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FEMA’s Potentially Improper Award of UFAS Contract Results in

$3 Million of Unnecessary Expenses

remarked to our investigator that, with regard to the new organizational structure, “it’s obvious that we just reshuffled the deck.”

The contracting officer stated that the submission of the new organizational charts in the best and final offers submitted by the companies allayed his concerns about whether the companies were operating independently. He also indicated that it is not FEMA’s job to “police” whether organizational charts are accurate or to investigate whether companies adhered to the certificate of independent price determination.

In response to our referral, Justice has decided to open an investigation of this matter.

We found that one of FEMA’s contracting officers may have improperly awarded the UFAS contract to lay asphalt to make the travel trailers accessible to individuals with disabilities, leading to over $3 million in unnecessary expenses. FEMA was required to make the trailers accessible as part of a September 2006 settlement agreement stemming from a lawsuit brought by disabled trailer occupants. Unlike the MD and GSM contracts, the FEMA contract officer set aside this UFAS contract for sole- source negotiation with a local 8(a) firm. At the time of the UFAS award process, 8(a) contracts could be awarded without competition if the anticipated total value of the contract was less than $3 million.29 According the Federal Acquisition Regulations (FAR), an 8(a) contract may not be awarded if the cost to the agency exceeds a fair market price. Further, the FAR provides that prior to making sole-source 8(a) awards, a contracting officer must estimate and justify the fair market value of the contract, using cost analyses or other available data. The FAR also states that the appearance of conflicts of interest in government-contractor relationships should be avoided. Given these criteria, the contracting officer may have improperly awarded the contract, costing taxpayers over $3 million in unnecessary expenses.

The government estimate to complete the UFAS asphalt work for about 150 trailers was $2.99 million, just under the $3 million threshold for awarding 8(a) contracts noncompetitively. In response to our request for additional information, FEMA said that it was not able locate any

29Shortly around the time of the contract award, this threshold was raised to $3.5 million. FAR 19.805-1(a)(2).

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GAO-08-106 Hurricane Katrina

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