Hearing Statement Of Congressman Stephen F. Lynch On Government Contracting After Hurricane Katrina

May 23, 2006

On May 4, 2006, Congressman Stephen F. Lynch made the following statement at the Government Reform Full Committee Hearing entitled "Sifting Through Katrina’s Legal Debris: Contracting in the Eye of the Storm:”

Thank you, Mr. Chairman and ranking member.

I also want to welcome and thank Mr. Taylor and Mr. Pickering for their participation.

The central mission of this committee is to provide oversight of government contracting practices, whether it be Halliburton or KBR in <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />Iraq, or major highway projects in my district where Bechtel was involved.

Basically, what we try to do are two things: One is to ascertain the cost of the work being done, and second, to try to determine whether or not it's reasonable or not.

So when we figured out the cost of providing temporary housing after Katrina, we sought to do our job on this.

And in particular, I want to look at the Carnival Cruise Lines contract, which caught my eye.  I must admit, I've never been on a cruise, but the numbers here are stunning, I think.

I actually live in a pretty high-cost housing state.  And I wanted to make sure that these numbers were right. According to what we have from DHS, the Carnival Cruise ship contract, which is now over, so we can take a good look at it, it cost -- the total picture -- it cost $236 million --$236 million.

It ran for six months, and based on the occupancy figures that we got -- now when Ms. Watson and the chairman led us down to a CODEL right after the hurricane, and I know there were some problems with getting people into the cruise ships, and I don't know why, but there were, but based on the occupancy figures from DHS, it cost over $53,000 to house each individual on board the ship.

That comes out to about $300 a night for an individual, and obviously $600 a night for two people.

Now, the way that GSA looks at this is we try to do comps.  That's shorthand for comparable properties or comparable accommodations. So what I did was I asked -- we all asked -- minority staff to come up with some comps on what $600 a night for a couple might get us and what $300 a night might get us for an individual so we know whether or not those are reasonable.

Now, this is a fairly boilerplate process, but I have to admit even though I represent the 9th Congressional District in Massachusetts, which includes Boston, which is fairly high in terms of housing costs, I have to admit, I was extremely surprised when we got the results.

Mr. Chairman, I don't know if we have the ability -- I know I have some photographs of the properties we came up with, but basically I'd like to put them up. Here's one property that we could have put people up at for $300 a night or $600 a couple.  It's the Bellagio Hotel and Casino in Las Vegas, which is, you know, which is pretty nice.  I've never been there either.

But it looks nice, and, you know, it's rather stunning that when we think we're trying to do temporary housing for these folks, and this is what we're paying for.  And you could stay at this hotel in a suite -- not just a room -- you could get a full suite for the money we paid to house these folks in the cruise line rooms.

Secondly, I asked them to do a broad assessment.  The next property that they came up with was -- actually, it looks a little bit like the chairman's house down in Virginia, but it's not.  It's actually a castle, a 12th century Gothic castle.  You could actually rent this for less money than we paid to put up these folks on the Carnival Cruise ships.

If it wasn't the taxpayers paying for this, this would be humorous.

And if it wasn't for the fact that the folks we were trying to help went without our help -- that's the other side of this.  It's not just the shortfall on the taxpayers' side, but the fact that the goodwill of the American people was put forward, it just never reached the people we were trying to help, and they desperately needed our help.

This castle actually has a premier golf course as well as an equestrian center for those who play polo.  But it's just a good indicator of what we could have done.

Or lastly, there's also another comp here.  This is actually the Trump Towers.  This is the Trump World Tower in New York City.  This is where Bill Gates and I think Derek Jeter live.  This would have been cheaper.  It would have been cheaper to put our folks up at Trump Towers than it was to have FEMA house the hurricane survivors on these Carnival Cruise ships.

Now, the exasperating part of this is that the Carnival Cruise line followed the rules.  That's what bothers me.  They followed the rules.  They didn't commit fraud.  They actually stayed within the guidelines and were able to get away with this within the rules, within the law, within the guidelines.  And that's a disgrace.  That's a disgrace.

I want to ask Ms. Lee, what controls are in place to prevent the administration from awarding contracts like these, which are, frankly, absurd and shocking to the average sensibilities out there, not only of the members of Congress, but also of the American taxpayer.

-30-