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The Honolulu Advertiser
Posted on: Wednesday, September 28, 2005

Ships spark post-Katrina debate

By Jonathan Weisman
Washington Post

Carnival Cruise Lines ships are docked in downtown New Orleans to house and feed people displaced by Hurricane Katrina.

DAVID J. PHILLIP | Associated Press

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WASHINGTON On Sept. 1, as tens of thousands of desperate Louisianans packed the New Orleans Superdome and convention center, the Federal Emergency Management Agency pleaded with the Military Sealift Command: The government needed 10,000 berths on full-service cruise ships, FEMA said, and it needed the deal done by noon the next day.

The hasty appeal yielded one of the most controversial contracts of the Hurricane Katrina relief operation, a $236 million agreement with Carnival Cruise Lines for three ships that now bob more than half empty in the Mississippi River and Mobile Bay. The six-month contract staunchly defended by Carnival but castigated by politicians from both parties has come to exemplify the cost of haste that followed Katrina's strike and FEMA's lack of preparation.

To critics, the price is exorbitant. If the ships were at capacity, with 7,116 evacuees, for six months, the price per evacuee would total $1,275 a week, according to calculations by aides to Sen. Tom Coburn, R-Okla. A seven-day western Caribbean cruise out of Galveston can be had for $599 a person.

"When the federal government would actually save millions of dollars by forgoing the status quo and actually sending evacuees on a luxurious six-month cruise, it is time to rethink how we are conducting oversight. A short-term temporary solution has turned into a long-term, grossly overpriced sweetheart deal for a cruise line," said Coburn and Sen. Barack Obama, D-Ill., in a joint statement yesterday calling for a chief financial officer to oversee Katrina spending.

After a one-day competition, Sealift Command had bids from 13 ships, but only four met FEMA's requirements for providing accommodations, which included full meal service, between-meal snacks, linen service and medical support. Four ships the Ecstasy, Sensation and Holiday, all owned by Carnival, as well as a ferry called the Scotia Prince landed the contracts.

Carnival's bid totaled $192 million over six months, plus $44 million in reimbursable expenses, such as port charges, fuel, food and docking costs. To Carnival, the contract will ensure only that the company breaks even when it pulls three ships out of normal operations. About 100,000 passengers found vacations canceled to accommodate the government's needs, said J. Michael Crye, president of the International Council of Cruise Lines, who has been answering questions for Carnival.

"In the end, we will make no additional money on this deal versus what we would have made by keeping these ships in service," said Jennifer de la Cruz, a Carnival spokeswoman. "That has been our position from the outset, and it has not changed."

Government contracting officials defended the deal. "They were the market," Capt. Joe Manna, director of contracts at the Sealift Command, said of Carnival. "Under the circumstances, I'd say we're getting a pretty good value."

Coburn and Obama disagreed. "Finding out after the fact that we're spending taxpayer money on no-bid contracts and sweetheart deals for cruise lines is no way to run a recovery effort," they said in the statement.

The Carnival deal is only one of several instances in which a lack of FEMA preparation may have left federal taxpayers with an outsized bill. Despite its experiences in Florida last year, FEMA lacked standing contracts for standard relief items such as plastic tarps to cover damaged roofs, according to Thomas Schatz, president of Citizens Against Government Waste.