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Dr. Coburn, Sen. Obama Say Suspicious Katrina Contracts Highlight Need for CFO Oversight

Location: Washington, DC

Dr. Coburn, Sen. Obama Say Suspicious Katrina Contracts Highlight Need for CFO Oversight

U.S. Senators Barack Obama (D-IL) and Tom Coburn, M.D. (R-OK) today issued the following statement in the wake of reports of waste, mismanagement and fraud in the handling Hurricane Katrina rebuilding effort.

"Just a few weeks into the most expensive rebuilding effort of all-time, we're already hearing reports of overcharges, underperformance, and mismanagement," said Obama and Coburn. "Finding out after the fact that we're spending taxpayer money on no-bid contracts and sweetheart deals for cruise lines is no way to run a recovery effort. We're already seeing examples that highlight the need for an independent CFO who will be in charge of every penny that goes out the door. The American public and the people of the Gulf Coast deserve no less."

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, TX.

"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 Coburn-Obama bill would create a Chief Financial Officer (CFO) to oversee all expenditures associated with the Hurricane Katrina relief and reconstruction effort. The Hurricane Katrina CFO would be appointed by the President, confirmed by the Senate, staffed with experts from relevant federal agencies, and would have management and oversight over any agency using federal funds for the recovery. The CFO would issue monthly financial reports to Congress, and the Government Accountability Office would issue quarterly reports to Congress reviewing the work of the CFO and recovery activities.

"Richard Skinner, the inspector general of the Department of Homeland Security said that FEMA officials awarding contracts ‘took a lot of shortcuts that may have resulted in a lot of waste'," said Obama and Coburn. "We should appoint a CFO immediately to ensure that rebuilding and reconstruction money gets to the people who need it the most."

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