updated 9/27/2005 11:36:50 AM ET 2005-09-27T15:36:50

Guests: Jeff Erwin, Bill Allison, Tom Schatz, Peter King, Bennie Thompson,

Oscar Ortiz  

CHRIS MATTHEWS, HOST:  President Bush scrambles to the Hurricane Rita disaster areas, still trying to catch up to the disaster of Katrina.  Here in New York, volunteers build houses for the desperate down in the Gulf area, as the word reaches us here in New York that the lobbyists are getting no-bid contracts for the biggest business in disaster relief.  Let‘s play HARDBALL. 

Welcome.  This is Chris Matthews on HARDBALL. 

We have got a big group of loud hammers behind us.  They‘re hammering nails into the houses that are going to go to help poor people who have been hit desperately by the disasters of Katrina and now Rita down in the Gulf area. 

Meanwhile, we have got a word that $300 million a day is going towards disaster relief, 80 percent of which is going toward what are called no-bid contracts, no competition.  People are simply getting these awards because they, in most cases, have well-connected lobbyists who have ties to the administration, very big corporations, Halliburton—Halliburton, Bechtel, other big corporations with connections to Joseph Allbaugh, the former FEMA director who worked for President Bush, lots of politics here. 

We are wondering how much wisdom is going into where this money is being spent. 

But, this morning, we had a great chance to take a look at what you‘re looking at behind me on Rockefeller Plaza.  You know, during the election, this was Democracy Plaza.  Well, it‘s been renamed Humanity Plaza this week by a combination of NBC News and Warner Music.  They have gotten together invited Habitat for Humanity, which has been building houses for years for people, with volunteer effort to come here and work.  And a lot of people here, like Katie Couric herself of “The Today Show,” have been working on this project. 

Let‘s take a look at her tour of this wonderful area of American volunteerism here at Rockefeller Plaza. 

(BEGIN VIDEOTAPE)

KATIE COURIC, CO-HOST, “THE TODAY SHOW”:  We‘re doing this project with Habitat for Humanity and Warner Music Group.  And we have joined forces to really just make a huge event out here on the Plaza to hopefully inspire other people to get involved.  And by the time it‘s over, we will hopefully have built almost 100 houses and raised money to build so many more. 

MATTHEWS:  So, you‘re putting together the walls here, right? 

COURIC:  Yes.  Well...

(CROSSTALK)

MATTHEWS:  It‘s like prefab. 

COURIC:  Yes.  Basically, these are called houses in a box.  And...

MATTHEWS:  What we‘re looking at right now.

COURIC:  Yes. 

MATTHEWS:  A bunch of walls that are being stood here. 

(CROSSTALK)

COURIC:  I think we‘re going to show a finished house on “The Today Show” tomorrow.  So, people can really get an idea of what these will look like once they‘re completed. 

But, essentially, the frames are built here.  Then they‘re loaded on to flatbed trucks and then they‘re placed in the area where the folks are going to live.  And then the rest of the house is completed.  They‘re three-bedroom houses and obviously provide a great opportunity for so many families. 

And, incidentally, they do pay a small mortgage and they‘re required to do something called sweat equity, everybody who gets a Habitat house, where they have to work on other houses for other people.  So, it‘s not welfare.  It‘s really giving people a chance and letting them have an investment in their own home. 

MATTHEWS:  What I‘m impressed by is the batting average of somebody I just saw hammering over here.  I‘d say it‘s about .200. 

COURIC:  I know. 

MATTHEWS:  But they‘re really trying.

COURIC:  Well, I almost hit my finger early on. 

But, you know, it‘s terrific.  And we have lot of celebrities coming by.  Tracy Chapman, Josh Groban came by to sing.  And we‘re really just trying to make it a huge, fun event and also do something wonderful for a lot of people. 

MATTHEWS:  You know, I‘m amazed, aren‘t you?  Well, tell me about your feelings about it.  You talk to so many people there.  There is a real outpouring, isn‘t there, around the country?

COURIC:  Well, you know...

(CROSSTALK)

MATTHEWS:  A lot of it.

COURIC:  I think I said on the show today, while we saw the worst of Mother Nature and actually also manmade structures, in terms of the levees in New Orleans, this national disaster has really brought out the best in so many people. 

And, in a way, it‘s a shame that something like this has got to happen for us to really open our hearts and our pocketbooks.  But I think a lot of people are pitching in.  And they see, you know, it was—it was shocking for some people to see these communities not only left devastated, but to see them, really, the way people live before this even happened.  And that‘s one thing the Habitat people point out, Chris.  It‘s not just the people in the Gulf Coast region who need help. 

There is poverty all over this country.  And people need suitable housing, and so many people just don‘t have it. 

MATTHEWS:  Katie, you‘re the star of this show.  Are you going to be the star of this building project...

(CROSSTALK)

COURIC:  Well, you know what?  I am.  I—I have to confess, I‘m not particularly handy, but I‘m going to bring Elle (ph) and Carey (ph), my daughters, down here. 

MATTHEWS:  I want to see how many two-by-fours you can haul at one time.  I remember watching Jimmy Carter and his wife hauling them around down in Tijuana.  So...

COURIC:  And they‘re impressive, right? 

(CROSSTALK)

MATTHEWS:  They sweat.  They‘re real sweat equity types. 

You know, Katie, television—we all learned about this story through television.  Is that what you think inspired people to do this kind of thing? 

COURIC:  Well, I mean, nothing like those stark images we saw of people trying to leave their homes, of the houses almost completely submerged by waters in New Orleans, houses torn apart, left like matchsticks in Biloxi and other places along the Mississippi coast. 

