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Audits, Inspections, and Evaluations

Report Number Title Issue Date Fiscal Year
OIG-15-77 KPMG LLP reviewed the Federal Emergency Management Agency (FEMA) internal control over financial reporting. The management letter contains 15 observations related to internal control and other operational matters for management’s considerations.

>Federal Emergency Management Agency's Management Letter for DHS' FY 2014 Financial Statements Audit 		2015
OIG-15-67-D As of February 2014, the Port Authority requested an estimated $213 million in Public Assistance funding for 2012 Hurricane Sandy damages. We conducted this audit early in the Public Assistance process to identify areas where the Port Authority may need additional technical assistance or monitoring to ensure compliance with Federal grant requirements. At the time of the grant award, the Port Authority of New York and New Jersey (Port Authority) did not have adequate accounting and procurement policies and procedures in place to ensure compliance with Federal Emergency Management Agency (FEMA) grant requirements. However, in late 2013, the Port Authority made changes to its accounting and procurement policies and procedures for FEMA-funded work. These changes should provide FEMA reasonable assurance that the Port Authority has the capability to account for and expend FEMA grant funds according to Federal requirements.

>The Port Authority of New York and New Jersey's Recently Updated Policies, Procedures, and Business Practices Should Be Adequate to Effectively Manage FEMA Public Assistance Grant Funds 		2015
OIG-15-66-D The South Carolina Department of Transportation (Department) expects to claim about $165.2 million in Public Assistance grant funds for debris removal activities associated with a February 2014 severe winter storm. We conducted this audit early in the Public Assistance process to identify areas where the Department may need additional technical assistance or monitoring to ensure compliance with Federal requirements. The Department generally has established policies, procedures, and business practices to adequately account for and expend FEMA grant funds according to Federal regulations and FEMA guidelines. The Department has accounting systems in place to account for disaster costs on a project-by-project basis and has adequate support for costs it plans to claim under the grant award. Further, the contracts the Department awarded to accomplish work under the grant met Federal and FEMA procurement requirements.

>South Carolina Department of Transportation Has Adequate Policies, Procedures, and Business Practices to Effectively Manage Its FEMA Public Assistance Grant Funding 		2015
OIG-15-65-D Holy Cross received an $89 million FEMA grant award for 2005 Hurricane Katrina damages to its campus in the Ninth Ward of New Orleans. By 2011, the school had completed work on 12 of its 16 projects. However, at the time of our audit, Louisiana had not submitted a final claim for the 12 projects and FEMA had closed only 1 large project. Holy Cross did not follow Federal procurement standards in awarding 21 contracts totaling $82.4 million. As a result, FEMA has no assurance that costs were reasonable. This is especially true for projects that FEMA funds at 100 percent of the costs. Further, the lack of open and free competition increased the risk of fraud, waste, and abuse and decreased opportunities for small businesses, minority-owned firms, and women’s business enterprises to compete for federally funded work. For the most part, we do not question costs that Holy Cross incurred to reopen school in January 2006, or to operate temporary facilities in the Ninth Ward. However, in 2007, Holy Cross decided to relocate from the Ninth Ward to the Gentilly neighborhood of New Orleans. Holy Cross set up a temporary campus in Gentilly in 2007 and began work on permanent facilities there in 2008. By 2007, exigent circumstances no longer existed, so Holy Cross should have procured competitive bids according to Federal regulations for the work in Gentilly.

>FEMA Should Disallow $82.4 Million of Improper Contracting Costs Awarded to Holy Cross School, New Orleans, Louisiana 		2015
OIG-15-54 We contracted with the independent public accounting firm KPMG LLP to perform the audit of the consolidated financial statements of the U.S. Department of Homeland Security for the year ended September 30, 2014. KPMG LLP evaluated selected general information technology controls, information technology entity level controls, and business process application controls at the Federal Emergency Management Agency (FEMA). KPMG LLP determined that FEMA had taken corrective action to design and consistently implement certain account management and configuration management controls. However, KPMG LLP continued to identify general information technology control deficiencies related to security management, logical access, configuration management, segregation of duties, and contingency planning for FEMA’s core financial and feeder systems. Such control deficiencies limited FEMA’s ability to ensure the confidentiality, integrity, and availability of its critical financial and operational data.

>Information Technology Management Letter for the Federal Emergency Management Agency Component of the FY 2014 Department of Homeland Security Financial Statement Audit 		2015
OIG-15-52 KPMG LLP reviewed National Flood Insurance Program’s internal control over financial reporting. The resulting management letter contains four observations related to internal controls and other operational matters for management’s consideration. KPMG LLP noted deficiencies and the need for improvements in certain National Flood Insurance Program (NFIP) processes. These deficiencies did not meet the criteria to be reported in the Independent Auditors’ Report on DHS’ FY 2014 Financial Statements and Internal Control over Financial Reporting, dated November 14, 2014, included in DHS’ fiscal year (FY) 2014 Agency Financial Report. These observations are intended to improve internal control or result in other operating efficiencies.

