WASHINGTON – As scrutiny intensifies on how the government spent money in the wake of Hurricane Katrina, two senators on Thursday questioned a $236 million deal with Carnival Cruise Lines to house evacuees on ships when Greece offered to provide its vessels for free.

In a letter to Homeland Security Secretary Michael Chertoff, Sens. Barack Obama, D-Ill., and Tom Coburn, R-Okla., asked why the Federal Emergency Management Agency signed a six-month agreement with the cruise line instead of accepting a humanitarian offer from the Greek government.

“Even if the Carnival contract were a good one – and it almost certainly is not – it is inexplicable why FEMA would fail to implement the Greek government’s offer of free cruise ships,” the senators said. “Unfortunately, this is merely the latest example of poor decision-making by FEMA.”

Coburn and Obama have introduced legislation calling for a chief financial officer to oversee how tax dollars are being spent on hurricane recovery efforts. They said the Carnival deal “appears to be a sweetheart government contract,” underscoring the need for independent oversight on the hurricane relief funding.

A spokesman for the Department of Homeland Security could not be reached for comment late Thursday.

The federal government contract with Carnival was for three cruise ships. Another contract with Scotia Prince Lines was for one vessel for displaced residents in Mississippi and Louisiana. The ships were largely sitting empty in the Gulf Coast, The Washington Post reported this week, prompting allegations of wasted government money from Republicans and Democrats alike.

The European Union said Greece extended an offer to the United States on Sept. 4 to donate two cruise ships to house victims of Hurricane Katrina.

Butch Kinerney, a FEMA spokesman, said the government entered an agreement with Carnival one day earlier. He said Greece could not guarantee how quickly their ships would arrive on the Gulf Coast, so officials were reluctant to turn away the Carnival option. “Our priority was to get the ships in place as quickly as possible,” Kinerney said.

Although the ships were not filled last week, Kinerney said they now are nearing capacity with a mix of residents who lost their homes and emergency officials working in the area.

In other hurricane-related developments, the New Orleans police department said it is investigating a dozen officers in connection with looting in the aftermath of Katrina.

Acting Police Superintendent Warren Riley said Thursday that four of the dozen officers already have been suspended for failing to stop looting.

And The Associated Press reported that Education Secretary Margaret Spellings announced that schools affected by Hurricanes Katrina and Rita may get a year’s delay on federal penalties if they demonstrate that the storms prevented them from making yearly progress required by the No Child Left Behind Act.

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