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to trailers placed at private sites. We also found evidence of potentially improper activity related to FEMA’s contract award process.

FEMA wasted as much as $16 million because it did not allocate task orders under the MD contracts to the companies with the lowest prices. Instead of including cost as a key decision factor when assigning task orders, FEMA considered “geographic locations and transportation concerns.” As a result, despite extraordinary pricing differences for the same services among the 10 MD contractors, FEMA issued task orders to all 10, spending about $48.2 million from June 2006 through January 2007 on the five contract line items that generate the most cost. These line items include monthly preventative maintenance,5 contractor phase-ins, deactivations, emergency after-hours repairs, and septic cleaning services. If FEMA had instead issued task orders to the five contractors with the lowest overall bid prices, it would have only spent about $32.5 million on these five line items during the same period and could have saved millions more through May 2007. In addition to having the lowest overall prices, FEMA determined that these five contractors would have been capable of collectively maintaining the estimated 30,000 trailers and mobile homes in Mississippi at the time of the award.

We estimate that FEMA spent an additional $16 million because it approved improper or potentially fraudulent invoices submitted by the MD contractors. This amount includes about $15 million in payments made for preventative maintenance—which includes a required monthly inspection—and over $600,000 in payments for emergency after-hours repairs. Although FEMA was supposed to systematically review invoices to provide reasonable assurance that these payments were being made for work actually performed, our work shows that FEMA was not adhering to this process. For example, of the $28.5 million paid to the contractors for maintenance inspections from June 2006 through January 2007, we

5For purposes of our analysis, “monthly preventative maintenance” includes two line items: mobile home preventative maintenance and travel trailer preventative maintenance.

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GAO-08-106 Hurricane Katrina

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