>National Flood Insurance Program's Management Letter for DHS' FY 2014 Financial Statements Audit (Redacted) 		2015
OIG-15-51-D The Palm Beach County School District, Florida (District) received a $34.0 million grant award from the Florida Division of Emergency Management (Florida), a Federal Emergency Management Agency (FEMA) grantee, for Hurricane Wilma damages in October 2005. The District did not comply with Federal procurement standards or record retention requirements for contracts valued at $9.2 million. Florida, as the grantee, was responsible for ensuring that the District was aware of and followed all Federal requirements. In fact, the District’s 2006 Single Audit report disclosed these problems, yet we found no evidence that either Florida or the District did anything to correct them. As a result, full and open competition did not occur, and the risk that fraud, waste, and abuse occurred is high. Normally, we would question such improper costs; however, we do not in this case because FEMA said the costs were reasonable and allowed the costs at project closeout using the agency’s authority granted under 44 Code of Federal Regulations (CFR) 13.6(c). We also determined that the District claimed $33,239 of costs that were ineligible because it did not credit its claim for rebates it received for installing energy efficient roofs provided for under the award.

>Florida and the Palm Beach County School District Did Not Properly Administer $7.7 Million of FEMA Grant Funds Awarded for Hurricane Jeanne Damages 		2015
OIG-15-50-D The Palm Beach County School District, Florida (District) received a $15.0 million grant award from the Florida Division of Emergency Management (Florida), a Federal Emergency Management Agency (FEMA) grantee for Hurricane Jeanne damages in September 2004. The District did not fully comply with Federal procurement requirements for contract work valued at $7.7 million. Florida, as the grantee, was responsible for ensuring that the District was aware of and followed all Federal requirements. Normally, we would question such improper costs; however, we are not in this case because FEMA said the costs were reasonable and allowed the costs at project closeout using the agency’s authority granted under 44 CFR 13.6(c). We also identified $145,145 of ineligible costs consisting of $98,645 of unreasonable contract costs and $46,500 in duplicate benefits.

>Florida and Palm Beach County School District Did Not Properly Administer $9.2 Million of FEMA Grant Funds Awarded for Hurricane Wilma Damages 		2015
OIG-15-49-D The Palm Beach County School District, Florida (District) received a Public Assistance award of $6.4 million from the Florida Division of Emergency Management, a Federal Emergency Management Agency (FEMA) grantee, for Hurricane Frances damages in September 2004. Our audit objective was to determine whether the District accounted for and expended FEMA funds according to Federal requirements. For the projects we reviewed, the District generally accounted for and expended FEMA Public Assistance grant funds according to Federal requirements.

>Palm Beach County School District, Florida, Effectively Managed FEMA Public Assistance Grant Funds Awarded for Hurricane Frances Damages 		2015
OIG-15-48-D The East Jefferson General Hospital, Metairie, Louisiana (Hospital) received a $14.3 million award from the Louisiana Governor’s Office of Homeland Security and Emergency Preparedness (Louisiana), a Federal Emergency Management Agency (FEMA) grantee, for damages resulting from Hurricane Katrina in August 2005. Our audit objective was to determine whether the Hospital accounted for and spent FEMA funds according to Federal requirements. The Hospital did not comply with Federal procurement standards in awarding $9.5 million for 17 contracts. Ten of the 17 contracts were prohibited cost-plus-a-percentage-of-cost contracts for exigent work. We did not question the majority of contract costsbecause contractors performed most of the work under exigent circumstances. We did, however, question $395,032 ofmarkups on costs because Federal regulations strictly forbid the cost-plus-a-percentage-of-cost method of contracting because it provides a disincentive for contractors to control costs. Because of our audit, the Hospital was preparing a Disaster Policy Guide to assist them in complying with Federal regulations for any future disasters.

>FEMA Should Recover $395,032 of Improper Contracting Costs from $14.3 Million Grant Funds Awarded to East Jefferson General Hospital, Metairie, Louisiana 		2015
OIG-15-40-D We reviewed $1,726,151 of costs the County claimed for one large project (Project 3095). This amount was $945,640 more than the $780,511 that FEMA initially authorized and obligated for the project. The County improperly claimed $945,640 more than the $780,511 that FEMA Region IX initially authorized to construct a wall to stabilize a damaged section of road. The County incurred the additional costs because, rather than adhere to the scope of work that FEMA authorized, it built a superior wall to lessen the susceptibility of damage that anticipated wildfires might cause in that location. FEMA Headquarters ultimately approved this funding and awarded the County both the initial $780,511 and an additional$945,640 for the already-completed project. However, FEMA Headquarters did not provide a reasonable justification for its decision and did not perform a benefit/cost analysis as required to fund mitigation measures. As a result, FEMA and taxpayers had no assurance that the mitigations work was cost effective, as Federal regulations and FEMA guidelines require.

>FEMA Needs to Ensure the Cost Effectiveness of $945,640 that Los Angeles County, California Spent for Hazard Mitigation Under the Public Assistance Program 		2015
OIG-15-37-D Gwinnett County, Georgia (County) received an award of $6.3 million from the Georgia Emergency Management Agency (Georgia), a Federal Emergency Management Agency (FEMA) grantee, for damages resulting from a September 2009 flood. We audited projects totaling $4.6 million to determine whether the County accounted for and expended FEMA funds according to Federal requirements. For the projects we reviewed, the County generally accounted for and expended FEMA funds according to Federal regulations and FEMA guidelines. The County’s claim did include $87,208 of ineligible costs that insurance covered; however, this occurred because of a minor FEMA funding error. In addition, Georgia overpaid the County a total of $871,129 under several projects. Although these overpayments to the County do not affect the amount of obligated Federal funds, the County should return the excess funds to Georgia to be put to better use.

