Army Corps to Seek Repayments from Norcross Firm

WASHINGTON — The U.S. Army Corps of Engineers has told federal auditors it will seek to recoup overpayments, estimated at $881,000, from a Norcross, Ga., company that is the sole supplier for emergency bottled water for the Federal Emergency Management Agency.

The Army Corps, which oversees the contract for FEMA, also agreed to tighten oversight of the small, family-owned firm, Lipsey Mountain Spring Water, whose operations were sharply criticized in an audit issued in February by the Defense Department's inspector general.

The Army Corps had earlier disputed another audit finding — that Lipsey had overcharged the government $6.5 million for undocumented air cargo expenses — and asserted that Lipsey had provided proper documents for those costs.

Late last week, however, the Army Corps agreed that the company should repay what auditors said were excess reimbursements for the costs of a temporary halt in water deliveries to areas hit by Hurricane Katrina in 2005.

Lipsey received the payments when loaded trucks were ordered to wait, or were diverted, before delivering the supplies. The inspector general's audit concluded the company was paid for the "same truck multiple times" in 58 instances and also for 21 trucks and trailers for which there was no proper verification. The audit assessed the overpayments at $881,000.

How much could be recovered is uncertain, the Army Corps said, adding that the Corps was being required to follow the "freedom of information" channels to retrieve the documentation used by the inspector general's auditors.

"This will delay completion of this action," the Army Corps said.

Company president Joseph Lipsey III declined to respond Tuesday, saying he needs "an opportunity to study these new interactions between DoD (the Department of Defense) and the Corps."

In response to questions last month, Lipsey said an accountant had reviewed his records and concluded that the company does not owe the government money. He said he has asked subcontractors who trucked the bottled water during Hurricane Katrina to provide documentation for the disputed reimbursements.