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Obama, Coburn Ask FEMA to Address Ballooning No-Bid Contracts for Gulf Coast Reconstruction

Location: Washington, DC

Obama, Coburn Ask FEMA to Address Ballooning No-bid Contracts for Gulf Coast Reconstruction

In the wake of reports that four no-bid contracts for Gulf Coast reconstruction have ballooned from $400 million to $3.4 billion, U.S. Senators Barack Obama (D-IL) and Tom Coburn, M.D. (R-OK) Monday sent a letter to Federal Emergency Management Agency (FEMA) Director R. David Paulison asking him explain what efforts have been made to stop the use of no-bid contracts, how these contracts were allowed to balloon, and what, if any, additional authority the agency needs to permanently stop these abuses.

"We cannot express to you in strong enough terms how serious this issue is to us and our Senate colleagues. On four separate occasions over the past year, the Senate has unanimously approved amendments to limit the use of non-competitive procedures in contracting," the Senators wrote. "Competition is good for American business, and it's good for the government. It helps to ensure high quality and low costs. Competition is what the American people have a right to expect, and that's what we intend to achieve."

Obama and Coburn said that in both private meetings and public testimony, Director Paulison has expressed concerns about the use of no-bid contracts and promised that FEMA would employ non-competitive procedures rarely and only when absolutely necessary to avoid unacceptable disruption to critical services. But despite these repeated assurances, news reports indicate that no-bid contracts are still being awarded. The four contractors who won no-bid contracts to house Hurricane Katrina evacuees have seen the value of the contracts balloon from $400 million to about $3.4 billion, and these contractors were awarded another $1 billion in potential contracts last week from FEMA.

"Given your strong statements in opposition to no-bid contracts, we were greatly troubled to learn that FEMA is continuing to extend these contracts to the point that their value is now more than eight times the original contract value," the Senators wrote. "Since we are nearing the one-year anniversary of Hurricane Katrina, we question whether any emergency remains that would justify a continued reliance on no-bid procedures."

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