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FEMA Improperly Paid Contractors about

$15 Million for Preventative Maintenance Inspections

FEMA Requires Monthly Inspections and Documentation of Work Performed

includes $2.2 million identified through a review of contractor billing records and $13 million18 identified through estimates calculated from a statistical sample. With regard to emergency after-hours repairs, we found that FEMA spent over $600,000 on these repairs even though the invoices should not have been approved because the housing units do not exist in FEMA’s inventory. We could not conduct any additional tests concerning the validity of payments FEMA made for these emergency repairs because the data we received were incomplete.

Because of FEMA’s failure to adequately review inspection documentation submitted by the MD contractors, we estimate that about 50 percent of the $28.5 million in payments FEMA made for preventative maintenance were based on improper or potentially fraudulent invoices that should not have been approved. Specifically, based on a review of contractor billing records, we found that FEMA spent $2.2 million for preventative maintenance even though there was no documentation to support that the required monthly inspections had occurred. Further, as a result of our testing of a statistical sample of inspection documentation associated with the remaining $26 million in payments, we estimate that FEMA spent an additional $13 million19 based on invoices that should not have been approved. We also confirmed allegations that contractors received payments for monthly preventative maintenance even though their inspectors falsified inspection documentation.

According to the terms of the contract and inspection forms provided by FEMA, MD contractors are responsible for routine repairs and for inspecting interior and exterior unit components. These components include the plumbing, electrical, and heating and cooling systems; panels, siding, windows, screens, and doors; and all appliances.20 According to FEMA, MD contractors must perform one preventative maintenance inspection per month in order to submit a valid invoice for unit maintenance. Furthermore, as specified by the terms of the contract,

18We are 95 percent confident that the actual dollar amount is between $11 and $15 million. 19We are 95 percent confident that the actual dollar amount is between $11 and $15 million.

20Most of the housing units in FEMA’s inventory were not designed or constructed to be used continuously, as they have been for the past 2 years. As such, we support FEMA’s decision to require these monthly interior and exterior inspections to ensure that the trailers are safe and habitable. However, when inspections are not performed or conducted only on the exterior of the unit, the risk for health and safety problems could increase.

Page 16

GAO-08-106 Hurricane Katrina

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