A Flood of Money
In the Gulf, a gold rush for government funds
There's a price for luxury. Just ask the Federal Emergency Management Agency. On September 1, when FEMA officials thought they would have thousands of evacuees from Hurricane Katrina to house and feed, along with hundreds of emergency workers, the disaster management agency signed a no-bid contract with the Carnival Corp., owners of a fleet of luxe cruise ships. The deal: The feds would get three ships, Holiday, Ecstasy, and Sensation, with food included, all for a cool $236 million for six months.
But now watchdog groups are howling. The cost, they say, is astronomical, and a census last week showed that more than half the slots on the ships were vacant. Add one more thing for Congress to take a look at in the government's lackluster response to Katrina. The devastation wreaked by the storm is being answered by what will surely be the most expensive government rebuilding exercise in history. But how some of the money is being spent is already raising eyebrows. Inspectors general from a variety of government agencies, keeping a close eye on many of the contracts in the immediate aftermath of Katrina, went to Capitol Hill last week and tried to reassure members of Congress worried about disaster-related spending run amok. The government gumshoes will no doubt get more money and staff for oversight, but how much is enough? Washington is spending at least hundreds of millions of dollars a day on relief and recovery efforts, and big-money contracts continue to fly out the door at a stunning pace.
Make no mistake: The scale of the Katrina recovery contracts will be staggering. Congress has already appropriated more than $62 billion--roughly $15 billion more than the Department of Homeland Security's entire budget for this fiscal year, and way more than the nearly $44 billion appropriated for immediate post-9/11 recovery efforts. The next congressional funding could bring the total to more than $200 billion. A controversial bill proposed by Louisiana Sens. Mary Landrieu and David Vitter asks for $250 billion for hurricane relief for their state alone, including projects critics say are unrelated to hurricane relief, like $25 million for a sugar-cane research lab, $25 million for timber and Christmas tree farms, and $35 million to market Gulf Coast seafood. Gripes Tom Schatz, president of Citizens Against Waste, a watchdog group: "It seems like blatant pork profiteering and business as usual."
Clearly, the money chase is on. At a Katrina reconstruction summit recently, some 300 people gathered in the Hart Senate Office Building on Capitol Hill to learn how to get in on the Katrina gold rush. Edward Badolato, a retired Marine colonel who is now an executive with the Shaw Group, reportedly reassured attendees. "Trust me," he said, "there' s going to be enough for everybody down there."
Some of the government contracts already let have gone to firms that critics consider the "usual suspects," big outfits that have controversial records in Iraq, for instance. Halliburton subsidiary Kellogg Brown & Root, a company that charged the Pentagon $100 for each 15-pound bag of laundry, has netted $60 million in Katrina contracts. "Despite what we've been told," says Danielle Brian, executive director of the Project on Government Oversight, a watchdog group, "the favored few are not the only companies capable of doing major construction and engineering work." A spokesperson for Halliburton says KBR is doing Katrina work under two pre-existing and competitively bid contracts. Complaints of overcharges on the firm's Iraq work, the spokesperson said, are "uninformed and flat wrong."