>Gwinnett County, Georgia, Generally Accounted for and Expended FEMA Public Assistance Grant Funds According to Federal Requirements 		2015
OIG-15-35-D The Imperial Irrigation District (District) received a $10.5 million award of Federal Emergency Management Agency (FEMA) Public Assistance grant funds for damages resulting from an April 2010 earthquake. We audited $7.8 million, or 74 percent of the total award. The District did not always account for and expend FEMA grant funds according to Federal requirements. The District awarded contracts totaling $3.6 million without taking the required affirmative steps to ensure the use of small and minority firms, women’s business enterprises, and labor surplus area firms when possible. As a result, FEMA has no assurance that these types of firms had opportunities to bid on Federal work as Congress intended. The District’s claim also included $45,408 of ineligible contract costs and $1,473 of unsupported equipment costs. In addition, FEMA should deobligate $2.5 million and put those funds to better use because the District completed disaster work and no longer needs those funds.

>FEMA Should Recover $6.2 Million of Ineligible and Unused Grant Funds Awarded to the Imperial Irrigation District, California 		2015
OIG-15-34-D Larimer County, Colorado (County) received a $22.5 million grant for damages from a September 2013 disaster. We conducted this audit early in the grant process to identify areas where the County may need additional technical assistance or monitoring to ensure compliance with Federal requirements. The policies, procedures, and business practices of the County are not adequate to account for and expend Federal Emergency Management Agency (FEMA) grant funds according to all Federal requirements. As a result, the County is at risk of losing some or all of its FEMA-approved funding, which totaled $22.5 million as of June 2014.

>Larimer County, Colorado, Needs Assistance to Ensure Compliance with FEMA Public Assistance Grant Requirements 		2015
OIG-15-30-D The City of Loveland, Colorado (City) received a $21.1 million grant for damages from a September 2013 disaster. We conducted this audit early in the grant process to identify areas where the City may need additional technical assistance or monitoring to ensure compliance with Federal requirements. The City generally has established policies, procedures, and business practices to adequately account for and expend FEMA Public Assistance Program grant funds according to Federal regulations and FEMA guidelines. However, we identified areas related to accounting, procurement, and insurance in which the City needs to improve its procedures to ensure compliance with Federal requirements for the $21.1 million Federal disaster award.

>The City of Loveland, Colorado, Could Benefit from Additional Assistance in Managing its FEMA Public Assistance Grant Funding 		2015
OIG-15-19-D We received two Office of Inspector General (OIG) Hotline complaints about insurance reviews of Florida disaster assistance applicants. In addition, three OIG audits of Florida grant recipients raised similar concerns. The quality of FEMA’s insurance reviews in Florida was not adequate to maximize insurance available under applicants’ policies and to ensure that duplication of benefits did not occur. FEMA’s Florida Recovery Office knew about these deficiencies in its insurance review process but did not correct them. As a result, FEMA may have funded up to $177 million that insurance should have covered.

>FEMA Insurance Reviews of Applicants Receiving Public Assistance Grant Funds for 2004 and 2005 Florida Hurricanes Were Not Adequate 		2015
OIG-15-152-D At the time of our audit, Mount Carmel Baptist Church (Mount Carmel) did not have adequate policies, procedures, and business practices to account for and expend FEMA grant funds according to Federal regulations and FEMA guidelines. Although the disaster occurred in 2013, Mount Carmel had not begun work to repair any of its damaged facilities and, therefore, had not incurred any costs for disaster-related work. In addition, Mount Carmel may lack the financial stability to meet the required 25 percent non-Federal cost share for the grant award. Finally, a Mount Carmel affiliate did not always comply with Federal grant requirements for a past Federal grant it received from another Federal agency. Therefore, FEMA should place special award conditions as needed on Mount Carmel though additional requirements.

>Mount Carmel Baptist Church in Hattiesburg, Mississippi Needs Assistance to Ensure Compliance with FEMA Public Assistance Grant Requirements 		2015
OIG-15-151-D The Borough received a $7 million grant award from the New Jersey Office of Emergency Management (New Jersey), a Federal Emergency Management Agency (FEMA) grantee, for damages resulting from Hurricane Sandy, which occurred in October 2012. We conducted this audit early in the grant process to identify areas where the Borough may need assistance in managing Federal funds. The Borough of Spring Lake, New Jersey, (Borough) accounted for disaster costs on a project-by-project basis and met applicable Federal regulations in processing disaster related procurement transactions. However, the Borough completed one large project below the estimated project cost, and about $2.0 million remains obligated for that project. Therefore, FEMA should deobligate the $2.0 million in unneeded funds as soon as possible and put those funds to better use. In addition, the Borough could not provide adequate support for emergency and permanent restoration work totaling $798,317. The Borough also had not applied insurance proceeds totaling $431,507 against claims for eligible project costs. Therefore, the $431,507 represents ineligible duplicate benefits, because FEMA cannot fund costs that insurance covers. These findings occurred, in part, because the Borough did not effectively coordinate with New Jersey to ensure Borough compliance with FEMA grant requirements.

