DHS OIG, OIG-20-44, Pre-Disaster Debris Removal Contracts in Florida (2020)

Pre-Disaster Debris Removal Contracts in Florida August 11, 2020 OIG-20-44 OFFICE OF INSPECTOR GENERAL Department of Homeland Security  Washington, DC 20528 / www.oig.dhs.gov  August 11, 2020 MEMORANDUM FOR: The Honorable Peter T. Gaynor Administrator Federal Emergency Management Agency FROM: Joseph V. Cuffari, Ph.D. JOSEPH V JOSEPH V CUFFARI Inspector General Date: 2020.08.07 Digitally signed by CUFFARI 18:20:35 -04'00' SUBJECT: Pre-Disaster Debris Removal Contracts in Florida For your information is our final report, Pre-Disaster Debris Removal Contracts in Florida. We are providing this report to make FEMA aware of our observations and other issues brought to our attention by several Florida counties, cities, and municipalities concerning pre-disaster debris removal contracts. This report contains no recommendations and, as such, we consider this review closed. Consistent with our responsibility under the Inspector General Act, we will provide copies of our report to congressional committees with oversight and appropriation responsibility over the Department of Homeland Security.

We will post the report on our website for public dissemination. Please call me with any questions, or your staff may contact Sondra McCauley, Assistant Inspector General for Audits, at (202) 981-6000. cc: Deputy Associate Administrator, Office of Response and Recovery, FEMA www.oig.dhs.gov DHS OIG HIGHLIGHTS Pre-Disaster Debris Removal Contracts in Florida August 11, 2020 Why We Did This Review The Department of Homeland Security Office of Inspector General initiated a review of the response to Hurricane Irma. The objective was to assess the Federal Emergency Management Agency’s (FEMA) and the State of Florida’s response and recovery activities as a result of the major disaster declaration. During our review, we identified debris removal contract performance issues and concerns.

This report discusses observations regarding the use of pre- disaster debris removal contracts in Florida following Hurricane Irma. Recommendations This report contains no recommendations. For Further Information: Contact our Office of Public Affairs at (202) 981-6000, or email us at [email protected] What We Found At least 50 Florida municipalities reported one or more contract performance issues with their pre-disaster debris removal contracts after Hurricane Irma made landfall in September 2017. Multiple factors, including a shortage of subcontractors and poor contracting practices, contributed to the costly delays.

As a result, some locations in Florida experienced higher debris removal costs. FEMA was generally unaware of which municipalities were experiencing debris removal contract issues in Florida. When localities reached out for assistance, FEMA did not have a method to track common issues. Without proper visibility, FEMA is unable to identify, assess, respond, and report on risks as they emerge during disaster recovery operations.

Finally, FEMA did not require proper documentation to support debris removal costs. This lapse in process occurred because FEMA provided insufficient training to FEMA officials responsible for reviewing public assistance projects. As a result, FEMA reimbursed $14.1 million ($11.8 million in Federal cost share) for debris removal costs for five projects that were not adequately documented, and approved $20,989 in potentially ineligible costs. FEMA later provided supporting cost documentation, but as of July 2020, FEMA had not included the documentation in its systems of record.

DHS OIG also has an ongoing audit of debris removal procurements in Monroe County, and will report on the extent to which FEMA ensured the procurements met Federal procurement requirements and FEMA guidelines, following Hurricane Irma. FEMA Response This report contains no recommendations, so we consider the report closed. Although not required, FEMA provided written comments, which we have included in Appendix B. www.oig.dhs.gov OIG-20-44 OFFICE OF INSPECTOR GENERAL Department of Homeland Security Table of Contents Background .................................................................................................2 Results of Review .........................................................................................5 Debris Removal Contract Performance Issues .....................................6 FEMA Did Not Track the Extent of Debris Removal Issues in Florida . 12 FEMA Obligated Funds without Supporting Documentation..............13 FEMA’s Comments and OIG Analysis................................................15 Appendixes Appendix A: Objective, Scope, and Methodology ...............................17 Appendix B: FEMA’s Comments.......................................................19 Appendix C: Analysis of Debris Removal Contract Issues, Actions Taken by Local Governments, Pre-Disaster Contract Provisions, and Contract Rate Increases.................................................................22 Appendix D: Debris Removal Contracts and Price Amendments FEMA-4332-DR-TX........................................................................27 Appendix E: Costs Missing Supporting Documentation in FEMA’s Grants Management System ..........................................................32 Appendix F: Report Distribution ......................................................33 Abbreviations CFR CRC EMMIE FEMA JFO OCC OIG PA PAAP PDAT U.S.C. Code of Federal Regulations Consolidated Resource Center Emergency Management Mission Integrated Environment Federal Emergency Management Agency Joint Field Office Office of Chief Counsel Office of Inspector General Public Assistance Public Assistance Alternative Procedures Procurement Disaster Assistance Team United States Code www.oig.dhs.gov OIG-20-44 OFFICE OF INSPECTOR GENERAL Department of Homeland Security Background When a disaster or emergency generates large amounts of debris, eligible recipients and subrecipients may request Public Assistance (PA) grant funding from the Federal Emergency Management Agency (FEMA) to offset expenses incurred for debris removal operations.1 According to FEMA’s Public Assistance Program and Policy Guide, FEMA is authorized to provide funding for debris removal activities eligible for reimbursement, including if the removal is in the public interest, based on whether the work:  eliminates immediate threats to lives, public health, and safety;  eliminates immediate threats of significant damage to improved public or private property;  ensures economic recovery of the affected community to the benefit of the community at large; or  mitigates risk to life and property by removing substantially damaged structures and associated structures.