I think those images really struck people and certainly started a national debate on a variety of issues.  And, you know, we in the media are often criticized for a lot of the things we do or don‘t do.  But I think, in this case, the immediacy of television and those pictures and the heartache and the emotion and how raw it was, it was hard for even the reporters, who pride themselves on being objective, not to get emotionally physically involved. 

So, I think all those things, brought together, really did create an environment where people were angry and—or people felt bad and wanted to do something. 

MATTHEWS:  This behind us, you know, I wonder if this is the one time in a long time that bringing people the bad news, they wanted to get it.  They were glad to know it. 

COURIC:  Yes.  I think people were glued to their sets, Chris.  I‘m sure everyone you know, they couldn‘t stop watching it, because it was such human drama.  I mean, it was such disturbing, upsetting human drama. 

But this—this was a question of lives and would they be saved and what would happen to people.  And it just—I think it brought out something very primal in all of us.  And that‘s the desire to try to help people and save lives.

And I think it‘s actually, hopefully, going to turn into a very positive thing.  But it certainly created enormous suffering in so many families in this country. 

MATTHEWS:  What is your imagination, your vision on what the kind of people who are going to grab these houses and really invest in them as poor people, what it is going to be like for them? 

COURIC:  You know, I think so many of us are so fortunate, don‘t even imagine what it‘s like not to have a decent roof over our heads. 

And I think this will mean the world for so many families.  We had a family here this morning, a woman named Jacqueline Collins (ph), who was in a rental house, had been working toward a Habitat house, had put in a lot of sweat equity.  And then this happened.  And she thought, it was even more beyond her reach.  And we were able to say:

(BEGIN VIDEO CLIP, “THE TODAY SHOW”)  

COURIC:  This is a key, because this house is going to go back to Covington, Louisiana, right away. 

(APPLAUSE)

COURIC:  And you and your family can finally have a house.  So, let me give you this key.  Congratulations.  You guys are going to have a house.  It‘s going to be erected in Hope (ph) Village in Covington, Louisiana, so you all can start all over again. 

(CROSSTALK)  

COURIC:  You‘re welcome. 

(END VIDEO CLIP)

COURIC:  Well, these are—these are people who have been left behind, who are disenfranchised, who are not a part of the American dream. 

And it‘s all because where we were born and who our parents were in many cases.  That‘s—that is sometimes your lot in life. 

(CROSSTALK)  

COURIC:  And these people deserve a chance and deserve an opportunity.  They want to contribute to society.  I think there‘s a misconception that these people just want to collect welfare checks every month. 

And when I was in Houston talking to the governor and to other folks who are involved in providing the housing, church leaders, they said, these people want to work.  They want to provide for their families, but they just have to be given the opportunity.  So, maybe this will sort of spur a whole new movement and a whole new feeling that it‘s up to us to provide everyone with opportunity, because that‘s what this country, ostensibly, is all about. 

MATTHEWS:  People hopefully will remember Katrina triggered some new American spirit, especially as always is the case with the young kids.  Young people tend to respond more freshly to things.  They‘re amazed by injustice and amazed by poverty, when they haven‘t lived it.  And I think we‘re seeing a lot of human response to this.  And maybe our government will catch up some day. 

COURIC:  I am.  I‘m putting the very last nail...

MATTHEWS:  This is the golden spike. 

COURIC:  I‘m very excited. 

UNIDENTIFIED MALE:  Stand here.

(CROSSTALK)

COURIC:  OK.

MATTHEWS:  This is how they built the railroads.  Look at this.  Look at this!  Batting .1000!  Batting .1000!

(CHEERING AND APPLAUSE) 

MATTHEWS:  Batting .1000 here, ladies and gentlemen. 

(END VIDEOTAPE)

MATTHEWS:  If you want to get involved in this great effort of building houses for people, it‘s something that just about anybody who did any kind of work like this can help with, or they will teach you, why don‘t you get ahold of us, HARDBALL.MSNBC.com online, HARDBALL.MSNBC.com? 

When we come back we will talk about some serious hardball, big questions how the federal government is spending its money.  It looks like you have to know somebody to get some of this federal dollars for reconstruction and recovery in the South.  If you know Joe Allbaugh, the former FEMA director, that helps.  If you‘re one of his clients, you‘re going to make some money.

There‘s a big firm down in Florida from Pompano making a lot of money.  If you‘re Bechtel, if you‘re Halliburton, well, what else is new?  You‘re going to make some money from this administration, lots of money going to no-bid contracts, no competition.  The people with the inside are getting the money.  Let‘s talk about it when we come back. 

(COMMERCIAL BREAK)

MATTHEWS:  We spoke to the mayor of Port Arthur, Texas, as the—

Hurricane Rita headed towards shore.  Now the mayor himself has lost his home.  We will talk to him in a minute. 

(COMMERCIAL BREAK)

MATTHEWS:  We are back here at Rockefeller Plaza in New York.  You all know the area.  This is famous for all the ice skating and the big Christmas tree at Christmastime.  But now it‘s Humanity Plaza all this week, because Habitat For Humanity, which of course Jimmy Carter made famous as a wonderful organization, which has volunteers, all volunteers, build houses for people who need them. 

Of course, we all know about people who need houses.  Right now, they‘re down in the Gulf area.  And, right now, behind us, a lot of people are being involved here because of NBC News—News is involved, and also Warner records, Warner Music.  And they have all been brought up here to help in this effort.  And if you want to get involved, just go, as I said, online, HARDBALL.MSNBC.com. 

