Texas’ outsourcing of the management of more than $1 billion in federal disaster recovery funds to an engineering firm has raised concern from federal officials.
The Austin American-Statesman reports that the firm, Kansas City, Mo.-based HNTB, which the state has so far paid $45 million to process infrastructure grants for communities damaged by Hurricanes Dolly and Ike has close ties to Gov. Rick Perry’s administration.
Three years after the storms, only 20 percent of the first round of money released to Texas to aid disaster recovery grants has been spent. Federal officials say at least half those projects should have been completed by now based on the state’s original timeline.
Allison Castle, a spokeswoman for Perry told the Associated Press in an email that 75 percent of the round one infrastructure projects are either completed or under way and the remaining 25 percent are making their way through the federal review process.
Weeks ago, the Texas General Land Office cancelled HNTB’s contract, which had increased from $69 million to $144 million as the firm assumed more responsibility for disaster grants. But the company still runs the infrastructure program on a temporary basis at its Austin offices.
Trying to get the program back on track, officials with the U.S. Department of Housing and Urban Development started quarterly reviews.
HUD warned in June that the rate of spending on administrative expenses, which as of Aug. 31 totaled 92 percent of what’s been budgeted, could jeopardize the processing of construction projects in the second round of funding.
To help Texans recover from hurricanes that struck the Gulf in 2008, Congress appropriated $3.1 billion. Fifty-five percent of the money, or $1.7 billion, is for housing, and 45 percent, or $1.4 billion, is for nonhousing projects including everything from emergency generators to new water and sewage treatment facilities. Of the total $3.1 billion, $1.3 billion was released in the first round of funding.
HNTB has been managing grants for nonhousing infrastructure. Castle said contracts like the one the state entered into with HNTB are not unusual.
In a May letter to state officials obtained by the American-Statesman, Stanley Gimont , director of block grant assistance for the U.S. Housing and Urban Development, said that using HNTB “to administer virtually all aspects” of the state agency’s work on the community development block grants “presents significant cause for concern.” Gimont said HNTB lacked experience with community development block grant programs.
Castle said the Texas Department of Rural Affairs, the state agency that worked with HNTB, had block grant programs experience.
He wrote that there are some responsibilities that should not be given to a third-party contractor, including monitoring of local grants and policy and program guidance on the proper use of community development funds.
The letter also raised questions about the state’s oversight of the company.
On July 1, Perry moved oversight of disaster recovery to General Land Commissioner Jerry Patterson, “to provide more accountability.”
“The governor was unhappy with the pace of disaster recovery expenditures and determined that placing the responsibility for recovery under a single agency headed by a statewide elected official would” be more efficient, Castle said.
Gary Hagood, deputy commissioner of financial management at the land office, said he’s “taking a hard look at the whole program.”
Hagood canceled HNTB’s contract as of Aug. 31, four years before it was to expire, and the land office posted a request for companies to submit their qualifications to finish the job. Hagood said 10 to 12 firms have responded, including HNTB.
For now, HNTB continues to run the program. Tom Wendorf , HNTB vice president in San Antonio, said that with some adjustments to the scope of work and the new oversight, “we fully expect to continue to work toward completion of the infrastructure projects” in 2015. State officials originally expected to have the entire $3.1 billion in federal funds spent by 2013.
HNTB has several ties to Perry. The company was the principal consultant for his proposed Trans-Texas Corridor and according to records with the state comptroller, the Texas Department of Transportation has paid HNTB $109 million since 2008 for engineering consulting services.
Also, Ray Sullivan, communications director for Perry’s presidential campaign, has been a lobbyist for HNTB.
Texans for Public Justice has identified the firm as one of 139 major “crossover donors” who have contributed substantial sums to Perry and the Republican Governors Association, which Perry has twice chaired. According to campaignmoney.com, HNTB and its executives have given more than $500,000 to the association, which has sent $4 million to Perry’s political campaigns.
Castle said neither the governor nor his office played any role in the selection of HNTB or its contract.
The company didn’t immediately respond to a request for comment from the AP.
Topics Texas
Was this article valuable?
Here are more articles you may enjoy.
DeSantis Signs Bill Barring Local Worker Heat Protection Measures 
Carnival Puts Miami Headquarters Up for Sale as Florida Real Estate Soars 
Progressive Records Five-Fold Increase in Q1 Net Income 
Soaring Insurance Costs Hit as US Buyers Finally Get a Break on Car Prices 
