There are so many problems with the way FEMA lets contracts that its hard to know where to start. In overview the problems are:

• Layers of subcontracting
• Impenetrable bureaucratic processes
  
• Lack of transparency
• No bid contracts
  
• Local businesses excluded
• Political connections
  
• Over paying poisons local labor markets
• Importing illegal aliens

In New Orleans we saw Operation and Blue Roof, debris collection, and several forms of temporary housing from cruise ships to travel trailers all display the same problems.

After digging into each issue I've found that each dollar spent by FEMA has the same impact as $0.25 spent by a prudent buyer. With 75% of every dollar going to administration and management you would expect fantastic customer service but the opposite is true. Information is hard to come by, inaccurate when delivered and delivered with an attitude.

FEMA flat out refuses to disclose how much of each dollar spent went to the various layers of contractors. They refused to tell a Congressional Subcommittee that was investigating their performance.  However I've been able to derive the following from various sources. FEMA itself takes 7% of every dollar for its own administrative costs. The top four prime contractors did no work at all but were paid near 1/3 of the dollars spent on their contracts. Additional layers of contractors each get less than the primes but taken together they extract another 1/3 of every dollar. The guys who eventually do the work get the rest which is roughly 25% of the amount alloted.

Pay rates for workers are often higher after a disaster because the urgency of the work demands urgent access to the workforce. Costs to live in the affected area are higher. There may be separation from family and travel hardships. But the stories out there go beyond the premiums these factors would suggest. $30 per hour for truck drivers hauling debris makes it tougher for private firms to recover because they have to pay so much more for workers.