Department of Homeland Security

Office of Inspector General 

Assessment of FEMA's Public Assistance 


Program Policies and Procedures 


OIG-10-26 December 2009 
 

Office of Inspector General 

U.S. Department of Homeland Security

Washington, DC 20528 

December 8, 2009 

Preface 

The U.S. Department of Homeland Security (DHS) Office of Inspector General (OIG) 

was established by the Homeland Security Act of 2002 (Public Law 107-296) by 

amendment to the Inspector General Act of 1978. This is one of a series of audit, 

inspection, and special reports prepared as part of our oversight responsibilities to 

promote economy, efficiency, and effectiveness within the department. 

This report addresses concerns raised by the U.S. House of Representatives Committee 

on Transportation and Infrastructure regarding the policies and procedures of the Federal 

Emergency Management Agency’s Public Assistance program. It is based on interviews 

with employees and officials of relevant entities, 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. 

Richard L. Skinner 


 Inspector General 

Table of Contents/Abbreviations 


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

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

Results of Audit..................................................................................................................4
 

Timeliness of Funding ...................................................................................................4


 Recommendations..........................................................................................................7 


Management Comments and OIG Analysis ..................................................................8 


 Congressional Consideration .........................................................................................9 


Program Management....................................................................................................9 


Recommendations........................................................................................................14 


Management Comments and OIG Analysis ................................................................15 


 Congressional Considerations......................................................................................15 


 Performance Measurement ..........................................................................................16 


Recommendations........................................................................................................17 


Management Comments and OIG Analysis ................................................................18 


 Congressional Consideration .......................................................................................18 


Alternatives to Streamline the PA Process ....................................................................18


 Recommendation .........................................................................................................23 


Management Comments and OIG Analysis ................................................................23 


Appendices 

Appendix A: Purpose, Scope, and Methodology.........................................................24
 

Appendix B: Management Comments to the Draft Report .........................................26 


Appendix C: OIG Analysis of Management Comments to the Draft Report..............36 


Appendix D: Major Contributors to This Report.........................................................41
 

Appendix E: Report Distribution.................................................................................42 


Abbreviations 

DHS Department of Homeland Security 


EHP Environmental and historic preservation 


EMMIE Emergency Management Mission Integrated Environment 


FEMA Federal Emergency Management Agency 


GPRA Government Performance and Results Act of 1993
 

IRS Internal Revenue Service 


NEMIS National Emergency Management Information System
 

NEPA National Environmental Policy Act
 

OIG Office of Inspector General 


Assessment of FEMA’s Public Assistance Program Policies and Procedures 
Table of Contents/Abbreviations 


OMB Office of Management and Budget 

PA Public Assistance 

PW Project worksheet 

Stafford Act Robert T. Stafford Disaster Relief and Emergency Assistance Act 

Assessment of FEMA’s Public Assistance Program Policies and Procedures 
OIG
 

Department of Homeland Security 

Office of Inspector General 

Executive Summary 

We performed this audit in response to Congressional concerns 

over the design and implementation of the Federal Emergency 

Management Agency’s Public Assistance program. Our objectives 

were to: (1) determine the efficacy of processes and procedures 

used to generate project worksheets, including the completeness, 

accuracy, and timeliness of project worksheets; and (2) identify 

alternatives to streamline the project worksheet process. 

The project worksheet process is hindered by untimely funding 

determinations, deficiencies in program management, and poorly 

designed performance measures. FEMA needs to improve the 

timeliness of the project worksheet process for appeals, 

environmental and historic preservation reviews, and insurance 

settlement reconciliations. Also, FEMA needs to reduce employee 

turnover and improve classroom and on-the-job-training for 

disaster officials. Further, FEMA needs to improve Public 

Assistance program performance objectives and measurements. 

To satisfy our second objective, we identified alternatives to 

streamline the Public Assistance process, including potential 

benefits and concerns. These alternatives include: negotiated 

settlements; an increase to the large project threshold; the 

replacement of grants with prescripted mission assignments; the 

transfer of other federal disaster programs to FEMA; and interval 

payments. 

We are making 16 recommendations aimed at improving FEMA's 

process for reviewing and approving Public Assistance projects. 

FEMA generally concurred with the majority of these 

recommendations and agreed to provide corrective action plans 

within 90 days. 