We have got now a man who has been victim of the hurricane himself, Hurricane Rita, more or less.  His name is Oscar Ortiz.  Of course, he‘s—he‘s the mayor of Port Arthur, Texas, probably the most hard-hit community this weekend. 

Mayor Ortiz, thank you.

You‘ve been on so many times as this hurricane approached.  How much damage did the hurricane do in your area? 

OSCAR ORTIZ, MAYOR OF PORT ARTHUR, TEXAS:  Well, it‘s going to be, Chris, most probably into the hundreds of millions of dollars. 

I took—I had the pleasure of taking Kay Bailey Hutchison, a wonderful, wonderful lady, who has helped us out tremendously down here, took her over to the area of Sabine Pass, where we have lost so many homes, took her over the refineries, where we have got some leaks in some of these big tanks.  We have got some gas leaks, I don‘t know what else. 

Most of the refineries are under about three or four foot of water.  I know that some people are saying that some of these refineries are coming up pretty fast, but they‘re not.  They‘re telling me three to five weeks before they can get into full production.  So, I guess you know what that is going to do to our gas prices in America. 

MATTHEWS:  I can guess. 

Tell me about the casualties.  There are some people that were killed in apartment complex down there? 

ORTIZ:  No.  We haven‘t had—I‘m lucky to say, in the state of Texas, Chris, we have not had one fatality. 

MATTHEWS:  What about in Beaumont. 

ORTIZ:  Now, Beaumont might have had...

(CROSSTALK)

MATTHEWS:  Five people found dead in an apartment complex today, carbon monoxide involved. 

ORTIZ:  I can‘t help with you that one, Chris.  I have not been notified of that.  We have no reports here in Port Arthur of that. 

MATTHEWS:  Well, let me ask you about your house.  You lost your house to fire, Mr. Mayor.  How did that happen?  That‘s a strange thing to happen right in the middle of this. 

ORTIZ:  Yes, it was.  I had loaned my niece the use of my garage while she fled this hurricane to get out of town.  And the fire marshal tells me that there was a short in the dash.  And when that short got going good, it just caught on fire and burned my whole house down. 

MATTHEWS:  God.  It got struck...

ORTIZ:  I was just over there a few minutes ago, and it‘s—it‘s not a pretty sight. 

MATTHEWS:  Let me ask you about the big picture. 

You said hundreds of millions of dollars of damage in your hometown of Port Arthur, which was hit so directly by Rita.  What do you think about these stories that have come out today in “The New York Times” that 80 percent of the money that‘s been already contracted for has gone to no-bid contracts in many cases to people with a lot of influence inside, clients of Joseph Allbaugh, the former FEMA director?  People—Haley Barbour‘s former firm, their client got a big chunk of money. 

Is this disturbing to you, that the insiders, the political insiders, are getting, getting a lot of this money for their clients? 

ORTIZ:  It always disturbs me, Chris, when the money doesn‘t get down to where it‘s supposed to.  And that‘s to the little guys down here who are suffering.

We went days without any food, days where we were practically out of water, days where we just about down to our last five gallons of gas, and trying to keep all our squad cars going, the state highway patrol, the EMS units, trying to keep them on the streets, so they can watch over the property here in Port Arthur.  Yes, that disturbs you an awful lot, because I have seen a lot of suffering down here in the last few days. 

MATTHEWS:  How are you going to lead a town that feels and knows that it was hurt so badly, as people scramble in many cases to get their piece of the relief money?

ORTIZ:  You know, Chris, it‘s—it‘s always a bad situation when disasters come into a community or to a state and you find those that are at the top seem to want to take advantage of the situation.

You know, we—we‘re going to have that, I know, once we open this up and allow contractors to come in there.

MATTHEWS:  Yes. 

ORTIZ:  We are going to have to make our people aware that they can be ripped off very easily. 

MATTHEWS:  Let me ask you about the president of the United States. 

President Bush is coming to Port Arthur, your—your town tomorrow. 

What are you going to tell him?  What are you going to tell him from a local perspective? 

ORTIZ:  I‘m going to tell, Mr. President, we need more help.  We need more fuel.  We need food.  We have got a lot of people here that we‘re trying to feed.

And especially when we open the doors and let these people come into the city of Port Arthur, you‘re going to have 60-plus-thousand people who are going to be hungry.  We have no restaurants open.  We have no service stations to get them gas.  We literally have nothing.  As you know, we have no—no phones working in the city.  We don‘t have our water and sewer up yet, no telephone service.  We‘re basically dead here.  This is a very dead community when the darkness comes. 

MATTHEWS:  Are you going to tell him to stop it with the no-bid contracts and force competition of all these contracts to help your area? 

ORTIZ:  If the president gives me an opportunity...

MATTHEWS:  I mean it‘s a nervy thing to say, but shouldn‘t somebody like you say that? 

OK. 

ORTIZ:  Yes, sir.

MATTHEWS:  Thank you very much.  It‘s great.  We root for you up here.  You were so helpful to us in spotting all this trouble up ahead.  And you were right on top of it.  Thank you.  And good luck getting that house rebuilt, sir.  Thank you very much, Mayor Oscar Ortiz of Port Arthur, Texas. 

We are going to come right back and talk about this no-bid business.  It‘s a big story, because the American people want to help, but they don‘t want their money going to the insiders.

We‘ll be right back with HARDBALL.

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL. 

As I said, we are going to be looking at—especially in the second half of the show, into this whole question of where all this federal money is going.  Everybody out there who is watching now pays taxes.  And you like to know where your tax dollars are going. 

And, apparently, 80 percent of the money going to disaster relief right now is going to what we call no-bid contracts.  And everybody knows what that means, no competition.  Somebody inside gets the bid, and that‘s it, regardless of the cost they charge. 

