STORY
LAUREL, MS (AP) Midway through his first day as a bit player in the Hurricane Katrina cleanup, Tracy House began wondering whether his piece of the pie wasn’t just another guy’s leftovers.
“Are you pulling someone else’s trailer?” jibed a fellow truck owner, eyeing the out-of-state caboose House had towed into the lot of the local Burger King. “Man, you can go down there and get your own contract!”
It hasn’t been nearly that simple. More than seven weeks after Katrina ripped this region apart, there’s plenty of money to be made clearing piles of twisted tree limbs, uprooted trunks and splintered wallboard.
But the ones claiming most of the profit, House and others like him say, aren’t those working as sub-sub-sub-sub-sub-contractors.
The federal government’s spending on recovery efforts has drawn headlines and Congressional inquiries about outsized contracts, including $2 billion to four companies for debris cleanup in Louisiana and Mississippi.
But at the bottom of the contract food chain is an army-for-hire of truckers, backhoe operators and tree-trimmers, most four, five or more tiers removed from the Federal Emergency Management Agency,the Army Corps of Engineers and the agencies’ money.
“The more contractors there are,” said Ben Ives, a truck owner from Gladstone, MI. five links down in the chain formed to clean up New Orleans, “the more hands in the cookie jar.”
The tiering of contracts goes to the heart of questions being raised about how to ensure local businesses, minority-owned businesses and smaller firms get a fair share of recovery spending.
Some tiering is necessary to manage any large government contract, particularly one as complex as recovery from a major disaster, said Steve Kelman, a professor of public management at Harvard University who headed the government’s Office of Federal Procurement Policy during the Clinton administration.
Contractors at each level play a role — securing landfills, and finding and supervising smaller haulers — and peel off a layer of profit.
But how many layers of contractors are too many?
Tiering worries small businesses even when there are no disasters involved, said John Chichester, who heads the Procurement Technical Assistance Center at Detroit’s Wayne State University.
“The subcontractor — they’re generally picking up the scraps,” said Chichester, whose center advises small businesses on how to win government contracts.
Individual haulers say they are being paid $6 to $8 per cubic yard to clear debris from Katrina. Some complain, saying that after last year’s hurricanes in Florida they earned $9 for similar work, when fuel was much cheaper. Midlevel contractors have said they’re being paid around $15 a yard, and the rumor among haulers is that prime contractors are charging considerably more.
The Army Corps of Engineers refused to disclose the unit costs it has negotiated with one of the prime contractors for debris removal, AshBritt Inc. of Pompano Beach, FL. The Corps said the company objected, arguing the information is proprietary and could aid competitors.
The Corps says it is in the process of reviewing a further request for details on unit costs charged by prime contractors for debris removal, a process it said will require review by the firms themselves.
In addition to AshBritt, the other prime contractors are Phillips and Jordan Inc. of Knoxville, TN, Ceres Environmental Services Inc. of Brooklyn Park, MN, and ECC Operating Services Inc. of Burlingame, CA. Each has a contract for up to $500 million, renewable for an additional $500 million.
AshBritt would not answer questions about its Katrina contract, referring inquiries to the Corps. Ceres and Phillips and Jordan did not return calls for comment. A spokesman for ECC also referred questions on unit costs to the Corps. He said the company delegates substantial responsibility to its subcontractors, but its agreement with the government insures fair pay.
“The nature of ECC’s relationship with individual subcontractors is to identify people who can do the work,” said Chad Kolton, the spokesman. “Both close scrutiny of what’s being hauled, as well as insuring the rates that ECC is paying its subcontractors demonstrates they’re doing everything possible to stay well within the law.”
Talk of Katrina money — and how best to climb the contracting ladder — fills the diesel-perfumed air in the dusty trucker’s camp that has commandeered the southwest corner of New Orleans’ City Park, where the pecking order is easy to see.
Supervisors for the prime contractors retire for the night to a cluster of shiny motor homes and trailers inside a guarded chain-link fence.
Laborers, meanwhile, have pitched tents alongside the dump trucks and knuckle-boom loaders crowding the median of Orleans Avenue. Some sleep behind the wheels of their vehicles.
They pay $5 to take a shower in a trailer brought in by the prime contractor. A catering tent, which served free meals in the first weeks of the cleanup, charges $7 for breakfast, $9 for lunch and $12 for dinner.
In the evening hours before most of the city goes black, they gather under the canopies of trailers pulled in by some truck owners, swapping stories and dreaming aloud of the profits to be made, over coolers brimming with beer.
“I’m ready to get to work, ready to throw some trees,” said William Lancto, who arrived from Lutz, FL, figuring to stay 15 months or longer if the money’s good.
“On paper, it all looks perfect,” says Robert Woodall, a trucker from Perry, FL, looking to stake his claim to a piece of the cleanup. “It ain’t going to work like that, trust me.”
With nearly a month’s experience in the cleanup of the area around his southern Mississippi hometown, House, the trucking company owner, is still trying to figure out how to make the process work to his benefit.
House’s mainstay is transporting frozen chicken up the East Coast and carting logs newly harvested from area forests to Laurel’s paper mill. When bigger trucking outfits started pouring in for the cleanup, House, a 33-year-old Laurel native, saw an opportunity for expansion.
In mid-September, he met a truck owner from North Carolina who signed House as his subcontractor — promising $3 a cubic yard.
“I don’t have any experience with debris cleanup,” House said. “I decided to take this contract and maybe on down the road, it’ll open up some doors.”
House upgraded his status after a day, when another trucker pointed out that bigger contractors were looking for locally owned haulers. That won House — operating together with a fellow Laurel truck owner — $6 for each cubic yard of material his crews picked up.
House says he’s just breaking even, particularly with diesel fuel for his trucks at $3.29 a gallon. In addition, the flow of work has been slower than expected.
After a week’s work, his partner passed House an invoice — the use of three trucks, their drivers and a trailer — billed at $10,250.
“Man, we aren’t making this kind of money,” House told him.
Instead, the subcontractor they’re working for paid House $3,300, which the partners split.
Stickers pasted to House’s trucks bear the name of AshBritt, the prime contractor for the cleanup of Mississippi. In reality, the relationship up to now has been at arm’s length.
AshBritt subcontracted some of the work to another disaster recovery firm, Byrd Bros. of Wilson, NC. Byrd has been subcontracting to Natco Inc. of Bristol, TN. Natco paid consultants to recruit and sign contracts with House and other companies, some of which tried to subcontract to still smaller businesses.
House says with the larger contractors tightening requirements that more work go to locals, a Michigan trucker has asked to work for him as a subcontractor.
The Army Corps of Engineers, which is handling the cleanup on FEMA’s behalf, said its master contract only governs its relationship with the prime contractor, not businesses that work underneath it.
“We don’t like to hear that people (subcontractors) are barely making ends meet, but we actually do not have any control over it,” said Shirley Wilson, the Corps’ lead contract officer for the cleanup in Mississippi.
Wilson said AshBritt had recently decided on its own to eliminate some layers of subcontractors because “it was impacting his ability to manage” the effort.
“I’ve been hiring all of our subcontractors to work directly for AshBritt so there is no multiple tiering,” said Rob Ray, a program director for AshBritt in counties including House’s. “Everyone is a prime contractor.”
Ray said the change would boost pay for hauling debris to $9 a cubic yard. House said he is still making $6 a yard and has not been told of any change.
Others truck owners say they’ll know things have improved when they see the money.
“The pay was supposed to be pretty good,” said Ives, the Michigan hauler. “But right now, it’s kind of iffy.”
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