Morning Edition, May 4, 2006 · Questions are being raised about new contracts that the Federal Emergency Management Agency (FEMA) is awarding for hurricane work along the Gulf Coast. The agency says it wants the money -- up to $3.6 billion -- to go to small and disadvantaged companies in the region. But some local firms have complained that too many winners are from out of state, and they question whether all of them are qualified. Federal investigators are reviewing some of the awards.

The 36 contracts are huge -- up to $100 million each -- to take care of thousands of trailers and mobile homes now housing hurricane victims on the Gulf Coast. FEMA decided to make the awards after it was criticized for giving no-bid contracts to four large national firms in the hectic days right after the storm. Acting FEMA director David Paulison told NPR in March that the new contracts would go to small, local companies.

"The quicker the businesses come back, the quicker jobs come back, the quicker people move back into the affected area. So we want to get that business and those dollars down to the local level," he said.

Tim White, of White Haul Transport, a manufactured-housing firm in Mississippi, was disappointed when FEMA rejected his bid. And he was angry when he saw the list of preliminary winners.

"Of the five, three of them were out of state," White said. "And I was surprised at that, because it was our understanding that out-of-state companies, their bid prices would be adjusted up 30 percent in order to allow Mississippi companies to be more competitive."

White decided to do some investigating, and what he found disturbed him even more. One winner was PRI/DJI, a joint venture of two California firms, Project Resources Inc. and Del-Jen Inc. It turns out that Del-Jen is a wholly owned subsidiary of Fluor, one of the four large firms that received the initial no-bid contracts. Project Resources also boasted on its Web site that it had recently received more than $500 million in government contracts.

"So that kind of threw up a red flag for us," White said.

He filed a complaint with the Small Business Administration. But the SBA said the joint venture met all the requirements. It noted that PRI/DJI is part of a special mentoring program that allows large firms to pair with small, minority-owned ones -- such as PRI -- to compete for contracts.

Shari Walden, CEO of Project Resources, told NPR that even though the company has federal contracts that could be worth hundreds of millions of dollars, its annual receipts still fall below $30 million, qualifying it as a small business. She also said many of those hired to do the trailer work will be from the Gulf Coast.

But some locals remain wary. PRI/DJI is the apparent winner of not one, but three of the 36 new contracts.

"None of the locals that we dealt with -- and we were about 30 companies -- won any of these bids," said Barbara Sonnier, who represents a Mississippi firm called DCMS, which sought some of the FEMA work. When the letter arrived listing preliminary winners, five of the eight were from out of state. Sonnier suspects some of the companies low-balled their estimates to be competitive. And she questions how they can do the work at those prices.

"This could be one of biggest, and I don't want to use the word loosely, frauds to make Louisiana look bad again. If local contractors fail, then shame on us. But shame on America if these out-of-state companies get these things and we get blamed for it because they failed," she said.

One firm being challenged is Doug Boyd Enterprises of Knightdale, N.C. Tim White and others note that the company was formed only a few months ago. But Boyd told NPR he's more than qualified to do the work. He says he handled emergency housing after Hurricane Floyd in 1999, when he was with the North Carolina Division of Emergency Management.

"I ran the entire temporary housing program for 30 months from start to finish. So when it comes to credentials, I am the best-qualified person for this particular contract." he said.

Still, one of the companies that lost out to Boyd has filed a protest with the Government Accountability Office, which has 100 days to review the award.

Questions have also been raised about one of the trailer contracts going to a minority-owned New Orleans accounting firm called Davis Professional Accounting Services. CEO Corinthia Davis would not comment on the dispute. Another contract winner, Rosemary Barbour -- the wife of Mississippi Gov. Haley Barbour's nephew -- has also raised some eyebrows.

FEMA spokesman Aaron Walker says politics had nothing to do with the awards. "Let me be completely clear, " Walker said. "In no uncertain terms does any political tie fall into any consideration. We look at the merits of the company."

He says all the awards met strict guidelines and were based on the lowest qualified bids. He adds that most of the 36 contracts will end up going to Gulf Coast firms, and that the program is on track.

"We've done everything we can in setting up that contract so that we are infusing money into the region," Walker said. "Even the companies who are outside of the state still have to contract locally. The subcontractors have to be local."