Clearer Guidance Would Improve FEMA's Oversight of the Public Assistance Alternative Procedures Pilot Program

FEMA’s Program Guide for the Alternative Procedures pilot program and letters of undertaking provide acceptable guidance in most areas to ensure compliance with Federal rules and regulations. However, our review of seven large dollar value projects valued at $3.9 billion identified weaknesses in five areas of guidance: (1) estimating project costs; (2) responding to Office of Inspector General (OIG) audits; (3) managing cash responsibly; (4) applying insurance proceeds; and (5) obtaining insurance for future losses. These weaknesses put Federal funds at greater risk of fraud, waste, and abuse. Correcting these weaknesses will better ensure that participants in the pilot program will follow Federal requirements when spending Federal funds. Further, to protect the Federal taxpayer from inflated estimates, FEMA’s oversight should include additional steps to assess the accuracy of subgrantee fixed-cost estimates that exceed certain thresholds. In addition, FEMA needs to make other changes to comply with the Stafford Act and protect the integrity of the program.