Washington -- On Sept. 1, as tens of thousands of desperate Louisianans
packed the New Orleans Superdome and convention center, the Federal
Emergency Management Agency pleaded with the U.S. Military Sealift
Command: The government needed 10,000 berths on full-service cruise
ships, FEMA said, and it needed the deal done by noon the next day.

The hasty appeal yielded one of the most controversial contracts of the
Hurricane Katrina relief operation, a $236 million agreement with
Carnival Cruise Lines for three ships that now bob more than half empty
in the Mississippi River and Mobile Bay. The six-month contract has
come to exemplify the cost of haste that followed Katrina's strike and
FEMA's lack of preparation.

To critics, the price is exorbitant. 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.

"When the federal government would actually save millions of dollars by
forgoing the status quo and actually sending evacuees on a luxurious
six-month cruise, it is time to rethink how we are conducting
oversight," said Coburn and Sen. Barack Obama, D-Ill., in a joint
statement Tuesday calling for a chief financial officer to oversee
Katrina spending. "A short-term temporary solution has turned into a
long-term, grossly overpriced sweetheart deal for a cruise line."

Carnival's bid totaled $192 million over six months, plus $44 million
in reimbursable expenses, such as port charges, fuel, food and docking
costs. To Carnival executives, the contract will ensure only that the
company breaks even when it pulls three ships from holiday operations.
"In the end, we will make no additional money on this deal versus what
we would have made by keeping these ships in service," said Jennifer de
la Cruz, a Carnival spokeswoman.

Government contracting officials defended the deal. "They were the
market," Capt. Joe Manna, director of contracts at the Sealift Command,
said of Carnival. "Under the circumstances, I'd say we're getting a
pretty good value."

Coburn and Obama disagreed. "Finding out after the fact that we're
spending taxpayer money on no-bid contracts and sweetheart deals for
cruise lines is no way to run a recovery effort," they said in the
statement.

The Carnival deal has come under particular scrutiny. Not only are
questions being raised over the contract's cost, but congressional
investigators are examining the company's tax status. Carnival, which
is based in Miami but incorporated for tax purposes in Panama, paid
just $3 million in income tax benefits on $1.9 billion in pretax income
last year, according to company documents.

"That's not even a tip," said Robert McIntyre of Citizens for Tax
Justice. U.S. companies in general pay an effective income tax rate of
about 25 percent, analysts say. That would have left Carnival with a
$475 million tax bill.