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documentation to support how this estimate was derived. Therefore, we asked GAO engineers with over 30 years experience to estimate the costs associated with laying asphalt at the sites. Although they did not visit these sites, the engineers used the information available from the contractor’s price proposals, to estimate that, in the Biloxi, Mississippi, region, this work should have only cost about $800,000.30

The company’s initial bid, submitted on October 4, 2006, was around $3.2 million, just over the 8(a) competitive threshold and four times the expert estimate of what the work should have cost. FEMA awarded the contract the very same day for $2.9 million; it appears that the contracting officer deleted 4 of the 33 bid items in order to keep the award amount under $3 million. Then, on November 1, 2006, less than a month after the award, the contracting officer modified the contract to add back one of the dropped line items and to increase the total award by almost $750,000, 25 percent of the total value. Two more modifications followed, on December 21, 2006, and January 31, 2007. The total value of the contract ultimately reached just over $4 million, five times the expert estimate to perform the work. Figure 9 shows the timeline for the initial award and subsequent modifications.

30The GAO engineers provided an order of magnitude estimate based on RS Means—a widely used guide for estimating construction costs—and the limited scope of work that was available from the contractor’s proposals. This order of magnitude estimate showed there was a significant difference (approximately 400 percent) between our estimate of what the work should have cost and the contractor’s proposed price of $3.2 million.

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GAO-08-106 Hurricane Katrina

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