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PBS Ombudsman Finds Newshour Segment on Bechtel 'Unfair'

  • 15 May 2007
  • Press Release

PBS Ombudsman Finds Newshour Segment on Bechtel 'Unfair'

After Bechtel took issue with a Katrina-related story on PBS's The NewsHour with Jim Lehrer, PBS ombudsman Michael Getler examined the story and called it "unfair" in his column on the PBS Web site.

The 10-minute segment, "Critics Question Post-Katrina Spending on Trailers," was reported by Jeffrey Kaye and aired on April 9, 2007. Bechtel responded to editors at The NewsHour, documenting ways in which Kaye mischaracterized our work. We received a courteous but unsatisfactory reply from the show's producer.  Bechtel sent a follow-up letter to Getler. He reviewed the story and agreed with Bechtel, concluding that the story's implication that our work was disreputable was "just rhetoric."


Getler's column along with the correspondence between Bechtel and PBS are reprinted below:


MAY 9, 2007


The ombudsman's inbox has been really busy lately: the saga of Ken Burns' "The War" and Latino unhappiness about the film continues; 12 hours of "America at the Crossroads" has been aired; Bill Moyers came roaring back to PBS sucking a huge amount of viewer e-mail in his wake; and then came four hours of "The Mormons," with another big engagement by viewers, many of whom liked it, and some big write-in campaigns as well, mostly from those who did not. (As a viewer, I found it very informative and fair in capturing a complex faith.)


But back on April 9, the NewsHour with Jim Lehrer aired a 10-minute segment that was about continuing controversy over spending on trailers in the post-Katrina Gulf Coast region -- especially about maintenance costs, as many of these trailers now sit empty, and also about continued criticism of the Federal Emergency Management Agency. Reporter Jeffrey Kaye of KCET in Los Angeles focused on southern Mississippi, where some 27,000 trailers and mobile homes still house people displaced by the devastating hurricane of August 2005.


The segment also focuses especially, and generally critically, on the role of the Bechtel Corporation, one of the world's largest engineering, construction and project management companies, and the almost half-billion dollar contract that Bechtel was awarded by FEMA for supplying and installing some 35,000 trailers and various disaster support functions related to this effort.


In the aftermath of the program, Jock Covey, a senior vice president for corporate affairs at Bechtel, wrote to the NewsHour, with a copy to me, about his "serious disappointment" with the segment. He claimed it "falls short of the program's usual standards for reporting and analysis, that the story resembled "a prosecutor's brief," and indulges in some "guilt-by-association" tactics.


I've included Covey's original letter further down in this column, along with a reply by Linda Winslow. She is the executive producer of the NewsHour and a faithful and thoughtful responder to viewer comments. I've also included a second, follow-up letter from Covey. That's a lot of back and forth about a segment that appeared a month ago, and I don't want to go through each item in the body of my column, or to produce an endless he said/she said account of the exchanges.


Rather, I'll pass along my assessment of this program and the subsequent exchanges because it touches on a journalistic issue that arises often enough, and not just on PBS, that it strikes me as noteworthy. That issue involves how large businesses are sometimes treated in news reports. One of the first columns I wrote as ombudsman for PBS in December 2005 dealt with the NOW program and how it treated (unfairly, I thought) a contractor that was also involved, ironically, in post-Katrina reconstruction work.


I thought, in a way, the April 9 NewsHour story also turned on its head one of the public's favorite journalistic yardsticks. It struck me as balanced yet unfair.


Having watched this segment and read the transcript a couple of times, I should say at the outset that I didn't think this was much of a story. There is a key point made at the outset that is a good one: "There are at least 1,000 abandoned FEMA trailers in Mississippi, but there's little financial incentive to haul them away quickly because the companies that do the towing also get monthly maintenance fees," Kaye reports. And, he says, "The maintenance contractor for the last eight months has not bothered to call FEMA and say, 'there's no resident living in this camper.'" But the maintenance contractors are never identified or interviewed about this situation, and it is only later in the program that we find out that Bechtel's work ended a year earlier, in March 2006.


There was no real "gotcha" in this segment, just claims and counter claims about such things as the expense of maintaining some trailers that are now vacant and what may have been some feather-bedding on sub-contracts where too many workers show up to do jobs that supposedly could be done by fewer. There is no criminality alleged. Some people are quoted who are grateful to have these homes. Bechtel is slammed by a local Democratic congressman, but the reporter points out that this lawmaker has been "a dogged critic of Bechtel." And Bechtel gets to respond but only for a few seconds. Someone described as a top FEMA official, but not identified on the program, says the Bechtel contract was wrong and costly, but another top FEMA official, the director of acquisition for Gulf Coast recovery, says on camera, "I do not believe that there was waste. I have not uncovered waste," and adds that Bechtel was paid a fair price but that, of course, "we could do better in the future in a competitive fashion."


