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October 2, 2005

FEMA cruise ship contracts defended

Florida Governor Jeb Bush and Carnival Corporation Chairman and CEO Micky Arison have defended FEMA's post-Katrina cruise ship charters.

The FEMA decision to charter cruise ships as temporary housing for hurricane victims has been the subject of Congressional questions and criticism.

On September 23, Rep. Henry Waxman (D.-Calif), Ranking Minority Member of the House Committee on Government Reform, wrote Homeland Security Secretary Michael Chertfoff saying he was "concerned about the costs of the contract" with Carnival.

Combined, the three Carnival ships chartered by FEMA at a reported cost of $192 million, with an additional reimburesment of expenses of up to $44 million, can accommodate 7,116 passengers.

"Many of the berths are going unfilled, which could make the cost per person extraordinarily high," wrote Waxman. "Even if all the berths were filled, the cost for a family of five appears to exceed $20,000 per month. "This would appear to be far more than other options, such as providing community-based housing."

Waxman asked Chertoff to provide copies of the contracts, requests for proposals and other documentation.

On September 27, U.S. Senators Barack Obama (D-IL) and Tom Coburn, M.D. (R-OK) piled on.

The two senators are sponsoring legislation that would create a Chief Financial Officer (CFO) to oversee all expenditures associated with the Hurricane Katrina relief and reconstruction effort.

In a joint statement they said that "the Senate Federal Financial Management Subcommittee's investigation into a six-month $192 million FEMA contract with Carnival Cruise Lines has discovered that taxpayers are paying, per evacuee, four times the amount a vacation cruise passenger would have to pay. Three Carnival ships are only half full and mostly occupied by relief workers. Carnival's overhead costs in the FEMA operation are far lower than during normal cruises. The Carnival ships are docked. No fuel is being used and no entertainment is being provided to the relief workers. Yet, taxpayers are paying $2,550 per guest per week, which is four times the cost of a $599 per person '7 Day Western Caribbean' Cruise from Galveston."

"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," Obama and Coburn said.

The FEMA contract has, however, found a defender in Florida Governor Jeb Bush.

Speaking to travel agents at an event in Fort Lauderdale he said critics who have labeled the Carnical contract a "sweetheart deal" are wrong, and that the charge could inhibit companies in Florida from stepping forward in the future if a similar hurricane situation develops there.

"There's some senators and politicians up there in Washington criticizing this and I think it's wrong," the Sun-Sentinel newspaper reports Bush as saying.

The the deal was done during a crisis," said the Governor. "There was total chaos. Entire communities were wiped out. [Carnival] responded as a good corporate citizen and I think they're being criticized unfairly."

The Sun-Sentinel also reports Carnival Chairman Micky Arison as saying there are 1,000 New Orleans police officers using two Carnival ships now located in New Orleans. He said reports they were empty are untrue, and that about 50 cabins are vacant on one ship and 100 on the other.

"Before those ships arrived, these guys had lost their homes. They were trying to police New Orleans without water, without food and without a roof over their heads," the Sun-Sentinel quotes Arison as saying.

The newspaper quotes Arison as saying the contract price was settled on to assure Carnival would break even when it refunded cruises for passengers who had to be displaced from the ships.

"The government felt the need was great and what we asked for was to be kept whole," he said

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