FOR IMMEDIATE RELEASE March 08, 2006

CONTACT: Brendan Daly/Jennifer Crider 202-226-7616

Democratic Leaders Request Investigation of Wasteful Katrina Contracts and Slow Pace of Recovery

Washington, D.C. – House Democratic Leader Nancy Pelosi joined other House Democratic leaders at a press stakeout this morning after the Democratic Caucus meeting to discuss their recent trip to the Gulf Coast region.  The leaders also released a letter they sent today to the General Accountability Office (GAO) requesting an investigation into wasteful spending for Hurricane Katrina relief efforts and the slow pace of recovery.

Below are Pelosi’s remarks, followed by the text of the letter:

“As you are probably aware, over the last weekend we had a bipartisan delegation that went to the Gulf Coast, where Hurricane Katrina struck.  I was pleased to lead the delegation with Speaker Hastert.

“What we saw there challenged the conscience of our nation.  Six months after the hurricanes, people are still not able to have access to their homes, if their homes even exist at all.  What we saw there challenges the conscience of this Congress.  To meet this challenge, we have come to ask for some answers.

“When Mr. Clyburn talks about $400 an hour and $65 an hour for contracts, that’s what FEMA has been charged.  We don’t know what the people delivering the service were paid.  And that was a constant theme when we were there.  Time and money have been spent by contracting and subcontracting instead of just hiring someone to get the job done, engaging the services of a local firm to get the job done.  I think this borders on a scandal.  But we don’t know.  That is why we are asking the GAO to look into this.  I think the American taxpayer is being ripped off.  But more importantly, the people of the region are not being served.  The American people are compassionate and generous, and we have a responsibility to the taxpayer.  We want these answers.

“I think it is important to note the scale of this so people know how vast it is.  For example, when we went to the Lower Ninth Ward in New Orleans and neighboring St. Bernard Parish, you think of it as a neighborhood, but it is the size of the island of Manhattan.  Think of Manhattan with no homes and no businesses up and running.  Let me correct myself.  In St. Bernard Parish, they had 27,000 homes; three of them are habitable.  So it’s not 100 percent -- 27,000 minus three, if that gives you any scale.  And from Galveston to Florida, the scope of hurricanes Katrina, Rita, and Wilma devastated an area the size of Great Britain.  So we are not talking about a few people.  We are talking about a huge part of our country, where we have not met the needs of the people. 

“Six months later, not only are people not in their homes, they are being kicked out of hotels.  This is not a statement of the values of the American people.  We are asking for the GAO to expedite and look into this and get back to us as soon as possible.”

* * *

March 8, 2006

The Honorable David Walker

Comptroller General

U.S. Government Accountability Office

Washington, D.C.

Dear Comptroller General Walker:

From March 2-4, 2006, many of us went on a bipartisan Congressional Delegation tour of the Gulf Coast to survey the region’s recovery from Hurricane Katrina.

The three-day tour revealed a battered landscape littered with mounds of debris, destroyed infrastructure, and few public services.  Little progress appears to have been made toward recovery and rebuilding along the Gulf in the six months since Hurricane Katrina made landfall.  This lack of progress is particularly troubling considering the $62 billion that Congress has appropriated to provide the 1.8 million displaced residents temporary relief and long-term assistance to begin the long process of rebuilding their lives and redeveloping the areas devastated by the storm.

The extraordinary devastation caused by Katrina should have called forth an equally extraordinary response.  But the lack of progress toward recovery in the Gulf raises fundamental questions about the competence of the federal response.  

We are particularly concerned by the evident waste of funds through improper and inefficient contracting decisions.  The federal response to Hurricane Katrina depended heavily on the use of private contractors to conduct routine relief and recovery activities such as furnishing and delivering ice, water, food and other supplies, removing debris, providing temporary coverings for roofs and arranging temporary housing.  The absence of Administration oversight of contracting appears to have permitted grossly wasteful and inefficient spending to continue, even as urgent needs of Gulf Coast communities remain unmet. 

From investigations conducted by inspectors general, Congressional committees, and the GAO, we know that the government has spent:

• $3 million for 4,000 base camp beds that were never used;
• $10 million to renovate rooms in a military barracks that were used to house only 6 people;
• $236 million to lease cruise ships that were never fully occupied by evacuees, and 
• $857 million for 25,000 manufactured homes for which there are current deployment plans for only 5,000. 

These examples alone depict a breakdown in the normal process of disaster recovery.  They are further exacerbated by recent findings by the President’s Council on Integrity and Efficiency (PCIE) that nearly 600 Katrina related contracts have been awarded on a no-bid /sole source basis. 

Meanwhile, Gulf Coast communities lack adequate housing and public infrastructure so that residents may return and rebuild.  That is unacceptable.

We understand that GAO is reviewing the efficiency of government contracting for the Katrina recovery effort.  Having witnessed firsthand the devastation along the Gulf and the slow rate of recovery and rebuilding progress, we request that you expedite your review in this area and report your findings to Congress as quickly as possible.  A full accounting of the use of no-bid awards and irregular contracting practices will help our efforts to rein in waste and inefficiency and jump start the stalled rebuilding and recovery effort.

We further ask that the GAO examine how the Administration was caught so unprepared to efficiently contract for Katrina reconstruction, repeating the mistakes that were discovered in contracting for Iraq reconstruction.  We also ask that your review identify the most wasteful contracts, so we can take immediate steps to end them and spend the money properly to benefit Gulf Coast residents.

Sincerely, 

Nancy Pelosi                                        Steny Hoyer                                

Democratic Leader                               Democratic Whip

James E. Clyburn                                  John B. Larson

Democratic Caucus Chair                     Democratic Caucus Vice Chair

Henry A. Waxman                                Bennie Thompson

Ranking Democrat,                               Ranking Democrat,

Government Reform                             Homeland Security

“ Democrats are united in presenting a New Direction for America, one that will make our nation as strong as its people, one that brings opportunity, security, and prosperity to all Americans. ”

Democratic Leader Nancy Pelosi