If a viewer was left at the end of this program not knowing what to think or what the big deal was, I can sympathize with that. Sure, waste is bad and itss worthwhile reporting and also asking, as Winslow explains, "Did FEMA get its moneyss worth?" But this program does not document waste on any kind of a large scale, nor does it say, exactly, whose fault it is. It makes one aware that waste happens but, while that is worthwhile knowing, is it surprising in an effort to quickly move 35,000 trailers into a devastated area while using 75 subcontractors?


Kaye uses Rep. Gene Taylor, D-Miss., the Bechtel critic, to make the point that "FEMA gave Bechtel a cost-plus contract, which pays for expenses and overruns and offers no motivation to minimize costs." Well, that's true. But it was FEMA that awarded the contract and that's not Bechtel's fault and it also was never explained that it is not unusual to have such no-bid, cost-plus contracts in emergency situations where costs are hard to estimate in advance and where people need help fast and can't await more competitive government procurement procedures.


What bothered me most about the segment was its tone, and so I come down more on the side of Covey and Bechtel here than the NewsHour. Bechtel is a big, and in some ways, easy target. And maybe they screwed up. But if they did, you can't prove it in this report.


The company is first mentioned when Kaye reports that after Katrina, FEMA awarded "no-bid" trailer contracts to four "well-connected" companies, with the Mississippi contract going to Bechtel. What, exactly, does "well-connected" mean, or imply? It is not until near the end of the segment that we learn that Bechtel's work ended a year earlier, in March 2006, and that the U.S. Department of Labor is investigating six of the nine companies that had been subsequently awarded contracts for the trailer deactivation work.

Then the segment concludes in this fashion: "The agency has also had competitive bidding for future housing. Of the six contractors that won an initial competition, four were the same companies that received no-bid contracts right after Katrina. Among them, the Bechtel Corporation."


That's the last word and it comes across to me with a pejorative ring, as though something disreputable is about to happen again, although there is no evidence -- just rhetoric -- that anything disreputable happened at the outset.


Bechtel's April 11, 2007 Letter to The NewsHour


From Jock Covey, Manager of Corporate Affairs


I am writing to express serious disappointment with The NewsHour's April 9 segment, "Critics Question Post-Katrina Spending on Trailers," reported by Jeffrey Kaye. It falls far short of the program´┐Żs usual standards for reporting and analysis and serves its viewers poorly.
In the guise of a balanced news story, the report resembles a prosecutor's brief. It starts with a bit of guilt-by-association, linking Bechtel in the viewer's mind with unrelated (and unnamed) maintenance contractors who may (or may not) have defrauded FEMA by billing for services to unoccupied trailers.


Next comes the prosecutor's opening argument, delivered by Rep. Gene Taylor, D-MS, who offers a passionate condemnation of Bechtel and our FEMA contract -- without any specific claims or evidence. Cliff Mumm, Bechtel's program manager, gets 11 seconds of defense rebuttal time.


Mr. Kaye offers up the fact that "Bechtel's total bill came to nearly half a billion dollars" without even noting (until much later) what Bechtel was hired to do or what we accomplished. His failure to set up the story and provide any context leaves the viewer impressed by the big dollar figure but with no way to judge its merit.


Mr. Kaye might have set the scene by reminding viewers of the total devastation of southern Mississippi, including the loss of power, water, communications, and other basic infrastructure, the disruption of government services, and the dispersal of workers and businesses equipped to help rebuild. Housing 100,000 people under such conditions was not under any circumstances going to be a trivial or inexpensive job.


He might have noted the many tasks Bechtel was assigned to perform in addition to hauling and installing trailers, including setting up and staffing disaster recovery centers and temporary emergency housing centers; finding and developing individual and group housing sites; obtaining government permits; setting up and running a 24-hour call center; initial maintenance and later deactivation of trailers as they were vacated; and helping FEMA meet its goals for the employment of small, local, and disadvantaged businesses.


He might have noted FEMA's rationale that it needed to issue emergency no-bid contracts to qualified engineering and construction firms because victims could not afford to wait months for a normal government procurement. Imagine the story Mr. Kaye might have run had FEMA delayed the start of emergency housing services by three months!


