U.S. inspectors are examining Department of Transportation spending in the aftermath of Hurricane Katrina, including a contract with trucking company Landstar System valued at as much as $400 million this year, according to Bloomberg News.
Landstar, based in Jacksonville, Fla., won a contract in October 2002 valued at as much as $400 million over four years for emergency logistics services, said agency spokesman Robert Johnson and Phyllis Scheinberg, the department’s chief financial officer. The contract was raised to $400 million for 2005 after Katrina, Scheinberg said.
The company also has an Express America unit that arranges shipments using trucks and planes. A “significant portion” of the $367 million the Transportation Department will spend on hurricane relief is going to Landstar, said the department’s inspector general, Kenneth Mead, in a memo posted recently on the DOT website.
Landstar Chief Executive Henry Gerkens told Bloomberg News that there’s no question about his company’s performance.
“With the scrutiny that everything is getting, it doesn’t surprise me that this is being looked at,” Gerkens said. “This is a reference to an internal review at the DOT. We have performed very well. The DOT gave us great marks for the way we responded.”
According to Bloomberg, Mead in the Oct. 7 memo said he “plans to conduct a series of audits and investigations” into the department’s relief and recovery efforts. “This work is directed towards preventing fraud, waste and abuse, and detecting and prosecuting fraud,” he wrote.
Transportation Secretary Norman Mineta told a House Appropriations Committee panel on Oct. 6 that Landstar “performed properly” while the Federal Emergency Management Agency performed “not well.”
