Department of Homeland Security 

Office of Inspector General 

Gulf Coast Recovery: 


FEMA's Management of the Hazard 


Mitigation Component of the Public Assistance 


Program 


OIG-10-28 December 2009 
Office ofltl$pector General

u.s. Department of Homeland Security

Washington, DC 20528

Homeland

Security

DEC 1 Q 2009

Preface

The Department of Homeland Security (DHS) Office of Inspector General (OIG) was established by

the Homeland Security Act of2002 (Public Law 107-296) by amendment to the Inspector General

Act of1978. This is one of a seriesof audit, inspection, and special reports prepared as part of our

oversight responsibilities to promote economy, efficiency, and effectiveness within the department.

This report addresses the strengths and weaknesses of the Federal Emergency Management

Agency's management of the hazard mitigation component of the Public Assistance Program within

the Gulf Coast states impacted by hurricanes Katrina and Rita in 2005. It is based on interviews

with Federal Emergency Management Agency, grantee, and subgrantee employees and officials;

direct observations; and a review of applicable documents.

The recommendations herein have been developed to the best knowledge available to our office, and

have been discussed in draft with those responsible for implementation. We trust this report will

result in more effective, efficient, and economical operations. We express our appreciation to all of

those who contributed to the preparation of this report.

~'~O(.~

Richard L. Skinner

Inspector General
Table of Contents/Abbreviations 


Executive Summary.............................................................................................................................1 


Background ..........................................................................................................................................2 


Results of Audit....................................................................................................................................3 


Management of Section 406–Hazard Mitigation.............................................................................3 


Recommendations......................................................................................................................8 


Management Comments and OIG Analysis ..............................................................................9 


Challenges in Louisiana.................................................................................................................13 


Recommendations....................................................................................................................16 


Management Comments and OIG Analysis ............................................................................16 


Appendixes 

Appendix A: Objective, Scope, and Methodology......................................................................17 


Appendix B: Management Comments to the Draft Report.........................................................19 


Appendix C: Projects Reviewed and Audit Issues......................................................................23 


Appendix D: Section 406–Hazard Mitigation Eligibility and Funding Requirements................28 


Appendix E: Major Contributors to This Report ........................................................................29 


Appendix F: Report Distribution ................................................................................................30 


Abbreviations 

BCA benefit-cost analysis 


CEF cost-estimating format 


DHS Department of Homeland Security 


FEMA Federal Emergency Management Agency 


GCRO Gulf Coast Recovery Office 


HMGP Hazard Mitigation Grant Program
 

LATRO Louisiana Transitional Recovery Office 


NEMIS National Emergency Management Information System
 

OIG Office of Inspector General 


PA Program Public Assistance Program 


PO project officer 


PPT Project Phase Tool 


PW project worksheets 


SOP standard operating procedure 


TAC technical assistance contractor 


TRO Transitional Recovery Office
 
OIG 


Department of Homeland Security 

Office of Inspector General 

Executive Summary 

This report addresses the Federal Emergency Management Agency’s 

management of the hazard mitigation component of its Public Assistance 

Program. We evaluated hazard mitigation activities in Louisiana, Mississippi, 

Alabama, and Texas after the widespread devastation and damage caused by 

hurricanes Katrina and Rita. Our objective was to determine whether the 

agency effectively managed grant funding for this public assistance 

component. Appendix A provides additional details regarding the audit 

objective, scope, and methodology. 

The Federal Emergency Management Agency continues to face challenges in 

managing public assistance–funded hazard mitigation work in the Gulf Coast 

region. Specifically, the agency needs to draw on lessons learned from past 

disasters to improve (1) overall oversight of program activities, (2) specific 

training on the Public Assistance Program’s hazard mitigation component, 

(3) plans for deploying trained staff to disaster-damaged areas, and 

(4) processes and procedures for developing project worksheets, including a 

requirement to document hazard mitigation scope of work and funding 

determinations. In addition, the Federal Emergency Management Agency 

faces challenges in Louisiana regarding the implementation of an effective 

hazard mitigation strategy that (1) improves delivery of hazard mitigation 

assistance to disaster-stricken communities, (2) improves coordination of 

project development with state officials, and (3) expedites project 

development and funding. 

Our report includes eight recommendations to improve the Federal 

Emergency Management Agency’s management of hazard mitigation 

measures funded through the Public Assistance Program. We also are 

questioning approximately $3.6 million in public assistance–funded hazard 

mitigation work that did not comply with federal regulations and Federal 

Emergency Management Agency guidelines. 

Gulf Coast Recovery: FEMA's Management of the Hazard 


Mitigation Component of the Public Assistance Program 


Page 1 
 

Background 

Over the period August through November 2005, hurricanes Katrina, Rita, 

and Wilma battered the Gulf Coast region, caused unprecedented damage, 

devastated whole communities and neighborhoods, and left hundreds of 

thousands of people without shelter and employment. In their aftermath, the 

Federal Emergency Management Agency (FEMA) created the Gulf Coast 

Recovery Office (GCRO) and established Transitional Recovery Offices 

(TROs) in Alabama, Louisiana, Mississippi, and Texas to deliver and 

administer effective and consistent recovery programs. This included the 

identification of timely and effective hazard mitigation assistance to reduce 

future risks and to protect people and communities. On April 10, 2009, the 

Acting FEMA Administrator (1) announced the dissolution of the GCRO; 

(2) indicated that the Alabama, Mississippi, and Texas TROs had already 

transitioned back to their respective FEMA Regional Offices; and (3) said that 

the Louisiana TRO would continue to operate under its own leadership with a 

direct report to the FEMA Administrator. 

The Robert T. Stafford Disaster Relief and Emergency Assistance Act 

(Stafford Act), P.L. 93-288, gives FEMA the authority to fund the restoration 

of eligible facilities that sustained disaster damage. Section 406 of the 

legislation contains a provision for the discretionary funding of additional 

measures, not required by applicable codes and standards, that would enhance 

a facility’s ability to resist similar damage in future events. In providing this 

additional discretionary authority, Congress recognized that, during the repair 

of damaged components of facilities, there would be unique opportunities to 

prevent recurrence of similar damage from future, similar disaster events 

(“Section 406–Hazard Mitigation” or “406 Mitigation”). 

Although the law provides that the President may authorize funds for eligible 

hazard mitigation projects, it does not require funding. FEMA, grantee, and 

subgrantee interests in disaster assistance must be balanced with the 

supplemental nature of disaster assistance and FEMA’s obligation for the 

prudent stewardship of federal disaster funds. Once approved under Section 

406, the hazard mitigation component of the Public Assistance (PA) Program 

becomes a condition of federal disaster assistance and the applicant is required 

to perform the work. 

FEMA has specific policies for the effective implementation of 

406 Mitigation. Those policies require adequate inspection of damaged 

facilities and elements, and a proper evaluation and determination of eligible 

mitigation assistance and related scope of work. Appendix D provides 

additional details regarding the eligibility and funding requirements for 

Section 406–Hazard Mitigation projects. 