Debris removal costs can be significant, averaging about one-third of total damage costs per hurricane.2 Debris includes, but is not limited to, vegetative debris, construction and demolition debris, sand, mud, silt, gravel, rocks, boulders, and vehicle and vessel wreckage. Hurricane Irma’s Impact on Florida On September 10, 2017, the President approved a Major Disaster Declaration (DR-4337-FL) when Hurricane Irma struck the State of Florida. FEMA approved the State of Florida for reimbursement of debris removal costs (Category A) for all 67 counties after Hurricane Irma.3 As of May 2019, 661 municipalities reported $1.39 billion in estimated debris removal costs related to Hurricane Irma. 1 Recipients can be states, territories, or tribal entities, while subrecipients are applicants, such as municipalities, that receive sub-awards from pass-through entities (recipients) to carry out part of a Federal program.

2 Based on our analysis of FEMA PA Summary (S.5) Reports for DR 1539 FL, DR 1545 FL, DR 1551 FL, DR 1609 FL, DR 1792 LA, DR 4019 NC, and DR 4086 NJ. 3 To facilitate the processing of PA funding, FEMA separates Emergency Work (immediate threat) into two categories: (A) Debris removal and (B) Emergency protective measures. www.oig.dhs.gov 2 OIG-20-44 OFFICE OF INSPECTOR GENERAL Department of Homeland Security Figure 1 illustrates our observations of roadside debris 3 months after Hurricane Irma made landfall. Figure 1: Roadside Debris Source: DHS Office of Inspector General (OIG) Federal Reimbursement of Debris Removal Costs FEMA’s Public Assistance Program and Policy Guide provides guidance to state and local entities for all PA programs, including debris removal. According to PA guidance, FEMA will reimburse state and local entities 75 percent of eligible debris removal costs from Federal funding.

The remaining 25 percent is the non-Federal cost share, which is the responsibility of the state or local entity. In October 2017, the President authorized a 90 percent Federal cost share for debris removal for one period of 30 consecutive days, established by the State of Florida, after Hurricane Irma. After that initial period, state and local entities were reimbursed at FEMA’s standard 75 percent Federal reimbursement rate.4 FEMA requires state and local entities seeking reimbursement to maintain source documentation supporting project costs such as records of debris removal, disposal operations, and eligible associated costs. This documentation serves as the basis for the project FEMA uses to review eligibility, assess reasonableness of costs, and ultimately authorize grant reimbursements to state and local entities.

4 On August 23, 2019, the President amended the Hurricane Irma disaster declarations of September 10, 2017, and October 2, 2017, to authorize a 90 percent Federal cost share for all categories of PA, including debris removal, except assistance previously approved at 100 percent. www.oig.dhs.gov 3 OIG-20-44 OFFICE OF INSPECTOR GENERAL Department of Homeland Security Federal and FEMA Procurement Guidance According to FEMA’s PA guidance, state, territorial, tribal, and local governments are encouraged to establish written procedures and guidance for managing debris in an expeditious, efficient, and environmentally sound manner. FEMA refers to these procedures as a debris management plan. Additionally, Federal law authorizes FEMA to provide an incentive to encourage local governments to submit a debris management plan with one or more prequalified debris removal contractors.5 A pre-qualified contractor is one that the municipality has evaluated and determined to be qualified to perform the work based on capabilities, such as technical and management skills, prior experience, past performance, and availability. Local governments generally do not have the resources to manage the amount of debris generated from a catastrophic disaster on their own and often rely on contractors to perform much of the debris removal activities.

Pre-qualified contractors are not guaranteed contracts; the local government must still conduct full and open competition and must allow additional contractors to qualify during the solicitation period for post-disaster contracts. In addition, some local governments may opt to negotiate one or more pre- disaster contracts before a disaster strikes. Based on the local government’s procurement process, the best-qualified bid would be selected as the primary pre-disaster contract. FEMA defines a pre-disaster contract as a contract that the local government procures prior to the incident period, in anticipation of a disaster, with a scope of work that covers goods or services to support recovery efforts.

In contrast, a post-disaster contract is a contract procured by the local government after the incident occurs. The local government must comply with Federal procurement standards for both pre-disaster and post-disaster contracts used to recover from a disaster. 5 Establishing pre-qualified debris removal contractors is a requirement for entities electing to participate in the Public Assistance Alternative Procedures (PAAP) pilot. 42 United States Code (U.S.C.) § 5189f(e)(2)(E); see also 42 U.S.C. § 5189f(a) and (b) (providing FEMA with the authority to establish public assistance alternative procedures).

For more information on the PAAP pilot, see FEMA’s Public Assistance Alternative Procedures Pilot Program Guide for Debris Removal (Version 5) (June 28, 2017). www.oig.dhs.gov 4 OIG-20-44 OFFICE OF INSPECTOR GENERAL Department of Homeland Security FEMA’s Procurement Disaster Assistance Team The Procurement Disaster Assistance Team’s (PDAT) mission is to ensure that FEMA personnel and nonprofit, local, tribal, state, regional, and national emergency management personnel are familiar with the Federal procurement standards applicable to FEMA’s PA disaster grants to facilitate compliance with these standards. FEMA created PDAT in response to our February 2014 report recommendations.6 Specifically, we found instances when FEMA personnel provided incomplete and, at times, inaccurate information to PA applicants regarding Federal procurement standards. We recommended FEMA provide training to Joint Field Office (JFO) PA and Office of Chief Counsel staff on Federal procurement standards. The PDAT consists of nine attorneys who deploy directly to the field during the disaster recovery phase to provide real-time training, guidance, and reference materials to municipalities affected by a disaster.7 The PDAT may also provide training to deployed PA staff to help identify and remedy procurement issues that may arise when a municipality solicits and awards contracts.

The PDAT does not approve debris removal rates for local governments, nor did it provide sample contracts after Hurricane Irma, as FEMA generally does not review or approve pre-disaster contracts. Results of Review At least 50 Florida municipalities reported one or more contract performance issues with their pre-disaster debris removal contracts after Hurricane Irma made landfall in September 2017. Multiple factors, including a shortage of subcontractors and poor contracting practices, contributed to the costly delays. As a result, some locations in Florida experienced higher debris removal costs.

