invoices submitted by the contractor for that particular line item. Prior to submitting the invoice to FEMA’s Disaster Finance Center for processing, the COTR is to check for duplicate billings and verify that work was not performed on trailers that had been deactivated. During the course of our investigation, we found instances where FEMA’s COTRs adhered to this process and did not approve payments because they identified inaccurate calculations or duplicate invoices.21 However, our review of contractor billing records and testing of a statistical sample of inspections also shows that FEMA paid the MD contractors even though there was insufficient documentation that work had been performed, making it difficult to believe that the COTRs were consistently conducting the accuracy checks specified in figure 2.
Review of Contractor Billing Records Reveals $2.2 Million in Improper or Potentially Fraudulent Maintenance Payments
From June 2006 through January 2007, available records indicate that FEMA made about $28.5 million in preventative maintenance payments for over 180,000 inspections. Based on our initial analysis of billing records related to 12,000 of these inspections, we confirmed that FEMA should not have approved about $2.2 million in payments. Specifically, we reviewed approximately 90 preventative maintenance invoices submitted by the MD contractors from June 2006 through January 2007. Most of these invoices contained approximately 1,000 to 3,000 monthly inspection billings. As a result of this review, we identified billings for about 12,000 inspections that did not contain any documentation to support that an inspection had actually occurred. Despite this lack of supporting documentation, FEMA paid the contractors for these inspections. Using the contractors’ pricing information, we determined that the payments for these 12,000 inspections totaled approximately $2.2 million.
Statistical Sample Results Indicate about $13 Million in Improper or Potentially Fraudulent Preventative Maintenance Payments
Based on our testing of a statistical sample of the remaining $26 million in preventative maintenance payments, we estimate that FEMA made $13 million22 in payments even though the trailer barcode listed on the inspection sheet did not match a barcode listed in FEMA’s tracking system or the required inspection sheet did not exist. This amount also includes payments for incomplete inspections, i.e., when the inspection sheet did not contain the trailer occupant’s signature to document that an interior and exterior inspection had been performed or the sheet showed no
21In contrast, we also found some instances where the COTRs approved payments for duplicate invoices and for work done on deactivated trailers, although we did not conduct any further investigations as to the magnitude of such payments.
22We are 95 percent confident that the actual dollar amount is between $11 and $15 million.
GAO-08-106 Hurricane Katrina