United States Government Accountability Office

GAO Testimony 

Before the Senate Committee on Small 

Business and Entrepreneurship 

HURRICANES KATRINA 

AND RITA 

Preliminary Observations 

on Contracting for 

Response and Recovery 

Efforts 

Statement of David E. Cooper, Director 

Acquisition and Sourcing Management 

For Release on Delivery

Expected at 10:00 a.m. EST 

Tuesday, November 8, 2005 

 

GAO-06-246T 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

November 8, 2005

HURRICANES KATRINA AND RITA

Preliminary Observations on Contracting 

Highlights of GAO-06-246T, a report to the for Response and Recovery Efforts 

Committee on Small Business and 

Entrepreneurship, United States Senate 

The devastation experienced by 

those throughout the Gulf Coast in 

Louisiana, Mississippi, Alabama,

and Texas in the wake of

Hurricanes Katrina and Rita has 

called into question the 

government’s ability to effectively

respond to such disasters. The 

government needs to understand 

what went right and what went

wrong, and to apply these lessons

to strengthen its disaster response 

and recovery operations. 

The federal government relies on 

partnerships across the public and 

private sectors to achieve critical

results in preparing for and 

responding to natural disasters,

with an increasing reliance on 

contractors to carry out specific

aspects of its missions. At the 

same time, the acquisition 

functions at several agencies are on

GAO’s high-risk list, indicating a

vulnerability to fraud, waste, abuse, 

and mismanagement. 

GAO was asked to provide an 

overview of (1) its role in

evaluating the contracting 

community with regard to disaster 

preparedness and response, (2)

GAO’s plans for reviewing the 

performance of the federal 

government and its contractors in

preparing for and responding to the 

hurricanes, and (3) what GAO has 

learned so far about the 

performance of the federal 

government and its contractors in

preparing for and responding to the 

hurricanes. 

The private sector is an important partner with the government in 

responding to and recovering from natural disasters such as Hurricanes 

Katrina and Rita. Such partnerships often include multiple federal agencies; 

for-profit contractors, including small businesses and local firms; not-forprofit organizations; and state and local governments. Importantly, federal 

agencies are relying increasingly on contractors to carry out specific aspects

of their missions. The government’s response to Katrina and Rita, for 

example, depended heavily on contractors to deliver ice, water, and food 

supplies as well as the effort to patch rooftops and supply temporary 

housing to displaced residents and evacuees. GAO can draw on its large 

body of knowledge to evaluate the procurement and contracting 

community’s preparation for and response to Katrina, Rita, and other 

disasters. GAO’s past work has shown that far too often, poorly planned and 

executed acquisitions have resulted in the government’s inability to obtain 

quality goods and services on time and at a fair price—an outcome that is 

unacceptable, particularly in the current fiscal environment. 

GAO’s work on contracting issues related to Hurricanes Katrina and Rita will 

focus on agency planning, contract execution, and monitoring of contractor 

performance. To ensure good contracting outcomes, agencies must have 

sound acquisition plans, sufficient knowledge to make good business 

decisions, and the means to monitor contractor performance and ensure 

accountability. These components are critical to successfully managing 

contracts following any disaster, especially catastrophic disasters such as 

Hurricanes Katrina and Rita. The fact that natural disasters are not precisely

predictable must not be an excuse for careless contracting practices. 

GAO’s preliminary observations about the purchase of classrooms by the 

Army Corps of Engineers (Corps) illustrate what can happen when sound 

contracting practices are not followed. The Corps was faced with a 

significant challenge in this acquisition because the classrooms were 

purchased in a short time frame and negotiations were compressed. GAO 

has concerns that the government may be paying more than necessary and 

questions whether Corps contracting officials had sufficient knowledge to 

ensure a good acquisition outcome. As a part of our ongoing work on 

Katrina and Rita, we will continue to review the facts and circumstances of 

this particular contract and other contracts supporting hurricane recovery 

efforts as we assess the overall contracting environment and practices in 

place. 

www.gao.gov/cgi-bin/getrpt?GAO-06-246T.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact David E. 