FEMA was generally unaware of which municipalities were experiencing debris removal contract issues in Florida. When localities reached out for assistance, FEMA did not have a method to track common issues. Without proper visibility, FEMA is unable to identify, assess, respond to, and report on risks as they emerge during disaster recovery operations. Finally, FEMA did not require proper documentation to support debris removal costs.

This lapse in process occurred because FEMA provided insufficient 6 FEMA’s Dissemination of Procurement Advice Early in Disaster Response Periods, OIG-14-46- D, February 28, 2014 7 The phases of emergency management include (1) mitigation, (2) preparedness, (3) response, and (4) recovery. The disaster recovery phase includes actions taken to return to a normal or improved operating condition following a disaster. www.oig.dhs.gov 5 OIG-20-44 OFFICE OF INSPECTOR GENERAL Department of Homeland Security training to FEMA officials responsible for reviewing PA projects. As a result, FEMA reimbursed $14.1 million ($11.8 million in Federal cost share) for debris removal costs for five projects that were not adequately documented, and approved $20,989 in potentially ineligible costs. FEMA later provided supporting cost documentation, but as of July 2020, FEMA had not included the documentation in its systems of record.

Debris Removal Contract Performance Issues At least 50 Florida municipalities reported one or more contract performance issues with their pre-disaster debris removal contracts after Hurricane Irma made landfall. Multiple factors, including a shortage of subcontractors and poor contracting practices, contributed to the costly delays. As a result, some locations in Florida experienced higher debris removal costs. Types of Contract Issues Reported by Municipalities Federal law authorizes FEMA to provide an incentive to encourage local governments to submit a debris management plan with one or more pre- qualified debris removal contractors.

Local governments may also opt to negotiate one or more pre-disaster contracts. In Florida, some local governments went beyond Federal guidelines and negotiated one or more pre-disaster debris removal contracts. However, these contracts did not perform as intended after Hurricane Irma. At least 50 Florida municipalities reported one or more performance issues with their pre-disaster debris removal contracts established prior to the hurricane.

Issues included primary pre-disaster contracts not being honored in 22 of 50 municipalities, and additional pre-disaster contracts not being honored in 10 of these 22 municipalities. According to local officials, 43 of 50 municipalities also experienced performance deficiencies, such as time delays and contractors with a lack of, or limited, equipment and equipment operators. Additionally, for 19 of 50 municipalities, the pre-disaster contractor requested modifications to the pre-disaster negotiated rate. Figure 2 illustrates the types of contract issues reported by municipalities.

Appendix C, table 1, provides additional details by municipality about the performance issues. www.oig.dhs.gov 6 OIG-20-44 OFFICE OF INSPECTOR GENERAL Department of Homeland Security Figure 2. Debris Removal Contract Issues Reported Total Performance Deficiencies Primary Pre-Disaster Contract not Honored Pre-Disaster Contractor Requested Modification No Pre-Disaster Contracts Honored 50 43 22 19 10 10 0 20 30 40 50 Source: DHS OIG analysis of information provided by Florida municipalities. *The total number of issues listed is more than the number of municipalities because some municipalities expressed multiple issues. These 50 municipalities established pre-disaster debris removal contracts in efforts to secure lower rates and have debris removal contractors readily available immediately after a disaster. However, in some instances, municipalities competing new contracts at higher post-disaster market rates drove up the cost for subcontractors.

As a result, contractors reported they could not retain the subcontractors based on pre-disaster negotiated rates. Some municipalities provided detailed accounts of their struggles to obtain and retain debris removal contractors immediately following Hurricane Irma.  Municipality #34 reported it had two pre-disaster contracts for debris collection. Its primary pre-disaster contractor informed Municipality #34 in September 2017 it was unable to perform because it lacked resources, such as equipment or equipment operators, immediately after the disaster; Municipality #34 later canceled the contract. The other pre- disaster contractor provided services in September 2017, but also lacked sufficient equipment and operators.

Consequently, the municipality executed post-disaster contracts to supplement its debris removal operation.  Municipality #48 reported it executed five pre-disaster contracts, but none of the contractors could obtain the equipment or equipment operators necessary to fulfill the contract terms. In September 2017, two contractors indicated that their subcontractors were leaving in favor of higher paying post-disaster contracts after achieving minor progress in removing debris. As a result, the municipality modified the contracts to increase prices and retain the two subcontractors.  Municipality #4 executed six pre-disaster debris removal contracts; www.oig.dhs.gov 7 OIG-20-44 OFFICE OF INSPECTOR GENERAL Department of Homeland Security however, its primary contractor was unresponsive to calls and the secondary contractor left 5 days after Hurricane Irma occurred. The contractor claimed the municipality did not have enough debris and that it preferred to deploy its resources elsewhere.

The other four pre-disaster debris removal contractors could not find equipment and equipment operators to execute removal operations, and were ultimately unable to provide any services to the municipality. In October 2017, the municipality entered into a post-disaster contract to perform its debris removal. Municipalities that reported performance issues with their pre-disaster debris removal contracts negotiated new contracts, modified existing pre-disaster contracts at higher rates, used local government workers to remove debris, or waited weeks for pre-disaster contractors to respond. Figure 3 illustrates the actions taken by local governments to address debris removal contractor shortages.

Appendix C, table 2, provides additional details of the actions taken by local governments to address this problem. Figure 3. Actions Taken by Local Governments to Address Debris Removal Contractor Shortages 0 5 10 15 20 25 30 Used Local Government Workers 23 Procured Post-Disaster Contract(s) 18 Used Non-Primary Pre-Disaster Contract in addition to or in lieu of Primary Pre-Disaster Contract 12 Increased Pre-Disaster Rates 5 Used Contractor that Honored Pre-Disaster Rates 24 Source: DHS OIG analysis of information provided by local municipalities in Florida. *Note: The total number of actions taken is more than 50, because some municipalities took one or more actions. Some municipalities provided detailed accounts of actions taken to address debris removal contractor shortages following Hurricane Irma.  Of the 50 municipalities that experienced contract-related performance issues, 23 municipalities told us they used local government workers for debris removal.