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Mitigation Component of the Public Assistance Program 


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Results of Audit 

As a result of the 2005 hurricanes, FEMA faced major challenges in delivering effective 

406 Mitigation assistance to grantees and subgrantees in the Gulf Coast states that sustained 

widespread damage. FEMA needs to improve its processes for ensuring effective oversight 

of 406 Mitigation work. In addition, FEMA still faces challenges in implementing an 

effective 406 Mitigation strategy in Louisiana. 

Management of Section 406–Hazard Mitigation 

At the onset of disaster recovery efforts after the hurricanes of 2005, identifying 

406 Mitigation opportunities was not a FEMA priority. FEMA personnel deployed to 

work on disaster recovery programs need additional training to ensure effective 

delivery of the PA Program, including the hazard mitigation component. Further, 

FEMA needs to strengthen its practices for recording, documenting, and funding 

406 Mitigation projects. 

Program Management 

The GCRO did not manage 406 Mitigation activities at the four TROs 

effectively. FEMA established the GCRO to lead and coordinate recovery 

and rebuilding efforts in the Gulf Coast region temporarily and to monitor the 

TROs’ delivery of disaster assistance. FEMA also expected the GCRO to 

ensure that FEMA programs were consistently and effectively administered.1 

However, GCRO did not make 406 Mitigation a priority during initial 

inspections of damaged facilities and collected only limited statistical data 

about PA activity, such as the number of project worksheets (PWs) processed 

and funding obligated. 

The Louisiana and Mississippi TROs did not follow established guidelines 

and processes for implementing the 406 Mitigation activities because this 

component of the PA Program was not a priority when initial inspections of 

damaged facilities were performed. TRO officials explained that the 

devastation was overwhelming and that priorities for field inspections were to 

identify damaged elements quickly and develop scopes of work to return 

damaged facilities to their pre-disaster condition. As a result, project repairs 

often were performed before hazard mitigation work was identified. 

Therefore, opportunities for 406 Mitigation assistance were potentially 

eliminated. Since 406 Mitigation provides a unique opportunity to prevent 

recurrence of similar damage from future, similar disaster events, FEMA 

should improve its management of this PA Program component by developing 

1

 March 15, 2007, Statement of Deputy Director of Gulf Coast Recovery before the House Appropriation Committee, 

Subcommittee on Homeland Security. 

Gulf Coast Recovery: FEMA's Management of the Hazard 


Mitigation Component of the Public Assistance Program 


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procedures that hold employees accountable for identifying and documenting 

406 Mitigation work in PWs early in the recovery process. 

The two TROs (Louisiana and Mississippi) could not monitor 406 Mitigation 

work after the initial damage inspections because records supporting 

inspections were incomplete and FEMA’s National Emergency Management 

Information System (NEMIS)2

 did not provide an easy way to extract 406 

Mitigation information from the system. TRO staff explained that because 

NEMIS data were often inaccurate or untimely, ad hoc systems were 

developed and used to produce information on 406 Mitigation work. 

However, these systems were not always effective. Consequently, FEMA 

missed opportunities for effective 406 Mitigation of damaged structures. 

On April 10, 2009, FEMA dissolved the GCRO. As of that date, only the 

Louisiana TRO remained in operation, and FEMA Regions IV and VI 

absorbed the responsibilities of the Alabama, Mississippi, and Texas TROs. 

FEMA needs to develop policies and procedures that require inspectors to 

identify eligible 406 Mitigation work early in the disaster recovery process – 

especially for catastrophic events. FEMA also needs to develop and adopt a 

standardized management reporting process that provides timely, accurate, 

and reliable information on 406 Mitigation activities. 

Program Delivery and Staffing 

According to disaster applicants in Louisiana and Mississippi,3

 FEMA project 

officers (POs) did not always have the technical proficiency or training to 

identify 406 Mitigation work. Some applicants said that FEMA’s practice for 

rotating disaster personnel impacted 406 Mitigation program delivery. POs 

are critical to the project formulation and funding process and are the primary 

link between FEMA and disaster applicants. POs perform site inspections, 

determine the level of disaster-related damage, develop scopes of work, and 

identify hazard mitigation work eligible for financial assistance. In addition, 

FEMA requires POs to collect all necessary information to support project 

funding decisions. 

There were concerns with the POs’ technical proficiency in determining eligible 

406 Mitigation work during initial inspections or subsequently as disaster 

recovery work began. Applicants noted that while some POs had knowledge of 

engineering and construction practices, they did not fully understand the federal 

requirements for identifying PA-funded hazard mitigation work. For example, 

an official with a parish school said work delays and missed mitigation 

2

 NEMIS records all project information, including PWs and supporting documentation, obligations, deobligations, and 


overall project status. 


3

 Under the PA Program, applicants who obtain assistance are formally identified as subgrantees. 


Gulf Coast Recovery: FEMA's Management of the Hazard 


Mitigation Component of the Public Assistance Program 


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assistance occurred because timely and accurate assistance could not be 

obtained from the PO. 

Although identifying 406 Mitigation measures was not an initial priority in 

Louisiana and Mississippi, the POs’ level of training in and experience with 

406 Mitigation before the disaster impacted their ability to identify 

406 Mitigation work as disaster recovery progressed. The limited training the 

TROs provided to POs with little or no practical experience in 406 Mitigation 

did not improve the quality and completeness of the PWs. In some cases, 

PWs omitted 406 Mitigation scopes of work when mitigation measures were 

available or justifications for mitigation measures when project scopes 

changed. Also, mitigation work was (1) inconsistently documented, 

(2) identified as emergency work instead of permanent work, and (3) added 

months after the disaster without subsequent inspection or further 

documentation. In Louisiana and Mississippi, most of the POs were technical 

assistance contractor (TAC) employees with little experience in 

406 Mitigation Programs.4

 The TACs and FEMA management employees we 

interviewed said that training should be enhanced to provide a more in-depth 

review of the PA Program, including the 406 Mitigation component. 

Frequent rotations of POs (primarily TACs) made it difficult to maintain an 

orderly and consistent project formulation process because the work 

performed and the records collected by the POs during the process did not 

always transition to new POs. One applicant provided the same 

documentation to at least four different POs. POs often rotated every 90 to 

120 days and usually did not return to serve the same applicants. As a result, 

control and maintenance of records collected during inspections were difficult. 

FEMA needs to develop guidance for recordkeeping as rotations occur. 

FEMA needs to improve training, personnel rotation practices, and control of 

project records to ensure that project eligibility determinations are adequate 

and federal funding is made available for eligible 406 Mitigation work. 

Project Development Documentation 

FEMA did not maintain appropriate documentation to support its decision to 

fund 13 of 66 projects we reviewed. Project documentation is vital to support 

the eligibility of the work and the funding provided to subgrantees for project 

execution. Appendix C identifies the projects and the related audit issues, 

which can be categorized as follows: 

Expected insurance proceeds were not offset against PW estimated 

costs, including costs associated with 406 Mitigation. 

4

 In Louisiana, TACs comprised about 80% of the PO cadre. 

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Mitigation Component of the Public Assistance Program 


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Project records did not have documentation to support 406 Mitigation 

funding. 