So, let‘s go right now to Lake Charles and look at some of the damage reports.

David Shuster of HARDBALL got a chopper-heighted view of the situation down there today in Lake Charles. 

Let‘s take a listen to him—David.

DAVID SHUSTER, NBC CORRESPONDENT:  Well, Chris, we‘re here at the Chennault Airport, which is the staging point for these urban search-and-rescue teams which are flying to the areas that Hurricane Rita hit the hardest. 

We flew on board a Border Patrol helicopter alongside a team from Phoenix, Arizona.  From the air, you can see that this was a very swampy area to begin with, very rural.  And yet you can see that many roads are under water.  Many homes, of course, have been flattened.  There‘s debris in some of these areas that you can see from the air.  The hardest-hit areas are on few small towns along the coast. 

We landed in a place called Grand Chenier.  And there, on the ground, you can see that the destruction for the people who lived in this small town was total.  The urban search-and-rescue team that we were with, they were after some information.  They wanted to know who was here, how many people may have gotten out.  They got that information when three cattle ranchers took a boat back to Grand Chenier to look at their own property. 

The destruction for the cattle ranchers, of course, was total, but here is part of their conversation with the search-and-rescue team. 

(BEGIN VIDEO CLIP) 

UNIDENTIFIED MALE:  This is Grand...

UNIDENTIFIED MALE:  Chenier.

UNIDENTIFIED MALE:  ... Chenier.  How many residents in the area? 

UNIDENTIFIED MALE:  Probably about 400, 300 or 400. 

UNIDENTIFIED MALE:  Four hundred?

UNIDENTIFIED MALE:  From that ridge to that end. 

(CROSSTALK)

UNIDENTIFIED MALE:  It‘s a long ridge to the Superior. 

UNIDENTIFIED MALE:  And, to your knowledge, did anybody stay? 

UNIDENTIFIED MALE:  Not to my knowledge. 

UNIDENTIFIED MALE:  No, not that we know of. 

UNIDENTIFIED MALE:  Most everybody—because it‘s a pretty tight neighborhood, community.  Everybody knows everybody.

(END VIDEO CLIP)

SHUSTER:  That was great information for the urban search-and-rescue team.  So, their mission was essentially a success, 400 people in this area who got out. 

All that was left, of course, mementos buried in the debris.  You could see some of the trophies, some of the ribbons from one family.  But, for the urban search-and-rescue team, again, this was success because of the information they received. 

Here is James Walter from Phoenix, Arizona. 

(BEGIN VIDEO CLIP)

JAMES WALTER, ARIZONA TASK FORCE:  We talked to some locals that had just came in on a boat to reassess and reevaluate Their property.  And they pretty much Have lost everything that they had here.  Their property is gone.  Their—all The buildings are gone.  There‘s not even much debris left. 

(END VIDEO CLIP)

SHUSTER:  And, yes, while all of the buildings are gone and there‘s just a lot of debris on the ground, this does put it in context, Chris, as far as Hurricane Rita.  It hit very hard in some areas, but areas that were largely unpopulated.  You‘re talking about towns of maybe 400 or 500.

And, for them, obviously, there‘s nothing left.  But, of course, you can see that behind me, with all the activity on this airport, there is a ton of federal resources being thrown in the terms of—thrown at this area in terms of Coast Guard helicopters, rescue helicopters and, of course, these urban search-and-rescue teams, which are still going through the area, checking the neighborhoods point by point, trying to make sure that everybody in fact did get out—Chris. 

MATTHEWS:  David, the president of the United States, George Bush, is going to be visiting that part of the country again tomorrow.  How are people reacting to this saturation level of visits by the president in the last week or so? 

SHUSTER:  Well, Chris, what‘s so interesting is, here in Lake Charles and in Beaumont, the people that the president may be visiting are largely these sort of search-and-rescue teams, the firefighters, the police.  Most of the people who live in these areas still have not returned. 

So, for them, they may see it on television.  They may hear about it on the radio, but they‘re actually not going to see the president.  What they‘re looking for out of the president is, of course, I suppose some reassurance that FEMA is going to stay here for the long haul, that they‘re not just going to be involved in just the putting back the power lines and clearing away the debris. 

But for the people who return, when they do return, they‘re hoping to hear some answers from the president as far as what specifically will the federal government be doing in some of these areas after the power has been turned back on and when people still have to deal with the devastation in their homes.

MATTHEWS:  Unbelievable. 

Thank you very much, David Shuster in Port Charles, Louisiana. 

Let‘s go right now to Donna Gregory, who is in New Orleans—Donna.

DONNA GREGORY, NBC CORRESPONDENT:  Hi, Chris. 

A lot of people have been trying to stream into the city to get a first-hand look at the damage caused by Katrina four weeks ago.  Many of the people from St. Bernard Parish waited for hours on the highway this morning in very, very long lines, just trying to get through the checkpoint, so they could see the damage caused to their homes. 

So, the community of Algiers also is open.  This is one of the few places that has water and—drinkable water, I should say—and power.  However, the mayor, Ray Nagin, says there are very limited resources there.  There‘s very limited police and fire service and no critical care in the hospitals. 

So, to that end, they‘re telling people, only able-bodied people should come in to stay in the area.  People are told not to bring elderly people, frail people, not to bring children into this area.  The Ninth Ward flooded twice in four weeks, has some good news today.  The Canal Street levee has been shored up once again by the Army Corps of Engineers.  They‘re pretty confident this will hold this time. 