Assessment of FEMA’s Public Assistance Program Policies and Procedures 

Page 1 
Background 

When disasters occur, local communities respond first, followed by 

the state, if necessary. Federal assistance may be requested under 

the Robert T. Stafford Disaster Relief and Emergency Assistance 

Act (Stafford Act) when the magnitude of the disaster exceeds 

local and state capacity. The Federal Emergency Management 

Agency Public Assistance (PA) program provides critical 

assistance, in the form of direct assistance and grants, to state, 

tribal, and local governments, as well as certain private nonprofit 

organizations, to enable communities to quickly respond to and 

recover from major, presidentially declared emergencies and 

disasters. 

FEMA awards grants to provide supplemental assistance for debris 

removal, emergency protective measures, and the repair, 

replacement, or restoration of eligible disaster-damaged facilities. 

The PA program also encourages protection of damaged facilities 

from future disasters by providing funding for hazard mitigation 

measures. PA funding has been substantial, totaling more than 

$30 billion for the past decade. 

The PA program is administered through a coordinated effort 

among FEMA, grantees, and subgrantees, each with different roles. 

FEMA manages the PA program, approves grants, and provides 

technical assistance to the grantees and subgrantees. In most cases, 

states are the FEMA grantees, while local governments and 

eligible private nonprofit organizations are the subgrantees. 

The grantee educates potential applicants, works with FEMA to 

manage the program, and is responsible for implementing and 

monitoring the grants awarded under the program. 

Subgrantees are responsible for identifying damages, submitting 

the request for public assistance, and documenting and completing 

response and recovery efforts approved under the program. 

The project worksheet (PW) provides the basis for awarding PA 

grants and is used to document the location, damage description, 

scope of work, and cost estimates for each project. The PW 

process generally includes an initial site inspection by a FEMA 

project officer who subsequently writes a PW that includes the 

scope of work and estimated project costs. During this process, 

FEMA’s project officer is responsible for coordinating with the 

grantee and subgrantee to prepare the PW. FEMA or state officials 

Assessment of FEMA’s Public Assistance Program Policies and Procedures 

Page 2 
assign a Public Assistance Coordinator crew leader to serve as the 

subgrantee’s customer service representative on PA program 

matters. 

The PA program project formulation process depicted in the 

following chart illustrates the steps in developing and approving 

PWs: 

Source: FEMA 

Note: The large project threshold for 2009 has been adjusted to $64,200 vs. the $47,800 shown 

above. Applicants become subgrantees upon FEMA’s approval of the Requests for Public 

Assistance. 

As a result of the devastation caused by the 2005 Gulf Coast 

hurricanes, scrutiny of FEMA’s program policies and procedures 

has increased significantly, as demonstrated by detailed inquiries 

by Congress, the DHS Office of Inspector General, the 

Government Accountability Office, and the media. These inquiries 

have focused particularly on the timeliness of FEMA decision 

making; the technical proficiency of FEMA personnel and 

contractors; the need for better communication and coordination 

among FEMA, grantees, and subgrantees; and inconsistency in 

policy interpretations and funding determinations. 

Assessment of FEMA’s Public Assistance Program Policies and Procedures 

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Results of Audit 

FEMA needs to: (1) improve the timeliness of appeal determinations, the 

environmental and historic preservation (EHP) process, and insurance 

settlements; (2) reduce program management deficiencies in such areas as 

initial PW procedures, eligibility determinations, and cost estimates; and 

(3) improve the measurement and achievement of PA performance and 

objectives. Contributing factors to program deficiencies include: the 

absence of timeline criteria for portions of the PW process; employee 

turnover and inexperience; and insufficient analyses of performance 

measurement methodology and objectives. Improvements need to be 

achieved by setting timelines for all key actions, overhauling the system 

for staffing and training disaster personnel, and changing performance 

measurement methodology and clarifying objectives. These 

improvements will provide more efficient recovery from disasters. 

Timeliness of Funding 

FEMA needs to improve the timeliness of PA funding, while ensuring PW 

accuracy and completeness, to avoid project delays and to improve overall 

program efficiency. FEMA’s Strategic Plan commits FEMA to provide 

“timely disaster assistance to hasten the recovery of individuals and 

communities.” However, funding to grantees and subgrantees is often 

delayed because of: (1) appeals processing time; (2) the EHP process; and 

(3) the reconciliation of insurance settlements. Improvements in these 

procedures will improve subgrantees’ cash flow and facilitate more timely 

completion of their projects. 

