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| By MICHAEL R. McKAY | |
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Rep. Henry Waxman (D-CA) has asked the U.S. Department of Homeland Security to reassess a controversial deal in which a U.S.-based foreign-flagged cruise line stationed three vessels as emergency housing on the storm-struck Gulf Coast for six months.
The agreement, signed in September 2005 by Carnival Cruise Line and the Federal Emergency Management Agency, a unit of the Department of Homeland Security, cost U.S. taxpayers a minimum of $192 million. The figure was drawn from what Carnival said it would have earned from the three vessels (Ecstasy, Sensation and Holiday) under routine operating conditions. In a letter March 8 to Homeland Security Inspector General Richard L. Skinner, Rep. Waxman made note of Skinner's three-page Feb. 16 report on the Carnival charter. "You concluded that 'FEMA's decision to lease the cruise ships was reasonable under the circumstances, although not necessarily cost-efficient,'" the Congressman wrote. "You further found that 'cruise ships could be cost-efficient for high-cost areas like New Orleans as long as a high occupancy rate is maintained,' but noted that 'several problems kept the occupancy rate low in the first weeks after the disaster, and the ships never reached full occupancy.'" Rep. Waxman added that, since all of the hurricane victims living aboard the ships had departed March 1, "we now know the actual occupancy rates for the ships over the course of the contract period." He asked Skinner to "update your analysis to reflect the new information." Rep. Waxman cited a FEMA analysis that found use of the cruise ships would have been cost-efficient if the occupancy rate had held at 95 percent over the six-month charter period. "My staff has done a preliminary analysis of the contracts," he continued. "It finds that if the three Carnival Cruise ships are considered on their own, they would not be cost-efficient even at full occupancy. If every berth had been filled on the two ships based in New Orleans, the Sensation and the Ecstasy, the weekly cost per person would have been about $1,720, almost exactly the federal weekly per diem rate of $1,286 in that area. If every berth had beenfilled on the Holiday, which was based along the Mississippi-Alabama coast, the cost per week would have been $1,294, almost twice the local per diem weekly rate of $770. "As your report acknowledged, the ships did not reach full occupancy," Rep. Waxman's letter added. "My staff's preliminary analysis, based on occupancy data for the last five months of the contract and your office's estimate that the ships averaged a 35-percent occupancy rate during the first month of the contract, shows that the three Carnival Cruise ships housed an average of 4,408 people over the course of the contract, far below the contract maximum of 7,116. As a result of the low occupancy rates, the average weekly cost of housing individuals on the three Carnival ships was much higher than the federal per diem rates. For the two ships based in New Orleans, the average weekly cost per passenger was about $1,862, 45 percent more than the local federal per diem rate of $1,2182. The Holiday, the Carnival Cruise ship based along the Mississippi-Alabama coast, was the least occupied ship, averaging only 818 passengers during this period. This low occupancy rate led to a per-person weekly cost of $2,923, almost four times more than the local per diem rate." Rep. Waxman cited testimony by Terry Thornton, a Carnival Cruise Line vice president, during a House hearing late last year on the charter agreement. Thornton testified that the two-person-per-cabin capacity of the Ecstasy and Sensation is 5,556. Thornton also said the ships were at or above capacity based on the lower capacity number. "I urge you to re-examine the contracts in light of the actual passenger counts for the full six months of the contract period," Rep. Waxman wrote. "In addition, I request that you provide me with additional information that should be available now that the contract is complete." The Congressman asked specifically for "documentation of the total amount paid to Carnival Cruise Lines, the total amount of costs reimbursed, and the total amount of profit earned by Carnival under this contract," and "documentation regardingCarnival's obligations under the neutrality provision of the contract, including any audits performed by the government and the total amount of payments reimbursed to the government by Carnival." Carnival Cruise Line has its corporate headquarters in Miami, but the line is incorporated in Panama and its ships are registered under foreign flags of convenience. |
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