>FEMA Should Recover $2.0 Million in Unneeded Funds and Disallow $1.2 Million of $7 Million in Grant Funds Awarded to Spring Lake, New Jersey, for Hurricane Sandy 		2015
OIG-15-15-D The Gulf Coast Mental Health Center (Center) received an award of $2.1 million from the Mississippi Emergency Management Agency, a Federal Emergency Management Agency (FEMA) grantee, for damages resulting from Hurricane Katrina, which occurred in August 2005. Our audit objective was to determine whether the Center accounted for and expended FEMA funds according to Federal regulations and FEMA guidelines. The Center generally accounted for and expended FEMA funds according to Federal regulations and FEMA guidelines. However, we identified $61,200 of duplicate benefits for costs recoverable from another source. This amount represented about 4 percent of the $1.4 million we reviewed for five projects.

>Gulf Coast Mental Health Center, Mississippi, Generally Accounted for and Expended FEMA Public Assistance Grant Funds According to Federal Requirements 		2015
OIG-15-149-D Riverside General Hospital (Riverside) received a $32.4 million award from the Texas Division of Emergency Management (Texas), a Federal Emergency Management Agency (FEMA) grantee, for damages resulting from Hurricane Ike in September 2008. At FEMA’s request, we audited $32.4 million, or 100 percent of the grant award. Riverside’s misuse of Federal funds did not end in 2012 with the indictment and departure of its Chief Executive Officer and others on charges of bilking Medicare out of $158 million. Following the indictments, Riverside’s remaining management continued to misuse and mismanage Federal funds—this time, FEMA funds. By 2013, Texas had advanced $17.6 million of the $32.4 million FEMA grant to Riverside. Riverside alleged that it spent $13.2 million of the $17.6 million received for disaster expenses. However, Riverside completely disregarded Federal grant requirements, and Texas did not adequately monitor Riverside’s grant activities. In fact, Riverside spent $7.9 million to fund its hospital operations and other unverifiable items. Further, Riverside awarded $12.2 million in disaster-related contracts without competition and did not always account for or support the grant funds. Therefore, we question the entire $32.4 million grant award, including $17.6 million in advanced funds and $14.8 million in unused funds.

>FEMA Should Recover $32.4 Million in Grant Funds Awarded to Riverside General Hospital, Houston, Texas 		2015
OIG-15-148-D The City received a $248.3 million grant for 2005 Hurricane Katrina damages. In this third audit of the grant, we reviewed $142.1 million FEMA approved for 43 permanent repair projects. At the time of our audit, the City had not completed work on all projects and, therefore, had not submitted a final claim for all project expenditures. For most of the projects in our audit scope, the City of Gulfport, Mississippi, (City) accounted for and expended Federal Emergency Management Agency (FEMA) funds according to Federal regulations and FEMA guidelines. However, the City did not comply with Federal procurement requirements when awarding two contracts for project management services valued at $10.4 million, of which $4.2 million was unreasonable. City officials were not aware that Federal procurement regulations prohibited the use of a qualifications-based contracting method for program management services. However, the grantee (Mississippi) is responsible for ensuring that its subgrantee (the City) is aware of and complies with Federal requirements, as well as for providing technical assistance and monitoring grant activities.

>FEMA Should Recover $4.2 Million of $142.1 Million in Grant Funds Awarded to the City of Gulfport, Mississippi, for Hurricane Katrina Damages 		2015
OIG-15-147-D The City of Asbury Park, New Jersey, (City) received a $9.3 million Public Assistance grant award from the New Jersey Office of Emergency Management (New Jersey), a Federal Emergency Management Agency (FEMA) grantee, for damages resulting from Hurricane Sandy, which occurred in October 2012. Our audit objective was to determine whether the City accounted for and expended FEMA funds according to Federal requirements. The City generally accounted for and expended FEMA funds for permanent work according to Federal regulations and FEMA guidelines. However, the City did not provide adequate support for $771,461 of the $798,819 it had claimed for debris removal and emergency work at the time of our audit. As a result, FEMA has no assurance that these costs are valid and eligible. FEMA initially estimated that debris and emergency work would exceed $2 million. Because we conducted this audit early in the grant cycle, the City has an opportunity to supplement deficient documentation or locate missing documentation before too much time elapses. FEMA should disallow any costs the City cannot adequately support and direct New Jersey to assist the City in properly supporting the costs it has claimed and additional costs the City plans to claim. The City also did not include all federally required contract provisions in five contracts totaling $3.9 million. We did not question these contract costs, because this instance of noncompliance did not cause negative consequences and because the City otherwise complied with Federal procurement standards.

>Asbury Park, New Jersey, Needs Assistance in Supporting More Than $2 Million in FEMA Grant Funds for Hurricane Sandy Debris and Emergency Work 		2015
OIG-15-146-D This is our sixth annual “capping” report summarizing our disaster-related audits. Our first five annual reports focused solely on our Public Assistance and Hazard Mitigation grant audits. This year, we added the results of our non-grant audits to reflect all of our work related to Disaster Relief Fund activities. In fiscal year (FY) 2014, we issued reports on 61 audits of FEMA grants, programs, and operations funded from the Disaster Relief Fund: 49 grant audits and 12 program audits. The 61 reports contained 159 recommendations, with potential monetary benefits of $1 billion, which included $971.7 million reported for grant audits and $29.3 million reported for program audits. The $971.7 million represents 28 percent of the $3.44 billion in grant funds we audited in FY 2014. One Hazard Mitigation Grant Program audit resulted in $812 million of the $971.7 million of potential monetary benefits. We continue to find problems with grant management, ineligible and unsupported costs, and noncompliance with Federal contracting requirements. The 12 program audits included 3 audits of FEMA’s initial response to disasters, 4 audits related to issues we identified during our audits of FEMA’s disaster responses, and 5 other audits of FEMA programs or operations. The 12 program audit reports recommended improvements to FEMA programs or operations and the recoupment of a $29.3 million debt that a state owed to FEMA. FEMA has been proactive in responding to our FY 2014 recommendations.

