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H i g h l i g h t s A c c o u n t a b i l i t y I n t e g r i t y R e l i a b i l i t y

Highlights of GAO-08-106, a report to the Committee on Homeland Security and Governmental Affairs, U.S. Senate

Why GAO Did This Study

Hurricane Katrina destroyed or damaged 134,000 homes and 10,000 rental units in Mississippi alone. The Federal Emergency Management Agency (FEMA) in part responded by providing displaced individuals with temporary housing in the form of mobile homes and travel trailers, placed on both private property and at FEMA-constructed group sites. In 2006, FEMA awarded 10 contracts in Mississippi to maintain and deactivate (MD) the housing units and 5 for group site maintenance (GSM). GAO was asked to investigate whether there were indications of fraud, waste, and abuse related to FEMA’s oversight of these 15 contracts. GAO analyzed FEMA’s issuance of task orders, tested a representative sample of monthly maintenance inspections payments, prepared case studies detailing the costs related to trailers placed at group sites, and investigated improper activity related to the contracts.

What GAO Recommends

FEMA should take six actions to improve the oversight of the contracts, including placing a greater emphasis on issuing task orders to the companies with the lowest costs, designing controls to test invoices, and reevaluating the allocation of work at the group sites. GAO has also referred all criminal matters identified to the Department of Justice for further investigation. FEMA concurred with all six recommendations and stated it had taken actions to address them.

To view the full product, including the scope and methodology, click on GAO-08-106. For more information, contact Gregory D. Kutz at (202) 512-6722 or kutzg@gao.gov.

HURRICANE KATRINA

Ineffective FEMA Oversight of Housing Maintenan Contracts in Mississippi Resulted in Millions of Dollars of Waste and Potential Fraud

What GAO Found FEMA’s ineffective oversight resulted in an estimated $30 million in wa and improper or potentially fraudulent payments to the MD contractors June 2006 through January 2007 and likely led to millions more in unnec spending beyond this period. For example, FEMA wasted as much as $1 million because it did not issue task orders to the contractors with the l prices. In addition, GAO estimates that FEMA paid the contractors almo million because it approved improper or potentially fraudulent invoices amount includes about $15 million spent on maintenance inspections ev though there was no evidence that inspections occurred and about $600 for emergency repairs on housing units that do not exist in FEMA’s inve

Furthermore, FEMA’s placement of trailers at group sites is leading to excessive costs. As shown below, FEMA will spend on average about $3 on each 280 square foot trailer at a private site through March 2009, the when FEMA plans to end temporary housing occupancy. In contrast, ex for just one trailer at the Port of Bienville Park case study site could esc to about $229,000---the same as the cost of a five bedroom, 2,000 square home in Jackson, Mississippi.

Comparison of Projected Trailer Costs at Private and Group Sites

Part of the reason for this expense is that FEMA placed only eight traile the Bienville site. FEMA wastes money when it operates sites with such small number of trailers because GSM costs are fixed whether a site co 1 or 50 trailer pads. At Bienville, FEMA spends over $576,000 per year— $72,000 per trailer—just for grounds maintenance and road and fence re

GAO also found evidence of improper activity related to the contract aw process. For example, FEMA awarded GSM contracts to two companie did not appear to have submitted independent bids, as required. These companies shared pricing information prior to submitting proposals to and also shared the same president and accountant. Personnel at both companies also misrepresented their job titles and functions, a potentia violation of the False Statements Act. In another case, FEMA’s contract officer awarded a $4 million contract to make the temporary housing un disabled-accessible; the contracting officer allegedly had a previous relationship with the awardee’s subcontractor. GAO licensed engineers estimated that the work should have only cost about $800,000, or one-fi what FEMA ultimately paid.

United States Government Accountabil

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