Potential for Massive Waste, Fraud, Abuse

(Washington, D.C.) – The Council for Citizens Against Government Waste (CCAGW) today criticized the $250 billion Hurricane Katrina Disaster Relief and Economic Recovery Act proposed by members of Louisiana’s congressional delegation.  As detailed by The Washington Post, the plan costs more than the Louisiana Purchase on an inflation-adjusted basis.  The bill includes $40 billion for Army Corps of Engineer projects; many are unrelated to flood protection.  CCAGW also called for strict oversight of all contracts awarded for hurricane cleanup and relief.

“The Louisiana delegation plan does far more than helping hurricane victims piece their lives back together,” CCAGW President Tom Schatz said.  “The federal government is being asked to turn over massive sums to a commission run by Louisiana residents to fund a wish list of projects.  The potential for waste and abuse is colossal.”

The request for $40 billion is 10 times the Army Corps’ annual budget of $4 billion for the entire nation, or 16 times the amount necessary to protect New Orleans from a category 5 Hurricane.  The bill would create a “Pelican Commission” controlled by Louisiana residents that would prioritize projects.  According to the Post, the legislation is based on a “working group dominated by lobbyists for ports, shipping firms, energy companies, and other corporate interests.”  The bill waves the normal cost-sharing requirements to shift the entire cost to the federal government.  The bill suggests funding for potential boondoggles like the New Orleans Industrial Canal and the Port of Iberia, two projects that have flunked the Corps’ cost-benefit analysis.  The 440-page bill also includes items such as $8 million for alligator farms and $25 million for a sugar-cane research laboratory which has not yet been completed.

“The Louisiana delegation is raising questions about its credibility by including so many unrelated and low-priority projects.  That doesn’t help Congress decipher victims’ real needs.  The call for total federal funding is a non-starter given our massive federal deficit and debt,” Schatz continued.  “Future generations will inevitably have their disasters to pay for; it is irresponsible to borrow more money than necessary to pay for unnecessary pork projects and corporate welfare.”

The $62.5 billion so far appropriated by Congress has auditors and investigators scrambling.  According to The New York Times, the federal government is spending $263 million per day on the recovery effort.  Of the $15.8 billion that has been allocated from a FEMA-managed disaster relief fund, $11.6 billion has gone toward contracts, individual aid, and federal agencies.  Investigators are looking into a $568 million in contracts for debris removal.  Other causes for concern include price disparities, handshake deals made without any documentation, and contracts for politically-connected companies.

“Federal officials must do a much better job of oversight than they have in the past.  It is important that no-bid contracts in the short term do not turn into long-term sweetheart deals.  Furthermore, agencies need to hold more open competition in advance for products routinely needed in emergencies,” Schatz concluded.

The Council for Citizens Against Government Waste is the lobbying arm of Citizens Against Government Waste, the nation’s largest nonpartisan, nonprofit organization dedicated to eliminating waste, fraud, abuse, and mismanagement in government.