Cooper at (202) 512-4841 or 

cooperd@gao.gov. 
Madame Chair and Members of the Committee: 

Thank you for inviting me here today to discuss the nation’s response to 

Hurricanes Katrina and Rita. We have witnessed many heroic efforts by 

dedicated public servants and volunteers working long hours to reduce the 

pain and suffering of those affected and to restore some sense of normalcy 

to the affected regions. Yet as you know, the devastation experienced by

those throughout the Gulf Coast in Louisiana, Mississippi, Alabama, and 

Texas has undermined the nation’s confidence in its government’s ability 

to effectively respond to such disasters. Ultimately, we need to understand 

what went right and what went wrong, and to apply these lessons to 

strengthen the government’s response and recovery operations as we look 

toward our long-range 21st century challenges. 

GAO has already had teams in the hurricane-stricken areas, which have

begun collecting information and gaining the insight that will be necessary 

to identify lessons learned and improvements needed for future 

emergencies. Our work is being coordinated with the rest of the 

accountability community at the federal, state, and local levels to ensure 

that all significant issues associated with relief and recovery are addressed 

while avoiding unnecessary duplication of efforts. The Comptroller 

General is personally involved in GAO’s efforts and is working closely with 

other accountability organizations. While the inspectors general are 

expected to be on the front lines of reviewing agencies’ response and 

recovery efforts, GAO plans to take a more systemic, crosscutting look at a 

broad range of issues, including how agencies provided for the use of 

small businesses and local firms in their acquisition decisions. As 

provided for in our congressional protocols, we are conducting hurricanerelated work under the Comptroller General’s statutory authority since it

is an issue of interest to the entire Congress and numerous committees in 

both houses. We plan to review the use of Katrina- and Rita-related funds 

by various federal agencies. 

My statement today will highlight GAO’s role in evaluating the federal 

contracting community with regard to disaster preparedness, response, 

and recovery; our plans for conducting hurricane-related work in the 

future; and what we have learned so far about the performance of the 

federal government and its contractors in their preparations for and 

response to Hurricanes Katrina and Rita. 

Page 1 GAO-06-246T 
GAO has a broad and deep reservoir of knowledge, which we will draw on

to conduct our work. Much of our response and recovery work was done 

in the aftermath of the terrorist attacks of September 11, 2001, and the 

subsequent creation of the Department of Homeland Security in March 

2003. In all, we have published over 120 reports on disaster preparedness 

and response and other issues raised by the hurricanes.1

Our framework of analysis for this work will be based on the National 

Response Plan.2

 We will draw on our large body of knowledge to address 

several crosscutting issues, one of which is contracting. Our past work on 

preparedness—programs to prevent disasters or prepare in advance to 

respond—has identified needed improvements in a number of areas, 

including balancing efforts to prepare for terrorism with efforts related to 

natural disasters; providing training, exercises, evaluations, and lessons 

learned to first responders; providing flood control and protection; and 

improving public health preparedness. Our prior work on disaster 

response also has identified needed improvements, including coordination

of federal, state, and local responses; the role of the military; and the 

medical and public health response capabilities. Finally, our work on 

recovery—programs to help affected communities get back to normal—

has identified challenges related to federal assistance to recovery areas, 

private nongovernment assistance efforts, and lessons from overseas 

recovery programs. In many of these areas we have made a number of 

recommendations, some of which have yet to be implemented. 

GAO’s Approach to 

Assessing the Impact 

of Hurricanes Katrina 

and Rita 

Contractors Play a Key 

Role in Response and 

Recovery 

The private sector is an important partner with the government in 

responding to and recovering from natural disasters such as Hurricanes 

Katrina and Rita. As we noted early this year, such partnerships 

increasingly underlie more and more government operations and 

 1

GAO has posted on its Web site (www.gao.gov) more than 120 prior reports and 

testimonies related to preparedness, response and recovery from natural disasters and 

terrorist attacks. The list includes, for example, our reports on the federal government’s 

response to Hurricane Andrew in 1992, including the military’s role in South Florida. GAO’s 

past work has noted a host of needed improvements in a variety of government programs

related to Hurricane Katrina and other natural disasters. 

