FEMA Should Disallow $2.78 Million of $14.67 Million in Public Assistance Grant Funds Awarded to the Township of Brick, New Jersey, for Hurricane Sandy Damages

The Township of Brick, New Jersey (Township) received a $14.57 million Public Assistance grant award from the New Jersey Office of Emergency Management (New Jersey), a Federal Emergency Management Agency (FEMA) grantee, resulting from Hurricane Sandy damages in October 2012. Our audit objective was to determine whether the Township accounted for and expended FEMA funds according to Federal requirements. FEMA should disallow $2.78 million in grant funds awarded to the Township. Although the Township generally accounted for FEMA funds on a project-by-project basis, it did not fully comply with Federal and FEMA procurement requirements in awarding contracts for disaster work, resulting in $1,496,131 in unreasonable debris removal costs. The unreasonable costs represent the difference between hourly rates the Township paid its contractors and the hourly rates that the State of New Jersey negotiated for statewide debris removal activities and made available to all municipalities within the state. Therefore, we question the unreasonable costs as ineligible. We also question as ineligible $1,286,255 of unrelated hazard mitigation costs. However, these costs may be eligible under other FEMA projects or programs. Therefore, the Township should work with New Jersey and FEMA to determine the eligibility of the hazard mitigation costs we question.