Carnival Contract Criticized

Lambasted might be the better choice of verb. Yesterday, former FEMA Chief Mike Brown told a Congressional panel that one of his failings during Katrina was providing insufficient media alerts. Today, we learn a more serious failing was contract oversight. The Washington Post details a 1 September FEMA directive (Brown was chief until 12 Sept.) to find 10,000 berths on full-service cruise ships for Katrina victims. It resulted in a $236 million contract with Carnival Cruise Lines. The Post reports (emphasis added)

If the ships were at capacity, with 7,116 evacuees, for six months, the price per evacuee would total $1,275 a week, according to calculations by aides to Sen. Tom Coburn (R-Okla.). A seven-day western Caribbean cruise out of Galveston can be had for $599 a person -- and that would include entertainment and the cost of actually making the ship move.

The ships, anchored in the Mississippi River and Mobile Bay, are only half-full -- thus doubling the cost to about $2,550 per person: four times the price of a cruise (not to belabor the point, but cruising requires more gas to power the engines than anchoring does).

Historically, FEMA contracts in advance for standard emergency items, like the blue tarps used to temporarily protect leaky roofs. This year, according to Citizens Against Government Waste, it failed to do so. In other words, it failed to plan. Even after the National Weather Service warned that 2005 would be a hurricane season for the record books.

The spotlight on Carnival, the Post says, has also turned congressional attention to taxes. Even though the cruise line is headquartered in Miami, it is incorporated in Panama. Last year, it paid $3 million in income tax on pretax income of $1.9 billion. According to analysts, the effective income tax rate for US companies is about 25 percent. Compare an estimated $475 million tax bill with the actual bill of $3 million.

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FEMA, Hurricane Katrina, Michael Brown, Politics