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Obama and Coburn Call FEMA Decision to Rebid No-Bid Hurricane Relief Contracts a Victory for Taxpayers

Thursday, October 6, 2005

For Immediate Release October 6, 2005
Obama Contact: Robert Gibbs or Tommy Vietor (202) 228-5511
Coburn Contact: John Hart (202) 228-5357

Obama and Coburn Call FEMA Decision to Rebid No-Bid Hurricane Relief Contracts a Victory for Taxpayers

(WASHINGTON, D.C.) - U.S. Senators Barack Obama (D-IL) and Tom Coburn, M.D. (R-OK) today said that the Federal Emergency Management Agency's (FEMA) decision to rebid millions of dollars worth of federal hurricane-relief contracts awarded with little or no competition is a victory for taxpayers.

The Associated Press has reported that FEMA's acting director R. David Paulison said millions of dollars worth of contracts awarded with little or no competition will be rebid. More than 80 percent of at least $1.5 billion in FEMA contracts were awarded with little or no competition.

"FEMA's decision to rebid millions of dollars worth of hurricane relief contracts that were awarded with little or no competition is a victory for all taxpayers as well as the next generation that is already burdened with enormous debt," said Obama and Coburn. "However, the fact that these contracts were ever signed in the first place underscores the importance of creating a Chief Financial Officer to oversee the Hurricane Katrina reconstruction efforts. It is crucial that we put one person in charge of constantly monitoring the billions of dollars being spent before that money goes out the door. Creating a team of inspectors general is a well-intentioned but deeply flawed approach that will only create a longer list of 'lessons learned' but not dollars saved."

U.S. Senators Barack Obama (D-IL) and Tom Coburn, M.D. (R-OK) introduced a bill to create a Chief Financial Officer (CFO) to oversee all expenditures associated with the Hurricane Katrina relief and reconstruction effort. The Hurricane Katrina CFO would be appointed by the President, confirmed by the Senate, staffed with experts from relevant federal agencies, and would have management and oversight over any agency using federal funds for the recovery. The CFO would issue monthly financial reports to Congress, and the Government Accountability Office would issue quarterly reports to Congress reviewing the work of the CFO and recovery activities.

"Richard Skinner, the inspector general of the Department of Homeland Security said that FEMA officials awarding contracts 'took a lot of shortcuts that may have resulted in a lot of waste'," said Obama and Coburn. "We should appoint a CFO immediately to ensure that rebuilding and reconstruction money gets to the people who need it the most."


SUMMARY OF COBURN-OBAMA "OVERSEE ACT"


  • A Chief Financial Officer (CFO) would be established and would be responsible for the efficient and effective use of federal funds in all activities relating to the recovery from Hurricane Katrina.


  • Unlike an IG which audits money after it has been spent, the CFO would review expenditures before they are approved. This is a better way to protect against waste, fraud, and abuse.


  • The CFO would be appointed by the President, confirmed by the Senate, and located in the Executive Office of the President.


  • The CFO office would be staffed with experts detailed from relevant federal agencies, would have management and oversight of each federal agency involved in the recovery effort, and would work in conjunction with the inspectors general in each of these agencies and the president.


  • Every month, the CFO would issue financial reports to Congress on the use of federal funds. These reports would include information about the extent to which federal funds have been distributed to persons most in need, the extent to which federal funds have been distributed to companies that hire local workers, and the use of no-bid and "cost-plus" contracts.

  • The Government Accountability Office (GAO) would issue quarterly reports reviewing the activities and expenses approved by the CFO. These reports would examine the accuracy of the CFO's reports and include information on the use of no-bid or "cost-plus" contracts, whether federal funds have been used for their intended purposes, and the extent to which federal funds have helped persons most in need and local workers.