wildfires

This interim report is part of an ongoing audit to determine the extent FEMA is meeting disaster survivors’ transitional shelter needs after the California wildfires and Hurricanes Harvey, Irma, and Maria in 2017. We determined that FEMA does not require disaster survivors to notify the agency when they vacate hotels participating in the TSA program, thus allowing the hotels to continue to bill FEMA for unoccupied rooms. Because FEMA is unaware when disaster survivors vacate the hotels, the agency does not know the magnitude of unnecessary hotel charges. Consequently, FEMA could not account for associated TSA payments it may have paid since August 2017, related to the 2017 hurricane season and California wildfires.

This is a Department of Homeland Security Office of the Inspector General (OIG) special report on Federal Emergency Management Agency (FEMA) and FEMA recipient and sub recipient disaster-related procurements. FEMA is currently responding to some of the most catastrophic disasters in U.S. history — Hurricanes Harvey, Irma, Maria, and the October 2017, California wildfires. Because of the massive scale of damage and the large number and high-dollar contracts that will likely be awarded, there is a significant risk that billions of taxpayer dollars may be exposed to waste, fraud, and abuse.

We prepared this special report to address challenges FEMA, Texas, Florida, U.S. territories in the Caribbean, and California may face managing insurance under the Public Assistance program in the wake of Hurricanes Harvey, Irma, and Maria, and the October 2017 California wildfires. This report describes lessons learned from findings and recommendations contained in our DHS OIG grant audit reports issued from fiscal years 2013–2017. During fiscal years 2013–2017, we issued 37 Disaster Assistance grant audit reports that disclosed challenges with FEMA’s Public Assistance insurance process. The major recurring challenges we identified included (1) Duplicate benefits in which subrecipients claimed FEMA reimbursement for costs that were covered by insurance; (2) Insufficient insurance in which subrecipients did not obtain and maintain sufficient insurance coverage required as a condition for receiving Federal disaster assistance; and (3) Misapplied or misallocated insurance proceeds in which subrecipients received insurance proceeds, and misapplied or did not allocate those proceeds to FEMA projects.

The purpose of this advisory report is to notify FEMA of an issue we observed during our ongoing audit of CalRecycle.  We determined that CalRecycle expects it will cost about $230 million to complete debris removal work, and has received invoices totaling $200 million from two contractors performing the work.  Yet, these invoices included documentation with numerous discrepancies that did not fully support the invoiced costs as Federal cost principles and procurement standards require.  Moreover, as of September 8, 2016, our audit cutoff date, CalRecycle had paid its contractors about $186.4 million of the $200 million in invoiced costs, but had not completed its review of invoices nor collected all missing support records.   FEMA and California, therefore, should continue to assist CalRecycle in assuring that all costs are valid and eligible.  We recommended that FEMA Region IX Administrator (1) direct California, as grantee, to provide CalRecycle with technical assistance it may need to ensure compliance with all applicable Federal regulations, specifically for document support and contract management, and to avoid improperly funding any of the $230 million ($173 million Federal share) in contract costs CalRecycle estimates it will claim for damages caused by this disaster; and (2) direct California, as grantee, to ensure that all CalRecycle’s cost reimbursement claims for debris removal work are supported with adequate documentation and that costs are eligible in accordance with FEMA’s debris removal guidelines.