WSJ: Some Firms Hired in Katrina's Wake Have Checkered Pasts

[question everything]

Some Firms Hired in Katrina's Wake Have Checkered Pasts

By YOCHI J. DREAZEN
Staff Reporter of THE WALL STREET JOURNAL
September 20, 2005; Page B1

GoldStar EMS was on the ropes earlier this year, beset by legal problems. The Texas ambulance provider's offices had been raided by the Federal Bureau of Investigation as part of a widening investigation into alleged Medicaid fraud. It faced a $1.3 million tax lien from the Internal Revenue Service. It had been forced to file for emergency bankruptcy protection to prevent the local tax assessors who had seized its airplane from also taking its helicopters. It had closed many of its offices across the state and fired two-thirds of its work force. Dozens of its ambulances sat idle in a parking lot in preparation for a fire sale.

Then Hurricane Katrina tore through the Gulf Coast, and GoldStar's fortunes began to change. Desperate to get ambulances into flood-ravaged areas of Louisiana, the Federal Emergency Management Agency put out a call for help.

(snip)

The GoldStar contract illustrates one of the unintended consequences of what is shaping up to be the largest government rebuilding effort in U.S. history. As the Bush administration rushes to rebuild Louisiana, it faces the prospect of turning to companies with checkered histories that even include disputes with other arms of the government. It's essentially a no-win situation: If officials don't get quick results, they're likely to be criticized for getting bogged down in bureaucracy. But if they push some of the contracting formalities aside, they may find themselves employing unreliable or unsavory companies.

(snip)

FEMA officials say they do have a procedure to review the background of Katrina contractors. First, they check with the General Services Administration to see if a company has been suspended or barred from government contracts. Then they check FEMA's own database to see if the agency has had problems with the contractor in the past. If problems are found, FEMA won't sign up the company. But such checks aren't likely to disclose much about first-time contractors or about companies that haven't been formally barred from federal work but still face tax liens, criminal investigations or other disputes with other parts of the government. And FEMA doesn't investigate the backgrounds of subcontractors at all, because, as spokesman Michael Widomski says, its work is "specifically through the main contractor."

(snip)

GoldStar isn't the only company hired in the wake of Katrina that has had prior run-ins with government agencies. Last month, Illinois state police terminated a $7 million contract with Bode Technology Group Inc., a subcontractor for the company hired by the U.S. to recover and identify Katrina victims. The Springfield, Va., company, which is a division of ChoicePoint Inc., found "false negatives" on many of the samples it was testing for the state police. Bode, which was reviewing rape kits, said it had found no usable evidence in many of the samples. But the state police, which performed its own quality-control tests, found otherwise.

(snip)


--Deborah Solomon contributed to this article.

Write to Yochi J. Dreazen at [e-mail]

URL for this article:
http://online.wsj.com/article/0,,SB112718090161445765,00.html (subscription)

[acmavm]

1. Crooks do business with crooks. Birds of a feather and all that jazz...

.

[Kahuna]

2. Gasp! You don't say!

:eyes: