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DHS IG Audits Raise More Questions About FEMA Readiness      �
by Anthony L. Kimery   �
Tuesday, 24 June 2008 

‘Once again, the taxpayers must pay for FEMA’s mistakes’
Two new Department of Homeland Security (DHS) Inspector General (IG) audits found that the Federal Emergency Management Agency (FEMA) has had the most management failings of any DHS component – resulting in tens of millions in violation of federal contracting regulations – and that the agency has stalled in implementing IT systems necessary to adequately manage it’s emergency crisis response logistics activities effectively.

Consequently, questions have been raised about FEMA’s ability to ably push and track vital resources needed in the aftermath of major catastrophes, and whether it can competently award post-disaster contracts.

Furthermore, the two new audits came as the Government Accountability Office reported that seven years after 9/11 and three years after Hurricane Katrina, DHS’s preparedness for catastrophic, potentially mass-casualty disasters continues to lag.

As of Dec. 31, 2007, FEMA had failed to implement more than 1,000 recommendations on how the agency could be managed more effectively – saving taxpayers tens of millions of dollars, according to the recently released report, “Status Report on Open Recommendations to DHS Components.” by the DHS’s Inspector General.

“Our office issued 214 reports with 1,070 recommendations that, according to our records, had not been implemented as of December 31, 2007,” the IG report stated, adding, “of the 1,070 recommendations, 27 were closed in January 2008. The largest number of open recommendations was made to FEMA. No other single DHS component accounts for more than 12 percent of unimplemented recommendations.

According to the IG report, FEMA accounted for 50 percent of the unimplemented recommendations, followed by the Transportation Security Administration, (12 percent); Customs and Border Protection (eight percent); US Coast Guard (seven percent); and DHS management (six percent).

DHS’s IG made 530 recommendations to FEMA alone.

“We often agree with the inspector general on his recommendations, but we have been known to disagree as well. The fact that a recommendation is made does not immediately qualify it as a good and workable one. The open recommendations cited in his report represent only about one fourth of the roughly 4,500 recommendations issued to date,” said DHS spokesman Russ Knocke.

FEMA’s “response to [the IG’s] recommendations has been almost complete silence,” said Rep. Bennie Thompson, chairman of the House Committee on Homeland Security. “Of these recommendations, only 27 – or 2.5 percent – were acted upon. These unanswered recommendations represent millions of dollars in federal money that was either wasted or worse.”

Thompson said he’s urged DHS Secretary Michael Chertoff “to require that these recommendations be addressed before this administration leaves office.”

In the case of FEMA’s contract with Clearbrook, LLC for base camp services associated with Hurricane Katrina activities in Louisiana, for instance, the IG reported  that as a result of “FEMA’s haste to establish base camps, and the shortage of trained and experienced contracting officials, the Clearbrook contract was not effectively administered, leading to contractual deficiencies, excessive billings, and questionable costs of $16.4 million.”

But because FEMA says the contract did not precisely spell out what Clearbrook was supposed to do, the agency will not try to recoup any of the $16.4 million in payments questioned by DHS’s IG, according to FEMA Management Director Albert Sligh in a letter to Thompson.

“Once again, the taxpayers must pay for FEMA’s mistakes,” Thompson declared in a statement. “Moreover, FEMA’s refusal to even attempt to recover this known overpayment is shocking and verges on an irresponsible stewardship of tax dollars.”

Clearbrook chief executive officer Bruce Wagner told the Alabama Press-Register that the company billed only for what FEMA asked it to do and followed standard contracting procedures.

John Carnahan, who led the IG team that audited Clearbrook, told the Press-Register “you can’t penalize the poor contractor because the contracting officer wrote such a miserable contract.”

The report names dozens of other companies, towns and cities the IG stated “did not account for and expend [millions in] FEMA funds according to federal regulations and FEMA guidelines.”

Procurement problems identified in audits of electric cooperatives resulted in nearly $200 million in questionable expenditures, the IG found.

“Based on past experience, we estimated that more than half” of reimbersments totaling $391 million to electric cooperatives from 2000 through 2004 were made “for costs incurred under contracts that do not comply with federal procurement standards,” the report stated.

“From September 2002 to January 2006, we issued nine audit reports containing findings that electric cooperatives did not follow federal procurement standards in awarding contracts for utility repairs and debris removal work,” the IG determined. “As a result, full and open competition did not occur and FEMA had no assurance that contract costs were reasonable. The nine audits covered $59.2 million in electric cooperative subgrantee claims, of which $39.3 million were for costs incurred under non-competitive contracts.”

Meanwhile, another DHS IG report, “Logistics Information Systems Need to BeStrengthened at the Federal Emergency Management Agency,” that investigated how well FEMA manages information technology to support disaster response logistics activities found FEMA’S “existing information technology systems do not support logistics activities effectively. Specifically, the systems do not provide complete asset visibility of disaster goods, such as commodities and property, from their initial shipment to final distribution in disaster areas.”

The IG’s audit determined that “the systems also do not provide comprehensive asset management; instead, several systems must be used to order, ship, and account for disaster goods. Additionally, the systems are not integrated and, therefore, cannot share information during disaster response. As a result, FEMA may be hindered in its ability to perform disaster response in an effective and timely manner.”

The report concluded that “FEMA has taken a number of positive steps to improve its logistics capabilities by developing a planning strategy and gathering independent evaluations of its technology and operations,” and that “these efforts will enhance FEMA’s ability to assess its existing systems, identify its information technology system requirements, and select the appropriate technologies to meet its logistics needs.”

The IG recommended that “the FEMA administrator direct the Logistics Management Directorate to finalize its logistics strategic and operational plans to guide logistics activities; develop standard business processes and procedures for logistics activities; evaluate current technologies; and develop a strategy for acquiring information technology systems to support the logistics mission.”

Following the 2005 hurricane season, Congress passed the Post-Katrina Emergency Management Reform Act of 2006 which required FEMA to lead and support the nation in a comprehensive emergency management system of preparedness, protection, response, recovery, and mitigation. It further required FEMA to develop an efficient, transparent, and flexible logistics system for procurement and delivery of goods and services during disasters, and to improve the information technology IT systems that support FEMA’s logistics activities.

But as the IG’s “Status Report on Open Recommendations to DHS Components” found
regarding contracts between FEMA, the Red Cross, and Corporate Lodging Consultants to provide hurricane evacuees with temporary housing, the program was riddled with problems.

“The American Red Cross and the consultants did not always follow procedures authorized by FEMA for determining evacuee eligibility or require hotels and motels to follow standard industry protocols,” the report stated said. “Billed room rates were greater than published rates. Definitive proof of occupancy prior to authorizing payments was not required. From our judgmental sample of 3,000 evacuees, we questioned costs of $3.4 million.”

In May 2007, GAO reported that FEMA should address five areas of logistics management for an effective logistics system:

Requirements – FEMA did not have operation plans to address disaster scenarios, nor did it have detailed information on states’ capabilities and resources;
Inventory Management – FEMA’s ability to track supplies in-transit was limited;
Facilities – FEMA had little assurance that it maintained the right number of facilities in the right places;
Distribution – Problems included poor transportation planning, unreliable contractors, and lack of distribution sites; and
People – Human capital issues were pervasive, including in the logistics area

GAO noted FEMA was taking many actions to transition its logistics program to be more proactive, flexible, and responsive, but that it would be several years before these areas were fully implemented and operational.