Should disaster strike Kentucky this year, DRC Emergency Services will have the important and potentially lucrative job of cleaning up the wreckage.
The Kentucky Transportation Cabinet awarded a pre-disaster contract to the Texas-based company in July 2024. A pre-disaster contract is one of the most important steps local governments can take to prepare themselves for an emergency, according to the Federal Emergency Management Agency, because they establish set prices before disaster strikes.
Kentucky didn’t have a pre-disaster contract in place when eastern Kentucky flooded in July 2022. With the floodwaters barely receding and debris blocking mountain roads, state officials rushed to hire Florida-based AshBritt Inc.
The Kentucky Center for Investigative Reporting detailed how the company increased costs nearly five times initial estimates, despite doing an incomplete cleanup job that local residents fear leaves them vulnerable to another flood. AshBritt now faces multiple lawsuits over its work in Kentucky.
Experts told KyCIR that signing a pre-disaster contract could have helped avoid some of the problems that occurred during the flood cleanup. AshBritt’s contract ended in May 2024. State officials solicited bids for the new pre-disaster contract the following month.
Eight companies submitted a bid for the new contract, AshBritt was not among them. Kentucky officials determined that DRC Emergency Services proposed the lowest price.
How much the company will be paid depends on the scope of the disaster. But one thing is for sure: Disaster spending is on the rise. Annual government spending more than tripled between 2005 and 2016 to top $16 billion. By 2030, the disaster response industry could grow to $240 billion a year.
The rise of the industry has created a “new economy” dominated by a few large companies that can leverage financial resources, political networks and armies of subcontractors to tap into a growing pool of federal funds and contracts, said Joaquin Villanueva, a professor at Gustavus Adolphus College in Minnesota, who has studied the impacts of disasters in Puerto Rico.
“We live in the era of climate disaster, climate calamity,” Villanueva said. “It’s an opportunity.”
Billion dollar business
DRC Emergency Services is part of a network of disaster response and infrastructure companies owned by brothers John, Todd and William Sullivan of Galveston, Texas.
The Sullivan family has raised beef cattle on Galveston Island for over 100 years. They loaded cattle onto boats at the Port of Galveston, where Gerald Sullivan built a major petroleum terminal and storage facility, according to a profile in Forbes.
The production, transport and processing of oil and gas produces nearly 15% of global energy-related greenhouse emissions, according to the International Energy Agency.
Those emissions contribute to a destabilizing climate, which fuels more destructive disasters and necessitates the massive flow of federal dollars to disaster zones.
“I believe in climate change, the climate is getting warmer, but I don't think we’re seeing more disasters because of it,” said John Sullivan, president of DRC Emergency Services, in an interview with KyCIR. He said he doesn’t see a connection between his family's oil investments and an increase in disasters.
“The business that we’re in is not directly correlated, or at least not in a way that I could do anything about it,” Sullivan said.
The Sullivan brothers bought DRC Emergency Services in 2016 from a bank after its previous owners defaulted on a loan used to buy the company from its founder, a former FBI agent who was investigated for corruption.
Since then, the brothers have cleaned up after hurricanes, tornadoes, fires and more. They’ve built a network of disaster related companies along the way.
There's SLSCO, a Sullivan-owned construction firm that won contracts to build 35 miles of President Donald Trump’s border wall for as much as $432 million, according to Forbes. A whistleblower later claimed the company did not properly vet its workers for the project. In 2022, SLSCO reached a settlement with a California artist who claimed workers destroyed a cheese wall he built near the construction site in 2019.
Kentucky signed a contract with SLSCO to provide housing for disaster survivors in November 2023.
Then there’s Forgen, a disaster mitigation company that lists debris removal as part of its services.
And Callan Marine, which takes on large scale marine construction and dredging projects.
“As natural disasters increase in frequency and severity, Callan Marine has the expertise and assets to support coastal protection,” the company’s website reads.
