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Background

contractor’s price proposals, they estimated that, in the Biloxi, Mississippi, region, this work should have only cost about $800,00010about one-fifth of what FEMA ultimately paid.

Given these findings, the Secretary of Homeland Security should direct FEMA to take six actions to improve the oversight of temporary housing maintenance contracts, including collecting any overpayments made to the contractors we investigated, placing a greater emphasis on issuing task orders to companies that can perform the most work at the lowest cost, conducting an inventory of housing units, designing controls to enforce the existing method of testing invoices, and reevaluating the allocation of work at the group sites. FEMA should also consider the suspension or debarment of any contractor found to have committed fraud.

FEMA provided written comments on a draft of this report in which it concurred with all six of our recommendations and outlined actions it has taken that are designed to address each of these recommendations. These comments are reprinted in appendix III. As part of its response, FEMA also provided background of the events leading up to the award of the MD and GSM contracts and detailed some of the overall improvements the agency states it has made since Hurricane Katrina.

Under the Stafford Act, FEMA may provide temporary housing units (such as travel trailers and mobile homes) directly to disaster victims who are unable to make use of financial assistance to rent alternate housing accommodations because of a lack of available housing resources. The act limits this direct assistance to an 18-month period, after which FEMA may charge fair market rent for the housing unless it extends the 18-month free-of-charge period due to extraordinary circumstances.11 To manage this post-disaster housing, FEMA typically has in place a contingency technical assistance contract. However, when Katrina made landfall in August 2005,

10The GAO engineers did not visit the sites where the work was performed. However, they provided an order of magnitude estimate based on RS Means—a widely used guide for estimating construction costs—and the limited scope of work that was available from the contractor’s proposals. This order of magnitude estimate showed there was a significant difference (approximately 400 percent) between what the work should have cost and the contractor’s proposed price of $3.2 million.

1142 U.S.C. § 5174(c)(1)(B). For more information on the types of housing assistance awarded to disaster victims, see GAO, Disaster Assistance: Better Planning Needed for Housing Victims of Catastrophic Disasters, GAO-07-88 (Washington: D.C.: Feb. 28, 2007).

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GAO-08-106 Hurricane Katrina

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