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Contract Is No Carnival For Taxpayers

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"Contract Is No Carnival For Taxpayers"

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After Katrina, Bush told the nation, “Our first commitment is to meet the immediate needs of those who had to flee their homes and leave all their possessions behind.”

FEMA’s solution? House evacuees on three Carnival cruise ships (the Ecstacy, the Holiday, and the Sensation) in a $236 million contract criticized by lawmakers for its exorbitant cost and impracticality.

Carnival’s main defense has been that the contract is profit-neutral because it has had to cancel reservations for regular passengers.

Rep. Henry Waxman (D-CA) yesterday sent a letter to DHS Secretary Chertoff, with new evidence calling into question Carnival’s assertion:

This financial data reveals that the federal government appears to be paying Carnival significantly more under the federal contract than the ships earned on their own, while Carnival’s expenses appear to be significantly less under the federal contract than the ships normally incur. The net result is a contract that looks lucrative for Carnival but exceptionally expensive for the taxpayer.

Carnival’s 2002 financial review reveals that its revenue was just $150 million for six months, meaning that the $236 million contract — even accounting for inflation — is significantly more than the company would ordinarily make. Moreover, the ships have 800 fewer employees than usual, creating more profits for the cruise line in salaries, accomodations, and meal costs it won’t have to pay.

Chertoff is a self-proclaimed “not a hurricane expert” and evidently, he is not a contract expert either.

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