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FEMA’s Issuance of Task Orders under MD Contracts Resulted in as Much as $16 Million in Waste

Temporary Housing Occupancy Extension: In April 2007, FEMA extended the temporary housing assistance program for hurricane victims living in trailers and mobile homes until March 2009. Beginning in March 2008, individuals residing in these units will pay a portion of the cost for rent, which will begin at $50 per month and incrementally increase each month thereafter until the program concludes on March 1, 2009. FEMA also began allowing residents of its mobile homes and travel trailers to purchase their dwellings at a fair and equitable price; however, on August 1, 2007, FEMA temporarily suspended sales while the agency works with health and environmental experts to assess health-related concerns raised by occupants.

FEMA wasted as much as $16 million because it did not allocate task orders under the MD contracts to the companies with the lowest prices. Despite extraordinary pricing differences for the same services among the 10 MD contractors,14 FEMA issued task orders to all 10, spending $48.2 million from June 2006 through January 2007 on the five contract line items that generate the most cost. If FEMA had instead issued task orders to only the five contractors with the lowest overall bid prices, it would have only spent an estimated $32.5 million on these five line items.

The scope of the work under the MD contracts primarily covered monthly trailer preventative maintenance, emergency repair, and unit deactivation and removal. Further, as stipulated in the contracts, each company receiving an award “must be prepared to perform th[is] work anywhere in the region.” In response to FEMA’s solicitations, the contractors provided a wide range of price proposals for identical services—from about $90 million to $300 million—as shown in table 1.

14In a report issued in March 2007, the DHS IG criticized FEMA’s acceptance of a wide disparity in bids, noting that “FEMA contracting officials exposed the agency to an unacceptable level of risk.” FEMA disagreed, stating that it believed that the “level of risk was necessary and acceptable.”

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GAO-08-106 Hurricane Katrina

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