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CNN Live At Daybreak

FEMA Cleanup Contracts for Katrina and Rita; President Bush Heads South Today to Get Firsthand Look at Damage Done by Hurricane Rita

Aired September 27, 2005 - 06:30   ET

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

ANNOUNCER: From the Time Warner Center in New York, this is DAYBREAK WITH CAROL COSTELLO AND CHAD MYERS.
CAROL COSTELLO, CNN ANCHOR: And good morning to you. Thank you for waking up with us. We've got a live report from hurricane-damaged Lake Charles in 15 minutes. Also this half hour, those FEMA cleanup contracts for Katrina and Rita, are there any $500 screwdrivers out there and sweetheart deals? We'll talk with someone who's got a handle on all of that.

And a leader in the Senate, was his sale of a chunk of stock a conflict of interest or totally above board?

But first, now in the news. President Bush plans to tour areas hit by Hurricane Rita today. The president is expected to talk with local officials and then he'll review oil refinery damage during stops in Beaumont, Texas and Lake Charles, Louisiana.

In France, the former head of the Concorde program is under investigation. State-run media reports that the chief engineer was questioned for more than 11 hours. The interrogation was part of the probe into the crash of the supersonic jet that killed 113 people five years ago.

There's been another suicide bombing in Iraq and again, police are the targets. About four hours ago a suicide bomber killed nine police recruits and injured 23 others. It happened in Baquba, about 35 miles north of Baghdad.

And separate attacks in Afghanistan leave two U.S. service members dead and a third injured. One was killed in a ground assault operation west of Kandahar, another soldier was wounded and then a marine was killed at a U.S. base when it came under fire.

To the forecast center and Chad. Good morning.

CHAD MYERS, CNN METEOROLOGIST: Good morning, Carol. I am changing my name to Rumplestiltskin.

COSTELLO: Oh, no.

MYERS: See you in 20 years.

Get some sleep out here. Good morning. Rain showers across parts of North Carolina all the way down into Atlanta and South Carolina today. Some of those showers are going to be heavy at times. I can kind of zoom into some. They have moved away from Boston, New York City, you had your share of rain, that's gone now. Also, Virginia Beach, Hampton Roads, gone.

But if you're down to about Myrtle Beach, into Charleston, all of that rain is still there and there will be more rain that comes onshore here on the western shore, the western coast of Florida from Gainesville, Cedar Key, right on down to Tampa later on this afternoon.

Temperatures, though, are going to be nice and mild. In fact, this morning, 59 in Denver, 57 in St. Louis, 47 in Chicago. How's that?

Right now the high in Chicago, 75 for today, but watch what happens tomorrow as another cool air mass swings on by. It doesn't bring much rain because now the air is fairly dry up there. Don't have that heat and humidity in the air.

Look at Denver, 57, Minneapolis 60, Billings 72. Now, this cool air does get to New York City for Friday. The high in New York on Friday only 66 but by next week you're back up to normal. Carol?

COSTELLO: Sounds good to me. Thank you Chad.

Take a look at what's on the front page of the "New York Times" this morning. It's a picture of the French Quarter in New Orleans, and as you can see, doesn't that look pretty? The lights are back on. When I was there last week, it was dark in the French Quarter. More and more residents, too, are trickling back, trying to clean up.

Soledad O'Brien is in New Orleans this morning. Can you tell us more good news?

SOLEDAD O'BRIEN, CNN CORRESPONDENT: Hey. You know, I can tell you some good news today. And as you mentioned, people are trickling back and what they're finding sometime is utter devastation and other times, as you point out, in the French Quarter, things are starting to come back around.

That's because they're putting lots of energy and lots of time and money, frankly, into trying to bring the cities, really, the heart of the business district back up and running.

We're on Magazine Street this morning, Carol, and this street is literally world-renowned. People come here to shop along the six miles if they're buying antiques or clothes or jewelry or furniture. It dates back to 1782 and it's a really important area for making New Orleans the port, really, that it became. It's going to be a very important area, as well, for any kind of recovery and economic development for the City of New Orleans.

