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Investigations

No-bid tornado cleanup contract in Graves County sparks squabble

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WKMS
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Derek Operle

The U.S. Army Corps of Engineers awarded a no-bid contract last month for debris cleanup in Graves County, prompting a battle in federal court.

A pair of disaster response firms have challenged the $23.7 million contract awarded to Texas-based DRC Emergency Services, claiming the U.S. Army Corps of Engineers violated federal purchasing rules and stifled competition by failing to solicit quotes from other companies.

The storm left extensive damage throughout western Kentucky and killed 77 people. The damage was especially severe in Graves County, where 23 people died and Mayfield, the county seat, suffered major infrastructure damage from a direct hit.

Graves County is the only affected county where disaster recovery is being led by the U.S. Army Corps of Engineers; the other counties are leading their own cleanup efforts.

President Joe Biden approved a federal emergency declaration following the storm, which directs additional resources for response and can alleviate costs for state and local governments. FEMA has assigned $120 million for Graves County cleanup, where the storms left an estimated 2 million cubic yards of storm debris.

The protests could bring the clean-up in Graves County to a temporary stop, if a federal judge grants requests for an injunction from Ceres Environmental Services and D&J Enterprises, which are protesting the award and asking that the contract be competitively bid. D&J Enterprises also asked the U.S. Government Accountability Office to recommend the corps rescind the contract and award the work to D&J — or at least review the Alabama-based company’s offer.

Both companies claim that the DRC contract followed an illegal, improper and unfair process that excluded capable contenders from the work, and ultimately will lead to higher prices, according to federal court filings.

Top executives with DRC Emergency Services and D&J Enterprises did not respond to requests for comment. Executives with Ceres Environmental Services declined to comment, citing the pending litigation before the U.S. Court of Federal Claims.

Katelyn C. Newton, public affairs chief for the U.S. Army Corps of Engineers Louisville District, which issued the contract, said in an email that the no-bid contract was necessary “to address the urgent and compelling needs of the Graves County citizens.”

But attorneys for the opposing companies claim the corps of engineers had ample opportunity to solicit bids for the work, which is routine in the aftermath of disaster.

A federal judge in Washington D.C. will hear the case via video conference next week.

In the meantime, the work continues. But John Sullivan, the president of DRC Emergency Services, warned in a statement filed with the court that any order for injunction or to bid the contract would lead to lengthy delays.

Graves County Judge Executive Jesse Perry and Mayfield Mayor Kathy Stewart O’Nan didn’t respond to requests for comment.

As of January 6, the corps reported just more than 2% of the some 2 million cubic yards of debris had been cleared from Graves County.

Feds say no-bid justified

The tornado front that swept through western Kentucky on Dec. 10 stretched from one side of Graves County to another — leaving behind some of the most intense destruction in the path of the 160-mile storm.

Debris clean-up crews were on the ground fast. By December 14, a Ceres Environmental employee surveyed the damage in western Kentucky and sent estimates via email to Bo Ansley, the chief of the corps’s emergency management branch.

In court filings, attorneys for Ceres Environmental Services say this is proof that the firm was ready to lead the cleanup effort.

But the corps never asked the company to bid before awarding the contract to DRC on Dec. 20, the attorneys allege.

Attorneys for D&J Enterprises claim in a separate protest to the U.S. Government Accountability Office that the corps failed to provide notice of the job opportunity and “handed it to DRC.” This, they claim, is a violation of federal procurement codes.

But Borislav Kushnir, a US Department of Justice attorney representing the corps, said in response that the agency violated no rules, and was well within its right to award the no-bid contract to “avoid an even larger humanitarian disaster.”

The agency considered competitive bidding, he said in the court documents, but ultimately decided it was “unworkable,” claiming the process could take up to six months to complete.

Newton, the corps’s spokesperson, said timelines can vary from project to project, but competitively bid contracts “generally take a significant amount of time to allow for the development of the requirement and solicitation, and the submission and evaluation of proposals.”

The corps had also already vetted DRC Emergency Services, Kushnir argued. It selected the firm last year for a regional debris management contract, which would designate DRC Emergency Services as the go-to firm for cleanup after disasters in a region that includes Kentucky.

But that contract has been on hold, due to bid protests.

“While the general need for debris removal after natural disasters may be predictable, the Government did not foresee – nor could it foresee – that a devastating tornado would hit western Kentucky … while a larger procurement for debris removal was in the midst of litigation,” Kushnir said.

And Kyle Jefcoat, an attorney for DRC Emergency Services, argues there would be little question that the firm would be “performing this exact work” under the regional contract, if not for the protests.

Other firms are handling the clean-up work in neighboring counties.

In Marshall County, officials approved a contract with Mississippi -based Looks Great Services of MS LLC on December 17 for debris removal.

Jason F. Darnall, the Marshall County attorney, said the contract was competitively bid, and five firms submitted a proposal for the work.

In Marshall County, a robust network of first-responders and capable volunteers helped local officials triage the immediate needs after the storm and take the time to bid the project competitively, Darnall said.

He wouldn’t speculate why the contract in Graves County wasn’t put up for bidding, but stressed that the extent of the damage between the two counties was vastly different. Marshall County’s damage was largely residential, while Graves County suffered a direct hit to downtown Mayfield.

“They are in a completely different situation than we are,” Darnall said.

DRC’s history of allegations

Spats between the nation’s largest disaster response firms are a common occurrence after storms strike.

The Graves County contractor, DRC Emergency Services, has faced nearly a dozen different federal lawsuits accusing it of underpaying workers or not paying subcontractors.

The company was briefly suspended in 2014 from bidding on federal contracts after allegedly failing to ensure local subcontractors got their share of the clean-up work after the 2011 tornado disaster in Joplin, Missouri. They were reinstated after adopting additional oversight and transparency measures.

After hurricanes Irma and Maria devastated Puerto Rico in 2017, a subcontractor accused both DRC Emergency Services and Ceres Environmental Services of directing subcontractors to cut down healthy trees to boost payloads.

That suit was dismissed in April 2021.

Newton, the spokesperson for the U.S. Army Corps of Engineers, declined an interview for this story, citing the pending litigation. But she said DRC Emergency Services is not actively suspended or debarred, and the company is qualified for the contract work in western Kentucky.

Contact Jacob Ryan at jryan@kycir.org.