In some instances, municipalities used local government workers because the pre-disaster contractors did not show up or provided insufficient resources. For instance, Municipality #11 told us www.oig.dhs.gov 8 OIG-20-44 OFFICE OF INSPECTOR GENERAL Department of Homeland Security that a week after the storm, its pre-disaster contractor communicated that it would be unable to provide trucks for at least 2 more weeks. The municipality decided to remove all storm-generated debris with its own forces.  Eighteen municipalities negotiated new contracts, six at higher rates. For example, in October 2017, Municipality #13 issued three new debris removal contracts to replace its pre-disaster contractor, resulting in a cost increase of approximately $13.44 per cubic yard to remove debris.  Twelve municipalities used a pre-disaster contractor other than the primary when the primary pre-disaster contractor could not fully perform the necessary debris removal activities.

For 9 of the 12 municipalities, using pre-disaster contractors other than the primary contractors increased debris removal costs. For example, Municipality #19 never received a response from its primary pre-disaster contractor, but its secondary pre-disaster contractor was able to assist with debris removal services at a rate of $1.85 more per cubic yard.  Five municipalities modified their pre-disaster contracts, resulting in increased rates of as much as $8.00 more per cubic yard than the pre- disaster rates.  For 24 municipalities, the pre-disaster contractors ultimately honored their pre-disaster contracts at the previously negotiated rates. Many of these contractors provided some services immediately after the disaster, but fully performed only after completing work in other municipalities that paid higher post-disaster rates. Multiple Factors Contributed to Pre-Disaster Debris Removal Contract Issues We found that a shortage of subcontractors and poorly defined or missing contract provisions may have contributed to the debris removal contract issues in Florida.

National Shortage of Subcontractors Within a 3-week period in 2017, Hurricanes Harvey and Irma made landfall in Texas, Florida, and Georgia, causing widespread flooding and powerful winds. Soon after, Hurricane Maria affected Puerto Rico and the U.S. Virgin Islands. According to FEMA Office of Chief Counsel (OCC) officials, contractors in Florida said that these major storms occurring within weeks of each other caused a nationwide shortage of debris removal subcontractors and equipment, preventing them from honoring the pre-disaster contracts. One contractor also www.oig.dhs.gov 9 OIG-20-44 OFFICE OF INSPECTOR GENERAL Department of Homeland Security told OCC that it contacted or attempted to contact each of the subcontractors in its collective network, and sought referrals for outside subcontractors.

However, the contractor claimed that the unprecedented volume and geographically disbursed demand for debris removal services exceeded the capacity of available subcontractor equipment or equipment operators. In addition, the contractor asserted that subcontractors had fled to jurisdictions that were paying higher rates, exacerbating the shortage of available assistance. Based on our discussions with FEMA officials at the JFO in Orlando and the Area Field Office in Miami, FEMA could not confirm or deny the contractor’s statements because FEMA was not tracking subrecipient debris removal issues. Additionally, as we reported in our related September 2018 Management Alert, FEMA officials did not perform field monitoring of debris removal operations, which may have provided better visibility of these issues.8 Missing Contract Provisions and Poorly Defined Contract Terms Missing provisions and poorly defined contract terms may have contributed to delays and contract disputes in Florida.

Applicable Federal regulations require federally funded non-Federal entity contracts to include specific provisions to allow a municipality to opt out of a contract for cause or convenience.9 We reviewed 34 pre- and 9 post-disaster contracts (43 total) to determine whether any of them described consequences of breach of contract,10 and addressed contract termination for cause or convenience.11 Appendix C, table 3, provides additional details on these 43 contracts. Of the 43 contracts we reviewed, 12 were missing provisions to terminate for cause or convenience. Without such provisions, a municipality has limited options when a contractor does not perform as expected. We also reviewed the contracts to determine whether they stipulated milestones or timeframes for debris removal.

Although not federally required, such milestones could help more clearly define terms for contract performance. In fact, prior FEMA guidance for debris management states that each contract should have a well-defined scope of work, specified costs, a basis of payment, 8 Management Alert – Observations of FEMA’s Debris Monitoring Efforts for Hurricane Irma, OIG- 18-85, September 2018 9 2 Code of Federal Regulations (CFR) Pt. 200, App. II(B) 10 2 CFR Pt. 200, App. II(A) 11 2 CFR Pt. 200, App. II(B) www.oig.dhs.gov 10 OIG-20-44 OFFICE OF INSPECTOR GENERAL Department of Homeland Security and a performance schedule.12,13 We determined that 28 of the 43 contracts did not establish timeframes for completing debris removal. Additionally, 32 of the 43 contracts did not include specific performance milestones for debris collection, such as committing the contractor to collect a minimum amount of debris in a set number of calendar days.14 Figure 4 contains an excerpt regarding performance terms. In this contract, the term “reasonable timeframe” was not defined, leaving the contract terms open to interpretation.

Furthermore, according to State officials, some contractors agreed to honor existing pre-disaster contracts after performing work for higher paying municipalities first. We asked State officials for a list of debris removal contractors that did not honor their pre-disaster contracts, but did not receive a reply by the end of our fieldwork in August 2019. Ultimately, affected municipalities waited with limited recourse for their pre-disaster contractors to fulfill their contract obligations. 12 Debris Management Brochure, FEMA-329 (June 29, 2006) 13 Our report, Management Alert Observations of FEMA’s Debris Monitoring Efforts for Hurricane Irma (OIG-18-85, September 2018), describes other instances where FEMA’s Public Assistance Program and Policy Guide does not provide adequate guidance for disaster management after FEMA consolidated older, more detailed guides.

14 As of October 2018, only 6 of these 43 debris removal contracts had undergone FEMA review. www.oig.dhs.gov 11 OIG-20-44 OFFICE OF INSPECTOR GENERAL Department of Homeland Security Debris Removal Delays Increased Costs Some municipalities experienced increased debris removal costs. Of the 50 municipalities within our scope, 13 experienced price increases when contractors did not honor their pre-disaster contracts and the municipalities instead used other contractors. Rate increases ranged from $0.05 to $16.94 per cubic yard of debris removed, or a .3 percent to 109.6 percent increase in cost. Appendix C, table 4, provides additional details on the per cubic yard rates charged.

