Firm criticized on hurricane grants in line for wildfire work

AMERICAN-STATESMAN STAFF

Updated: 5:17 a.m. Tuesday, Dec. 6, 2011

Published: 9:56 p.m. Monday, Dec. 5, 2011

While spiraling costs were leading one state agency to cancel an engineering firm's $144 million contract to manage hurricane disaster grants, another agency was arranging to hire the same firm, at the same rates, to provide more disaster services this time in response to the hundreds of wildfires that scorched Texas this year.

Texas Department of Public Safety records obtained by the American-Statesman show it has paid the firm, HNTB, up to five times as much per worker hour as it paid dozens of independent contractors for the same type of work, performing wildfire damage assessments in Bastrop and other counties. The payments were made under a work order authorizing the firm to receive up to $400,000 for wildfire operations, with the potential for more work in the future.

An earlier $2.8 million proposal from HNTB for wildfire services was derailed in September after DPS could not secure the necessary funds. The DPS Office of Emergency Management, which coordinates state and local responses to major emergencies and disasters, is the primary conduit for hundreds of millions in FEMA dollars to Texas, and most of the wildfire response is being reimbursed by the federal agency.

Kansas City-based HNTB, whose disaster-related services have earned the firm more than $65 million from no-bid state contracts in the past three years, remains well-positioned to win more state disaster business despite its recent role in the troubled grant program it administered under the auspices of the recently dissolved Texas Department of Rural Affairs.

In the first round of spending from $1.4 billion in federal infrastructure grants to Texas communities stricken by hurricanes Ike and Dolly, the overhead budget was almost depleted, yet two-thirds of the infrastructure projects remain unbuilt three years after the storms.

The high costs of administration and the slow pace of construction led to warnings from federal officials and the cancellation in August of HNTB's contract to manage the community development block grants from the Department of Housing and Urban Development.

As the American-Statesman has reported, the state also redirected $28.6 million intended for new public works in hurricane-damaged locales to pay HNTB's bills. Meanwhile the firm continues to manage the infrastructure grants under a different contract with the General Land Office, which is now in charge of the HUD disaster relief program in Texas.

It is that agency's contract for engineering and other disaster-related services which the DPS has piggybacked on to pay HNTB for wildfire field work. HNTB was one of 10 engineering services firms that qualified to receive work orders under the contract but has earned 99 percent of the money so far — $4.5 million. It has also qualified as a vendor of engineering services under a new state contract with the land office that is replacing its canceled contract to manage the nonhousing grants.

HNTB is well-connected to Gov. Rick Perry's administration. It was the lead consultant for Perry's proposed (and later canceled) Trans-Texas Corridor toll road project, and Perry's presidential campaign spokesman, Ray Sullivan, lobbied for the firm before joining the governor's office in 2009. HNTB and its executives have donated more than $500,000 to the Republican Governors Association, one of Perry's chief funding sources, and to Perry's campaigns.

Josh Havens, a spokesman for Perry's office, said neither the governor nor his office had any involvement in the interagency contract with HNTB.

Emails and documents obtained by the Statesman under the Texas Public Information Act show that DPS eagerly sought the arrangement with HNTB last summer, "based on the critical need to hire supplemental support for the fire and hurricane season," DPS spokesman Tom Vinger said. Even before the destructive Labor Day wildfires, fires had already scorched 3.5 million acres across the state and destroyed more than 1,000 homes.

The agency planned to issue a request in September for a private firm to provide a roster of 190 subcontractors who would augment the state's emergency personnel when needed, but the move was postponed to pursue the interagency contract with HNTB, which could be consummated more quickly, officials said.

"DPS is still developing its strategy regarding future use of contractors," Vinger said.

Like many other states, Texas already has a roster of individuals — often retired military and government workers with experience in finance, engineering, public assistance, hazard mitigation and the like — who work wildfires, floods and other emergencies under temporary contracts for up to six months. According to DPS records, their billings average about $33 an hour .

Vinger said there are currently about 35 of these reservists on active duty for the state, most of them involved in wildfire recovery efforts. Weekly invoices tracked by the agency show they cost about $310 per day, versus HNTB's average cost of $1,600 per day per worker.