Other Sullivan-owned companies registered to do business in Kentucky include SLS Health Services, which provides emergency medical staffing, and ModCorr, LLC, which builds modular housing for correctional facilities.
In 2019, Forbes estimated the brothers saw around $1 billion in revenue from government contracts. The magazine said the brothers “could have reasonably gleaned $50 million in profits.”
John Sullivan said the business isn’t as profitable as it seems.
“We get some bad attention because people say we look like carpetbaggers, profiteers rolling in after disasters in pressed suits and making a ton of money, but that's not the case,” Sullivan said.
DRC Emergency Services directly employs about 40 to 50 people and relies on subcontractors to do the groundwork, Sullivan said.
He said companies need to manage huge amounts of debt to pay subcontractors on time. He said this partly explains why a handful of larger companies seem to dominate large contracts – smaller companies just don’t have the capital to tackle big jobs.
DRC Emergency Services won contracts in Florida, Tennessee and Georgia stemming from Hurricane Helene, Sullivan said. He said the company reached out to Kentucky officials following the January snow storm, but the state has not yet activated its contract.
He said the company has been making connections with potential subcontractors throughout the state, in case they are needed.
“Places aren’t disaster prone, until they are,” Sullivan said.
A professionalized industry
A trail of lawsuits follow DRC’s work – including 17 disclosed to Kentucky officials during the procurement process – alleging the company put workers' safety at risk, damaged property, broke deals with business partners and misrepresented their experience to obtain contracts.
At least 30 other lawsuits accuse DRC Emergency Services or other companies owned by the Sullivan brothers of not paying local subcontractors, discriminating against potential subcontractors, actively recruiting and hiring undocumented workers to build the border wall, and defrauding the federal government.
Sullivan said the disaster industry is a litigious business and many of those lawsuits accuse DRC’s subcontractors of wrongdoing, not the company itself.
Sullivan said he began subcontracting for DRC after a hurricane hit Galveston in 2008. The disaster response industry before then was “sort of the wild west,” Sullivan said.
FEMA wasn’t as involved to provide oversight and many smaller businesses worked directly with local government officials to get contracts in the wake of disasters on informal handshake deals, Sullivan said.
Sullivan says the industry has professionalized since then. A handful of big companies like DRC Emergency Services compete for contracts that are much larger. DRC currently holds a multi-state contract with the U.S. Army Corps of Engineers worth a maximum of $250 million, for example.
“The industry has tightened up a lot,” Sullivan said. “I know our competitors are much more responsible, we have some very aggressive competitors, but a lot of legitimate folks who do not do things on handshakes.”
Villanueva, the professor who studies the disaster industry, agreed that the industry has “professionalized” in the years since Hurricane Katrina, especially in regards to the lobbying and influence building in decision centers like Washington, D.C.
“These local knowledge organizations in Appalachia or in Puerto Rico, it puts them at a disadvantage over these more highly professionalized sort of companies that have a plethora of lobbyists and influences across the nation,” Villanueva said.
Sullivan Brothers Investments LLC donated $135,000 to the Democratic Governors Association in the runup to the 2023 election, according to fundraising reports filed with the Internal Revenue Service. The DGA spent more than $20 million supporting Kentucky Gov. Andy Beshear in his re-election campaign that same year and recently named him co-chair of the organization.
AshBritt gave $50,000 to the DGA during that election cycle.
Federal Election Commission records also show John Sullivan gave more than $13,000 in contributions to PACs supporting or endorsed by former Republican House Majority Leader Kevin McCarthy on a single day in April 2023. He also contributed $10,000 to Democrat Gavin Newsom’s 2019 campaign for California governor, according to the campaign finance website OpenSecrets.
DRC Emergency Services paid a total of $400,000 to lobby the federal government until 2016. But today, Sullivan said DRC Emergency Services doesn’t hire lobbyists to influence laws. The company does, however, employ consultants who introduce the company to public officials they might work for.
“I don’t think I’ve ever gotten a job through consultants,” Sullivan said. ”But they’ve helped make introductions.”
This article has been updated.