Project officials provided conflicting information regarding the 

eligibility of 406 Mitigation projects. 

The cost-estimating format was misapplied and resulted in replacing 

rather than repairing a facility. 

In addition, FEMA staff prepared benefit-cost analyses (BCAs) to support the 

cost-effectiveness of mitigation projects but did not maintain documentation 

identifying the source and applicability of the data used in the calculations. For 

example, one project in Louisiana had two BCAs prepared more than a year 

apart. The first BCA produced a funding decision that supported 

406 Mitigation work. Project records noted that a second BCA was required 

because of increases in project scope and estimated costs. With assumptions 

remaining the same, higher project costs should have produced a BCA that was 

less cost-effective than the original BCA. However, the second BCA showed 

greater cost-effectiveness than the first, and documentation to support that 

decision was not available. 

In some instances, because BCA computations included costs not associated 

with the damaged elements of a facility, FEMA funded questionable 

406 Mitigation projects. In other cases, because project documentation was 

incomplete, we were unable to determine the adequacy and accuracy of BCA 

calculations. FEMA should establish procedures for maintaining project 

documentation used to perform BCA calculations. 

Project Funding Determinations 

Funding determinations were not always consistent with federal regulations 

and FEMA guidelines for determining 406 Mitigation work eligibility. As 

discussed below, use of a systems approach in Louisiana resulted in funding 

determinations that appeared cost-effective because they included work 

unrelated to the damaged elements of a facility. FEMA guidance limits 

406 Mitigation funding to specific damaged elements of a facility. 

Louisiana TRO (LATRO). LATRO’s 406 Hazard Mitigation Section 

(406 Team) implemented a systems approach to 406 Mitigation. This 

approach resulted in mitigation projects for both damaged and undamaged 

elements of a facility. 

Under the systems approach, the 406 Team concluded that when damaged 

elements, such as windows and roofs, were part of a system in a damaged 

facility, then funding could be provided for undamaged elements. For 

example, the 406 Team recommended $12 million in 406 Mitigation funding 

Gulf Coast Recovery: FEMA's Management of the Hazard 


Mitigation Component of the Public Assistance Program 


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for improvements to an undamaged berm that protected the New Orleans – 

East Bank Waste Water Treatment Facility (project 16335). Project records 

did not identify any 406 Mitigation work and attributed the damage to a flood 

door that was left open, not to a failure of the berm. 

The 406 Team’s decision to fund this project was based primarily on a desk 

review of records obtained by the PO who performed the field inspection. 

The 406 Team used its systems approach and developed a BCA that included 

the costs to repair disaster-damaged buildings and the costs to upgrade the 

berm. Late in the process, FEMA management discovered the error and took 

action to deobligate funding. The applicant and state appealed FEMA’s 

determination, and the issue is now in second appeal.5 

The following two instances illustrate how the 406 Team applied the systems 

approach to fund ineligible hazard mitigation work, reversing decisions made 

by POs that performed the onsite damage inspections. 

For project 14689 (1603-DR-LA), FEMA provided $2,932,276 in 

406 Mitigation funding for a hospital emergency backup generator 

system (redundancy project). In 2005, the existing backup generator 

system was repaired to pre-disaster condition, and FEMA denied 

funding for the redundancy project. However, in 2007, FEMA 

reversed its decision. To justify funding the project, FEMA prepared a 

BCA that considered the cost of the new system and an additional 

$6.4 million associated with other disaster damage caused by the 

failure of the existing backup generator system. Using these costs, the 

BCA supported the project’s cost-effectiveness and was used as 

FEMA’s justification for funding the project. 

For project 3704 (1603-DR-LA), FEMA provided $621,400 in 

406 Mitigation funding to repair bus and automobile maintenance 

equipment (lifts) damaged by flooding at a regional transit authority. 

A vendor provided repair estimates, and FEMA determined that hazard 

mitigation was not technically feasible. However, FEMA funded the 

replacement of the lifts based on apparent flood resistance of the 

newer model. Project records did not include a BCA analysis or 

support FEMA’s decision. Also, the manufacturer of the lifts told us 

that the new lift equipment offered no more flood resistance than the 

older lifts if flooding similar to that experienced with hurricane 

Katrina occurred. 

Based on LATRO’s use of the systems approach, we question FEMA 

obligations of $3,553,676 ($2,932,276 plus $621,400) because the scopes of 

5

 According to Title 44, Code of Federal Regulations, Section 206.206, FEMA regions make first appeal determinations 

and FEMA headquarters makes the second appeal determinations. 

Gulf Coast Recovery: FEMA's Management of the Hazard 


Mitigation Component of the Public Assistance Program 


Page 7 
 

work for the two projects did not meet 406 Mitigation eligibility requirements 

(see appendix C for additional project details). 

Alabama, Mississippi, and Texas TROs. These states had fewer 406 

Mitigation projects and fewer errors in eligibility determinations. In 

Mississippi, for example, a few projects initially identified for 406 Mitigation 

became replacement projects and were funded with PA funds. Under federal 

regulations,6

 FEMA can approve PA funds to replace a damaged facility when 

the cost to repair the facility equals or exceeds 50% of the costs to replace it to 

current codes and standards. Although we did not question any costs 

associated with 406 Mitigation funding decisions in the Mississippi and Texas 

TROs, we identified various administrative issues. We questioned a FEMA 

obligation of $4,0737

 in 406 Mitigation work not completed by the City of 

Mobile, Alabama (see appendix C for details). 

Conclusion 

406 Mitigation was not a priority in the early stage of disaster recovery 

because of the significance of the devastation in Louisiana and Mississippi. 

However, regardless of the level of damage caused by a disaster, FEMA needs 

to ensure that its employees, whether full-time, intermittent, or contractor, 

have the experience and training to identify and develop hazard mitigation 

projects when deployed to field offices. In addition, deploying trained 

personnel to disaster-damaged areas during a multistate event and holding 

disaster employees accountable for effectiveness and efficiency is essential to 

the success of 406 Mitigation. Lastly, FEMA needs to improve the process of 

developing, recording, and documenting 406 Mitigation work to support the 

cost-effectiveness of the work it deems eligible for mitigation funding. 

Recommendations 

We recommend that the Administrator, FEMA: 

Recommendation #1: Develop policies and procedures that require 

inspectors to identify eligible 406 Mitigation work early in the disaster 

recovery process and develop and adopt a standardized management reporting 

process that gives FEMA project managers timely, accurate, and reliable 

information on 406 Mitigation activities. 

Recommendation #2: Establish training guidelines to ensure that staff 

(including TACs) are knowledgeable in FEMA’s 406 Mitigation policies and 

procedures, including identifying and recording 406 Mitigation data in 

NEMIS. 

6

 Title 44, Code of Federal Regulations, Section 206.226(f). 

7

 PW 1580; 1605-DR-AL. 

Gulf Coast Recovery: FEMA's Management of the Hazard 


Mitigation Component of the Public Assistance Program 


Page 8 
Recommendation #3: Modify PA Program technical assistance agreements 

to mitigate project formulation problems caused by frequent TAC employee 

rotations and develop guidance for managing and transitioning site inspection 

project records as rotations take place. 