Appeal Determination Process. FEMA takes excessive time to 

process appeals because it does not: (1) adhere to, or has not set, 

timeliness standards for the appeals determination process; 

(2) have a standardized system to track appeals; and (3) offer an 

agency-wide mediation process for appeals that have reached 

impasse. 

The appeal process is the opportunity for subgrantees to request 

reconsideration of decisions regarding project scope and funding. 

Subgrantees must file an appeal with supporting documentation 

through the grantee to the appropriate FEMA regional office 

within 60 days of receiving what they consider an unfavorable 

FEMA decision. If the first appeal is not successful, the 

subgrantee may submit a second appeal through the grantee to 

FEMA headquarters. FEMA officials are required to make a final 

decision within 90 days of receipt of the request for each appeal, 

unless they request additional information from the subgrantee. 

Assessment of FEMA’s Public Assistance Program Policies and Procedures 

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FEMA does not have established timelines for receiving additional 

information or analysis during the second appeal process. 

The following diagram depicts the process for appealing FEMA 

funding decisions: 

FEMA does not consistently adhere to timeliness standards 

governing the amount of time its officials have to provide 

determinations on appeals. We reviewed appeals that showed, on 

average, FEMA rendered a decision after about 7 months for first 

appeals, and after about 10 additional months for second appeals. 

In some cases, the appeal process spanned several years. For 

example, a subgrantee submitted a first appeal on February 27, 

2005, and received an unfavorable response from FEMA on 

October 20, 2006, an elapsed time of about 20 months. On March 

9, 2007, the subgrantee submitted a second appeal and received a 

response from FEMA 17 months later, on August 7, 2008. In this 

example, the total elapsed time for the appeal process was about 3 

years. 

FEMA has no agency-wide system of tracking appeals from 

submission date to final determination. As a result, FEMA has no 

standardized means to identify delays for each appeal. This 

condition is compounded by incomplete record keeping on 

appeals. Both factors contribute to FEMA’s misperception that the 

Assessment of FEMA’s Public Assistance Program Policies and Procedures 

Page 5 
appeal process is timely, and thus to its inaction in correcting 

systemic delays. 

Subgrantees expressed dissatisfaction with the appeal process, and 

some suggested creating an appeals mediation board or 

ombudsman’s office to resolve issues that have reached an 

impasse. Such options have already been created for the Gulf 

Coast states most affected by hurricanes Katrina and Rita. 

Louisiana, Mississippi, and Texas can use FEMA’s Appeals 

Arbitration Panel to resolve issues that have reached an impasse, 

and may also collaborate with joint FEMA-state teams to address 

more immediate operational issues. 

EHP Process. FEMA takes excessive time to complete the EHP 

process because it does not manage it proactively. This can result 

in significant project delays, thus preventing communities from 

quickly responding to and recovering from major emergencies or 

disasters. 

FEMA is required to determine subgrantee compliance with 

applicable environmental and historic preservation laws, 

regulations, and executive orders before PA funds are provided and 

work can begin. Federal regulations require the use of the 

National Environmental Policy Act (NEPA) review process to 

ensure compliance with relevant environmental laws, regulations, 

and Executive Orders. NEPA requires every federal agency to 

follow a specific planning process to ensure that FEMA, the state, 

and local governments have considered, and the general public is 

fully informed about, the environmental consequences of a federal 

action prior to starting a project. The National Historic 

Preservation Act likewise provides a review process—prior to the 

beginning of work—and requires federal agencies to consider the 

effects of their projects on any district, site, building, structure, or 

object that is included in, or eligible for inclusion in, the National 

Register of Historic Places. 

Although the EHP process can be inherently time-consuming, 

unnecessary delays occur because FEMA does not: 

�	 Perform EHP work consistently, early in the disaster 

recovery process.

, 

�	 Triage EHP workload based on importance, 

�	 Require formal time limits for the EHP process, 

Assessment of FEMA’s Public Assistance Program Policies and Procedures 

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�	 Coordinate sufficiently, and establish pre-disaster 

agreements, with other federal agencies involved in the 

EHP process, or 

�	 Coordinate state EHP workload to mitigate duplicative 

efforts. 

Delays have occurred, for example, when a Gulf Coast subgrantee 

waited more than 2 years while FEMA considered demolishing 

numerous structures that were destroyed by Hurricane Katrina. 

Ultimately, the subgrantee chose to proceed with the work without 

FEMA’s approval because the structures posed health and safety 

risks to the community. This exemplifies the need for FEMA to 

implement an efficient EHP process. 

