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Appendix I: Objectives, Scope, and Methodology

The objective of our investigation was to determine whether there were indications of fraud, waste, and abuse related to Federal Emergency Management Agency (FEMA) oversight of the 10 MD and 5 GSM contracts in Mississippi. We focused our efforts on investigating (1) FEMA’s issuance of task orders to the MD contractors and (2) FEMA’s invoice review process. We also prepared case studies to determine the costs associated with the placement of travel trailers at group sites and investigated allegations of criminal and improper activity related to the contracts.

To investigate FEMA’s issuance of task orders to the MD contractors, we assessed whether the agency issued the task orders in a cost-effective manner. We analyzed the costs associated with the five most expensive contract line items. We analyzed MD contractor invoices and FEMA receiving reports from June 2006 through January 2007 to find the total number of units paid for by FEMA. For each of the 10 contractors, we totaled the number of units paid for by FEMA for the preventative maintenance, phase in, deactivation, septic bladder pumping, and emergency after-hours repairs contract line items. We then totaled the number of units and amount paid to all contractors for all listed contract line items. To determine the five least expensive contractors, we divided the total number of units for each line item by five, and then multiplied that total by each contractor’s line item cost. By adding up the cost of all line items for each contractor, we were able to determine the five least expensive contractors. Using these five contractors, we determined what the total cost for each line item would have been if FEMA had awarded these five the MD task orders. We then compared the new cost to the original FEMA payments to figure potential savings for the line items.

To investigate FEMA’s invoice review process, we reviewed invoices and backup documentation associated with the $28.5 million in payments FEMA made for monthly preventative maintenance and the $2.2 million in payments FEMA made for emergency after-hours repairs. With regard to monthly preventative maintenance, we initially reviewed approximately 90 preventative maintenance invoices submitted by the MD contractors from June 2006 through January 2007. Each of these invoices contained approximately 1,000 to 3,000 monthly inspection billings. As a result of this review, we identified billings for 12,000 inspections, totaling $2.2 million, that did not contain any documentation to support that an inspection had actually occurred.

To provide an estimate of improper or potentially fraudulent payments related to the remaining $26 million in preventative maintenance payments

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GAO-08-106 Hurricane Katrina

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