However, they say it will take about a weak to pump out all the water in the area.  Business owners in the central business district as well have been invited to come back in and check out the damage.  And it is major in many, many offices.  We went with some computer Web designers into their office in the Amoco  building.  And they found widespread destruction.  All the windows on the north side of their office setting on the sixth floor have been blown out. 

And they say they‘re simply going to have to take their business to another state.  They plan to relocate in Washington, D.C.  And they‘re very concerned, Chris, about the flavor here in New Orleans.  They say that the big businesses, the major hotels, the big-name restaurants that we all know, will be able to survive and rebuild. 

They‘re very concerned about small businesses like theirs, saying all of their client base is local.  And all of those people have scattered around the country.  If those people don‘t come back, there will be no business for the small business to conduct—Chris.

MATTHEWS:  That makes sense.

Donna Gregory, if you can‘t find a buyer, you can‘t find a sale. 

Anyway, thank you, Donna Gregory, who is down in New Orleans. 

We are going to come back and do what I told you we were going to do now.  We are going to talk about these no-bid contracts when we come back.  It‘s a big question.  It could be a scandal. 

Back with HARDBALL in just a moment.

(COMMERCIAL BREAK)

MATTHEWS:  We‘re back at Rockefeller Plaza, which has been christened this week at least Humanity Plaza, because of all the people out behind me building houses for people down in the Gulf.  It‘s a great volunteer effort.  A lot of people here who come from miles away came here to help build it. 

On the other side of the coin, questions now about where the money is going. 

Congressman Peter King is a Republican from New York state.  Congressman Bennie Thompson is a Democrat from Mississippi.  They both join us right now. 

Gentlemen, I want to review these facts and see how you look at them;

80 percent of the $1.5 billion that‘s been let out in contracts for

recovery efforts down in the Gulf has gone to no-bid contracts.  You just -

it‘s a deal with one company, no competition; $60 million has gone to a Halliburton subsidiary represented in the lobbying world by Joseph Allbaugh, the former FEMA director for President Bush; $100 million has gone to Bechtel, which is still in a controversial situation for perhaps unsubstantiated charges in the Big Dig up in Boston.

A $568 million has gone to a group called Ashbritt down in Pompano Beach, Florida.  That is represented by the firm formerly headed by Haley Barbour.

Haley Barbour, Joe Allbaugh, Big Dig, lots of connections here with politicians close to the Bush administration. 

Congressman Bennie Thompson, what do you think of it? 

REP. BENNIE THOMPSON (D), MISSISSIPPI:  Well, I think, Chris, we absolutely have to have transparency in our process. 

At this point in this entire contracting, we have no transparency, no accountability.  And I think the public absolutely should be made available in terms of what‘s going on.  Other companies should be involved in the process of bidding.  Right now, sole-sourcing is not the way to go. 

MATTHEWS:  Congressman King, remember that line in “Casablanca” where the guy, the Vichy—well, he became a good buy—the Vichy policeman said, round up the usual suspects.  When I read these names, I go, it looks like the usual suspects are getting all these bids. 

In fact, there‘s no bidding.  They get the contract. 

REP. PETER KING ®, NEW YORK:  Well, first, Chris—Chris, the reality is, in situations like—in situations like this, there generally is not bidding. 

I mean, the law specifically provides that, in the early stages of a disaster, that the contracts usually are done without bidding.  You wouldn‘t have time.  You can‘t have it both ways.  You can‘t say we want quick action and yet put something out for bidding.  So, the reality is, it‘s always done this way in a large disaster. 

Now, the other part of it is that every invoice is being checked.  There‘s an inspector general monitoring everything.  If there‘s any abuse, if there‘s any contracts that are out of line, if there‘s anything that‘s not fair market value, that will be taken care of.  And I can assure you that my committee and Bennie Thompson, the ranking member on the committee, will be examining this very carefully. 

But there‘s already a team of inspectors general in there to make sure that every voucher can be explained, that no one is overcharging.  And, if they are, there will be action taken. 

(CROSSTALK)

MATTHEWS:  According to “The New York Times” report—and I‘m not here for “The New York Times”—they report that several of these contracts dealt with projects not to begin for at least three months.  So, it wasn‘t a rush job. 

Let me ask you this.  Congressman King, I want you to continue this thought, because you‘re a good politician. 

KING:  Right. 

MATTHEWS:  What does your sense of smell tell you when you notice that Halliburton, Bechtel, clients of the former Haley Barbour firm, clients of Joseph Allbaugh, the president‘s FEMA director—former FEMA director—everybody seems to have a brand name representing them who gets the money?  Doesn‘t that make you think, wait a minute; maybe it helps to have a friend of the president‘s doing the bidding here, cutting the deal?

KING:  Obviously, that has to be looked at. 

But, also, remember, under Bill Clinton, most of the big contracts went to Halliburton and Bechtel also, especially Halliburton.  They‘re the ones that do this type of work.  Chris, I can assure you this is going to be watched very carefully.  If there‘s anything out of order at all, it will be caught either number one by the Department of Homeland Security.

If not by them, it will be certainly caught by the congressional committees, including my committee.  We will watch it very carefully.  I don‘t think we should be rushing to judgment here.  I think that‘s what‘s wrong from the beginning of this.  You know, people in the media are so quick to demonize.  And they are, I think, creating a very bad atmosphere. 

If it‘s true, it‘s true.  But if it‘s not, I think the media should watch what it says.  We should look at it very carefully.  But let‘s not rush to judgment.  That—Chris, that—that used to be called McCarthyism. 

(CROSSTALK)

THOMPSON:  Chris, let me tell you one thing that has happened.