For example, Municipality #49 resorted to using its secondary pre-disaster contractor when its primary pre-disaster contractor did not perform duties as outlined in the contract. As a result, Municipality #49 experienced a cost increase of $1.25 per cubic yard, or an additional $563,586, to have debris removed. FEMA Did Not Track the Extent of Debris Removal Issues in Florida According to the Post-Katrina Emergency Management Reform Act of 2006, FEMA is responsible for providing state, territorial, tribal, and local governments with the Federal leadership necessary to prepare for, protect against, respond to, recover from, or mitigate against disasters.15 This responsibility includes supervising grant programs. Additionally, Office of Management and Budget Circular A-123 reminds Federal leaders and managers that they are responsible for implementing management practices that identify, assess, respond to, and report on risks.

However, as we reported in September 2018, when FEMA issued its latest PA guide, it eliminated Federal and state monitoring responsibilities for debris removal operations originally established in FEMA’s 2010 Public Assistance Debris Monitoring Guide.16 FEMA officials were generally unaware of which municipalities were experiencing debris removal issues during the Hurricane Irma response and recovery phase. For example, according to the Hurricane Irma Federal Coordinating Official, FEMA had not identified debris removal contractor performance as an issue as of October 26, 2017, almost 7 weeks after the Federal disaster declaration and start of debris removal activities. This official agreed that tracking common issues across a disaster could be beneficial for making informed decisions. 15 6 U.S.C. § 314(a) 16 Management Alert Observations of FEMA’s Debris Monitoring Efforts for Hurricane Irma, OIG- 18-85, September 2018 www.oig.dhs.gov 12 OIG-20-44 OFFICE OF INSPECTOR GENERAL Department of Homeland Security While FEMA was responsive by providing guidance and information to municipalities when requested, it did not have a formal method to track and address common debris issues.

For example, FEMA’s PDAT received requests from 13 municipalities on debris contract-related topics, including 7 municipalities that requested FEMA perform a review of debris-related contracts and 6 municipalities that submitted various procurement related questions.17 In response, PDAT provided these municipalities with information, such as the proper use of modified pre-disaster and emergency contracts. For instance, PDAT officials provided us with a memo containing techniques for making a price modification to an existing contract; a frequently-asked- questions document regarding sole sourcing in exigency or emergency circumstances; and techniques for making fair and reasonable price determinations.18 However, FEMA officials did not proactively disseminate this PDAT guidance to all local governments in Florida. FEMA’s decision to limit the dissemination of this guidance, its inability to track debris issues, and its decision to eliminate field monitoring adversely affected FEMA’s ability to assist subrecipients with debris removal issues. The PDAT also provided Federal procurement information to entities that attended its training sessions.

We determined that 22 of the 50 municipalities with debris removal contract issues attended a PDAT training session between October and November 2017. However, FEMA JFO did not have any documentation of issues or concerns raised by these entities. FEMA officials in Florida were unaware of the extent to which the debris removal contract issues affected local governments and disseminated procurement guidance on a limited basis. In these circumstances, without proper visibility of municipality issues or concerns, FEMA was generally unable to effectively manage and identify, assess, respond to, and report on risks as they emerged during disaster recovery operations.

FEMA Obligated Funds without Supporting Documentation According to Federal procurement regulations and FEMA’s PA guide, all procurement transactions must be conducted in a manner providing full and open competition.19 Additionally, procurement regulations require that FEMA review supporting documentation to determine the eligible amount for which each large project can be reimbursed before approving eligible costs.20 To 17 Of the municipalities included in this review, municipalities #31 and #45 requested PDAT assistance. 18 The FEMA Federal Coordinating Officer for Hurricane Harvey (DR-4332-TX) signed the memo Debris Removal Contracts and Price Amendments FEMA-4332-DR-TX on September 15, 2017. Appendix D contains a copy of the memo. 19 2 CFR § 200.319(a) 20 44 CFR § 206.205(b)(2) www.oig.dhs.gov 13 OIG-20-44 OFFICE OF INSPECTOR GENERAL Department of Homeland Security ensure these requirements are met, FEMA’s PA guide requires documentation substantiating that the work is eligible, and provides a list of information the municipality should submit to support costs claimed.

According to FEMA officials at the JFO, the program delivery manager is responsible for ensuring the municipality has uploaded all required documentation to FEMA’s grants management system before routing a project to the Consolidated Resource Center (CRC). The CRC staff is responsible for reviewing the project to determine whether there is sufficient documentation to support work eligibility and that contracts were procured in accordance with Federal requirements in order to recommend reimbursement. The CRC then routes projects for final review and obligation by the JFO. However, FEMA officials at the CRC and the JFO did not always follow these procedures for requiring proper documentation when reviewing debris removal projects for reimbursement.

As of October 2018, 4 of the 50 municipalities in our review submitted 8 debris removal projects for reimbursement, totaling $18,743,659 ($15,645,306 Federal cost share). For 5 of the 8 projects, neither the FEMA Grants Manager nor the Emergency Management Mission Integrated Environment (EMMIE) systems contained documentation to support claimed costs.21 Specifically, FEMA’s systems of record did not contain one or more of the following items for each of the five projects:  invitations to bid;  requests for proposal;  bid tabulations and rankings;  documented justifications for not using first ranked contractors;  change orders;  source documentation; or  documented justifications for use of emergency or exigency contracts. Nonetheless, FEMA officials approved costs and obligated $14,095,875 ($11,802,254 Federal cost share) for the five projects that may not have been procured properly and may have included ineligible costs. Appendix E, table 5, provides additional details on these costs.

