Monday, September 12, 2005

Lord Fartquad manages his crisis

From today's Wall Street Journal:
FEMA, meanwhile, has announced four major contracts with firms charged with providing emergency housing relief in storm-battered areas of Louisiana, Alabama and Mississippi. The $100 million contracts with Bechtel, Fluor, Shaw Group and Denver-based CH2M Hill Cos. were awarded after what FEMA described as "limited competition." ...

FEMA has been given primary responsibility for spending the more than $50 billion in aid approved by lawmakers last week, which means it will be the lead contracting agency for months to come. That gives it a responsibility well beyond its normal role in past disasters. The agency has never before been asked to disburse money at the level that it will for Katrina. ...

All the deals include cost-plus language, which means the companies can pass along all their costs -- plus a predetermined profit -- to the government. Similar provisions were routinely used in Iraq. Critics said they encouraged waste by removing any incentive to control costs


Blogger Gas Fairy said...

This comment has been removed by a blog administrator.

9/12/2005 2:41 PM  
Blogger Gas Fairy said...

Why do we focus our reformation on an area of land protected by a levee system that -- in its current design -- will melt away the next time Poseidon gets angry? If the sea barriers can't be properly (and cost effectively) fortified, shouldn't we rebuild the homes in a different location(s)?

$50 Billion is a lot of money.

According to the latest Census of New Orleans, there were 212,781 housing units in the city, 84,472 owner-occupied, 95,910 renter-occupied and 32,399 vacant. The median value of homes is equal to $131,377. The median household income is 31,369 and the per-capita income is $19,711.

Let's assume that the rental unit landlords should be insured, so the governement should NOT pay a penny to them. Furthermore, let's unreasonably assume that 100% of the single-family homes are uninsured. The cost of replacing these should be (84,472 x $131,377) or $11 billion. The over-25 population of New Orleans is 282,892. If FEMA gives them each 2,000 and then some, that roughly adds another $1 billion, bringing our total to $12 billion.

Granted, this is only the cost of replacing single family homes in New Orleans, but it's far short of $50 billion.

9/12/2005 3:42 PM  
Blogger Tom Matrullo said...

Not sure whether you are suggesting rebuilding the sf homes in the same place, or somewhere safer from the sea-god's wrath. Also, replacement costs will be higher, as we continue to find in FL every time a hurricane comes through. Builders and suppliers jack up every cost. Plywood suddenly is platinum. Schedules for rebuilding are elongated. Where put people in the meantime? Oh.

There is no clear idea of what FEMA is supposed to do. They used to conceive of themselves as a quick fix and then a loan. Now?

But all that aside, thanks for an analysis that I've not yet seen in, say, journalism.

9/12/2005 8:04 PM  
Blogger Gas Fairy said...

This comment has been removed by a blog administrator.

9/12/2005 11:49 PM  
Blogger Gas Fairy said...

I'm sorry. I deleted that last comment -- I can't write.

9/13/2005 12:01 AM  
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9/30/2005 10:33 PM  
Blogger kalisekj said...

Cool Blog, I never really thought about it that way.

I have a Hurricane Katrina blog. It pretty much covers hurricane related stuff.

Thank you - and keep up the thoughts!

10/03/2005 6:44 PM  

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