Today's Article
The increasingly
violent hurricane
season may actually
create quite a
financial windfall for
U.S. government
contractors.
The American Spark
Climate Change May Reap Big Profits For Federal Contractors

By Cliff Montgomery - Feb. 28th, 2018

“As climate change worsens, so does hurricane season,” pointed out TIME magazine. But a new report from
the U.S. Government Accountability Office (GAO) hints that the increasingly violent hurricane season - and
thus climate change - may actually create quite a financial windfall for U.S. government contractors.

That’s because natural disasters can mean big profits for those who earn money rebuilding destroyed areas.
Could this be why at least some U.S. businesspeople - as well as the politicians bought by them -  simply
refuse to tackle the problem of global warming?

“The National Oceanic and Atmospheric Administration has estimated the total cost of the three major 2017
hurricanes to be approximately $265 billion, placing them among the top five costliest hurricanes on record in
the United States along with Hurricanes Katrina and Sandy,” declares the GAO study.

“In September 2015, we found that [federal] contracts play a key role in immediate disaster response and the
longer-term community recovery,” adds the report.

“Following the 2017 hurricane season, federal agencies continue to contract for essential products, such as
food, water, and temporary housing for displaced residents and services such as power line restoration,” the
GAO states.

“As of December 31, 2017, 19 federal agencies had entered into contracts and obligated over $5.6 billion ...
to support efforts related to Hurricanes Harvey, Irma, and Maria,” declares the study.

And it gets better. Though “federal agencies are generally required to award contracts based on full and open
competition,” it turns out that “an agency may award a contract non-competitively when the need for goods
and/or services is urgent—as in the case of a natural disaster.”

This could mean an extra bonus for the lucky business awarded the federal contract, beyond its already
lucrative rebuilding efforts.

Below, the
American Spark offers a number of quotes from this eye-opening report:


The 2017 hurricane season affected approximately 25.8 million people, or nearly 8 percent of the United
States population, according to the Federal Emergency Management Agency (FEMA).

“The National Oceanic and Atmospheric Administration has estimated the total cost of the three major 2017
hurricanes to be approximately $265 billion, placing them among the top five costliest hurricanes on record in
the United States along with Hurricanes Katrina and Sandy.

“In September 2015, we found that contracts play a key role in immediate disaster response and the longer-
term community recovery.

“Following the 2017 hurricane season, federal agencies continue to contract for essential products, such as
food, water, and temporary housing for displaced residents and services such as power line restoration. [...]

“Three major hurricanes made historic landfalls in the United States in 2017.  Hurricanes Harvey and Irma
marked the first time two Atlantic Category 4 hurricanes hit the continental United States during the same
season, and Hurricane Maria was the first Category 4 hurricane to make landfall on the main island of Puerto
Rico in 85 years. [...]

[“Hurricanes are measured on the Saffir-Simpson Hurricane Wind Scale, which runs from Category 1 up to
Category 5,” according to
TIME magazine.]

“Historically, federal contracts comprise a notable share of federal expenditures for hurricane response. It can
take years to fully account for federal contract obligations resulting from a hurricane.

“For example, federal agencies are still making contract obligations as part of the recovery efforts as far back
as Hurricanes Sandy and Katrina, which occurred in 2012 and 2005, respectively.

“Early estimates for the 2017 hurricanes already place them among the most expensive hurricanes in terms of
federal contract obligations since 2005, when FPDS-NG (Federal Procurement Data System-Next
Genera-
tion) began tracking information by hurricane.

“For example, within the first 90 days after its landfall, obligations for Hurricane Maria surpassed total obliga
-
tions for Hurricane Sandy—$3.38 billion compared to $3.08 billion. [...]

“As of December 31, 2017, 19 federal agencies had entered into contracts and obligated over
$5.6 billion ...
to support efforts related to Hurricanes Harvey, Irma, and Maria.

“The Department of Homeland Security, including the Federal Emergency Management Agency (FEMA),  and
Department of Defense components, including the U.S. Army Corps of Engineers, accounted for approxi
-
mately 97 percent of those obligations.

“Federal agencies have obligated more than $2 billion for products, such as food, water, and shelter, and
about $3.6 billion for services, such as power restoration.

“The rate of competition for federal contracts was higher in the immediate aftermath of the three recent
hurricanes GAO examined than for Hurricane Katrina during the same time period.

“Federal agencies are generally required to award contracts based on full and open competition. However, an
agency may award a contract non-competitively when the need for goods and/or services is urgent—as in the
case of a natural disaster.

“GAO found, for the three hurricanes:

  • the percentage of total obligations reported under competitive contracts was [only] 73 percent as of
    December 31, 2017 [i.e., 27 percent of the reported contracts were non-competitive]; and

  • the percentage of contracts awarded competitively within the first 90 days after each hurricane’s landfall
    was approximately [only] 74 percent—[but] an improvement compared to the first 90 days after Hurricane
    Katrina’s landfall, when the competition rate for contracts was about 53 percent.”



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