Recommendation #4: Establish procedures for maintaining project 

documentation, including documentation used to perform BCA calculations, 

before funding 406 Mitigation proposals, and ensuring that 406 Mitigation 

eligibility determinations are correct and performed in a timely manner. 

Recommendation #5: Require LATRO to disallow the $3,553,676 of 

questionable obligations resulting from the use of the systems approach. 

Recommendation #6: Require FEMA Region IV to disallow $4,073 for 

406 Mitigation work not completed by the City of Mobile, Alabama. 

Management Comments and OIG Analysis 

Appendix B provides the complete text of FEMA's responses to these six 

recommendations. FEMA officials concurred with Recommendations #1, #2, 

#4, and #6 but did not concur with Recommendations #3 and #5. Synopses of 

FEMA comments and our analysis of those comments are provided below. 

Recommendations #1, #2, and #4 

FEMA officials concurred and convened a Section 406 Hazard Mitigation 

National Workgroup in September 2009 to (1) develop national guidance 

consisting of standard operating procedures (SOPs) and protocols for 

evaluating 406 Mitigation opportunities, (2) adopt the Mitigation Directorate's 

Benefit/Cost Analysis (BCA) methodology for 406 Mitigation projects, and 

(3) develop a staffing and training plan to increase the pool of trained and 

experienced 406 Mitigation specialists. 

FEMA officials said that the national guidance will address the hazard 

mitigation specialist's role in preliminary damage assessments and kickoff 

meetings in order to assess 406 Mitigation opportunities and review projects 

early in the process. In addition, FEMA has developed a standardized 

management report, Public Assistance Mitigation Profile, in the Emergency 

Management Mission Integrated Environment that provides hazard mitigation 

project details by category, size of project, dollar amount, and percentage of 

total projects for the disaster. 

Regarding procedures for maintaining project documentation, FEMA officials 

said that in August 2009, a memorandum was issued stating that the PA 

Program plans to adopt a consistent BCA methodology to support and 

Gulf Coast Recovery: FEMA's Management of the Hazard 


Mitigation Component of the Public Assistance Program 


Page 9 
 

encourage cost-effective mitigation. In addition, FEMA will revise its 

Disaster Assistance Policy 9526.1, Hazard Mitigation Funding Under Section 

406 (Stafford Act), as necessary to reflect the new methodology. 

The actions planned or taken, as summarized above, meet the intent of 

Recommendations # 1, #2, and #4. We consider these recommendations 

resolved but open pending review and evaluation of FEMA's more detailed 

corrective action plan to be provided subsequent to the issuance of this report. 

Recommendation #3 

FEMA officials did not concur with this recommendation. They said that the 

development of national guidance for all PA staff to adhere to in the field will 

accomplish the goal without the need to modify the TAC agreements. They 

further said that the SOP currently under development will provide guidance 

on document management including the transfer of files and information 

between project officers or PA coordinators (permanent, temporary, or 

contractor employees) prior to rotating out of a joint field office. 

FEMA action to develop a SOP that will provide document management 

guidance on the transfer of files and information during staff transitions 

satisfies the intent of this recommendation. While the guidance will be 

provided to all individuals (including TAC employees) involved in 

406 Mitigation, the SOP should include procedures that ensure the guidance is 

carried out. Although FEMA did not concur, its action satisfies the intent of 

the recommendation. Therefore, we consider the recommendation resolved 

but open pending receipt and evaluation of the SOP. 

Recommendation #5 

As discussed below, FEMA officials did not concur that LATRO should 

disallow nearly $3.6 million of questionable 406 Mitigation costs that resulted 

from using a systems approach to determine the cost-effectiveness of projects. 

FEMA comments on project 14689 (Touro Infirmary, 1603-DR-LA). 

FEMA officials provided information on two separate mitigation 

proposals – one proposal dealing with a fuel filtration system to mitigate 

against damages caused by contaminated fuels, and one proposal dealing 

with a looped electrical distribution network combined with automatic 

switching equipment that would mitigate against damages caused by 

overloading the backup generators. 

For the first proposal, FEMA officials said that LATRO reviewed 14 PWs 

containing the damages caused by the loss of environmental control due to 

failure of the emergency power generator system and concluded this 

damage would not have occurred if the generator system continued to 

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Mitigation Component of the Public Assistance Program 


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function. FEMA recalculated the BCA using 13 of the 14 PWs and stated 

the recalculated BCA still resulted in a cost-effective 406 Mitigation 

project. 

For the second proposal, FEMA officials said that the work performed was 

a cost-effective mitigation project per Section [1]E.8 of the appendix to 

FEMA Policy 959521.1, Hazard Mitigation Funding Under Section 406, 

(Stafford Act). 

OIG analysis. We disagree with FEMA's position that the project was 

cost-effective and therefore eligible fort 406 Mitigation funding. The two 

mitigation measures discussed in FEMA's response go hand-in-hand as 

justification for the funding provided in 2007 of the looped distribution 

capability. PW 14689 identified the damaged element of the emergency 

power generator system as a clogged fuel line between the ground tank 

and the generator day tank that resulted in the system taking in fuel 

contaminated with particles of sand. Damage repairs performed in 2005 

included replacing filters, oils, batteries, and fluids at a total cost of 

$14,430. 

FEMA’s comments noted that the claimed costs associated with 13 PWs 

served as the basis for its determination that the project was cost-effective. 

However, many of the costs included in the BCA computation were 

unrelated to the clogged fuel line bringing that calculation into question. 

Examples of the unrelated work included: (a) cleanup of Main Hospital 

PW#2292 – $1,753,055; (b) Main Hospital Carpet PW#2452 – $260,844; 

(c) Main Hospital Complex Ceiling Tile replacement PW#2475 – 

$988,539; and (d) Replacement of Telecom Switching Equipment 

PW#4890 – $632,904. These disaster costs resulted from the facility 

being physically compromised by the hurricane and were not directly 

attributable to the clogged fuel line. 

Although FEMA policy allows for the installation of looped electrical 

distribution service or other redundancies in the electrical service to 

critical facilities, other criteria must be met. Specifically, the same 

appendix to Disaster Assistance Policy 9526.1 referenced in FEMA's 

response says that certain infrastructure systems (including electrical 

power distribution systems) are determined to be cost-effective if they: 

Do not exceed 100% of project cost, 

Are appropriate to the disaster damage, 

Will prevent future similar damage, and 

Are directly related to the damaged eligible elements. 

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Mitigation Component of the Public Assistance Program 


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Paragraph 7.a. of the policy says “The mitigation measures must be related 

to eligible disaster-related damages and must directly reduce the potential 

of future, similar disaster damages to the eligible facility.” 

PW 14689, Version 0, Special Consideration #5, page 6 of 15, referred to 

the mitigation proposal and noted “a lack of a fuel filter assembly between 

the ground tank and day tanks caused the damage. The loop system 

would not have prevented the damage.”(emphasis added) FEMA's 

initial analysis recognized that contaminated fuel and an inadequate 

filtering system caused the damage to the emergency power generator 

system. In addition, electrical demand after the disaster did not represent a 

catastrophic problem since the hospital’s staff manually transferred the 

electric load to a remaining generator after the first two generators shut 

down. 