>Summary and Key Findings of Fiscal Year 2014 FEMA Disaster Grant and Program Audits 		2015
OIG-15-145-D The Federal Emergency Management Agency (FEMA) Region III and the West Virginia Division of Homeland Security and Emergency Management (West Virginia) requested our assistance at FEMA’s Joint Field Office in Charleston, West Virginia to provide assurance that FEMA is complying with Public Assistance and Federal grant requirements regarding the eligibility of damages to the runway safety area at Yeager Airport in Charleston, West Virginia. FEMA opened the Joint Field Office in response to a disaster declaration for severe winter storms, flooding, landslides, and mudslides that occurred in March 2015. FEMA should take reasonable steps to determine whether the damage to the runway safety area (i.e., the Engineered Arresting structure) at Yeager Airport is the direct result of the disaster, and, if so, that a duplication of benefits does not occur. Further, FEMA should fully document such determinations in the agency’s official disaster records. This action should provide reasonable assurance that FEMA obligates Public Assistance funding only for eligible work, thus preventing future large deobligations or recoveries for work that FEMA or an audit may later determine to be ineligible.

>OIG Deployment Activities at FEMA's Joint Field Office in Charleston, West Virginia -Yeager Airport 		2015
OIG-15-143-D Rock County Highway Department, Minnesota, (Department) received a $1.25 million grant for damages from a 2014 disaster. We conducted this audit early in the grant process to identify areas where the Department may need additional technical assistance or monitoring to ensure compliance with Federal requirements. The Department has established policies, procedures, and business practices to account for and expend Federal Emergency Management Agency (FEMA) Public Assistance grant funds according to Federal regulations and FEMA guidelines.

>Rock County, Minnesota, Highway Department Has Adequate Policies, Procedures, and Business Practices to Effectively Manage Its FEMA Public Assistance Grant Funding 		2015
OIG-15-142-D The Puerto Rico Department of Housing received two Federal Emergency Management Agency (FEMA) grant awards totaling $186.13 million to implement the New Secure Housing Program following Hurricane Georges in September 1998. In August 2012, the Puerto Rico Department of Housing submitted final expenditure claims totaling $184.34 million. FEMA requested that we audit these claims to facilitate closeout of the grants. The Puerto Rico Department of Housing did not always account for and expend FEMA grant funds awarded for the New Secure Housing Program according to Federal requirements. Of the $179.98 million of construction costs the Puerto Rico Department of Housing claimed, we found that $90.79 million was ineligible. The majority of these findings occurred because the Puerto Rico Emergency Management Agency, as the grantee, should have done a better job of managing the grants.

>The Puerto Rico Department of Housing Did Not Properly Administer $90.79 Million of FEMA Grant Funds Awarded for the New Secure Housing Program 		2015
OIG-15-141-D 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.

>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 		2015
OIG-15-14 This report responds to the annual reporting requirement and summarizes 18 audits completed in fiscal year 2014. The audits included about $447 million in State Homeland Security Program and Urban Areas Security Initiative grants awarded by the Federal Emergency Management Agency (FEMA) to 13 states, 4 territories, and the District of Columbia during 3-year periods between fiscal years 2009 and 2012. During fiscal year 2014, we issued reports for Alabama, Alaska, American Samoa, Delaware, District of Columbia, Guam, Hawaii, Idaho, Iowa, Maine, New Hampshire, North Dakota, Northern Mariana Islands, Oregon, Puerto Rico, South Dakota, Vermont, and Wyoming. In most instances, the states and urban areas administered grant programs efficiently and effectively and in compliance with grant guidance and regulations. We also identified one innovative practice that other jurisdictions could consider using. We identified two major areas for improvement: strategic planning and oversight of grant activities. We also identified about $14.5 million in questioned costs.

>Annual Report to Congress on States’ and Urban Areas’ Management of Homeland Security Grant Programs Fiscal Year 2014 		2015
OIG-15-139-D Los Alamos County, New Mexico, (County) received a $5.1 million award from the New Mexico Department of Homeland Security and Emergency Management Agency, a FEMA grantee, for damages resulting from severe storms and flooding in September 2013. Our audit objective was to determine whether the County accounted for and expended FEMA funds according to Federal regulations and FEMA guidelines. The County generally accounted for and expended Federal Emergency Management Agency (FEMA) Public Assistance grant funds according to Federal requirements. However, the County did not always comply with Federal procurement standards in awarding its three largest contracts for disaster work totaling $1.9 million. Specifically, the County did not take all required affirmative steps to assure the use of small, minority, women-owned, and labor-surplus area firms when possible. However, although the County did not take the specific steps that Federal procurement standards require, it did award all three contracts to these types of disadvantaged firms. In addition, the County’s contractors performed adequately and billed for their work appropriately. Therefore, we did not question costs because the County’s noncompliance with Federal requirements did not negatively impact the Federal government. County officials said that they were not aware of this requirement, but would update their policies and procedures to include this Federal procurement standard for future disasters.