21 EMMIE is the official system of record for grant administration and funding. The Grants Manager is a tool that complements EMMIE by automating and enhancing grant processing. Grants Manager is used by FEMA employees to assign and track action throughout PA project development, and to collect all PA project-related information and documents. The CRC Document Integrity Unit ensures all information and documentation in EMMIE matches the information and documentation in Grants Manager. www.oig.dhs.gov 14 OIG-20-44 OFFICE OF INSPECTOR GENERAL Department of Homeland Security Additionally, of the eight projects reviewed, we identified one instance when the CRC recommended for approval debris removal costs that were not supported by the executed contract.

Specifically, Municipality #26 should have submitted a request for $488,201 based on the applicable contract terms. However, it submitted a request for reimbursement of $509,190. In this case, FEMA officials did not compare the claimed rate to the contract rate for accuracy and therefore approved $20,989 in potentially ineligible costs. When asked about project review requirements, FEMA officials stated that, for large projects, they do not perform 100 percent validation and only review sampled costs.

FEMA officials also were unable to show us their methodology for sample selection. During preparation of our report, we reached out to JFO officials and obtained missing documentation supporting the request for reimbursement. However, as of July 2020, FEMA had not yet included the documentation in EMMIE. According to a FEMA JFO official, failure by the CRC and JFO staff to follow FEMA procedures occurred because FEMA did not provide sufficient training to its employees to identify missing documentation to support claimed costs or to ensure the claims were reviewed at all.

Because FEMA did not require documentation to support costs, it may have approved ineligible costs. In total, FEMA reimbursed $14.1 million ($11.8 million in Federal cost share) for debris removal costs for five projects that were not adequately documented. Additionally, FEMA officials approved $20,989 in potentially ineligible costs. DHS OIG has an ongoing audit of debris removal procurements in Monroe County, Florida and will report on the results of the review.

22 The objective of the review is to determine the extent to which FEMA ensured procurements for Monroe County debris removal operations met Federal procurement requirements and FEMA guidelines, following Hurricane Irma. Management Comments and OIG Analysis Because this report contains no recommendations, we consider it closed. Although not required, FEMA submitted a management response to the draft report, raising concerns regarding two of our observations. We have addressed those concerns below and included FEMA’s written response in Appendix B. FEMA Comment: The statement that “FEMA had not identified debris removal contractor performance as an issue as of October 26, 2017,” is incorrect.

22 Procurement of Debris Removal Services for Monroe County, FL, Following Hurricane Irma (18- 127-AUD-FEMA) www.oig.dhs.gov 15 OIG-20-44 OFFICE OF INSPECTOR GENERAL Department of Homeland Security OIG Analysis: We disagree with FEMA’s assertion. According to Hurricane Irma JFO officials we interviewed from October 17-26, 2017, some applicants were experiencing debris removal issues. However, FEMA officials were unable to provide a comprehensive list of these applicants or their concerns. After numerous requests, FEMA’s PDAT provided email correspondence regarding 13 municipalities that had reached out to FEMA PDAT with questions or concerns, as discussed in this report.

During the course of the audit and at the exit conference, we asked FEMA to provide additional documentation to support its statements that it had monitored debris removal contractor performance issues related to Hurricane Irma. However, FEMA did not provide any additional evidence to support its statements. FEMA’s lack of oversight and situational awareness prevented it from using the challenges experienced by local municipalities to inform its policy development, procurement, and cost review processes, as well as its coordination efforts with the State of Florida. Therefore, we stand by our statement.

FEMA Comment: In accordance with Federal regulations, PA grant program applicants are responsible for providing oversight of debris removal activities for which costs are claimed. Applicants must monitor these activities — including all contracted debris operations — to ensure work performed complies with applicable Federal requirements and claimed work and costs meet PA grant program eligibility criteria. OIG Analysis: We disagree. Although the PA grant program requires applicants to monitor debris activity, FEMA is responsible for the overall performance of the PA program and the greater share of the costs.

As FEMA stated in its response, FEMA staff are supposed to review and validate the documentation that applicants submit to FEMA to support their requests for funding. However, as we determined during this review, FEMA obligated $14.1 million in costs ($11.8 million in Federal cost share) for debris removal costs for five projects that were not adequately supported by documentation. FEMA’s failure to track known procurement and debris removal issues, coupled with its failure to review and validate supporting documentation for debris costs, increases the risk that FEMA is reimbursing millions of dollars of ineligible costs. www.oig.dhs.gov 16 OIG-20-44 OFFICE OF INSPECTOR GENERAL Department of Homeland Security Appendix A Objective, Scope, and Methodology The Department of Homeland Security Office of Inspector General was established by the Homeland Security Act of 2002 (Public Law 107−296) by amendment to the Inspector General Act of 1978. We conducted a review of FEMA’s response to Hurricane Irma that occurred in Florida in September 2017.

Our objective was to assess FEMA’s and the State of Florida’s response and recovery activities as a result of the major disaster declaration. During our review, we identified debris removal contract performance issues and concerns. This report discusses our observations regarding the use of pre-disaster debris removal contracts in Florida following Hurricane Irma. To accomplish our objective, we reviewed Federal laws and regulations, and FEMA policies and procedures.

We compiled, reviewed, analyzed, and summarized 8 projects, along with their supporting documentation, and 43 debris removal contracts.23 We reviewed these contracts for two federally- required contract provisions and identified issues related to noncompliance with Federal procurement regulations. Additionally, we analyzed these contracts for provisions that are not federally required but may be beneficial to providing clear terms for contract performance. We also interviewed FEMA and State of Florida officials at the JFO in Orlando and Miami, Florida; and FEMA officials at the CRC in Winchester, Virginia, as well as from FEMA headquarters. We requested information from local government officials in various locations across the State of Florida.

In addition, we reviewed previous DHS OIG reports to identify types of frequently reported debris removal issues, and performed other procedures we considered necessary to accomplish our objective. Specifically, we reviewed:  FEMA’s Dissemination of Procurement Advice Early in Disaster Response Periods, OIG-14-46-D, February 28, 2014; and  Management Alert—Observations of FEMA’s Debris Monitoring Efforts for Hurricane Irma, OIG-18-85, September 27, 2018. During fieldwork, we asked FEMA to provide a list of municipalities affected by debris removal contract issues. However, FEMA officials stated they did not identify or track those municipalities.