(CROSSTALK)

MATTHEWS:  The question is whether there should be a judgment by the taxpayers when they see the money heading to the usual suspects. 

Congressman Thompson. 

(CROSSTALK)

THOMPSON:  One of the issues, Chris, that I‘m looking at is that local businesses are not being given an opportunity to participate in this process. 

One of the things that we waived was any requirements—the president waived, not Congress, any requirement for local participation by small business, veteran-owned businesses.  So, if you are going to resurrect an area, you need to involve the people who live in that area.  None of these sole-source contracts have gone to a single individual who live in the hurricane-impacted area. 

MATTHEWS:  Well, what about Congressman King‘s argument that these jobs are too big for the little guys?

THOMPSON:  Well...

KING:  I didn‘t say that, Chris. 

THOMPSON:  Well, I mean, there‘s no..

(CROSSTALK)

MATTHEWS:  Well, you said that they‘re sole-sourced.  You said you have—that you have to go to these same guys year in and year out, regardless of the administration. 

(CROSSTALK)

KING:  No.  Chris, I‘m saying, at the early stages, you might have to. 

But Bennie Thompson and I have both signed a letter where we have called on Secretary Chertoff to give as many local contracts out as he can.  And that‘s actually required by the act by the Stafford Act.  That‘s required by federal law.  And I‘m confident that they will comply with that. 

And, actually, a number of contracts have gone out.  And I believe a lot of the subcontractor is going to locals. 

MATTHEWS:  Yes. 

KING:  But I signed letter with Bennie saying they should go to local contractors, minority contractors, women-owned companies. 

(CROSSTALK)

THOMPSON:  Well, you‘re right, Peter. 

But, at this point, I can tell you that that‘s not the case.  I have met with small contractors who can‘t get phone calls returned.  They go on the Internet.  They register their company.  Nobody ever calls.  We had a meeting last Saturday with over 100 minority contractors, small business contractors.  None of them have ever been contacted. 

So, what we‘re trying to do is say to these super contractors, if you are going to follow the Stafford Act, you have to hire local people.  And you are not doing that. 

KING:  Well, Bennie, I agree with you. 

(CROSSTALK)

MATTHEWS:  Let‘s—what should we be doing, Congressman King, here?  What should be done?  When you look at the—a front-page story of “The New York Times” today that says that 80 percent of the money is going out in no-bid contracts and, as you say, sole suppliers, perhaps—but doesn‘t that raise concerns by taxpayers that the money is going to the usual suspects?

KING:  Well, first of all, the fact it‘s in “The New York Times” means nothing to me. 

But having said that, obviously, any time you have no-bid contracts or sole-source contracts, it raises questions that have to be addressed.  That‘s why Bennie Thompson and I sent a letter to Secretary Chertoff telling him that, as much as possible, contracts should be given out to local contracts, minority contractors.

That‘s why inspectors general are down there.  That‘s where my committee and others are going to be looking at this carefully.  If anything is done wrong, the price will be paid.  I‘m just saying, let‘s not rush to judgment.  Obviously, any time you go around the bidding process, the presumption is that it has to be looked at.  It will be looked at very carefully.  I can guarantee you that. 

I‘m just saying, don‘t indict and convict people before the facts are in. 

THOMPSON:  Well, but if—if, Peter, if we are...

(CROSSTALK)

MATTHEWS:  No.  Well, let me go back to the president.  Let me go back to the president for both of you. 

We have a public record of a Michael Brown being head of FEMA, elected

rather, appointed by the president of the United States.  And he was found to be so incompetent, he was sacked within a week after this disaster.  So, it is a reasonable thing for the American taxpayer to pay attention to what obviously other people weren‘t paying attention to, which is the competence and the reliability of FEMA. 

Don‘t you agree, Mr. King? 

KING:  Chris, that‘s why I said that the congressional committees will be looking at it, as will the Homeland Security Oversight, the inspectors general. 

But, also, let‘s face it, Mike Brown did have four hurricanes in Florida last year, and he did a very good job.  I mean, there has been a pile-on here by the media.  You guys are in a rush to judgment, no matter what George Bush does.  If he had sent this out to bidding, you would say, nothing is being done.  What is he waiting for?  He had the power to suspend bidding. 

Now, he has suspended bidding and you are raising questions.  I‘m saying, let‘s look at this in its totality.  If anything is found wrong, I guarantee you, the price will be paid.  And Bennie Thompson will be leading the charge.  And I will be right next to him. 

(CROSSTALK)

MATTHEWS:  OK. 

THOMPSON:  Well, Chris, one of the things that we have to look at... 

(CROSSTALK)

MATTHEWS:  So, I want to go back to the beginning here.  Has FEMA been operating in a incompetent fashion, gentlemen?  I just bring the case that the president himself sacked a guy in the midst of this crisis because he realized the guy was an incompetent for this job. 

If there‘s any other reason why he fired him, I don‘t understand it, Mr. King.  But the fact is, the president admitted that he hadn‘t given enough attention to this appointment, to who he put at FEMA.  He hasn‘t—he hasn‘t—he didn‘t give enough attention initially to Katrina, so he‘s spending all these days down there now. 

I think the president has been very honest about this.  There was a failure of oversight in who was heading FEMA.  There was a slowness to act by himself and his officials early on.  He‘s made up for that dramatically.  I don‘t know why anybody would want to defend the current system at FEMA, though.

THOMPSON:  Well, well, Chris, there‘s a bigger issue. 

Where is Michael Chertoff, the secretary of homeland security, in all this?  The president has basically taken charge of this whole effort.  And the man he put in charge of the overall agency is missing in action.  He‘s a...

(CROSSTALK)

KING:  That‘s not true. 