We assert that mitigation measure taken: (a) did not resolve the potential 

of future, similar disaster damages to the electrical system should the only 

source of diesel fuel again prove to be contaminated and (b) was not costeffective since disaster damages unrelated to the clogged fuel line were 

included in the BCA computation. Therefore, we question the $2,932,276 

expended for the mitigation measure. 

FEMA comments on project 3704 (Regional Transit Authority, 1603­

DR-LA). FEMA officials said that since the original proposal in 2006, the 

subgrantee has provided design information that shows the proposed work 

is eligible as a "least cost alternative" and as such, does not require 406 

Mitigation funding. These officials also said that Hazard Mitigation Grant 

Program funds committed to this project would be deobligated as FEMA 

moved forward with the scope alignment process for restoring the facility. 

OIG analysis. The finding addresses 406 Mitigation funding to repair bus 

and automobile maintenance equipment damaged by flooding. FEMA's 

action to deobligate the mitigation funds committed to this project 

satisfactorily addresses $621,400 of the $3,553,676 we questioned. This 

assumes that the amount FEMA disallows relates to 406 Mitigation 

funding rather than the Hazard Mitigation Grant Program (Section 404) 

funding referred to in FEMA's comment. 

Based on our analysis of FEMA's response to this recommendation and the 

additional comments we provide above, we consider Recommendation #5 

unresolved. 

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Mitigation Component of the Public Assistance Program 


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Recommendation #6 

FEMA officials consider this recommendation resolved because the 

subgrantee, the City of Mobile, Alabama, completed the 406 Mitigation 

portion of the project in 2008. 

At the time of our fieldwork, the City of Mobile had repaired (rather than 

replaced) a generator damaged by flooding but had not elevated it as specified 

in project 1580 (1605-DR-AL). Although FEMA officials did not comment 

on how it verified that the work had been accomplished (inspection or 

subgrantee certification), their responses indicate that the work was 

completed, thus mitigating against of future flooding damage. Therefore, we 

consider the recommendation resolved and closed. 

Challenges in Louisiana 

LATRO used various strategies to implement the 406 Mitigation component 

of the PA Program in Louisiana, but these strategies did not produce desired 

results. Identifying and funding 406 Mitigation work early in disaster 

recovery was inconsistent and resulted in delays in reconstructing critical 

facilities. LATRO needs to develop a strategy and standard operating 

procedures (SOPs) that address (1) project scope corrections, (2) development 

and funding of additional 406 Mitigation work, and (3) the benefits available 

to the state and the applicants by the partnering of 406 Mitigation work with 

the Hazard Mitigation Grant Program (HMGP, or 404 Mitigation). 

406 Mitigation Strategy 

LATRO implemented a 406 Database Mining program in March 2007 

because potentially eligible hazard mitigation work had not been identified 

early in the recovery process. The mining effort included (1) a desk review of 

approved PWs, (2) identification of damaged elements, and (3) application of 

mitigation solutions to those elements. During a 6-month period, LATRO 

staff reviewed approximately 6,000 PWs and identified about 700 projects 

that had hazard mitigation possibilities. Because many of the possibilities 

were no longer eligible for 406 Mitigation consideration because disaster 

repairs had already been completed, LATRO terminated this time-consuming 

effort. 

Next, LATRO placed mitigation specialists with POs in the field. However, 

because the process did not produce significant results and the work became 

overwhelming for the few mitigation specialists assisting the many POs, 

LATRO terminated this effort. 

In March 2008, LATRO began training LATRO and state field personnel on 

406 Mitigation, and jointly with the state, drafted an SOP on how 

Gulf Coast Recovery: FEMA's Management of the Hazard 

Mitigation Component of the Public Assistance Program 

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406 Mitigation should be managed in Louisiana. In January 2009, LATRO 

informed us that the final draft SOP had been provided to the state. The SOP 

describes a process for (1) identifying and communicating feasible and 

cost-effective 406 Mitigation work to applicants, (2) establishing uniform 

goals and expectations, (3) tracking and reporting projects, and (4) training 

field staff. At the conclusion of our fieldwork, the SOP was pending state 

approval. 

LATRO’s 406 Mitigation strategy and SOP should address: 

(1) How and when project scope corrections will be handled, 

(2) Steps that can be taken to expedite project development for applicants 

with cash flow difficulties, and 

(3) The benefits available to the state and applicants by partnering the 

406 Mitigation component of the PA Program with the HMGP. 

Project Scope Corrections. LATRO initiated a project scope realignment 

process (PW scope of work and funding revisions) applicable to eligible 

unfinished work because some previously approved 406 Mitigation projects 

were not developed using best practices and some projects contained errors or 

may have been undervalued. This occurred, in part, because some POs did 

not physically inspect damaged facilities but rather relied on the damages 

identified by insurance adjusters who may not have been familiar with 

406 Mitigation work eligibility requirements. Other scope corrections being 

considered by LATRO relate to eligible repair work inappropriately identified 

as 406 Mitigation work, changes in material and cost estimates that made a 

mitigation project not cost-effective, and eligible work to meet Americans 

With Disabilities Act requirements. 

Project scope realignment is a time-consuming effort for LATRO staff and 

applicants. LATRO estimates that at least 4,700 PWs with 406 Mitigation 

need realignment. 

Project Development. Immediately following the hurricanes of 2005, the state 

and many applicants experienced financial instability, cash flow difficulties, 

personnel shortages, and building material and contractor shortages, all of 

which impacted project development. LATRO’s continued involvement with 

the state and applicants, and a moderate increase in available contractors, has 

helped the state and many subgrantees to move forward with reconstruction. 

However, cash flow difficulties continue to delay developing scopes of work 

for some subgrantees. 

While initial federal funding for public assistance was 75%, P.L. 110-28 

§ 4501 increased the federal share of assistance to 100% for eligible costs 

Gulf Coast Recovery: FEMA's Management of the Hazard 


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applied for before May 25, 2007. Despite the 100% funding provided under 

P.L. 110-28, FEMA generally requires subgrantees to incur repair and 

reconstruction costs before seeking reimbursement from the grantee. In 

addition, some local ordinances require subgrantees to have funds available 

before awarding contracts for design or construction work. Consequently, 

applicants with cash flow difficulties cannot commit to projects, including 

projects with a 406 Mitigation component, until they have cash to cover the 

costs before seeking reimbursement from the state. Applicants who 

implemented 406 Mitigation measures explained that a key to their success 

was obtaining funding from sources other than FEMA. One applicant used 

bond money, and others drew lines of credit from banks to begin repairs. 

LATRO officials noted that they are working with applicants to expedite 

project development and PW preparation. 

Partnering Hazard Mitigation Programs. Louisiana needs to expand the 

partnership between the 406 Mitigation component of the PA Program and the 

HMGP. Unlike 406 Mitigation funding, which is limited to disaster-damaged 

elements of public facilities, HMGP funds are available for disaster-related 

and non-disaster-related projects identified by the state. 

