Congressional Watchdogs Eye Katrina Waste, Abuse

Lawmakers who approved billions of dollars to help rebuild the Gulf Coast following Hurricane Katrina (search) said Wednesday there are worrisome signs of wasteful spending.

Citing no-bid contracts and relaxation of government spending rules to speed the flow of money to the Gulf Coast, House members said government auditors need to be aggressive in their oversight.

"I fear that the days are soon upon us where we will see daily reports of exotic, unnecessary and grossly overpriced purchases of goods and services under the guise of providing hurricane relief and recovery," said Rep. Jay Inslee, D-Wash.

"It does not appear that their efforts to ensure the money is spent wisely.

They announced several new audits intended to stem fraud, including aggressive review of no-bid contracts and government credit card spending. The limit on credit card purchases for Katrina-related items was raised from $2,500 to $250,000.

"I think the office of inspector general is well-equipped to deal with oversight," said Richard Skinner (search), inspector general at the Homeland Security Department, which is coordinating auditing efforts among the various agencies.

Skinner's remarks drew skeptical questioning from several lawmakers, who repeatedly asked whether he could handle the task of coordinating the work of all the agency inspectors general.

They pointed to the early approval of large contracts for emergency housing, including one $236 million deal with Carnival Cruise Lines for ships that are sitting half-full. They also questioned the Bush administration's recommendation of the higher purchase limit for credit cards.

"Who approved these? Who's in charge here?" asked Rep. Bart Stupak, D-Mich., expressing concerns that an after-the-fact review of contracts may not be sufficient to recover already lost dollars.

"I just think we're throwing a lot of money out there," he said. "We need someone in charge and accountable."

The hearing was held amid a flurry of legislation pending in Congress that would create additional layers of oversight to the Katrina contracting and award process.

One bill, proposed by Sens. Tom Coburn, R-Okla., and Barack Obama, D-Ill., would create a chief financial officer to oversee and approve all Katrina spending. Currently, that task is designated to the contracting officers at the respective agencies, which are then subject to review by the inspectors general.

In the weeks after the storm, more than 80 percent of the $1.5 billion in contracts awarded by the Federal Emergency Management Agency for Katrina work were handed out with little or no competition or had open-ended or vague terms that previous audits have cited as being highly prone to abuse.

Rep. Michael Burgess, R-Texas, questioned FEMA's decision to order 100,000 trailers for emergency housing in the aftermath of the storm. One contract was awarded to Bechtel Corp. (search), which has strong ties to the Bush administration, in an open-ended agreement whose cost has yet to be set.

"We're going to have another disaster that will require multiple people to be displaced," Burgess said. "This calls into question if we have an effective contracting process if you're rushing out to buy 100,000 trailers."

Skinner said Homeland Security had stopped delivering new trailers and would vigorously review contracts that may have been improperly awarded based on political connections.

"By using no-bid contracts, we create a vulnerability to waste, so that's what we want to closely look at," he said.