Barack Obama Amendment to Stop No-Bid Contracts for Gulf Coast Recovery and Reconstruction

May 2, 2006

Mr. President, after the devastation of Hurricane Katrina, millions of Americans opened their hearts, their homes, and their wallets to help the victims in the Gulf Coast. Even before Katrina’s winds and rains died down, Americans across the country called national hotlines and pledged their hard-earned dollars, their time, and their prayers to the relief effort.

But they didn’t just pledge ? they also delivered. They delivered to the tune of $3.5 billion dollars. Many of these donations came from working-class families who didn’t have much to give, but they gave what they could.

Like the American people, President Bush made a pledge after the disaster. He pledged that he would provide the Gulf Coast with the federal assistance it needed to get back on its feet. With the bill now before us, the total amount of federal funding for hurricane recovery will exceed $100 billion, and it’s safe to say that more money will be needed in the months and years to come.

But in order to make good on the President’s pledge, we need to do more. We need to pledge to be responsible stewards of taxpayer dollars. We owe this to the Americans who donated their own funds to hurricane relief efforts and who trust us each day with the tax money they send to Washington.

Unfortunately, we haven’t done a very good job so far of delivering on this pledge.

Yesterday, Senator Coburn and I came to the floor to detail the numerous instances of waste, fraud, and abuse in the use of Katrina funds.

We know that FEMA spent nearly $880 million in taxpayer money on 25,000 temporary housing trailers stored around the country, including 11,000 that are rusting away in a field in Arkansas.

There are reports of prime contractors charging upwards of $30 per cubic yard for debris removal ? work that actually costs subcontractors as little as $6 per cubic yard.

And, as the Washington Post reported, four large companies are charging a 1,500% mark-up to cover damaged roofs with plastic tarps.

Senator Coburn and I have tried to address these problems by offering a sensible package of amendments to ensure fiscal accountability and transparency. We have proposed the appointment of a chief financial officer to oversee the spending of federal funding. We have proposed limits on the amount of overhead expenses that a contractor can charge the federal government. And we have proposed that the details of all large Katrina contracts be posted on the Internet.

Unfortunately, these amendments are not germane now that cloture has been invoked.

That is unfortunate. It’s unfortunate because the interests of the American taxpayer are not being well-served by the U.S. Senate. Even though we will have appropriated well over $100 billion by the end of this week for Katrina relief and recovery, we haven’t put any accountability systems in place to ensure that the money is well-spent.

I know I’m new to this body, but I’m troubled that Senate rules are getting in the way of sound policy. I understand that’s how the Senate works, so Senator Coburn and I are here to offer one modest amendment to protect taxpayer dollars. Our amendment addresses no-bid contracting and is germane to the underlying bill.

Immediately after the hurricane, FEMA awarded four $100 million no-bid contracts to four large companies. $400 million taxpayer dollars, without full and open competition.

Acting FEMA Director David Paulison was asked about these contracts when he testified before the Senate Homeland Security and Governmental Affairs Committee on October 6, 2005. He said the following:

"I've been a public servant for a long time, and I've never been a fan of no-bid contracts. Sometimes you have to do them because of the expediency of getting things done. And I can assure that you we are going to look at all of those contracts very carefully. All of those no-bid contracts, we are going to go back and rebid."

Senator Coburn and I expected Director Paulison to stick to his word and rebid these contracts. But a month and a half passed, and the contracts still had not been rebid. So last November, we introduced an amendment to the tax reconciliation bill expressing the Sense of the Senate that FEMA should immediately rebid these contracts. Our colleagues agreed and passed this amendment by unanimous consent.

After our amendment passed, both Senator Coburn and I met with Director Paulison, and again he assured us that these contracts would be rebid.

Yet, these contracts still have not been rebid. And to add insult to injury, FEMA said in March that the contracts would not be rebid after all. In fact, the contracts actually have been extended, despite the fact that GAO found that three of these four firms had wasted millions of dollars in taxpayer funds.

The abuse doesn’t stop with these four contracts. We learned just two weeks ago that the Army Corps of Engineers missed an opportunity to negotiate a lower price on a $40 million contract for portable classrooms in Mississippi. Instead, a no-bid and overpriced contract was awarded to an out-of-state firm.

I’ve often heard it said that the definition of insanity is doing the same thing over and over again, and expecting different results. Frankly, what we’re doing with Katrina funding borders on insanity ? we in Congress just keep trusting FEMA to enter into competitive contracts even though there’s no evidence that it has any intention of doing so.

So the amendment we’re offering today is our effort to say enough is enough. Our amendment requires all federal agencies to follow competitive bidding procedures for any Katrina-related contracts exceeding $500,000. This is a common sense amendment. Eight months after Katrina, there’s no longer any emergency that justifies a no-bid contract that might have been entered into the days after Katrina.

The American people deserve the benefits of competition on government contracts. Competition is good for American business and it’s good for the government. It helps to ensure high quality and low costs. That’s what the American people have a right to expect, and that’s what our amendment seeks to deliver.

Before we spend another dollar in the Gulf Coast, let’s make sure that we have some transparency and accountability systems in place to ensure that federal money is helping those people most in need, instead of lining the pockets of a contractor.

In our rush to get money to the Gulf Coast eight months ago, we didn’t do that, and the American taxpayers ? and more importantly, the victims of Katrina ? paid a heavy price. Let’s not repeat that mistake again.

I urge my colleagues to support Senator Coburn and me in this effort.