As part of recovery efforts in the Gulf Coast states, in January 2007, FEMA 

headquarters implemented a post disaster Partnering Mitigation Program 

initiative to maximize the use of 406 Mitigation and HMGP funding. In 

Louisiana, FEMA and state efforts to partner both 406 Mitigation and HMGP 

funding did not begin until the latter part of 2008 because $1.1 billion of the 

$1.5 billion in HMGP funds awarded to the state was earmarked to the state’s 

Road Home Homeowner Assistance Program. 

In June 2008, Louisiana released $320 million of the $1.1 billion allocated to 

the Road Home program to fund HMGP projects. As of that date, Louisiana 

had more than $700 million in HMGP funds that could be partnered with 

406 Mitigation funding. In January 2009, FEMA officials explained that the 

partnering program in Louisiana had began to produce results, as the state had 

earmarked HMGP funding to specific localities, including critical projects in 

New Orleans. Expanding the partnership of these two hazard mitigation 

programs would make more funding available to reduce the likelihood of 

future losses from natural disasters and ensure the continued functionality of 

critical services and facilities after a disaster event similar to the hurricanes of 

2005. In addition, the need for federal assistance for future disasters should 

decrease as a result of effective mitigation measures taken during the repair 

and reconstruction process in Louisiana. 

Conclusion 

LATRO is making progress implementing 406 Mitigation. This effort 

includes (1) changing the management of the program, (2) training field 

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personnel, (3) revaluating previous eligibility determinations, (4) working 

with applicants to overcome cash flow difficulties impacting project 

development, and (5) partnering 406 Mitigation with HMGP funding to 

provide cost-effective mitigation measures to protect public facilities from 

future disaster damage. 

Recommendations 

We recommend that the Administrator, FEMA: 

Recommendation #7: Require that, within 60 days, LATRO complete the 

development and issuance of a 406 Mitigation strategy that describes the steps 

to be taken in (a) reevaluating previously approved project scopes of work, 

(b) deobligating unneeded or ineligible funding, and (c) maximizing the use of 

406 Mitigation and HMGP funding to protect public facilities from future 

disaster damage. 

Recommendation #8: Require that, within 60 days, LATRO (1) finalize and 

implement SOPs that will improve delivery of 406 Mitigation, (2) improve 

coordination for project development with state officials, and (3) expedite 

project development and funding. 

Management Comments and OIG Analysis 

Appendix B provides the complete text of FEMA's responses to these two 

recommendations. FEMA officials concurred with both recommendations 

and provided us with the current versions of its strategy for implementing the 

406 Mitigation program and the FEMA/GOHSEP-developed SOP. These 

officials said that the SOP is a living document that is evolving and changing 

as FEMA and GOHSEP move forward, and they are continuing to refine 

acceptable metrics for 406 Mitigation performance and delivery. We consider 

both recommendations resolved and closed. 

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Appendix A 

Objective, Scope, and Methodology 

We audited FEMA’s management of the hazard mitigation component of the 

PA Program (406 Mitigation) during the Gulf Coast region recovery process. 

The objective of the audit was to determine whether FEMA effectively 

managed PA Program hazard mitigation grant funding across the Gulf Coast 

region following the 2005 hurricanes. 

We evaluated FEMA’s delivery of 406 Mitigation funding through its PA 

Program to the Gulf Coast states devastated by hurricanes Katrina and Rita. 

We evaluated program oversight; management tools used to measure progress 

and success; project development, including site inspections and PW 

preparation; and staffing. We also documented the challenges that FEMA 

faces in the overall Gulf Coast region recovery process. 

We performed the audit under the authority of the Inspector General Act of 

1978, as amended, and according to Government Auditing Standards issued 

by the Comptroller General of the United States. These standards require that 

we plan and perform the audit to obtain sufficient, appropriate evidence to 

provide a reasonable basis for our findings and conclusions. We believe that 

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objective. 

To accomplish our objective, we visited FEMA’s Gulf Coast Recovery Office, 

Transitional Recovery Offices, FEMA Regions IV and VI, and several 

grantees and subgrantees. At each location, we interviewed responsible 

officials regarding the overall delivery and effectiveness of the 406 Mitigation 

component of the PA Program. We also reviewed NEMIS information, 

management reports, PWs, and project records. We performed other auditing 

procedures considered necessary under the circumstances. 

We selected the highest value 406 Mitigation projects for review, and 

interviewed appropriate state and local officials responsible for those projects. 

States 

Projects 

Selected 

Applicants/ 

Subgrantees 

Project 

Dollars 

(millions) 

406 Mitigation 

Dollars 

(millions) 

Applicants 

Interviewed 

LA 20 15 $249.5 $56.4 8 

MS 14 8 81.8 14.5 8 

TX 24 3 22.5 3.1 3 

AL 8 4 17.1 10.0 4 

Total 66 30 $370.9 $84.0 23 

We also considered FEMA’s efforts to complete projects by combining 

406 Mitigation and HMGP funding, but we did not evaluate FEMA’s 

effectiveness in managing the HMGP in the Gulf Coast region. 

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Appendix A 

Objective, Scope, and Methodology 

We held an exit conference on January 12, 2009, with FEMA’s Gulf Coast 

Recovery Office officials. We gave those officials a written summary 

detailing audit results and proposed recommendations, and the officials 

provided verbal and written responses to the findings but not to the 

recommendations. 

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Appendix B 


Management Comments to the Draft Report.
 

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Mitigation Component of the Public Assistance Program 


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Appendix B 


Management Comments to the Draft Report.
 

Gulf Coast Recovery: FEMA's Management of the Hazard 


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Appendix B 


Management Comments to the Draft Report.
 

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Appendix B 


Management Comments to the Draft Report.
 

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Appendix C 

Projects Reviewed and Audit Issues 

Louisiana 

#1 LA, Superdome (1603-DR-LA, PW 2205, $16 million) 

Scope of work: Install a roofing system to code requirements, furnish PBX box and elevate to second 

floor, and replace 448 damaged plastic laminate toilets. 

Audit Issue: Administrative: No allocation of insurance proceeds. Facility was insured at the time of 

the disaster; however, estimated costs in the PW were not netted for expected insurance 

proceeds. 

#2 UNO Kieffer Lakefront Arena (1603-DR-LA, PW 4831, $543,568) 

Scope of work: 	 The applicant (FP&C) proposes to add 156 18'8" steel reinforcing beams to provide 

additional reinforcement points of support for the facility’s fascia, soffit, and lower roof. 

The proposed mitigation measures (additional support) will increase the wind resistance 

to a rating of 135 MPH, a 50% increase in wind resistance. 

Audit Issue:	 Administrative: No allocation of insurance proceeds. Facility was insured at the time of 

the disaster; however, estimated cost in PW was not reduced for expected insurance 

proceeds. 

#3 HR LSUHSC Lion’s Eye Clinic (1603-DR-LA, PW 9289, $8.2 million) 

Scope of work: 	 Mitigation of architectural; essential mechanical, electrical, and plumbing (MEP); 

nonessential MEP; operating theater; and contents of the Lion’s Eye Cohn Learning 

Center, caused by flooding as a result of hurricane Katrina. 

