Published Online: November 8, 2005
Published in Print: November 9, 2005, as Caveat Emptor

Federal File

Caveat Emptor

The GAO says the U.S. may have overpaid for portable classrooms

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An official of the Government Accountability Office told a congressional panel last week that the federal government may have overpaid a company that contracted to provide portable classrooms for Mississippi schools damaged by Hurricanes Katrina and Rita.

In his Nov. 2 testimony before a House select committee investigating hurricane response, David E. Cooper, the GAO’s director of acquisition and sourcing management, said the watchdog agency of Congress was reviewing the contract and had “concerns that the government may be paying more than necessary.”

Rep. Bennie Thompson, D-Miss., asked for the investigation in September. In a Sept. 29 letter to the Department of Homeland Security’s inspector general, he said the federal government was paying $88,000 per mobile classroom, when the units should have cost $35,000 to $42,000 each. Rep. Thompson added that Akima Site Operations, which was awarded the contract by the U.S. Army Corps of Engineers on behalf of the Federal Emergency Management Agency, does not have any “particular expertise in constructing or installing portable classrooms.”

Under the no-bid contract, Akima is to receive $39.5 million to provide 450 portable classrooms to Mississippi schools heavily damaged in the hurricanes, although another contractor, Kent Adams of the Mississippi-based Adams Home Center, had agreed to deliver and set up the same number of classrooms for around $26 million.

USA Today reported last month that Akima, based in North Carolina, is a subsidiary of a politically linked minority company called Nana Regional, based in Alaska. Federal rules allow Alaskan Native-owned firms to receive no-bid federal contracts worth more than the $3 million to $5 million limit applied to other minority-owned companies. The rules have drawn criticism from other companies and some members of Congress.

Mr. Cooper of the GAO told the House select committee last week that “since being awarded, the order [for portable classrooms] has been amended several times to adjust the type and quantity of classrooms provided and other work required,” and that the GAO questions “whether Corps contracting officials had sufficient knowledge to ensure a good acquisition outcome.”

He added that information in the Corps of Engineers’ contract files and other sources “suggest the negotiated prices were inflated.”

Vol. 25, Issue 11, Page 27

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