estimate that FEMA spent about $15 million6 even though (1) it had no evidence that FEMA owned the trailers being inspected; (2) the contractors provided no evidence that an inspection took place; or (3) the contractors could not prove that they had conducted an interior inspection of the units, as required. But even when proper inspection documentation existed, there is still no guarantee that the work was actually performed. For example, we confirmed allegations that contractors received payments for monthly preventative maintenance even though their inspectors falsified inspection documentation. Although we also intended to test the $2.2 million in payments FEMA made for emergency after-hours repairs, we could not conduct this work because the data we received from FEMA concerning these calls were incomplete. However, we were able to determine that FEMA spent over $600,000 for emergency repairs even though the invoices for these repairs should not have been approved because the housing units do not exist in FEMA’s inventory.
In addition, our case studies illustrate how FEMA’s placement of travel trailers at group and commercial sites can lead to excessive costs. It is reasonable to expect that the overall expenses at these sites would be higher than for the trailers at the private sites, given that FEMA has had to pay extra for site construction and maintenance, security, leases, and utilities. However, our case studies show that these expenses can become exorbitant. For example, FEMA will have spent on average about $30,000 on each 280 square foot trailer at a private site through the March 2009 temporary housing extension. In contrast, expenses associated with a trailer at our Port of Bienville Industrial Park case study group site during the same period could end up costing taxpayers about $229,000—or about
6This $15 million includes payments identified through a review of contractor billing records and through estimates calculated from a statistical sample. From June 2006 through January 2007, FEMA made about $28.5 million in preventative maintenance payments for over 180,000 inspections. Our initial review of contractor billing records related to 12,000 of these inspections confirmed that FEMA made about $2.2 million in payments even though there was no documentation to support that the required monthly inspection had occurred. Based on this finding, we also selected a random sample from the remaining 170,000 inspections, totaling about $26 million in preventative maintenance payments, to determine the magnitude of potentially fraudulent and improper payments. Based on these calculations, we estimate that FEMA made an additional $13 million in payments for preventative maintenance based on invoices that should not have been approved. For this $13 million, we are 95 percent confident that the actual dollar amount is between $11 and $15 million. By adding the $2.2 million that we calculated from reviewing contractor invoices to the estimated $13 million derived from the statistical sample, we estimate that FEMA made $15 million in payments for preventative maintenance based on potentially fraudulent invoices.
GAO-08-106 Hurricane Katrina