By Tim Sandler, NBC News producer
Louisiana could have saved millions of dollars in the aftermath of Hurricane Katrina if it hadn’t hired high-profile consultant James Lee Witt, according to a new report released by state auditors. Witt’s firm billed the state double what it paid subcontractors to manage storm debris removal, the audit said.
The Louisiana Legislative Auditor’s Office examined work performed by James Lee Witt Associates [JLW], a company that has made tens of million of dollars as a top contractor for the state’s Governor’s Office of Homeland Security and Emergency Preparedness.
Witt was director of the Federal Emergency Management Agency (FEMA) during the Clinton administration and received an open-ended no-bid contract from the state of Louisiana shortly after the Katrina disaster.
The audit was conducted after NBC News reported last July that Witt Associates made 100 percent markups on invoices submitted to the state for debris monitoring and grant management. Sources told NBC News that the markups were submitted even though Witt Associates did little more than clerical work on the contracts, which were farmed out to three small companies.
“Had [the state] contracted directly for these employees rather than obtaining them through JLW, it could have avoided the 100 percent markup charged by JLW and achieved cost savings of potentially $9,403,753,” the audit concluded.
The report also faults the state for not having “the ability to contract directly” with the subcontractors hired by Witt Associates.
A statement issued by Witt Associates said that “certain elements of the report are not fully explained or put in context, which could leave the reader with the mistaken impressions about the services provided by James Lee Witt Associates.” Nevertheless, the company said the audit cleared it of any improprieties.
Over $90,000 billed in one month
An analysis last year by NBC News of Witt Associates invoices showed that the company’s top manager in Louisiana, Mark Merritt, tallied $506,000 in billable hours between September 2005 and June 2006. One of the bills totaled $92,675 for a single month’s work by Merritt, nearly as much as the governor was paid for the entire year.
One of the subcontractors hired by Witt Associates to monitor debris removal was a small Arkansas-based firm called RMI, which is run by Merritt’s parents. The Merritt and Witt families have been friends for decades. Mark Merritt once worked for Witt at FEMA and went to school in Dardanelle, Ark. with Witt’s sons. After Witt Associates hired RMI, RMI hired Witt’s brother-in-law to work in Louisiana.
An advisory opinion issued by the Louisiana Ethics Board in 2006 said this about the relationship: “Since [Mark Merritt} is not involved in the oversight of the subcontract with RMI, it does not appear that RMI is prohibited from providing the contractual service for the State.”