In the absence of FEMA records, we contacted 865 local government officials registered to receive Public Assistance grant funding in Florida for Hurricane Irma. We inquired whether they had 23 As of October 2018, only 6 of these 43 debris removal contracts had undergone FEMA review. www.oig.dhs.gov 17 OIG-20-44 OFFICE OF INSPECTOR GENERAL Department of Homeland Security experienced any debris removal issues. We received responses from 102 municipalities. Of the 102 municipalities, 50 reported issues directly related to debris removal contracts.

For those municipalities that reported debris-related issues, we:  determined whether the municipalities had pre-disaster debris removal contracts in place and if the contractors had honored those contracts;  obtained and reviewed relevant pre- and post-disaster debris removal contracts;  reviewed the pre-disaster contracts for two federally required contract  provisions and five potentially beneficial contract provisions; identified methods used to collect debris and changes in debris collection rates; and  reviewed FEMA’s Grants Manager and EMMIE systems to identify and obtain project support documentation for obligated funds. We conducted this review between October 2017 and April 2019 pursuant to the Inspector General Act of 1978, as amended, and in accordance with the Council of Inspectors General on Integrity and Excellence Quality Standards for Inspection and Evaluation. Office of Audits major contributors to this report are Katherine Trimble, Deputy Assistant Inspector General for Audits; Yesi Starinsky, Director; Carlos Aviles, Audit Manager; Jason Jackson, Program Analyst; Lauren Bullis, Auditor; Angelica Esquerdo, Auditor; James Townsend, Program Analyst; Nicole Kraft, Independent Referencer; and Thomas Hamlin, Communications Analyst. www.oig.dhs.gov 18 OIG-20-44 OFFICE OF INSPECTOR GENERAL Department of Homeland Security Appendix B FEMA’s Comments www.oig.dhs.gov 19 OIG-20-44 OFFICE OF INSPECTOR GENERAL Department of Homeland Security www.oig.dhs.gov 20 OIG-20-44 OFFICE OF INSPECTOR GENERAL Department of Homeland Security www.oig.dhs.gov 21 OIG-20-44 OFFICE OF INSPECTOR GENERAL Department of Homeland Security Appendix C Analysis of Debris Removal Contract Issues, Actions Taken by Local Governments, Pre-Disaster Contract Provisions, and Contract Rate Increases Table 1: Debris Removal Performance Issues Reported Municipalities Primary Pre- Disaster Contract not Honored No Pre- Disaster Contracts Honored Performance Deficiencies Pre-Disaster Contractor Requested Modification Municipality 1 Municipality 2 Municipality 3 Municipality 4 Municipality 5 Municipality 6 Municipality 7 Municipality 8 Municipality 9 Municipality 10 Municipality 11 Municipality 12 Municipality 13 Municipality 14 Municipality 15 Municipality 16 Municipality 17 Municipality 18 Municipality 19 Municipality 20 Municipality 21 Municipality 22 Municipality 23 Municipality 24 Municipality 25 Municipality 26 Municipality 27 Municipality 28 Municipality 29 Municipality 30 Municipality 31 Municipality 32 Municipality 33 Municipality 34 Municipality 35 Municipality 36 Municipality 37 X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X www.oig.dhs.gov 22 OIG-20-44 OFFICE OF INSPECTOR GENERAL Department of Homeland Security Municipalities Primary Pre- Disaster Contract not Honored No Pre- Disaster Contracts Honored Performance Deficiencies Pre-Disaster Contractor Requested Modification Municipality 38 Municipality 39 Municipality 40 Municipality 41 Municipality 42 Municipality 43 Municipality 44 Municipality 45 Municipality 46 Municipality 47 Municipality 48 Municipality 49 Municipality 50 COUNT: 50 X X X X X X X 22 X X 10 X X X X X X X X X X X X 43 X X X X 19 Table 2: Actions Taken by Local Governments to Address Debris Removal Contractor Shortages Municipalities Used Local Government Workers Procured Post- Disaster Contract(s) Municipality 1 Municipality 2 Municipality 3 Municipality 4 Municipality 5 Municipality 6 Municipality 7 Municipality 8 Municipality 9 Municipality 10 Municipality 11 Municipality 12 Municipality 13 Municipality 14 Municipality 15 Municipality 16 Municipality 17 Municipality 18 X X X X X X X X Used Non- Primary Pre-Disaster Contract Increased Pre-Disaster Rates Used Contractor that Honored Pre-Disaster Rates X X X X X X X X X X X X X X X X X X X X www.oig.dhs.gov 23 OIG-20-44 OFFICE OF INSPECTOR GENERAL Department of Homeland Security Municipalities Used Local Government Workers Procured Post- Disaster Contract(s) Used Non- Primary Pre-Disaster Contract Increased Pre-Disaster Rates Used Contractor that Honored Pre-Disaster Rates Municipality 19 Municipality 20 Municipality 21 Municipality 22 Municipality 23 Municipality 24 Municipality 25 Municipality 26 Municipality 27 Municipality 28 Municipality 29 Municipality 30 Municipality 31 Municipality 32 Municipality 33 Municipality 34 Municipality 35 Municipality 36 Municipality 37 Municipality 38 Municipality 39 Municipality 40 Municipality 41 Municipality 42 Municipality 43 Municipality 44 Municipality 45 Municipality 46 Municipality 47 Municipality 48 Municipality 49 Municipality 50 TOTAL X X X X X X X X X X X X X X X 23 X X X X X X X X X 12 X X X X X X X X X X X X X