Landstar executive denies overcharging for Katrina evacuation

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Landstar has denied that it overcharged the government $32 million for busing evacuees from New Orleans in the aftermath of Hurricane Katrina. “To characterize that as an overpayment is a gross inaccuracy,” Henry Gerkens, chief executive officer of Landstar System, told the Associated Press.

According to the report released Friday, Jan. 20 by the Transportation Department inspector general, Landstar Express America — owned by Jacksonville, Fla.-based Landstar System — was given 570 specific tasks to supply enough vehicles to haul thousands of truckloads of goods and thousands of busloads of people after the hurricane struck. The report said the Federal Aviation Administration paid a $59,082,000 partial payment “with no documentation showing the actual amount of services provided to that date,” according to the report signed by Assistant Inspector General David Dobbs.

The Federal Emergency Management Agency asked for 1,105 buses from Aug. 31 through Oct. 7 to evacuate people from New Orleans. In early September, Landstar asked for an advance of $59,082,000. “We said, ‘If this is going to be this large a task, and we have to pay our contractors, we need an advance,'” Gerkens told the AP. But only about 400 buses per day were needed, and they cost much less than originally thought – $27,081,859. FAA paid the invoice, according to the report.

The inspector general’s staff met in mid-October with the FAA’s contracting officer and to back up the invoices from Landstar for services during the week, according to the report. Several weeks later, Landstar came up with documentation showing how many buses actually had been used. Landstar repaid the money that day, and the inspector general noted that it was the company’s action that allowed the government to recover the money.