2

The National Response Plan, prepared by the Department of Homeland Security, 

establishes a comprehensive all-hazards, both natural and man-made, approach to enhance 

the ability of the United States to manage domestic incidents.

Page 2 GAO-06-246T 
missions.3

 Networks that are being created often include multiple federal

agencies, for-profit contractors and not-for-profit organizations, and state 

and local governments. Importantly, federal agencies are relying 

increasingly on contractors to carry out specific aspects of their missions. 

The government’s response to Katrina and Rita, for example, depended 

heavily on contractors to deliver ice, water, and food supplies, as well as 

the effort to patch rooftops and supply temporary housing to displaced 

residents and evacuees.

With hundreds of billions of tax dollars spent each year on goods and 

services, it is essential that federal agency acquisitions be handled in an

efficient, effective, and accountable manner. However, as the government 

increases its reliance on contractors, GAO and other accountability 

organizations, inspectors general, and agencies continue to identify 

systemwide weaknesses in key areas of acquisition. The acquisition 

function at several agencies has been on GAO’s high-risk list for over a 

decade,

4

 and in January 2005, we added interagency contracting to this 

list.5

 For Katrina relief alone, Congress has appropriated over $62 billion—

over 95 percent of which is being administered through the Department of 

Homeland Security. In January 2003, we designated DHS’s formation 

through the merger of 22 agencies as high-risk because of the size and 

complexity of the effort and the wide array of existing challenges faced by

the components being merged into the department.

 6

 

Far too often, the result of poorly planned and executed acquisitions has 

been an inability to obtain quality goods and services on time and at a fair 

price. Given the fiscal challenges we currently face and are likely to 

continue to face for decades to come, the federal government must 

improve its ability to acquire goods and services in a cost-effective 

manner. 

Key elements must be in place to manage risks and achieve successful 

contract outcomes. To ensure good contracting outcomes, agencies must 

 3

21st Century Challenges: Reexamining the Base of the Federal Government, 

GAO-05-325SP (Washington, D.C.: February 2005). 4

GAO’s High-Risk Series identifies areas in the federal government with vulnerability to 

fraud, waste, abuse, and mismanagement. 

5

High-Risk Series: An Update, GAO-05-207 (Washington D.C.: January 2005).

6

Major Management Challenges and Program Risks: Department of Homeland Security, 

GAO-03-102 (Washington, D.C.: January 2003).

Page 3 GAO-06-246T 
have sound acquisition plans, sufficient knowledge to make good business 

decisions, and the means to monitor contractor performance and ensure 

accountability. These components are critical to successfully managing 

contracts following any disaster—especially catastrophic disasters, such 

as Hurricanes Katrina and Rita. The fact that these disasters are not 

precisely predictable must not be an excuse for careless contracting 

practices. 

Our preliminary fieldwork indicates that agency contracting practices in 

preparing for and responding to natural disasters are in need of review and 

revision. GAO’s work on contracting issues related to Hurricanes Katrina 

and Rita in both the near and the long term will focus on agency planning, 

execution, and monitoring of contractor performance. 

Among the issues that warrant consideration in assessing agency 

approaches to emergency contract planning are 

Achieving Successful 

Contracting 

Outcomes Will Be the 

Focus of GAO’s Work 

on Katrina and Rita 

Contracting Practices • the strategies and flexibilities agencies used to plan their procurements 

to avoid the risks associated with undefined contracts; 

• the knowledge agencies used to identify, select, and manage 

contractors, including small businesses and local firms, to achieve 

successful outcomes; 

• the foresight to have competitively awarded contracts in place prior to 

the event against which orders can be placed as needed; and 

• agencies’ decisions to use national or local contractors. 

