Paulison told the Senate Homeland Security Committee, which is investigating the government's response to the disaster, "I've been a public servant for a long time, and I've never been a fan of no bid contracts."
"Sometimes you have to do them because of the expediency of getting things done. And I can assure that you we are going to look at all of those contracts very carefully."
Paulison further said that some of the already awarded contracts would be opened to new bidders.
In the immediate aftermath of the storm, an estimated 80 percent of contracts worth $1.5 billion went to companies that did not participate in a normal bidding process where multiple companies compete by submitting proposals. In a bidding scenario, the contract awarding agency weighs the ability of a company to do the job and the price for the work.
But, Paulison said, sometimes emergency situations require the government to quickly hire contractors in order to provide immediate relief services.
"It sure looks with hindsight that FEMA would have been in a much better position if it had had a lot of contracts in place that had been bid that were standby contracts to provide exactly the kind of services that FEMA rushed in to provide on a no bid basis and which we fear the taxpayers may have ended up paying more money for than they should have," said Sen. Joseph Lieberman, D-Conn.
Paulison responded that FEMA would "hopefully put things in place for the future where we won't have to depend on no bid contracts for future use."
Paulison was one of a host of government officials who appeared before the committee to testify about hurricane relief efforts.
Some lawmakers, including Sen. Susan Collins, R-Maine, sharply questioned officials about continued housing problems experienced by thousands of displaced people.
Collins said that FEMA has spent around $2 billion for 120,000 temporary housing units, including mobile homes, but only 109 families have been moved in to them. Collins said thousands remain in shelters.
"More than a month after Katrina's landfall, frustration, concerns and questions about FEMA's responsiveness and planning persist as Gulf Coast residents work to put their lives and communities back together," said Collins, who chaired the Senate hearing.
FEMA has implemented a housing assistance program that offers $2,000 a month for up to 18 months for families to rent anywhere in the country. An estimated 600,000 people have registered for the program, but they face an Oct. 15 deadline for finding stable housing. FEMA officials have said they will consider an extension of the program.
Also on Thursday the Labor Department reported that 74,000 unemployment claims as the result of Hurricanes Katrina and Rita were filed last week, bringing estimated job loss totals from the storms to 363,000.