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Number of trailers

Projected cost per trailer

Case details

McLeod Water Park



Contractor made $1.5 million per year profit by subcontracting septic services

Table 5: Estimated Trailer Costs at Commercial Site in Mississippi through March 2009

McLeod Water Park in Hancock County: Figure 7 shows the breakdown of expenses per trailer at this park through March 2009.

Figure 7: Estimated Life-cycle Trailer Costs at McLeod through March 2009

Source: GAO.

FEMA could have used cheaper sources to complete septic work

The MD contractor at this park charged FEMA $245 per septic service, or more than 500 percent of what FEMA could have paid, to provide septic cleanings to the approximately 61 trailers at the park. In total, FEMA paid the contractor about $1.8 million for this service because the cleanings were provided 3 times per week per trailer over the course of a year. However, this contractor made a profit of almost $1.5 million on these cleanings because it paid a subcontractor just $45 per cleaning to actually perform the work. FEMA could have saved this $1.5 million by awarding a separate contract for the septic cleaning services with the less expensive subcontractor; the septic bladder line item specifies that “FEMA reserves the right to use other sources to complete the work.” However, FEMA did not exercise this option. When we asked the MD contractor about this high profit margin, he said that officials from FEMA were aware of the situation but told him they “did not care about the profit margin.”

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GAO-08-106 Hurricane Katrina

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