Perkins says, the former Army Corps head is in touch with AshBritt daily to help on legal issues, answer paperwork questions, and offer local Mississippi contracting advice. Doug Garman, a spokesman for the Army Corps, says "politics or pressure from the outside played no role in the contracting decisions of these contract awards."
One of the things Parker has been doing for AshBritt is smoothing feathers on Capitol Hill. Mississippi Senator Trent Lott (R) has been a vocal critic of the size of Ashbritt's contract, complaining it hasn't hired enough local Magnolia State subcontractors. But Lott says his old colleague Parker put him in touch with CEO Perkins when he had a gripe about subcontractors who did get work not being paid fast enough by AshBritt: "I called and raised Cain about it," Lott says.
The next day, the subcontractors got their money. "Mike knows his way around here, and it's smart to have him working there," says Lott.
But such a blend of politics and business contracts could draw attention from lawmakers and investigators looking into the rush of federal contracting in the aftermath of one of the worst hurricane seasons on record. Already, $100 million in Federal Emergency Management Agency contracts awarded to the Shaw Group (SGR ), Bechtel, CH2M Hill, and Fluor (FLR ) have been rebid, due to concerns over the original no-bid process in the initial federal response to Katrina.
What's more, Homeland Security Inspector General Richard Skinner told a congressional committee on Oct. 6 that he's investigating "all the contracting activities that took place immediately following this disaster from day one." The top of his priority list? Debris-removal contracts.
Perkins defends the crisis-driven process: "No, these contracts weren't advertised for 30 days, because you can't [do that]. It has to be done in an expedited nature. But ultimately, we're the right company to do the job," he told BusinessWeek Online.
The controversy highlights the central tension for the federal government in post-disaster contracting: doing business fast, vs. going through the full vetting process that could delay service but would avoid questions later. Other companies got contracts just as quickly as AshBritt under the competitive-bidding process. Among them: Ceres Environmental Services, Environmental Chemical, and Phillips & Jordan.
But AshBritt has been the focus for the strongest criticism since the storm clouds parted. A recent report in The Washington Post revealed that until October, AshBritt listed itself in government databases as a minority-owned, woman-owned company, even though it's run by a white man. Perkins' Cuban-American wife, Saily, was listed in Florida state records as company president, while Perkins was listed on AshBritt's Web site as managing vice-president.
Perkins affirms that he runs AshBritt, adding that his wife stepped out of the company earlier this year and attributing the failure to update the listing to a clerical error. He says AshBritt didn't benefit from any minority set asides or preferences in winning the Army Corps contracts, and notes that, as a privately held company, AshBritt doesn't report to the Securities & Exchange Commission: "How we want to set up our company is our business," he says.
That's certainly true, but how the Army Corps spends its money is Congress' business. And in the post-hurricane political climate, there may be increasing appetite on Capitol Hill to review the bidding process for companies that have earned the most Katrina cash.
Javers is a correspondent in BusinessWeek's Washington bureau