contractors

Homeland Security Presidential Directive (HSPD) 12 requires that Federal agencies implement a government-wide standard for secure, reliable identification for their employees and contractors to access facilities and systems. Our objective was to assess DHS’ progress in implementing and managing the HSPD-12 program since our prior audits in 2007 and 2010.  The Department of Homeland Security has not made much progress in implementing and managing requirements of the HSPD-12 program department-wide. Many of the same issues we previously reported in 2007 and 2010 pose challenges today.

DHS reported using its Other Transaction Authority to work with non-traditional contractors, DHS did not always follow statutory requirements when entering, modifying, and overseeing its agreements. Inadequate internal policies contributed to DHS falling short of meeting all statutory requirements for using OTAs. In addition, DHS acquisition policy staff reported that competing priorities prevented timely reporting to Congress. As a result, DHS may have taken on more risks and costs than necessary and impeded Congress’ ability to oversee DHS’ use of OTAs.

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.