Land office spokesman Jim Suydam cautioned that the company's billing rates, which average $190 an hour with an annual escalator of 4 percent, are subject to negotiation. "These published fees are the most they can charge and simply serve as a starting point for negotiations on each and every work order that is authorized," he said.

Emergency management director Nim Kidd did not respond to the Statesman's request for an interview about HNTB's role in disaster response.

In answer to written questions from the Statesman, Vinger replied by email that "external support contracts, such as with HNTB, are above and beyond the reservist program. They provide additional levels of expertise to assist program staff \u2026 where needs may be greater for specific talents such as \u2026 insurance specialists, hydrologists, mechanical/structural engineers, etc."

However, the work that HNTB has performed for DPS — damage assessments — is identical to the tasks performed by the reservists in Bastrop County, for less money.

The original plan that HNTB submitted to DPS last summer proposed a wide array of wildfire services, from debris removal to reviewing utility projects, costing $2.8 million.

The plan assumed that 90 Texas counties would be declared disaster eligible, though at that time only 45 counties had received the designation from the president. (Since the Labor Day fires, an additional 45 counties have been designated major disaster areas.)

In a July letter to DPS, HNTB Vice President Glenn Gregory Jr. noted that DPS had concerns "about being reimbursed by FEMA for HNTB's services should the additional 45 counties not be declared major disaster areas." He proposed splitting the job into two, so that the first phase would cost only $1.5 million. But the DPS staff questioned the viability of even that scaled-down plan, in the absence of a FEMA obligation to fund it.

On Sept. 12, DPS Procurement and Contract Manager Hank Vice wrote that the agency was still working on how to pay HNTB: "I'm sure, (now) that the important people are involved \u2026 something will happen soon."

The same day, something did. DPS Director Steven McCraw wrote to Milton Rister, director of administration for Perry's office, seeking $4.75 million in emergency funding to assist the agency in responding to wildfires, especially the Labor Day conflagrations that included Bastrop County. The emergency appropriation designated $700,000 for the reservists and $400,000 for preliminary damage assessment contracts.

The request was quickly approved. DPS signed the interagency contract with HNTB on Sept. 14 and on Sept. 16 approved a $400,000 purchase order for HNTB. To date the firm has been paid $90,000, Vinger said.

Asked to explain the preliminary damage assessment process, DPS reservist Richard Boltz called it a "very rough" estimate of the range of damage inflicted on neighborhoods, public facilities, utility systems and the like. It is completed quickly to qualify a county for FEMA assistance.

The next, more lengthy step details specific conditions of each affected property or piece of infrastructure and estimates the cost of removing debris, making repairs and mitigating hazards. Following up how the FEMA money is spent takes longer. "The permanent (state) people will inherit this when our job is complete," Boltz said. "Some of these disasters stay open for five to 10 years."

Perry has been quick to lament perceived slights in federal disaster funding; since the spring he has repeatedly pressed to extend the presidential disaster declaration to more of Texas' 254 counties affected by the wildfires.

Still, like a Panhandle snowstorm, FEMA and HUD disaster relief money has drifted higher and higher in Texas in recent years. Since Hurricane Rita in 2006, the federal outlay has totaled more than $5.3 billion, passed through the DPS, the Texas Department of Housing and Community Affairs and other state agencies to local governments and individuals who qualified for the assistance. The HUD allocations for Ike and Dolly alone come to $3.1 billion, an amount equivalent to the largest public works project in state history.

bbell@statesman.com; 445-3634

MONEY PAID HNTB THROUGH CONTRACTS WITH STATE OF TEXAS SINCE 2007

Texas Department of Public Safety (2011 wildfire damage assessments) $400,000

Texas Department of Rural Affairs (2009 contracts for hurricane relief project management and damage assessment) $48.9 million

Texas General Land Office (2010 contract for engineering services) $10 million limit

Texas General Land Office (2009 contract for engineering services) $5 million limit

Texas Department of Transportation (Trans-Texas Corridor) $38.5 million

Texas Department of Transportation (highway engineering) $73.3 million

TOTAL $176 Million

MAJOR FEMA DISASTER GRANTS FOR HURRICANES AND WILDFIRES SINCE 2008: $592.9 MILLION