THOMPSON:  Oh, absolutely.  Yes, it is. 

There‘s absolutely nothing being done by the secretary in this Hurricane Rita process. 

(CROSSTALK)

THOMPSON:  The president has—Peter, the secretary is missing in action.  We have tried...

(CROSSTALK)

KING:  That‘s not true.  The secretary...

(CROSSTALK)

MATTHEWS:  Who is that, Mr. Chertoff? 

THOMPSON:  That‘s right.  That‘s correct. 

(CROSSTALK)

KING:  Let me tell you—let me tell you, Chris—let me tell you, Chris, Mike Chertoff has been with the president every step of the way. 

(CROSSTALK)

KING:  I met with Secretary Chertoff the other day.

MATTHEWS:  OK, Peter—Mr. King, your turn.

KING:  Yes, OK.

Mike Chertoff has been with the president each stage over the last several days.  He was there in the planning.  I was with him last week, when he was involved in the planning.  He‘s been with President Bush at every stage. 

And, Chris, there is sort of a frenzy here by the media.  Let‘s not forget the incompetence of the mayor of New Orleans, the governor of New Orleans.  They were the ones in the first instance who were required to do the job, and they didn‘t. 

As far as President Bush, it‘s wrong for you to say he wasn‘t caring.  He certainly was caring.  What he was not equipped for was to explain for the incompetency of the local officials or to explain the hysteria, anticipate the hysteria created by people like you in the media who go off the deep end.  Let‘s treat this with a little bit of rationality and a little bit of decency. 

THOMPSON:  Chris, let me give you a little ration...

(CROSSTALK)

MATTHEWS:  Well, Mr. King, go ahead. 

(CROSSTALK)

THOMPSON:  Let me give you a little rationality.

MATTHEWS:  The fact is that most people trust the media on this story, because the pictures of what was happening down there in New Orleans apparently got to them before they heard of any federal action. 

But go ahead. 

(CROSSTALK)

KING:  Chris, you are totally distorting reality.  And that‘s the problem with you.  You are distorting reality.  You are on the story.  You and MSNBC have carried away with this.  You should all be ashamed of yourself. 

MATTHEWS:  OK. 

KING:  You have disgraced yourself and the media. 

MATTHEWS:  OK.  Thank you.  OK.

KING:  Thank you. 

MATTHEWS:  Thank you very much, Congressman Peter King.

Thank you very much, Congressman Bennie Thompson of Mississippi.

We will be right back with more on this story of no-bid contracts. 

(COMMERCIAL BREAK)

MATTHEWS:  Will the billions of dollars in hurricane relief be spent most wisely or most politically? 

Back in a moment. 

(COMMERCIAL BREAK)

MATTHEWS:  Well, that was a hot moment with Peter King, Congressman Peter King. 

And I think the issue is accountability.  And we can argue how it‘s done.  But I think most Americans recognize the role of the media and the role of Congress is to make sure federal dollars are not misspent. 

Tom Schatz is a man who has devoted himself to that cause, Citizens Against Government Waste.  And Bill Allison is with the Center for Public Integrity.

Tom Schatz, I want to you get into this conversation.  You‘ve been following the one we had before with the two U.S. Congress people.  What role should citizens groups or watchdog groups play in making sure that these no-bid contracts don‘t lead to cronyism and federal dollars being—and tax payer dollars going to friends of the political insiders?

TOM SCHATZ, PRESIDENT, CITIZENS AGAINST GOVERNMENT WASTE:  Chris, we do that every day. 

And we also very much appreciate what the media does to point out examples of wasteful spending.  The congressional oversight has to be improved.  And they have got inspectors general now going down to watch the money for Katrina relief and I‘m sure for Rita as well.  In the second Katrina relief bill, they had $15 million to beef up the Inspector General‘s Office. 

We expect reports.  We expect accountability.  And that‘s for anything the government spends, but it‘s especially important under these circumstances that this money go to help people and provide relief, not just big checks to companies that aren‘t doing the job they‘re supposed to.  And, again, there‘s no evidence yet that that‘s happening, but we have got to watch it. 

MATTHEWS:  Bill Allison, your view of the news today in “The New York Times” that 80 percent of the initial contracts, $1.5 billion, that has gone to relief have gone in no-bid contracts.

BILL ALLISON, CENTER FOR PUBLIC INTEGRITY:  Well, it‘s not really all that surprising. 

I mean, if you look at just what the Pentagon does—by way of example, we took a look at six years of Pentagon contracting and found that about 64 percent of those contracts are awarded without full and open competition.  So, the fact that 80 percent are going in no-bid contracts isn‘t all that surprising. 

I think what is a little surprising is, is that FEMA had to hire a private company to help them award those contracts.  And that‘s—they hired a company in Virginia that‘s made up of former procurement officers.  And they‘re assisting the agency in giving out these contracts, these no-bid contracts. 

MATTHEWS:  Tom Schatz, how important is it, if you‘re a company, to hire somebody close to an administration, like hiring a company that was formerly headed by Haley Barbour, the governor of Alabama, or—

Mississippi, rather—or a company that is headed by Joe Allbaugh, the former FEMA director for President Bush?  How much does that clout give you an inside on getting some money from the federal government?

SCHATZ:  It certainly doesn‘t hurt, Chris.

But the point is that some of these contracts are openly bid.  For example, the $45 million for Kellogg, Brown & Root to repair levee is done on what is called an indefinite delivery, indefinite quantity.  And it‘s an open bid that anybody can go for.  So, they have that in place before the disaster strikes. 