Audit Issue:	 Administrative: No allocation of existing insurance. Facility was insured at the time of 

the disaster; however, estimated cost in PW was not reduced for expected insurance 

proceeds. 

Audit Issue :	 Administrative: Project records did not have documentation describing disaster 

damage. The information in the PW and related project records was not sufficient to 

determine the magnitude and dimensions of the damage being mitigated. We could not 

determine the nature of the 406 Mitigation funding or the project’s cost-effectiveness. 

# 4 East Bank Wastewater Treatment Facility (1603-DR-LA, PW 16335, $12 million) 

Scope of work: Raising existing protective earthen berm surrounding the plant from approximately 

12 feet to 18 feet. 

Audit Issue:	 Administrative: Project records identified conflicting eligibility opinions by FEMA 

officials. The berm received minor damage as a result of the disaster. Overall, the 

flooding of the facility was caused when a floodgate failed. Under the 406 Mitigation 

Program, only damages caused by disaster are eligible for funding. While FEMA 

eventually denied funding for the project, the applicant appealed FEMA’s determination. 

The applicant’s decision to appeal appears to be caused by conflicting information 

provided by FEMA employees. 

#5 Lafitte Elementary School (1603-DR-LA, PW 9866, $626,522) 

Scope of work: 	 Three building roofs (Annex, Main, and Cafeteria) were damaged to varying degrees. A 

mitigation proposal was written to replace all three roofs to establish a wind resistance 

guarantee. 

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Appendix C 

Projects Reviewed with Audit Issues 

Audit Issue: Administrative: Roof replacement for three buildings not supported with 

documentation. 

Documentation in the PW states that the architect’s estimate for square footage of roof 

repairs was not used. The documentation provides no explanation for this change or 

justification for the revised square footage of repairs. The damaged roof area recorded in 

the mitigation proposal did not match the area of roof replaced. 

#6 LA, Touro Infirmary (1603-DR-LA, PW 14689, $2.9 million) 

Scope of work: The cost to repair the plugged fuel lines totaled $14,430. The hazard mitigation work 

consisted of replacing the existing emergency generator system with a looped 

distribution service for redundancy. Key component changes: (a) generators – 500K VA 

replaced with 750 KVA, (b) increase the fuel storage capacity, (c) redesign the diesel 

fuel pumping scheme, and (d) associated construction. 

Audit Issue: Cost Questioned: Repairs and expansion beyond the damaged elements. FEMA 

provided $2,932,276 in 406 Mitigation funding for a hospital emergency backup 

generator system; and $14,430 to repair and replace filters and fluids for an existing 

generator system that was reported as damaged by the disaster. 

In November 2005, the hospital requested FEMA funding to replace the existing 

generator system with a state-of-the-art redundant system (electrical mechanical and fuel 

system). FEMA denied the request as not eligible for 406 Mitigation funding and noted 

that the damage to the existing system was not disaster related but was caused by lack of 

a fuel filter assembly. FEMA concluded that the proposed new system would not 

prevent damage if an event similar to hurricane Katrina occurred. 

However, in May 2007, FEMA approved the redundancy project. To justify funding the 

project, FEMA prepared a BCA that considered the cost of the new system (14 PWs) and 

an additional $6.4 million (15 PWs) associated with other disaster damage caused by the 

failure of the existing backup generator system. Using these costs, the BCA yielded a 

favorable result and was used to justify funding the redundant system. 

We question the $2,932,276 in funding for the redundant system because the project did 

not meet federal eligibility requirements for 406 Mitigation. The disaster did not damage 

the backup generator system or cause its failure. In addition, the state-of-the-art 

redundant system will not prove any more effective should the reliable supply of diesel 

fuel again become a problem. 

Administrative: Justification based on a broad definition of damaged elements. The 

406 Hazard Mitigation Group generated a hazard mitigation proposal based on FEMA’s 

incurred claimed costs of $6.4 million for 14 hospital repair PWs. Many of those costs 

were unrelated to the generator failure. Those unrelated costs included: (a) cleanup of 

Main Hospital PW#2292 – $1,753,055; (b) Main Hospital Carpet PW#2452 – $260,844; 

(c) Main Hospital Complex Ceiling Tile replacement PW#2475 – $988,539; and 

(d) Replacement of Telecom Switching Equipment PW#4890 – $632,904. 

#7. LA, Regional Transit Authority (1603-DR-LA, PW 3704, $621,400) 

Scope of work: Replace 13 bus lifts with a new self-contained modular unit. The new system uses the 

latest environmental protection capabilities. It is flood resistant because the system is 

totally contained in a steel enclosure and protected with an “enviroguard” protective 

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Appendix C 

Projects Reviewed with Audit Issues 

coating. 

Audit Issue:	 Cost Questioned: Eligible claimed repair cost not determined. FEMA provided 

$621,400 in 406 Mitigation funding to repair bus and automobile maintenance equipment 

damaged by flooding at a regional transit authority (authority). The flooding resulted in 

13 bus lifts and 5 light-duty automobile lifts being submerged in oily, corrosive 

floodwaters for approximately 2 weeks. 

A vendor provided repair estimates ranging from $20,000 (clean and repair) to $67,000 

(clean, repair, and replace cylinders), and told the authority that newer automobile lifts 

systems offered an in-ground coated housing that protected against corrosive effects of 

immersion in water. FEMA field staff who inspected the damage determined that 

“hazard mitigation was considered but not technically feasible to seal underground lifts 

from another flood event.” However, despite its earlier determination, FEMA provided 

the authority with $621,400 in 406 Mitigation funding to replace the bus lifts with the 

newer model. 

Although the required BCA was not found in FEMA’s project records, FEMA justified 

and funded the replacement of the lifts based on the apparent flood resistance of the 

newer model. However, the manufacturer of the lifts told us that the new equipment 

offered no more flood resistance than the older lifts if flooding similar to that 

experienced with hurricane Katrina occurred. 

We question the $621,400 because the work did not meet federal eligibility requirements 

for 406 Mitigation. Even with a broad interpretation of 406 Mitigation funding criteria, 

it is unlikely that this project would provide a cost-effective mitigation measure to 

prevent future damage. FEMA should have considered the replacement of the bus lifts 

as an improved project and limited funding to the cost of repairing the lifts to their 

pre-disaster condition (maximum of $67,000). 

Administrative: Project documentation does not support hazard mitigation benefit claim. 

The new system is “flood resistant” because the system is totally contained in a steel 

enclosure and protected with an “enviroguard” protective coating. However, we were 

unable to locate in either the company’s literature or through contacting the company the 

basis for the assertion that the new lifts had “flood-resistant” properties. The only 

supportable assertion is that the containment housing protects against ground water. 

#8 Orleans Parish Criminal Sheriff’s Office (1603-DR-LA, PW 4876, $9.4 million) 

Scope of work: Wind and flood damage to two detention facilities, identified as Templeman 3 and 4. 