He might have noted that cost-plus contracts are common on government and private sector jobs where costs cannot be reliably estimated in advance and the scope of work is highly uncertain. Until Bechtel surveyed the area of devastation and worked with FEMA to plan a response, FEMA had no way to seek, and Bechtel could not offer, a fixed price for work. As the scope of work became defined, Bechtel was able to break the work down into biddable packages and put them out to competition. Each package was approved by FEMA and, as Mr. Mumm pointed out, all payments to Bechtel were based on verified invoices and specific costs.


Mr. Kaye's story cites one trailer resident's observation that in one instance "seven men" helped build a staircase, but makes no effort to verify who did the work or whether such numbers were the norm. He also cites construction worker Robert Jackson's similar claim that "six or eight guys" typically set up a trailer when only two were needed. Since the allegedly wasted manpower was apparently expended by Mr. Jackson's own firm, why didn't Mr. Kaye press him for an explanation? Mr. Kaye did not mention the fact that trailer installations included not simply hauling trailers onto sites, but extending power, water and other utilities, hooking them up to the trailers, inspecting the trailers, and building stairs or ramps. In the high-production environment Bechtel created, all this was more than a "two-guy" job.

Mr. Kaye's disdain for the apparently wasteful "food chain" of subcontracting misses a critical point: Bechtel put most of its subcontracts up for bid. In other words, taxpayers were protected by competitive, fixed-price subcontracts against undue waste. The fact that some subcontractors in turn contracted with others for specialized services is hardly mysterious or suspect. I'm sure more than a few of your viewers have hired a general contractor to build or repair a house, only to have him (or her) subcontract specialized electrical, plumbing, or roofing work.


Aaron Lott's comments, as summarized by Mr. Kaye, are particularly misleading in this regard. First of all, FEMA did not pay Bechtel an average of $15,000 per installed trailer; the correct figure, as Mr. Kaye knows well, is about $9,000 ($320 million/35,000 trailers). Second, the sum paid to Bechtel included not just the hauling and placement of the trailer, but management and operation of the trailer depots as well as utility hookups, trailer inspections, and building of associated structures such as stairs and ramps. In short, the $3,000 figure cited by Mr. Lott and the $9,000 paid to Bechtel are apples and oranges.


Had Mr. Kaye approached his story with an open mind, he might have been impressed that Bechtel installed trailers roughly twelve times faster than FEMA's contractors (including Mr. Lott's company) achieved after Hurricane Charlie struck Florida in 2004. He could have noted that we housed 100,000 people -- the size of a medium-sized city -- in only seven months. He could have verified that Bechtel's costs were all audited by the Defense Contracts Audit Agency. He might have been impressed that we accomplished all this with a safety record four times better than the national average (recorded by OSHA) for trailer hauling.


In a 10-minute news story largely devoted to Bechtel, he might have given Bechtel more than about 50 seconds to explain (as we did over the course of many hours with Mr. Kaye) how we managed to mobilize so quickly (installing the first housing units within 11 days of the hurricane's landfall); the logistics we used to bring people and supplies to the region on such short notice; the creative systems approach we took to maximize the efficiency of trailer hauling; and the exceptional record we achieved of hiring small businesses, local firms, and women- and minority-owned companies. We awarded 70 percent of our subcontracts, valued at nearly $235 million, to companies in the immediate Gulf region, boosting its overall recovery.


By almost any measure, Bechtel's performance was "a remarkable success," as FEMA officials termed it at the time. Evidently, Mr. Kaye was not prepared to consider a "good news" story, despite our record-breaking performance. It doesn't take much journalistic legwork or imagination to find a few people associated with any project who will take shots. It does, however, take an abdication of journalistic responsibility to present their claims without trying to verify them or place them in context.


Response to Bechtel


I regret that you think the NewsHour's report on Federal spending post-Katrina was not up to our usual reporting standards. It was the product of research conducted over a three-month period that included extensive reviews of Congressional testimony and various reports by government and non-government agencies, plus approximately 70 interviews with former FEMA officials, contractors, subcontractors, workers, inspectors and trailer residents.


I'd like to first address the issues you had with the way the story was told. As the person who ultimately signs off on every tape report we air, I think I am responsible for some of your complaints. Jeffrey's original version of this story was much longer than the version we aired. He is a VERY thorough reporter. In this case, I asked him to make his story more focused, and to eliminate multiple examples of the same problem, people saying roughly the same thing, etc.


Jeffrey and I agree with you that the story might have benefited from more background about the scope of the devastation in Mississippi. We started where we did because the NewsHour has been covering the devastation and rebuilding effort in Mississippi, in addition to New Orleans, extensively; in an effort to save time, we established the trailers as a reminder of all that. But nowhere did we suggest that housing 100,000 people under such conditions was a trivial or inexpensive job. The question we were addressing was "Did FEMA get its money's worth?" The piece included people who said yes, it did, and people who said no, it did not.