This morning we're going to talk to two businesspeople who work right along this street who say they are happy to be back and really want to get back to business. Also, as you mentioned, as people come back and return home we've got some emotional stories at St. Bernard Parish where people come back and really realize that there is nothing to try to salvage from their homes.

Those stories are ahead this morning on AMERICAN MORNING, Carol, at the top of the hour. We'll see you then.

COSTELLO: I saw so many people go inside of their ruined homes and all they had left was a shoebox full of stuff and that's it.

S. O'BRIEN: It breaks your heart, doesn't it? And anything that is salvageable is covered with a smelly, oily much that will never come out. It's quite heart-wrenching, actually, to see people trying to salvage literally all that they have.

Carol?

COSTELLO: It's nice to see the lights on behind you, though.

Soledad O'Brien, we'll see you on AMERICAN MORNING in just about a half hour.

It's costing all of us a lot to cleanup after Katrina and Rita. According to the "New York Times," as of last week, FEMA was spending $263 million per day. Huge contracts, some of them unbid, have been awarded to a number of companies, some with political connections. Take a look.

According to the U.S. Army Corps of Engineers, five contracts over $500 million were awarded to various company, 15 worth more than $100 million have been doled out. And all of this happened very quickly, sometimes on a handshake.

With us now from Washington, Josh Schwartz from George Washington University. He's a professor of law and co-director of the government procurement program. Good morning.

JOSH SCHWARTZ, GWU: Good morning, Carol.

COSTELLO: When you think about that number, $263 million a day, it's easy to understand why some of that money will be wasted. The question is, do we know how much?

SCHWARTZ: Well, we don't know how much. I think we can certainly be confident that some of it will be wasted and the other thing I'd say is that we'll find out after the fact but the other thing I guess I'd like to say this morning is that less of it would have been wasted if agencies like FEMA had been properly prepared for this kind of emergency, which they were not.

COSTELLO: What do you mean by that, in this instance?

SCHWARTZ: Well, the "New York Times" story that you refer to talks about this thing called IDIQ contracts, so maybe I should explain what that is and why they should have done that and they didn't.

COSTELLO: Go for it.

SCHWARTZ: Indefinite delivery, indefinite quantity. It's military-speak, or an acronym. We also call them contingency contracts, I think that's a little bit more accessible term, but what it means is that a government agency has the authority to, and in this situation, is supposed to contract before the emergency happens to have lined up the kinds of goods and services that you're foreseeably going to need in a hurry when the emergency occurs.

When the emergency is a hurricane, an earthquake on the West Coast, a terrorist attack somewhere in our country, or a tornado in Kansas, you're going to need a foreseeable range of water, fuel, food and FEMA should have but did not contract for these things in advance. Had they done so, they would have gotten better prices.

COSTELLO: Well, so when the disaster happens they had to quickly go out and find companies to do this work and maybe they didn't have time to put it out for competitive bidding. Is that what you're saying?

SCHWARTZ: That's right and had they prepared in advance, there would have been time for competitive bidding. You can't fault them for - once they didn't prepare and you have a hurricane, you can't fault them for not pausing to take the extra time the competition takes. But you absolutely can fault them, and I do fault them severely, for failing to prepare in advance. If they had done so, we would have had competition, we would have had better prices and the taxpayer would know that the company that got the contract was the company that got it on the basis of best price or best value and competence, not on the basis of connections.

COSTELLO: And well, let's talk about connections, because that was my next point. When you hear about companies like Halliburton being awarded a big contract to clean up, you immediately think of the political connection to Dick Cheney.

Another company out of Florida was hired, it has connections to Haley Barbour, the governor of Mississippi and so there's that sense that people are hiring their friends, but is that fair?