On the other hand, FEMA did not have that kind of contract in place to buy the blue sheets to place over roofs.  You would think FEMA would know better and be able to find the cheapest blue sheets in the country on a regular basis and just have them delivered wherever they‘re needed. 

MATTHEWS:  Well, how do we—Bill, how do you set price?  Now, here is question a lot of people—it was asked in—in “The New York Times” today.  If you only have one bidder for a contract, a sole source, how do you know what the—what they‘re allowed to charge the taxpayer? 

ALLISON:  Well, that‘s a problem.  Really, you don‘t. 

I mean, that‘s what it—that‘s been a big problem with federal contracting.  And if you look at what‘s going on with—you know, with the Katrina, with—there‘s company that was awarded—it was about a third higher than what‘s normally charged for clearing away debris and rubble.  And the local officials say, we would only do it for 10 bucks and they‘re charging 15 bucks per unit.  That is real problem. 

And I think this is a problem with IDIQ contracts generally, the indefinite quantity, indefinite delivery contracts.  We have had a government lawyer jokingly refer to them as a defraud-us-please contract.  And you have these contractors that get in the door.  They call them hunting licenses, where they can go for any kind of federal business that they want, and there‘s not the kind of oversight that you can—that you normally would have with federal...

(CROSSTALK)

MATTHEWS:  Bill, the American people are going to pay a lot of attention to this in the weeks ahead.  And I can tell you, we are going to do it on HARDBALL, because, when you‘re talking $200 billion in aid money, there‘s lot of room in there for—for sleaze, as you say.  And we want to try to stop it. 

Thank you very much, Bill Allison of the Center For Public Integrity and Tom Schatz of Citizens Against Government Waste.

We will be back with more HARDBALL in a moment, more about what is going on back here to make you feel a little better, because the volunteers are doing good work, even if some people are taking advantage. 

We‘ll be right back.

(COMMERCIAL BREAK)

MATTHEWS:  So, let‘s see what the good guys are up with. 

Jeff Erwin, what a guy you are.  You put together this thing. 

Congratulations. 

JEFF ERWIN, SITE MANAGER, HABITAT FOR HUMANITY:  Thank—thank you.

MATTHEWS:  How many houses can you build for the folks down in the Gulf? 

ERWIN:  We‘re looking to build 40 houses this week in five days. 

That‘s a 24-hour operation, five days. 

MATTHEWS:  And what do these houses go for, the people that buy them? 

ERWIN:  It varies in which affiliate they may put them in.  It could be at $68,000, $70,000, zero percent interest. 

MATTHEWS:  Is the house worth that much or worth more? 

ERWIN:  Absolutely.  It‘s worth more than that. 

MATTHEWS:  And how long do you figure a house like this will stand up? 

Is it a real sturdy house? 

ERWIN:  Well, let‘s put it this way.  The last time one of the big hurricanes hit in Florida, one of the few remaining houses standing were Habitat-built houses. 

MATTHEWS:  Were they really?

ERWIN:  They were.

MATTHEWS:  I was down with Jimmy Carter covering him for my paper out in California back in the old days down in Tijuana.

ERWIN:  Yes, sir.

MATTHEWS:  They used to build them with what they called coffee cups and hangers...

ERWIN:  Yes, sir.

MATTHEWS:  ... which is styrofoam and the—what do you call it—the mesh for the Sheetrock. 

ERWIN:  Right.  And we have upgraded to that here. 

(LAUGHTER)

MATTHEWS:  What is going to be on the outside of these?  When these are done—we‘re looking at this raising now of these frames. 

ERWIN:  That‘s right. 

(CROSSTALK)

MATTHEWS:  But what is going to be behind them, on the outside of them? 

ERWIN:  That will have insulation.  And the interior walls will of course be finished out in Sheetrock.  And then the exteriors will have Hardiplank, which is a cement board which can be used.  And it has got a 50-year life span easily. 

MATTHEWS:  Right.  Well, we‘re—we are looking at the product here over to your right.  That‘s the walls, right? 

ERWIN:  That‘s correct. 

MATTHEWS:  And they‘re going to be flatbedded down to the south? 

ERWIN:  That is correct.

They‘re being put in empty trucks in the evening.  They roll them out.  And the truck rolls down south.  It has a complete house in it, other than the trusses.  The trusses are being delivered on site.  They are building the foundations while we‘re up here doing this. 

MATTHEWS:  Is this like getting a Christmas toy for your kid, where you open it up and there‘s the instructions in there on how to put it together? 

(LAUGHTER)

ERWIN:  We hope it is better than that.  But a lot of affiliates locally do component building anyway, because it is more efficient. 

MATTHEWS:  OK.  Where are these headed, what states? 

ERWIN:  These are going to Louisiana, basically, initially, to Covington, Louisiana. 

MATTHEWS:  I know where that is, yes.

ERWIN:  And Tiffany—excuse me, Tammany, Louisiana.

MATTHEWS:  How are your volunteers today?  Do they know how to put a nail in?  I saw Katie Couric bat .1000 today.

ERWIN:  They are excellent.  Well, she had a hard time, but she got there.

(CROSSTALK)

MATTHEWS:  No, no, not what I was seeing.  No, I‘m not overselling her.  She was a...

(CROSSTALK)

ERWIN:  She was doing good.

MATTHEWS:  Right. 

ERWIN:  The volunteers...

(CROSSTALK)

MATTHEWS:  Anyway, Jeff, thank you. 

ERWIN:  OK.

MATTHEWS:  Did a great show tonight.

We will be back with more of this tomorrow night.  We will be back with more HARDBALL.  We will back at 7:00. 

Thank you. 

ERWIN:  Thank you. 

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

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