Out of 25 field personnel, Marceaux assigned 10 full time investigators to the greater New Orleans area. “We have 21,000 licensed contractors, but for every one licensed, there are four or five that are not,” he said, adding that catching up with fraud is “like lightning striking while we happen to be watching.”
The Louisiana Legislature has enacted several new consumer protection laws that Marceaux says will limit fraud. The cost of “home improvement” has been capped at $75,000 to limit insurance and contractor fraud. No longer will contractors have the ability to file liens against homeowners who refuse to pay because of inferior work or outright theft. Finally, LSLBC inspectors now have the ability to immediately issue citations in the field without an administrative hearing.
As long as there are disasters, there will be scam artists who prey upon the vulnerable. In New Orleans, that amounts to about 217,000 potential scams in the residential sector alone.
Uncle Sam has YOU Footing the Bill
But what about federally awarded contracts that affect taxpayers across the board?
After Katrina, the Bush administration relied upon no-bid private contracts worth billions in the recovery efforts. In September of 2005, Henry Waxman and Nancy Pelosi introduced the “Hurricane Katrina Accountability and Clean Contracting Act” (H.R. 3838), stating: “We cannot allow greed, mismanagement, and cronyism to squander billions of taxpayer dollars.”
Bush rejected the oversight bill promising, “We’ll make sure your money is being spent wisely. And we’re going to make sure that the money is spent honestly.” And so the taxpayer once again fell victim to the “Lucy Van Pelt” syndrome.
As of June 30, 2006, over $10.6 billion had been awarded to private contractors for Gulf Coast recovery. $10.1 billion of that amount was awarded in 1,237 contracts valued at $500,000 or more. Only 30% of these contracts were awarded with full and open competition.
One example of the misuse of federal subcontractors involved the “blue roof” program. Anyone who has been through a hurricane is familiar with the blue plastic tarps that provide temporary protection from rain damage. In the days immediately after Hurricane Katrina, FEMA and the Army Corps of Engineers entered into contracts with three large contractors, the Shaw Group, Simon Roofing, and LJC Construction, to cover damaged roofs with blue tarps. Because so many layers of contractors took a cut of the funds, the fees charged to taxpayers were vastly inflated. According to one published account, the costs to the taxpayer under the tiered contracts were sometimes 1,700% higher than the job’s actual cost. A second account reported that the taxpayer paid an average of $2,480 per roof for a job that should cost under $300.17. (Source: http://oversight.house.gov/documents/20060824110705-30132.pdf)
In addition, FEMA’s own website published what amounts to a “How-To” guide for fraudulent contractors stalking federal contracts. How To Market To FEMA (http://www.fema.gov/business/market.shtm) offers 25 tips for increasing success in the quest for government bids. Tip number 22 advises the contractor with a shaky consumer rating to “Clean up your performance rating -- Get copies of how agencies evaluated you. Clear up any inaccuracies, and try to counteract negative information with positive ratings from other jobs. List best references first in your proposals.”
In other words, pad the resume and when that fails, lie.
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