>Los Alamos County, New Mexico, Generally Accounted For and Expended FEMA Grant Funds Properly 		2015
OIG-15-136-D St. Tammany Parish (Parish) received awards totaling $15.3 million from the Louisiana Governor’s Office of Homeland Security and Emergency Preparedness (Louisiana), a Federal Emergency Management Agency (FEMA) grantee, for the Hazard Mitigation Grant Program resulting from four federally declared disasters. The Parish’s hazard mitigation projects generally met FEMA’s eligibility requirements; and the Parish’s project management generally complied with applicable regulations and guidelines. However, the Parish did not always account for and expend grant funds according to Federal regulations and FEMA guidelines. We audited 11 projects totaling $14.98 million, or 98 percent of the total $15.3 million award. However, at the time of our audit, the Parish had completed only 4 of the 11 projects and had claimed project costs of $6.9 million for the 11 projects in our audit scope. We found $609,271 in ineligible project costs and $320,108 in unsupported project costs for total questioned costs of $929,379. These findings occurred, in part, because Louisiana has not properly managed its grants. Most significantly, Louisiana had not developed and implemented a comprehensive strategy to close all Hazard Mitigation Grant Program projects.

>FEMA Should Recover $929,379 of Hazard Mitigation Funds Awarded to St. Tammany Parish, Louisiana 		2015
OIG-15-135-D On August 24, 2014, a magnitude 6.0 earthquake struck northern California. FEMA expects eligible damages in Napa County, California (County), from the earthquake and aftershocks to exceed $6 million. We conducted this audit early in the grant process to identify areas where the County may need additional technical assistance or monitoring to ensure compliance with Federal requirements. The County has adequate policies, procedures, and business practices to account for Public Assistance grant funds according to Federal regulations and Federal Emergency Management Agency (FEMA) guidelines. The County can account for disaster costs on a project-by-project basis and is able to adequately support repair costs. Additionally, the County’s insurance procedures and practices are adequate to ensure that the County can properly manage anticipated insurance proceeds. The County also has adequate procurement policies and procedures that are consistent with Federal procurement standards. However, the County did not follow Federal procurement standards or its own contracting requirements when it awarded, without competition, a non-emergency grant management contract for $973,778. Therefore, we question $973,778 as ineligible contract costs.

>Napa County, California, Needs Additional Technical Assistance and Monitoring to Ensure Compliance with Federal Regulations 		2015
OIG-15-134-D The Knoxville Utilities Board received a Public Assistance award of $2.7 million from the Tennessee Emergency Management Agency, a FEMA grantee, for damages resulting from severe storms and tornadoes in April 2011. We audited projects totaling $2.5 million. For the projects we reviewed, the Utility properly accounting for and expended FEMA funds according to Federal requirements.

>The Knoxville Utilities Board Effectively Managed FEMA Public Assistance Grant Funds Awarded for Damages from Tornadoes and Severe Storms in April 2011 		2015
OIG-15-133-D The Knoxville Utilities Board received a Public Assistance award of $5.2 million from the Tennessee Emergency Management Agency, a FEMA grantee, for damages resulting from severe storms and tornadoes in June 2011. We audited projects totaling $4.3 million. For the projects we reviewed, the Utility properly accounting for and expended FEMA funds according to Federal requirements.

>The Knoxville Utilities Board Effectively Managed FEMA Public Assistance Grant Funds Awarded for Damages from Tornadoes and Severe Storms in June 2011 		2015
OIG-15-132-D The City of Duluth, Minnesota, (City) received a Public Assistance grant award of $13.34 million from Minnesota’s Department of Public Safety, Division of Homeland Security and Emergency Management (Minnesota), a FEMA grantee, for damages resulting from severe storms and flooding in June 2012. The City did not follow Federal procurement standards in awarding $3.08 million for 12 contracts—$1.54 million for 8 non-exigent contracts and $1.54 million for 4 exigent contracts. Although the City competitively awarded all but 3 of the 12 contracts we reviewed, it did not take required steps to provide opportunities to disadvantaged firms to bid on federally funded work, as Congress intended. Therefore, we question the $1.54 million the City claimed for eight contracts for non-exigent work. We generally do not question costs for work when lives and property are at risk. Therefore, of the $1.54 million the City claimed for exigent work, we question only $8,566 in markups on the cost because one of the City’s contractors billed on a prohibited cost-plus-percentage-of-cost basis.

>FEMA Should Recover $1.78 Million of Public Assistance Grant Funds Awarded to the City of Duluth, Minnesota 		2015
OIG-15-131-D This is our third audit of the FEMA Public Assistance grant the City received for 2005 Hurricane Katrina damages. For the majority of the $376 million we reviewed, the City of Biloxi, Mississippi (City) accounted for and expended FEMA funds according to Federal requirements. However, the City did not follow all Federal procurement standards for a contract totaling$21.7 million for management of an infrastructure project. As a result, full and open competition did not always occur, which increased the risk of fraud, waste, and abuse, and at least $8.1 million of the $21.7 million in contract costs was unreasonable.

>FEMA Should Recover $21.7 Million of $376 Million in Public Assistance Grant Funds Awarded to the City of Biloxi, Mississippi, for Hurricane Katrina Damages 		2015
OIG-15-130-D The City of Kenner, Louisiana (City), received a $5.4 million FEMA Public Assistance grant award for August 2012 Hurricane Isaac damages. Our audit objective was to determine whether the City accounted for and expended FEMA funds according to Federal regulations and FEMA guidelines. The City generally accounted for and expended FEMA Public Assistance grant funds according to Federal requirements. However, FEMA should recover $148,500 of the $5.4 million award because the City claimed project costs that insurance covered. In addition, the City awarded 12 contracts totaling $3.1 million, without taking the required affirmative steps to ensure the use of small and minority firms, women’s business enterprises, and labor-surplus area firms when possible. As a result, FEMA has little assurance that these types of firms had sufficient opportunities to bid on federally funded work.

