[StBernard] Contractors Fume Over Slow FEMA Checks

[Westley Annis]

Contractors Fume Over Slow FEMA Checks
By BECKY BOHRER 07.18.07, 2:13 PM ET

NEW ORLEANS - 
Contractors hired to clean up after Hurricane Katrina are fuming over delays
in getting paid by FEMA, and some fear the red tape will discourage
companies from bidding on the big rebuilding projects that lie ahead for New
Orleans.

One company claims it is owed about $150 million, and some contractors have
walked off the job or gone to court to get the money they say they should
have been paid for demolition and debris removal completed as much as a year
and a half ago.

"You better hope another storm doesn't hit you. You guys will be under water
for six months," said Zach Johnson, a Kansas City, Mo.-area contractor who
is suing for about $1.7 million for tree-clearing in 2005. "Everybody got a
bad taste in their mouth from Louisiana."

Johnson called the whole situation "messed-up, frustrating, depressing" and
said he will not pursue any more cleanup and recovery jobs in Louisiana.

"Oh, hell no. Nooo," he said. "I won't be back."

In some cases, cleanup contractors were hired by New Orleans-area parishes
on the understanding the Federal Emergency Emergency Management Agency would
cover most, if not all, the costs.

FEMA said slow payments often stem from incomplete paperwork submitted by
the contractors and parishes. The agency said it is trying to protect the
taxpayer by making sure that the government is not overpaying and that the
work was performed as promised.

"We've done our part," spokesman Andrew Thomas said.

The agency said it could not immediately put a total value on delayed
payments in the New Orleans region.

In hard-hit St. Bernard Parish, local officials fear the slow-pay reputation
will discourage contractors from bidding on the next major phase - the major
reconstruction projects involving roads, sewers, schools, and police and
fire stations.

The situation is so bad, officials said, that bidders are tough to find for
demolition and debris-removal work that remains nearly two years after the
storm.

"It's slowing us down, limiting the amount of contractors that will bid and
costing us more," said St. Bernard Parish Councilman Joey DiFatta. "This is
effectively stopping the recovery."

Local officials said one big reason for the delays is that FEMA
underestimated cleanup costs. St. Bernard, for example, is appealing four
projects the FEMA valued at nearly $9.3 million but the parish says are
worth $16.5 million.

It's been a nightmare," said Amy Blanchard, finance director for St. Bernard
Parish.

The city of New Orleans let the Army Corps of Engineers handle contracts for
storm cleanup and deal with FEMA, and the Corps said it has seen few
disputes with contractors. But St. Bernard, Washington and St. Tammany
parishes handled contracting themselves, and are now caught up in red tape.

It is not unusual for federal contractors to have to wait a few months for
initial payments. But the delays here have been "very excessive, with no
answer in sight for when they're going to get paid," said Ken Naquin, chief
executive of the Louisiana Associated General Contractors.

Contractor Lawrence Green said he is owed about $150 million for demolition
and debris and sewage hauling in St. Bernard Parish. At one time, he said,
his crews stopped picking up debris. They later resumed work.

"Our profits look great on paper, but you have to collect the money," he
said.

Cash-strapped St. Bernard and other parishes fear they could be saddled with
millions of dollars in costs if FEMA does not pay.

St. Bernard remains largely in ruins and has only about half the annual $50
million budget it had before Katrina. Warped streets wind through
neighborhoods, and slabs sit where houses once stood. Waste must be hauled
out because the sewers have not been fixed.

FEMA has estimated it will cost $891 million to repair Katrina's damage in
St. Bernard.

Omni Pinnacle LLC, a contractor for debris clearing in St. Tammany Parish,
is suing for more than $16 million it claims it is owed. St. Tammany also
has been sued for more than $9 million by Shaw Environmental &
Infrastructure Inc., which was hired to monitor work done by contractors.

The parish itself is suing, too, claiming FEMA has not approved about $3
million to clear clogged canals.