FEMA Reopening Its No-Bid Contracts

The government is reopening federal contracts worth hundreds of millions of dollars handed out with little or no competition in the relief and reconstruction efforts after Hurricane Katrina, FEMA director R. David Paulison told a congressional committee Thursday.

“All of those no-bid contracts, we are going to go back and re-bid. We’re in the process of re-bidding them already,” Paulison said in his first public testimony since succeeding Michael D. Brown three weeks ago as chief of the Federal Emergency Management Agency.

Paulison’s announcement came as senators warned him that the agency must move quickly to rebuild public confidence after FEMA’s much-criticized initial response to the hurricane.

Paulison distanced himself from decisions made by his predecessor and pledged FEMA’s cooperation with congressional investigators who were examining the agency’s handling of one of the worst natural disasters in U.S. history.

He made two appearances on Capitol Hill as half a dozen congressional committees held hearings on the hurricane and lawmakers continued to wrangle over what role the federal government should play in the recovery and how it should pay the multibillion-dollar costs.

“I’ve been a public servant for a long time, and I’ve never been a fan of no-bid contracts,” Paulison told the Senate Homeland Security and Governmental Affairs Committee. The panel is responsible for oversight of the Department of Homeland Security, which includes FEMA, and for the Senate’s investigation into the government’s response to the hurricane.

After the hearing, Paulison told reporters that he had no total figure for how many contracts had been awarded with little or no bidding. But he said four agreements for $100 million each for construction and housing were included.

Senators pressed Paulison to say how FEMA was addressing problems that continued to slow the delivery of services, including housing, to hurricane survivors. They expressed concern about FEMA’s failure to reunite some families separated by the storm, its inability to provide one-stop service to storm victims and reports that it has overpaid for some services and supplies.

Sen. Joe Lieberman of Connecticut, the senior Democrat on the panel, told Paulison that FEMA should have stockpiled supplies before the storm hit through contracts that “would have been, presumably, at more competitive prices.”

The FEMA chief also faced criticism for the agency’s decision to rent cruise ships to house recovery workers and some of those left homeless by the hurricane.

“We know that people need to be housed, but you spent a quarter of a billion dollars on cruise ships,” said Sen. Norman Coleman (R-Minn.).

Paulison defended the use of the ships, saying they are an important piece of FEMA’s effort to house between 400,000 and 600,000 people. The cruise ships, he said, are “almost completely full,” housing mostly federal workers at a cost of $168 a day. That price, he said, is “becoming very cost-effective.”

Paulison said FEMA did not want to concentrate displaced families in large trailer parks. The agency, he added, would try to “put travel trailers in people’s driveways or on their lot where they can rebuild their homes.”

But he cautioned: “There is simply not enough housing stock in Louisiana to take all Louisianians back in there. That’s not going to happen.”

It was a day of mounting anger on Capitol Hill as senators from both parties gave vent to their frustrations over the Bush administration’s relief efforts.

Senate Finance Committee Chairman Charles E. Grassley (R-Iowa), usually a strong administration supporter, lashed out at the White House for refusing to support his bill to have the federal government pick up all of the Medicaid costs of impoverished Katrina victims for five months after the day the hurricane hit land.

“I resent that, considering how much I’ve delivered for the White House over the years,” Grassley told Treasury Secretary John W. Snow at a Finance Committee hearing.

Grassley’s bill would expand eligibility for Medicaid and relieve the states of Louisiana, Mississippi and Alabama of their usual share of the program’s expenses.

Snow argued that there was no need to expand the Medicaid program, even temporarily, to meet the needs of hurricane victims. Current law, he said, allows the government to negotiate waivers to help states cover enough of the added costs of caring for flood victims.

Sen. Max Baucus (D-Mont.), the committee’s senior Democrat and a co-sponsor of Grassley’s bill, disagreed, saying the waivers did not provide enough coverage.

Snow promised to relay the senators’ concerns to Health and Human Services Secretary Mike Leavitt, whose department administers Medicaid and who has spoken out against Grassley’s bill.

Grassley replied: “If you’re going to see Secretary Leavitt, tell him to back off.”

Sen. Mary L. Landrieu (D-La.) threatened to stall debate on a defense spending bill and keep the Senate in session all night, if necessary, to protest what she said was its failure to deliver “real money to real people” in her devastated state.

Landrieu demanded $1 billion to be sent directly to Louisiana immediately to help hard-hit cities meet their payrolls.

Times staff writer Richard Simon contributed to this report.