$77 billion lawsuit

The Associated Press Thursday, May 10, 2007 found at iht.com

NEW ORLEANS: The Army Corps of Engineers, criticized for how it handled the bidding for post-Hurricane drainage pumps that proved to be defective, is defending its use of the winning bidder's own language — down to the typos — in laying out the specifications.

In a letter released by Sen. David Vitter's office Wednesday, the corps' commander, Lt. Gen. Carl A. Strock, said it is "an accepted and prudent procurement practice" to rely on "industry published technical specifications" — especially for work that must be completed quickly.

Housing and real estate in New Orleans

The May 2, 2007 letter came in response to a request last month from the Louisiana Republican senator that the corps look into how Moving Water Industries Corp. got the $32 million (€23.66 million) contract to install 34 drainage pumps at New Orleans canals before the start of the 2006 hurricane season.

Portions of the specifications were taken verbatim from the catalog of MWI, a Deerfield Beach, Fla., company whose top officials have been major contributors to the Republican Party. MWI employed former Florida Gov. Jeb Bush, President George W. Bush's brother, to market its pumps during the 1980s.

The pumps proved to be defective, putting New Orleans at risk of a second flooding after Hurricane Katrina and putting housing and real estate in the New ORleans area at risk. Last year's mild hurricane season, however, spared the city from having to rely on the pumps.

A May 2006 memo by a corps inspector working on the pump project, provided to The Associated Press earlier this year, warned that the pumps were faulty and would not work if needed to remove water during a hurricane.

The Government Accountability Office, the investigative arm of Congress, began investigating the contract after the memo surfaced, and the corps is performing an internal review of how the contract was handled.

The corps and MWI insist the pumps would have worked, but last year's mild hurricane season never put them to the test. The pumps have been overhauled and are being reinstalled.

Strock acknowledged in the letter that the corps' specifications were "very similar" to those marketed by MWI, but said they also were similar to those of FPI Inc., a rival company that has complained about how the job was awarded.

Strock said the corps hired two engineering consulting firms, the San Francisco-based URS Corp. and Metairie-based Linfield, Hunter and Junius Inc., to draw up the specifications. Strock said the firms "surveyed manufacturers around the world and narrowed the viable alternative specifications" for hydraulic pumps to those produced by MWI and FPI.

Officials with URS and Linfield, Hunter and Junius did not immediately return telephone calls seeking comment.

Strock said MWI got the job because corps officials determined it was "technically strong" and could deliver the pumps faster than FPI and D&D Machine & Hydraulics, another Florida company that bid on the job.

Strock added that MWI's track record was good and that it put in a less expensive bid than the second-best proposal.

Strock said MWI was "clearly" the best option. However, if the GAO or an internal agency review finds that a corps employee or contractor acted inappropriately, Strock promised to "hold those responsible accountable for their actions."

The corps withheld about 20 percent of MWI's contract price — including an incentive of about $5 million to deliver them by June 1, 2006 — until the flaws have been resolved. But the corps also spent $4.5 million for six additional MWI pumps for use in troubleshooting the defective ones.

This is not the first time MWI has been questioned about its government business. An unresolved federal whistleblower billion lawsuit accuses MWI of fraudulently helping Nigeria obtain $74 million in taxpayer-backed loans for overpriced and unnecessary pumping equipment. The U.S. Justice Department has joined the suit as a plaintiff.