>The City of Kenner, Louisiana, Generally Accounted For and Expended FEMA Grant Funds Properly 		2015
OIG-15-129-D The City of Mankato, Minnesota (City) received a $939,719 grant for damages from a June 2014 disaster. We conducted this audit early in the grant process to identify areas where the City may need additional technical assistance or monitoring to ensure compliance with Federal requirements. The City has established policies, procedures, and business practices to account for and expend FEMA Public Assistance grant funds according to Federal regulations and FEMA guidelines.

>Mankato, Minnesota, Has Adequate Policies, Procedures, and Business Practices to Effectively Manage Its FEMA Public Assistance Grant Funding 		2015
OIG-15-128-D FEMA’s selection of the Hurricane Sandy JFO in Lincroft, New Jersey, was not cost effective because FEMA waited until after Hurricane Sandy struck. While FEMA’s policies and procedures provide FEMA disaster response officials flexibility in responding to the unique disaster circumstances, FEMA was unprepared to set up a cost-effective JFO in New Jersey. As a result, FEMA’s selection of the New Jersey JFO for Hurricane Sandy exposed the Federal Government to unnecessary costs and delayed JFO operations. By taking advantage of nearby Federal facilities or locating more affordable flexible office space, FEMA might have avoided these facility costs and saved significant Federal disaster funds. Additionally, FEMA could have saved over $1.5 million by taking corrective actions to reduce lease costs as the disaster workforce decreased.

>FEMA's Process for Selecting Joint Field Offices Needs Improvement 		2015
OIG-15-127-D Jefferson Parish, Louisiana, (Parish) received an award of $18.1 million from the Louisiana Governor’s Office of Homeland Security and Emergency Preparedness (Louisiana), a FEMA grantee, for damages resulting from Hurricane Isaac, which occurred in August 2012. Our audit objective was to determine whether the Parish accounted for and expended FEMA funds according to Federal regulations and FEMA guidelines. The Parish generally accounted for and expended FEMA funds according to Federal regulations and FEMA guidelines. However, we identified $129,480 of ineligible costs

>Jefferson Parish, Louisiana, Generally Accounted For and Expended FEMA Grant Funds Properly 		2015
OIG-15-126-D On August 24, 2014, a magnitude 6.0 earthquake struck northern California. FEMA expects eligible damages in the City of Napa, California (City) from the earthquake and aftershocks to exceed $8 million. We conducted this audit early in the grant process to identify areas where the City may need additional technical assistance or monitoring to ensure compliance with Federal requirements. The City has adequate policies, procedures, and business practices to account for Public Assistance grant funds according to Federal regulations and FEMA guidelines. The City can account for disaster costs on a project-by-project basis and is able to support disaster-related costs adequately. Additionally, the City’s insurance procedures and practices are adequate to assure FEMA that the City can properly manage anticipated insurance proceeds and obtain and maintain insurance to mitigate the cost of future damages.

>The City of Napa, California, Needs Additional Technical Assistance and Monitoring to Ensure Compliance with Federal Regulations 		2015
OIG-15-125-D Scott County’s Physical Development Department in Jordan, Minnesota (County), received a $2.6 million grant for damages from a June 2014 disaster. We conducted this audit early in the grant process to identify areas where the County may need additional technical assistance or monitoring to ensure compliance with Federal requirements. The County has established policies, procedures, and business practices to account for and expend FEMA Public Assistance grant funds according to Federal regulations and FEMA guidelines.

>Scott County, Minnesota, Physical Development Department Has Adequate Policies, Procedures, and Business Practices to Effectively Manage Its FEMA Public Assistance Grant Funding 		2015
OIG-15-124 DHS provides grant guidance over the acquisition of public safety communication equipment. However, the guidance the Office of Emergency Communications and the Federal Emergency Management Agency (FEMA) issued is unclear, inconsistent, and does not prevent grantees from purchasing non-interoperable communications equipment. The Office of Emergency Communications, within the National Protection and Programs Directorate, develops the National Emergency Communications Plan and the SAFECOM Guidance; however, neither document dictates specific requirements when purchasing emergency communications equipment. FEMA’s grant guidance also does not specify interoperability requirements. Without clear and consistent DHS grant guidance requiring interoperability, grantees could spend Federal funds for non-interoperable communications equipment purchases. Without interoperable emergency communications equipment, the lives of first responders and those of whom they are trying to assist may be at risk.

>DHS Needs to Improve Grant Guidance for Public Safety Communications Equipment 		2015
OIG-15-123-D The County received a $14 million grant for damages from Hurricane Isaac, an August 2012 disaster. We conducted this audit early in the grant process to identify areas where the County may need additional technical assistance or monitoring to ensure compliance with Federal requirements. At the time of our audit, the Jackson County, Mississippi, Board of Supervisors (County) had not established accounting procedures to account for disaster costs on a project-by-project basis, as Federal regulations and FEMA guidelines require. As a result, we had to rely on direct assistance from County officials to identify project costs and related supporting documentation. Additionally, although most of the County’s contracts complied with Federal procurement standards, the County improperly procured an architectural and engineering (A/E) contract totaling $1.3 million for dredging navigation channels. Inadequate competition increased the likelihood of fraud, waste, and abuse of Federal funds and resulted in at least $353,154 of unreasonable costs. Further, in soliciting bids for the A/E contract, the County did not provide opportunities for disadvantaged firms, such as small and minority firms, to bid on federally funded work as Congress intended. Lastly, the contract included a clause making payment contingent upon FEMA funding, which Federal cost principles do not allow.

