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Debating FEMA's no-bid contracts

Congressmen King and Thompson play Hardball with MSNBC's Matthews
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On Monday, MSNBC's Chris Matthews welcomed New York Republican Peter King, chairman of the House Committee on Homeland Security and Congressman Bennie Thompson of Mississippi, the leading Democrat on the committee, to discuss the billions of dollars in no-bid contracts that FEMA has rewarded since the Hurricane Katrina disaster.

To read an excerpt of their heated conversation, continue to the text below. To watch the video, click on the "Launch" button to the right.

CHRIS MATTHEWS: Eighty 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.  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.

$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 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 (R) NEW YORK:  Well, first, Chris, the reality is, 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. 

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. ... 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 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. 

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. 

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?

KING:  I didn't say that, Chris. 

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

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

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. 

MATTHEWS:  What should we be doing, Congressman King, here?  What should be done?  When you look at the 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, 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. 

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, 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.
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 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. ...

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.  ...

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. ... 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. 

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. 

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. 


KING:  You have disgraced yourself and the media. 

Watch each night at 5 and 7 p.m. ET on MSNBC.