X X X X X 5 24 X X X X X X X X X X X X 18 www.oig.dhs.gov 24 OIG-20-44 OFFICE OF INSPECTOR GENERAL Department of Homeland Security Table 3: Review of Contract Provisions Municipalities # of Contracts Reviewed Did not contain Provision for Termination of Contract for Cause and Convenience Other Provisions No Performance Timeframe for Completion No Milestones for the Amount of Debris (in cubic yards) to be Collected on a Specific Basis Municipality 1 Municipality 2 Municipality 4 Municipality 7 Municipality 9 Municipality 10 Municipality 11 Municipality 13 Municipality 16 Municipality 18 Municipality 22 Municipality 26 Municipality 27 Municipality 28 Municipality 29 Municipality 34 Municipality 35 Municipality 36 Municipality 38 Municipality 41 Municipality 42 Municipality 43 Municipality 44 Municipality 45 Municipality 47 Municipality 48 Municipality 49 Municipality 50 MUNICIPALITY COUNT: 28 CONTRACT COUNT 2 1 2 1 1 1 1 3 1 1 2 2 4 1 2 2 1 2 1 2 1 1 1 2 1 1 2 1 43 2 1 1 1 1 1 2 1 1 1 10 12 1 2 1 1 1 3 1 2 2 4 1 1 1 1 1 1 2 1 1 19 28 1 2 1 1 1 1 3 1 1 2 2 1 1 2 1 2 1 2 1 1 1 2 1 23 32 www.oig.dhs.gov 25 OIG-20-44 OFFICE OF INSPECTOR GENERAL Department of Homeland Security Table 4: Analysis of Rate Changes Comparison of Pre-Disaster Rates to Actual Cradle-to-Grave Rates Municipalities Primary Pre- Disaster Rate Actual Rate for Contract Used Municipality 1 Municipality 4 Municipality 12 Municipality 13 Municipality 19 Municipality 22 Municipality 24 Municipality 27 Municipality 34 Municipality 36 Municipality 39 Municipality 41 Municipality 45 Municipality 48 Municipality 49 $10.25 8.90 14.00 13.61 12.35 13.45 15.45 15.20 12.18 15.95 11.85 18.00 15.45 14.10 16.50 $13.15 9.55 13.75 27.0524 14.20 20.00 32.39 14.75 14.05 16.00 12.70 26.00 16.50 16.10 17.75 Difference between Primary Pre-Disaster and Rate Used $2.90 0.65 (0.25) 13.44 1.85 6.55 16.94 (0.45) 1.87 0.05 0.85 8.00 1.05 2.00 1.25 Rate Change Percentage 28.29% 7.3% -1.79% 98.75% 14.98% 48.7% 109.64% -2.96% 15.35% .31% 7.17% 44.44% 6.8% 14.18% 7.58% 24 We calculated the actual rate used for Municipality #13 by averaging three post-disaster contracts used. For the remaining municipalities, the actual rate was obtained from a single contract. www.oig.dhs.gov 26 OIG-20-44 OFFICE OF INSPECTOR GENERAL Department of Homeland Security Appendix D Debris Removal Contracts and Price Amendments FEMA-4332- DR-TX www.oig.dhs.gov 27 OIG-20-44 OFFICE OF INSPECTOR GENERAL Department of Homeland Security www.oig.dhs.gov 28 OIG-20-44 OFFICE OF INSPECTOR GENERAL Department of Homeland Security www.oig.dhs.gov 29 OIG-20-44 OFFICE OF INSPECTOR GENERAL Department of Homeland Security www.oig.dhs.gov 30 OIG-20-44 OFFICE OF INSPECTOR GENERAL Department of Homeland Security www.oig.dhs.gov 31 OIG-20-44 OFFICE OF INSPECTOR GENERAL Department of Homeland Security Appendix E Costs Missing Supporting Documentation in FEMA’s Grants Management System Table 5: Category A Projects Obligated without Supporting Documentation Municipality Obligated Amount Unsupported Amount Federal Share of Unsupported Amount $646,553 $581,898 Municipality #26 Municipality #38 Municipality #38 Municipality #38 Municipality #49 Municipality #49 Municipality #49 Municipality #50 TOTAL $801,325 1,281,088 2,836,755 374,833 4,619,213 7,604,131 1,205,510 20,804 4,157,291 6,083,304 964,408 15,353 $18,743,659 $14,095,875 $11,802,254 4,619,212 7,604,130 1,205,510 20,470 www.oig.dhs.gov 32 OIG-20-44 OFFICE OF INSPECTOR GENERAL Department of Homeland Security Appendix F Report Distribution Department of Homeland Security Secretary Deputy Secretary Under Secretary for Management Chief of Staff Deputy Chiefs of Staff General Counsel Executive Secretary Director, GAO/OIG Liaison Office Under Secretary, Office of Strategy, Policy, and Plans Assistant Secretary for Office of Public Affairs Assistant Secretary for Office of Legislative Affairs Federal Emergency Management Agency Administrator Associate Administrator, Office of Response and Recovery Assistant Administrator for Recovery Director, Risk Management and Compliance Chief Procurement Officer Audit Liaison, FEMA (Job Code 18-008-AUD-FEMA (a Federal Coordinating Officer, DR-4337-FL Regional Administrator, Region IV Audit Liaison, Region IV Office of Management and Budget Chief, Homeland Security Branch DHS OIG Budget Examiner Congress Congressional Oversight and Appropriations Committees External Deputy Director, Florida Department of Emergency Management General Counsel, Florida Department of Emergency Management Florida Auditor General www.oig.dhs.gov 33 OIG-20-44 Additional Information and Copies To view this and any of our other reports, please visit our website at: www.oig.dhs.gov.

For further information or questions, please contact Office of Inspector General Public Affairs at: [email protected]. Follow us on Twitter at: @dhsoig. OIG Hotline To report fraud, waste, or abuse, visit our website at www.oig.dhs.gov and click on the red "Hotline" tab. If you cannot access our website, call our hotline at (800) 323-8603, fax our hotline at (202) 254-4297, or write to us at: Department of Homeland Security Office of Inspector General, Mail Stop 0305 Attention: Hotline 245 Murray Drive, SW Washington, DC 20528-0305