We determined that the District’s accounting policies, procedures, and business practices are adequate to account for FEMA grant funds and insurance proceeds according to Federal regulations and FEMA guidelines. However, the District’s procurement policies, procedures, and business practices were not adequate to meet minimum Federal standards and address key procurement elements such as to ensure no award is made to any party debarred or suspended from Federal assistance programs. The District took immediate corrective actions and amended its procurement procedures to be compliant with Federal procurement standards. Non-compliance occurred because District officials were not fully aware of the required procurement standards for Federal grants. We recommended that FEMA direct Texas to continue providing technical assistance and closely monitor the District to ensure it complies with Federal procurement standards for awarding and administering disaster-related contracts to prevent improper spending of the estimated $12,854,705 ($9,641,029 Federal share) in contract costs for remaining permanent work. FEMA agreed with the findings and recommendation in the report.