Audit Issue: Administrative: Cost-estimating format (CEF) calculations with errors used to justify 

replacement of the damaged facility. This error resulted from not properly computing 

the project’s midpoint of construction. Either the number of months FEMA used for the 

escalation factor did not agree with the information recorded in the CEF Notes, or the 

stated assumptions did not have the required detail. For example, the CEF Notes 

identified a factor of 14 months to the midpoint of construction. However, the factor 

actually applied was 24 months. CEF calculations were improperly used to justify 

facility replacement. 

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Appendix C 

Projects Reviewed with Audit Issues 

Mississippi 

#9 Hancock Medical Center (1604-DR-MS, PW 7082, $12,914,832) 

Scope of work: Repair, remove, and replace ceilings, tiles, walls, etc., for the main hospital building 

including a 406 Mitigation proposal of $8.8 million dollars to fund entirely a new 

building to house the Operating Room, Emergency Room, Imaging Laboratory, and 

Service Laboratories, including considerable amounts of ancillary spaces. 

Audit Issue: Administrative: FEMA’s quality control/quality assurance review process for project 

formulation needs improvement. FEMA approved $8.8 million in 406 Mitigation 

funding for the project. Records indicated that more than a year after the funding was 

approved, FEMA informed the applicant that the scope of work was not eligible for 

406 Mitigation, deobligated the funding, and requested that the applicant submit a 

revised scope of work. FEMA will reimburse the applicant about $165,000 in costs 

incurred in error. 

Alabama 

#10 Alabama State Port Authority (1605-DR-AL, PW 1289, $15 million) 

Scope of work: Debris removal and disposal, dredge/re-excavate an equipment access channel, and 

dump and shape unclassified material, including hazard mitigation proposal of 

$9.5 million for riprap at Gaillard Island. 

Audit Issue: Administrative: BCA calculations not adequately supported. Because of insufficient 

documented evidence supporting changes to BCA calculations, we were unable to 

determine the adequacy of $3.6 million in 406 Mitigation funding for this project. 

#11 City of Mobile (1605-DR-AL, PW 1580, $22,800) 

Scope of work: 	 Remove and dispose of a 500 KVA transformer damaged by the disaster. Install a new 

500 KVA transformer and raise it on a steel stand. Installation to include additional 

stranded copper wire. 

Audit Issue:	 Cost Questioned: Repair work omitted 406 Mitigation. FEMA provided $4,073 in 

406 Mitigation funding for work on a small project; however, the work was not 

performed. The original project was to replace and elevate a 500 KVA transformer at 

an estimated cost of $22,000. The applicant repaired the transformer but did not 

elevate it to meet the 406 Mitigation funding requirements. Therefore, we question the 

$4,073 in 406 Mitigation funding provided for this project. 

Texas 

#12 Memorial Herman Baptist Hospital (1606-DR-TX, PW 2471 - $1.2 million, PW 3187 

– $6.1 million, PW 3241 - $5.9 million) 

Scope of work: 	 Repairs to various buildings. 

Audit Issue:	 Administrative: Disproportional allocation of insurance proceeds. The applicant did 

not allocate the insurance proceeds proportionally among all insured risks based on 

documentable damages. Instead, the applicant disproportionately allocated insurance 

proceeds to business interruption losses, an item not eligible for federal 

reimbursement. 

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Appendix C 

Projects Reviewed with Audit Issues 

#13 Lamar University (1606-DR-TX, PW 1749, 17 different PWs) 

Scope of work: Project entailed roof replacements at the Gladys City/Boomtown Museum Complex 

(Museum Complex) and 16 other university buildings. 

Audit Issue:	 Administrative: Ineligible public assistance costs. University records identified that 

the roofs at the Museum Complex required only general repairs and were not eligible 

for replacement or 406 Mitigation funding. Those records also identified that roof 

damage to 16 other university buildings may not have been adequately determined. 

Also, collateral internal damage to the 16 buildings did not correlate and justify the 

need for complete roof replacements. 

Gulf Coast Recovery: FEMA's Management of the Hazard 


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Appendix D 

Section 406–Hazard Mitigation Eligibility and Funding Requirements 

Section 406 of the Stafford Act provides discretionary authority to fund 

mitigation measures in conjunction with the repair of a disaster-damaged 

facility so that the additional measures enhance the ability to resist similar 

damage in future events. Title 44, Code of Federal Regulations, Section 

206.226 interprets and codifies the requirements of the Stafford Act and 

provides clarification on federal funding for hazard mitigation. 

FEMA’s Disaster Assistance Policy 9526.1 (August 13, 1998 [subsequently 

revised on July 30, 2007]) provides guidance on the appropriate use of the 

discretionary funding available under Section 406 of the Stafford Act. 

FEMA’s Public Assistance Guide 322 provides additional direction on this 

topic. 

To be eligible for this discretionary funding, proposed 406 Mitigation 

measures: 

Must be appropriate to the disaster damage and must prevent future 

damage similar to that caused by the declared disaster. 

Must be applied only to the damaged element(s) of a facility. This 

criterion is particularly important when repairing a portion of a system. 

Cannot increase risk or cause adverse effects to the facility or to other 

property. 

Must consist of work that is above and beyond the eligible work 

required to return the damaged facility to its pre-disaster design, and 

the funding cannot be applied to replacement buildings. 

In addition, the 406 Mitigation measure must be cost-effective. The measure 

may amount to up to 15% of the project’s repair costs or up to 100% if FEMA 

has determined that the measure is cost-effective. If the measure’s cost 

exceeds the project’s repair cost, the cost-effectiveness must be demonstrated 

through an acceptable BCA. FEMA must approve the 406 hazard mitigation 

measure to ensure eligibility, technical feasibility, environmental and 

historical compliance, and cost-effectiveness. 

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Appendix E 

Major Contributors to This Report 

Robert J. Lastrico, Western Regional Director 

Humberto Melara, Supervisory Auditor 

Ravinder Anand, Auditor 

Arona Maiava, Auditor 

Curtis Johnson, Auditor 

Willard Stark, Auditor 

Carlos Feliciano, Analyst 

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Appendix F 

Report Distribution 

Department of Homeland Security 

Secretary 

Deputy Secretary 

Chief of Staff for Operations 

Chief of Staff for Policy 

Deputy Chiefs of Staff 

General Counsel 

Executive Secretariat 

Director, GAO/OIG Liaison Office 

Assistant Secretary for Office of Policy 

Assistant Secretary for Office of Public Affairs 

Assistant Secretary for Office of Legislative Affairs 

FEMA Administrator 

FEMA Assistant Administrator, Grant Programs Directorate 

FEMA Assistant Administrator, Disaster Assistance Directorate 

FEMA Director, Office of Policy and Program Analysis 

FEMA Director, Office of Management 

FEMA Audit Liaison (DP7W05/09-047-EMO-FEMA) 

FEMA Grant Programs Directorate Audit Liaison 

Office of Management and Budget 

Chief, Homeland Security Branch 

DHS OIG Budget Examiner 

Congress 

Congressional Oversight and Appropriations Committees, as appropriate 

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ADDITIONAL INFORMATION AND COPIES 

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