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10 firms with government ties won largest Katrina contracts

WASHINGTON -- When Hurricane Katrina struck, Ashbritt Inc. was well positioned to take advantage of the torrent of government dollars that followed.

The Pompano Beach, Fla., firm had spent years cultivating its relationship with the federal government, contributing tens of thousands of dollars to the Republican Party and, more recently, hiring a powerful firm to lobby the Army Corps of Engineers on ''disaster mitigation."

After Katrina hit, Ashbritt was given the largest award to date -- a deal worth as much as $1.1 billion from the Corps for debris removal.

It is a story of government ties that is repeated time and again for the winners of the 10 largest Katrina contracts, according to an Associated Press review.

At least four of those contracts are now being reviewed for possible waste and abuse.

All 10 companies are located outside the affected Gulf Coast region, most are politically active, and most got the work after a limited bidding process.

''How can the government say it is serious about reconstructing the Gulf Coast and edge out small and minority-owned businesses?" said Representative Bennie Thompson of Mississippi, the ranking Democrat on the House Committee on Homeland Security. ''The only way to make sure the relief funds reach hurricane victims and damaged areas is to be aggressive about oversight."

The Federal Emergency Management Agency and the Army Corps, which award the bulk of Katrina contracts, say they are committed to handing out contracts based on merit and open competition.

FEMA also has pledged to rebid four contracts worth $100 million each to politically connected firms -- Shaw Group Inc., Bechtel Corp., CH2M Hill Inc., and Fluor Corp. -- that were awarded with little or no competition.

Priority will be given to small and minority-owned businesses, FEMA says.

But the winners of even larger Katrina deals -- those valued at $170 million or more -- will not have to rebid or renegotiate.

Most of the companies had done previous work for the government, either related to earlier hurricanes or in Iraq, and those existing relationships were key to winning new deals.

''This shows the best government contractors don't always get hired, the most politically influential do," said Keith Ashdown, vice president of the watchdog group Taxpayers for Common Sense. ''We need to strive for more competitive bidding."

The deals include:

A $521.4 million contract to Gulf Stream Coach of Nappanee, Ind., for travel trailers to house evacuees. Since 2000, company founder James F. Shea and his family have contributed more than $20,000 to GOP candidates, including President Bush and Representative Bob Ney, an Ohio Republican who chairs the House Administration Committee.

A no-bid modification to an existing contract with Landstar Express America Inc. for about $300 million worth of trucking services. Company chairman Jeffrey Crowe recently headed the US Chamber of Commerce, whose political action committee regularly contributes to the GOP.

In a preliminary review, government auditors this week found that the Transportation Department approved payments on the Landstar contract without issuing written orders or otherwise recording them in ways to allow adequate oversight.

A $236 million rush order with Carnival Cruise Lines for six months of temporary housing.

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