We determined that the Authority did not comply with Federal regulations in its award and administration of three contracts totaling $31.7 million. As a result, FEMA has no assurance that these costs were reasonable or that the Authority selected the most qualified contractors. Specifically, the Authority did not: perform cost/price analyses of bid proposals to ensure fair and reasonable costs; follow its own procurement policy and Federal regulations when evaluating and selecting its contractors; include all mandatory Federal provisions in contracts to document rights and responsibilities of the parties; maintain records sufficient to detail the significant history of its procurements; maintain an adequate contract administration system that included careful review of invoices; or include a ceiling price in time-and-material contracts that contractors exceed at their own risk. Therefore, we recommended that FEMA should ineligible contract costs, review costs associated with the Authority’s other large projects and disallow any costs that are ineligible; review the process the Authority used to procure its engineering contract; and direct the California Governor’s Office of Emergency Services, to provide increased guidance to the Authority and more closely monitor its performance to ensure the Authority complies with mandatory Federal regulations and FEMA guidelines.
The Victor Valley Wastewater Reclamation Authority in Victorville, California, Did Not Properly Manage $32 Million in FEMA Grant Funds