Nowhere did our report allege any criminal wrongdoing. The FEMA official included in Jeffrey's piece says she does not believe the Bechtel contract involved any waste. She adds "Do I think that we should do things better in the future in a competitive fashion? Of course." But it should be pointed out, another FEMA official told a Congressional committee the Bechtel contract was "wrong" and "costly".


The example Jeffrey included to illustrate multiple people working on a project was one of many such stories he collected. In the interest of saving time, he used the example of one to represent the many. As to the cost of the trailers: In a phone interview, Bechtel Media Relations Manager Jonathan Marshall told Jeffrey Kaye Bechtel was paid $495 million. Divided by 35,000, that's $14,143 per trailer.


I do sympathize with anyone who gives an interviewer two hours of his time, as Mr. Mumm did with Jeffrey, only to see very little of the interview in the finished piece. On behalf of the NewsHour, I'd like to thank him for his fortitude, and his patience. I think he did a good job of explaining Bechtel's position in the edited story. In addition, some of the points you make were covered by the FEMA representative. However, this program tries very hard not to reduce its guests to simple "sound bites" and I think we made a mistake in not giving Mr. Mumm more time to make his case. I sincerely apologize for that.


In the end, I think the story was fair to both Bechtel and FEMA. I am truly sorry you disagree.

Bechtel's Follow-up Letter


It was very thoughtful of Ms. Winslow to reply personally and promptly, to acknowledge that the show could have used more context, and to apologize forthrightly for giving Cliff Mumm so little time. Other than these courtesies, however, Ms. Winslow's response is troubling as it either glossed over or failed to address much more fundamental problems with the segment.


First, the story was constructed in such a way as to imply that Bechtel is responsible for the current problems with trailer maintenance, deactivation and removal that were featured at the top and bottom of the segment. Our contract in Mississippi ended in March 2006.


Second, the segment can hardly be called balanced or "fair" when it juxtaposes a member of Congress clearly on a rant ("they'll never convince me otherwise") with an individual resident with no knowledge other than her personal experience. There are many capable state officials, from the governor of Mississippi on down, who were intimately familiar with the situation and directly responsible for the crisis response. I cannot understand why none of them were even mentioned, let alone heard from.


Third, the dollar amount that figured so centrally in the story, the amount that Bechtel was paid per trailer, was overstated by a whopping 66 percent. It was $9,000 per trailer, not the $15,000 per trailer that the story asserted. Jonathan Marshall, Bechtel's media relations manager, carefully briefed Mr. Kaye in detail on our contract in the days before the interview, specifically explaining to Mr. Kaye that the correct figure for trailer installation was $320 million, not $495 million, with the remainder earmarked for tasks such as site selection, creation and staffing of disaster recovery and emergency housing centers, trailer maintenance, establishment of a 24-hour call center for residents, and so forth. Jonathan and Cliff Mumm reiterated that explanation face-to-face with Mr. Kaye in our Frederick, Maryland offices. Since even rudimentary fact checking would have confirmed their explanation, it is beyond understanding how Ms. Winslow could characterize the reporter as "very thorough," or how she could try to justify that inflated number by simply dividing the wrong dollar figure by 35,000.


Fourth, misreporting the amount paid per trailer led to extensive misreporting in the rest of the piece. By comparing the inflated number to amounts that subcontractors received for doing their piece of onepart of the larger job for which Bechtel was responsible, viewers were seriously misled. As Jonathan and Cliff explained exhaustively to Mr. Kaye, the portion of Bechtel's work relating to trailer installation included hauling and placement of the trailers, management and operation of the trailer depots, utility hookups, trailer inspections, building of associate structures such as stairs and ramps, and contract management to meet federal criteria, including training and development to meet targets for small and disadvantaged businesses. It's not surprising and certainly not news that a subcontractor who performed only one aspect of that work would be paid only a portion of the overall amount.

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About Bechtel

Bechtel is a trusted engineering, construction and project management partner to industry and government. Differentiated by the quality of our people and our relentless drive to deliver the most successful outcomes, we align our capabilities to our customers’ objectives to create a lasting positive impact. Since 1898, we have helped customers complete more than 25,000 projects in 160 countries on all seven continents that have created jobs, grown economies, improved the resiliency of the world's infrastructure, increased access to energy, resources, and vital services, and made the world a safer, cleaner place.  

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