SCHWARTZ: It's not necessarily fair but what is really the most precisely accurate thing you can say is that it's impossible to tell when you contract in a hurry on an emergency basis. There's good reason for skipping the competition, but when you do that nobody really can know objectively whether the company that got the contract deserved it because they were best at doing this work.

In some of these cases companies - this is not a popular thing to say, but Halliburton may be the best company for this work, but if there had been competition, you would have some confidence that they got the contract because they were the best company or had the best price or both.

COSTELLO: Exactly. SCHWARTZ: Since there is no competition, it's only a guess.

COSTELLO: Well, we've already heard of the expenditures far above what the normal price would be. We've heard of $89 for a pair of shoes for EPA workers. Who knows how many of those come out?

When all is said and done, though and you go back and you say to a company, hey, you overcharged us, is there anything the government can do at that point?

SCHWARTZ: Very little. It is not - the term is sometimes used, price gouging. But price gouging is not normally a federal crime and the fault for setting up the potential for price gouging is largely the government's.

My sense is that most businesses have actually behaved responsibly and have not charged every last penny that the market would bear to the government now that we're in this emergency situation. Obviously there are always some bad apples in every bunch, but if the government had contracted in advance, it would have gotten good, competitive prices and they would have been cheaper.

So what can be done about this is to make sure that we don't make these mistakes again.

COSTELLO: And maybe, of course, Michael Brown, the former FEMA chief, he is testifying before a committee on Capitol Hill today, these issues will come up there.

Josh Schwartz from the George Washington University. Thank you for joining us this morning.

SCHWARTZ: You're very welcome. Have a good day.

COSTELLO: You too.

Senate Majority Leader Bill Frist says he did absolutely nothing wrong. The Justice Department and the SEC are investigating Frist over a stock sale. In June, the senator sold shares in the Hospital Corporation of America, that's a company founded by his father and run by his brother.

Shortly thereafter, the price dropped on the heels of a disappointing earnings report. Frist says his actions were above board.

(BEGIN VIDEO CLIP)

SEN. BILL FRIST, (R) MAJORITY LEADER: My only objective in selling the stock was to eliminate the appearance of a conflict of interest. I had no information about HCA or its performance that was not publicly available when I directed the trustees to sell the stock.

(END VIDEO CLIP)

COSTELLO: Frist says the stock sale had been approved in advance by the Senate Ethics Committee.

Still to come on DAYBREAK, a community decimated by Rita. The latest from Lake Charles, Louisiana. We'll have a live report for you but first here's a look at what else is making news this Tuesday.

(COMMERCIAL BREAK)

COSTELLO: Your news, money, weather and sports at 6:45 Eastern. Here's what's all new this morning. President Bush heads back to the Gulf Coast today. The president plans to view damage and review recovery measures in Beaumont, Texas and Lake Charles, Louisiana.

In money news, you're running out of time to Ask Jeeves. The Internet search engine is changing it's name. It's also dropping its English butler mascot. The new owner, Barry Diller, says the site will be renamed Ask or ask.com.

In pop culture, D-list diva Kathy Griffin has filed for divorce. I know you have been waiting for this news. Griffin lists irreconcilable differences as the reason for ending her four and a half year marriage to Matt Moline. The comedienne has seen a career rebirth with comedy specials and a new TV series.

In the world of sports, Louisiana State University dropped their home opener in disappointing fashion. Tennessee rebounded from a bad first half to beat LSU 30-27 in overtime. The game was originally scheduled for Saturday but was delayed by Hurricane Rita. LSU's original home opener was moved due to Katrina.

Chad?

MYERS: Hey, Carol, did you hear about the Monday night football game?

COSTELLO: With Denver and Kansas City.

MYERS: Yeah, the clock error.

COSTELLO: Really?

MYERS: They added 52 seconds. Or 51 seconds to the fourth quarter that shouldn't have been there. Therefore, that field goal that should have won the game, well, was way after the game was over.

COSTELLO: Does it count though? What are they going to do?

MYERS: Yeah, they're going to let it go. What can they do at this point in time, right?