>The Jackson County, Mississippi, Board of Supervisors Would Benefit from Technical Assistance in Managing Its $14 Million FEMA Grant Award 		2015
OIG-15-120 We reviewed 12 of FEMA Region V’s 166 disaster-related responsibilities and determined that the region was not meeting 3 of these 12 responsibilities. Specifically, Region V did not: (1) have policies and procedures to provide temporary public transportation during disasters; (2) process first-level Public Assistance appeals in a timely manner; and (3) hold mandated meetings to inform the Regional Administrator about the region’s emergency management issues.

>Inspection of FEMA's Regional Offices - Region V 		2015
OIG-15-12-D The District received a Public Assistance grant award of $4.9 million for damages resulting from Hurricane Katrina, which occurred in August 2005. Our audit objective was to determine whether the District accounted for and expended FEMA grant funds according to Federal regulations and FEMA guidelines. For the projects we reviewed, the Gulfport School District, Mississippi, (District) properly accounted for and expended FEMA funds according to Federal regulations and FEMA guidelines.

>Gulfport School District, Mississippi, Properly Accounted for and Expended FEMA Public Assistance Grant Funds Awarded for Hurricane Katrina Damages 		2015
OIG-15-119-D Pulaski County (County) received an award of $5.8 million from the Missouri State Emergency Management Agency (Missouri), a FEMA grantee, for damages resulting from severe storms, straight-line winds, and flooding in August 2013. We conducted this audit early in the grant process to identify areas where the County may need additional technical assistance or monitoring to ensure compliance with Federal grant requirements. The County’s policies, procedures, and business practices were generally adequate to account for and expend FEMA Public Assistance grant funds according to Federal regulations and FEMA guidelines. However, the County’s procurement policies and procedures did not include all elements needed to comply fully with Federal requirements for the approximately $724,515 in estimated future disaster contracting.

>Pulaski County, Missouri, Could Benefit from Additional Assistance in Managing Its FEMA Public Assistance Grant 		2015
OIG-15-116-D Montgomery County, Maryland (County) received a Public Assistance award of $8.2 million from the Maryland Emergency Management Agency, a FEMA grantee for damages resulting from severe storms during June and July 2012. Our audit objective was to determine whether the County accounted for and expended FEMA funds according to Federal requirements. The County generally accounted for and expended Public Assistance grant funds according to Federal requirements. However, we did identify $36,244 of duplicate equipment costs the County claimed that FEMA should disallow.

>Montgomery County, Maryland, Generally Accounted for and Expended FEMA Public Assistance Grant Funds According to Federal Requirements – Hurricane Sandy Activities ( 		2015
OIG-15-115-D Montgomery County, Maryland (County) received a Public Assistance award of $8.2 million from the Maryland Emergency Management Agency, a FEMA grantee for damages resulting from severe storms during June and July 2012. The County generally accounted for and expended Public Assistance grant funds according to Federal requirements. However, we did identify $36,244 of duplicate equipment costs the County claimed that FEMA should disallow.

>Montgomery County, Maryland, Effectively Managed FEMA Public Assistance Grant Funds Awarded for Severe Storms During June and July 2012 		2015
OIG-15-114-D Fox Waterway Agency (Fox Waterway) received a $9.4 million award in Federal Emergency Management Agency (FEMA) grant funds for damages resulting from severe storms, straight-line winds, and flooding during April and May 2013. Our audit objective was to determine whether Fox Waterway expended FEMA funds according to Federal regulations and FEMA guidelines. Fox Waterway did not account for and expend FEMA funds according to Federal regulations and FEMA guidelines. The period of performance has expired for all projects, and Fox Waterway has not requested time extensions. Further, Fox Waterway officials could not tell us how much they had spent on disaster-related work or provide us documentation supporting all expenditures. Therefore, we question $9,367,187 of costs— $8,230,969 as ineligible and $1,136,218 as unsupported.

>FEMA Should Recover $9.3 Million of Ineligible and Unsupported Costs from Fox Waterway Agency in Fox Lake, Illinois 		2015
OIG-15-113-D The Mountain View Electric Association (Association) received a $7.1 million award of FEMA Public Assistance grant funds to repair facilities damaged in the Colorado Black Forest Fire. We audited $7.4 million in disaster-related costs, which included $322,417 in cost overruns. The Association did not always account for and expend FEMA Public Assistance grant funds in accordance with Federal regulations. Specifically, the Association did not follow all applicable Federal procurement standards in awarding FEMA-approved work valued at over $4 million for utility repairs and debris removal. As a result, FEMA has no assurance that costs are reasonable or that disadvantaged firms had sufficient opportunities to bid on Federal work as Congress intended.

>FEMA Should Disallow over $4 Million Awarded to Mountain View Electric Association, Colorado, for Improper Procurement Practices 		2015

*NDAA, Pub. L. 117-263, section 5274 Response Received. View responses

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