In assessing the execution of these contracts, we will consider such issues 

as how effectively agencies 

• communicated and coordinated among themselves and with 

contractors, 

• provided for the participation of small businesses and local firms in 

response and recovery contracts, 

• defined contract terms and conditions to avoid excessive costs and 

ensure desired performance, and 

• monitored contractors. 

We will consider the possible underlying causes of the problems we 

identify in agency planning and execution, such as 

• the capability of information systems to provide visibility into financial 

and contracting operations; 

Page 4 GAO-06-246T 
• the skills and training of the acquisition workforce; 

• the alignment of responsibilities among the key officials in managing 

the award and oversight of contracts; and 

• the policies, procedures, and guidance for managing contracts.

To illustrate what can happen when sound contracting practices are not 

followed, I would like to discuss some preliminary observations about the 

purchase of portable classrooms for the state of Mississippi. In response to 

a tip received through GAO’s hotline7

 that the government is paying highly 

inflated prices, we are reviewing a contract the Army Corps of Engineers 

(Corps) awarded on behalf of the Federal Emergency Management Agency 

to purchase portable classrooms for Mississippi schools damaged along 

the Gulf Coast. 

Preliminary 

Observations from 

One GAO Review 

The Corps faced a significant challenge in this acquisition. It was faced 

with acquiring the classrooms in a short time frame, and negotiations were 

compressed. To meet the requirement, the Corps placed a non-competitive

order on a preexisting agreement established by the Army Contracting 

Agency in Fort Eustis, Virginia. The agreement was intended to be used to 

acquire and install portable buildings (not specifically classrooms) on 

Army installations. In negotiations, the contractor proposed to provide the 

classrooms for $39 million, and that amount was accepted. Since being 

awarded, the order has been amended several times to adjust the type and 

quantity of classrooms provided and other work required. 

We have concerns that the government may be paying more than 

necessary. We question whether Corps contracting officials had sufficient 

knowledge to ensure a good acquisition outcome. For example, we found 

information in the Corps’ contract files and from other sources that 

suggest the negotiated prices were inflated. Further, we found the Corps 

modified the contract after it was awarded to allow the contractor to 

substitute a different mix of classrooms than required by the contract. 

However, we found little evidence that the Corps conducted a complete 

analysis to determine the impact of the modifications on the contract 

price. 

 7

The purpose of the Government Accountability Office’s FraudNET is to facilitate the 

reporting of allegations of fraud, waste, abuse, or mismanagement of federal funds.

Allegations are received via e-mail at fraudnet@gao.gov. 

Page 5 GAO-06-246T 
In this situation, the Corps was heavily dependent on information provided 

by the vendor and did not have the benefit of competition. These 

circumstances, as we have shown in prior work, increase risk and often 

result in poor outcomes. We will pursue the question of whether the 

contracting staff had sufficient information to make a sound business 

decision. 

As a part of our ongoing work on Katrina and Rita, we will continue to 

review the facts and circumstances of this particular contract and other 

contracts supporting hurricane recovery efforts as we assess the overall

contracting environment and practices in place. 

In closing, as federal agencies prepare for and respond to unforeseen 

devastation that results from hurricanes and other natural disasters and 

terrorist attacks, they must be effective in planning and executing 

contracts with private firms to achieve critical mission outcomes and 

ensure accountability. We will continue to work with the accountability 

community and have already reached out to relevant congressional 

committees, federal inspectors general, and state and local auditors in the 

affected states to coordinate our efforts and most effectively utilize our 

resources. 

Mr. Chairman this concludes my statement. I would be happy to respond

to any questions you or other members of the committee may have at this

time. 

For further information regarding this testimony, please contact David 

Cooper at (202) 512-4841 or cooperd@gao.gov. Individuals making key 

contributions to this testimony included William T. Woods, Penny Berrier, 

John Needham, Ralph Roffo, Karen Sloan, and Katherine Trimble. 

Page 6 GAO-06-246T 

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