Take a look at the Atlantic Ocean here. We're looking at a couple little flare-ups. You can see the two little orange areas, one south of Jamaica, one in the middle of the Atlantic Ocean. Rain showers here across parts of the Caribbean. No name, no circulation, nothing yet, but we're still going to have to watch that, possibly moving toward Cancun or Cozumel. Boston today 73, pleasant weather, although, Carol, it's going to be windy for you in New York, Boston and Philadelphia. That could slow down a few of the airports.

Looking at some of the wind gusts today, could approach 23 to 25 miles per hour and that may slow down the approach of the planes. They'll have to separate them a little bit more than they're used to. Back to you.

COSTELLO: Thanks Chad.

MYERS: Yup.

COSTELLO: President Bush heads south today to get a firsthand look at the damage done by Hurricane Rita. One place he is visiting will be Lake Charles, Louisiana. Let's check in with CNN Radio's Lisa Goddard. She is there this morning. Good morning, Lisa.

LISA GODDARD, CNN CORRESPONDENT (on phone): Good morning, Carol.

COSTELLO: Are things getting a little better?

GODDARD: Yeah. Things are getting a little better here. People are sweeping up their yards, trees are out of the roads so the emergency crews here can move around a lot more easily but the basics they still don't have, power, many places still don't have any water and for that reason a lot of folks are still saying away and some of the folks who made it through the hurricane here have evacuated out.

COSTELLO: Where will the president go? Will he be on a helicopter or will he be on the ground?

GODDARD: Yeah. The president is starting out in his home state of Texas, in Beaumont, Texas, which did get a wallop from this storm. He's going to fly by helicopter over damaged areas and he'll come here to Lake Charles and he'll meet with some officials, thank some volunteers, thank people who have been here and get some briefings along the way.

Now it's not clear exactly what path his flight will take but I would guess that it is going to head over some of his parishes on the Gulf, like Cameron Parish, that were hit hardest and I have to tell you I saw that damage myself yesterday. It is so severe that I can't imagine even from a helicopter that you might be able to recognize where buildings used to stand.

COSTELLO: As far as the rescue effort, has that now ended and have they turned to a recovery effort?

GODDARD: Well, it's kind of in a middle stage right now. In those parishes that were flattened, rescue and search crews are still going house to house, marking the houses with bright neon orange paint and an X to indicate that there was no one inside.

Now, they haven't found anyone in those areas so they're hopeful that they won't ever find any victims in those houses but they are still checking house by house.

Now, most of the relief crews and emergency crews here have indeed moved to the relief effort which is going to be massive. We're talking about a few - half a dozen towns that were completely obliterated, people who have lost everything.

COSTELLO: Lisa Goddard, live in Lake Charles, Louisiana this morning. Thank you.

Still to come on DAYBREAK, what's making news today and of course we'll give away mugs. You're watching DAYBREAK for Tuesday, September 27.

(COMMERCIAL BREAK)

COSTELLO: Welcome back. It's 6:52 Eastern. Here's what will be making news today. U.S. envoy Karen Hughes takes her public relations campaign to Saudi Arabia today. She's in the Middle East this morning hoping to improve America's image among Arabs. She is calling it the listening tour. Here is what she says about it.

(BEGIN VIDEO CLIP)

KAREN HUGHES, UNDERSECRETARY OF STATE: I think it's important that we take a stand in a humble way, but yet in a forward-looking way as the president is doing with his inaugural address, with his democracy and freedom agenda, to say we believe as America that there are certain principles that are right and true for people everywhere and we're going to stand for them.

(END VIDEO CLIP)

COSTELLO: Homeland Security Secretary Michael Chertoff speaks at a police chief's conference in Miami today. He'll also visit the National Hurricane Center.

Pennsylvania courtroom is the latest battleground in the fight over teaching what's being called "intelligent design." Eight families sued the school district, saying it's a religious theory with no scientific foundation.

And the full Senate continues its debate over the nomination of Judge John Roberts. Roberts is expected to be confirmed as the nation's chief justice as early as Thursday.

And in the meantime, President Bush could announce his next Supreme Court pick on Friday. The president has said he is leaning towards choosing a woman or a minority candidate. This nomination is to replace Justice Sandra Day O'Connor who announced her retirement in July.

To the mug.

MYERS: Time to give away a mug from yesterday. Our questions were actually quite easy but that's OK. We had a lot of winners. A lot of right answers, anyway. How many gallons of diesel fuel does Georgia's Governor Purdue hope to save by closing the schools today and tomorrow? Between 225 and 250,000 gallons of diesel fuel per day.

And Porsche says it plans to buy a 20 percent voting stake in what company? And that would be Volkswagen. Maybe they'll bring back the 914. Who knows?

And the winner is Mike Cooper from Columbus, Mississippi. Congratulations. Your daybreak coffee mug, in the mail.

Now the questions for today, maybe not quite so easy. Wal-Mart is looking to buy out what clothing designer company? That's number one. You have to answer them both.

And number two, according to the "Archives of Internal Medicine," what percentage of doctors surveyed actually misdiagnosed chicken pox?

Go to cnn.com/daybreak. Give us your answers. We'll give you the winner tomorrow.

COSTELLO: You're asking people to stretch their minds today.

MYERS: Well. We hope they're awake.

COSTELLO: You've got that right.

OK, here's kind of a strange and wacky story. The American team walked away with golf's President's Cup over the weekend. That's not the wacky part, but it seems that not that many people were talking about how well Tiger Woods played in the tournament. Instead, they were talking about his hair. Take a look at his new 'do, Chad.

MYERS: I did. I got nothing.

COSTELLO: Come on. It looks like there are little patches of blond all over it ...

MYERS: It looks like he put bleach inside of a football helmet and then put the football helmet on because that's what the inside of a football helmet looks like.

COSTELLO: Interesting.

MYERS: It's got those little pads.

COSTELLO: Well, here's what he had to say about it.

MYERS: OK.

(BEGIN VIDEO CLIP)

TIGER WOODS, GOLFER: I tell you what, as I said earlier, I've got to do it while I still have it and my family tends to recede so it has been receding, so I've got to do it and have some fun while it's still here.

UNIDENTIFIED FEMALE: Does it have anything to do Tiger (inaudible) WOODS: It kind of turned out that way but I was just having fun with it.

(END VIDEO CLIP)

COSTELLO: So, Chad, as a man, and I hate to bring this up, but as a man with kind of a receding hairline ...

MYERS: Kind of? You're too kind.

You know what I say? I say gray's better than gone so I'm not even coloring that gray stuff up there.

COSTELLO: I understand perfectly.

I believe we're going to a break. We'll be right back.

(COMMERCIAL BREAK)

COSTELLO: Travel forecast. Chad has that for you this morning.

MYERS: Expecting some delays, Carol, across the Northeast, even though right now the weather looks absolutely perfect, clear skies, the winds are going to be out of the north hear at about 20 miles per hour and some times depending on which way, the runway they're trying to use, if that's the cross runway wind, they make have to separate the planes a little bit. Expecting delays there.

Atlanta could have an airport delay because of some low clouds. D.C., Baltimore, all the way out there through Hampton Roads, it's great, though, today. Clear skies and sunshine, the rain showers could pop up across parts of Florida from Tampa right on over to Jacksonville, even a couple of thunderstorms to Miami, but other than that the rest of the country looks pretty darn good.

COSTELLO: No tropical storms out there ...

MYERS: Nothing.

COSTELLO: ... depressions.

MYERS: Nothing.

COSTELLO: That makes me happy, and I'm sure a lot of other people, too.

MYERS: Yeah.

COSTELLO: Thank you, Chad.

From the Time Warner Center in New York, I'm Carol Costello along with Chad Myers. AMERICAN MORNING starts right now.

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