Insurance Settlements. Subgrantees encounter delays in 

completing work on insured structures as a result of monetary 

shortfalls while awaiting final settlement from the insurer. To 

prevent duplicative benefits, the Stafford Act requires FEMA to 

reduce the funding for eligible work by the amount of any 

anticipated insurance proceeds. Upon final settlement, the 

subgrantee may submit a claim to FEMA for any costs not 

reimbursed by the insurer. However, insurers can take years to 

reach a settlement, thus creating cash flow problems for the 

subgrantee. Although subgrantees can receive advances from 

FEMA, many are generally not in favor of addressing cash flow 

problems through this option because of financial management and 

accountability concerns. 

Conclusion 

FEMA’s PA funding is delayed by insufficient timelines for PW 

actions pertaining to appeals, the EHP process, and insurance 

settlements. The appeals process lacks complete timeliness 

standards, an agency-wide means to identify delays, and a 

mediation process for unresolved complex issues. The inherently 

time-consuming EHP process is prolonged by FEMA’s untimely, 

unstructured, and uncoordinated reviews. Projects are also delayed 

while subgrantees await insurance proceeds. Addressing these 

issues would significantly improve the timeliness of PA project 

funding. 

Recommendations 

We recommend that the FEMA Administrator: 

Assessment of FEMA’s Public Assistance Program Policies and Procedures 

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Recommendation #1: Establish a complete set of standards for 

achieving timeliness in the appeals process and adhere consistently 

to those standards previously established. 

Recommendation #2: Develop and implement a tracking system 

that records the status and timeliness of each appeal. 

Recommendation #3: Establish a FEMA-wide mediation or 

arbitration process for appeals that have reached an impasse. Refer 

claims that have reached an impasse within FEMA’s appeals 

system to the mediation or arbitration board. 

Recommendation #4: Initiate and triage EHP workload, 

immediately after a disaster, based on importance and not 

necessarily the order in which received. 

Recommendation #5: Establish and enforce formal time limits 

for the EHP process. 

Recommendation #6: Coordinate the EHP process through 

programmatic or similar agreements with other federal agencies 

and state entities involved. 

Recommendation #7: Provide funding for projects that will later 

be covered by insurance proceeds when the insurer and the insured 

(subgrantee) agree to subrogate all applicable funds to FEMA. 

Management Comments and OIG Analysis 

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

these seven recommendations. FEMA did not concur with 

Recommendations 3 and 5. Consequently, for the reasons stated in 

Appendix C, OIG Analysis of Management Comments to the Draft 

Report, we consider these two recommendations unresolved. 

While FEMA concurred with Recommendations 1, 4, and 6 and 

considered them closed, it did not address the core issue of timely 

appeals determinations subsequent to its requests for additional 

information. We also consider these recommendations unresolved 

for the reasons included in Appendix C which provides additional 

details concerning the finding and recommendations. We consider 

Recommendations 2 and 7 resolved but open, pending review of 

corrective actions taken. 

Assessment of FEMA’s Public Assistance Program Policies and Procedures 

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Congressional Consideration 

The following proposed action is presented for congressional 

consideration: 

Congressional Consideration #1: Provide authority for FEMA to 

implement a binding arbitration process for appeals that have 

reached an impasse and direct FEMA to use such a system when 

appropriate. 

Program Management 

FEMA needs to improve its management of the PA program by addressing 

problems in the following areas: (1) determinations by FEMA project 

officers; (2) revisions to the initial PW; (3) deferral of decisions; (4) scope 

of work clarity; (5) negotiations with subgrantees on eligibility; 

(6) acceptance of subgrantees’ supporting documentation; (7) repetitive 

documentation requests; (8) familiarity with codes and standards; (9) hazard 

mitigation projects; and (10) reasonableness of cost estimates. Effecting 

changes in these areas will require addressing turnover, inexperience, and 

lack of training among FEMA personnel assigned to disaster response and 

recovery, in addition to disseminating a clear and consolidated body of PA 

guidance. Such changes would also improve program timeliness, as 

discussed in the preceding section. 

Determinations by FEMA Project Officers. Subgrantees 

experience project delays and excessive administrative efforts 

because of FEMA’s inconsistent determinations on project 

eligibility. FEMA often reverses course on previous decisions for 

scopes of work and estimated costs after working with subgrantees 

for months. This is the result of turnover and rotation throughout 

the PA process, which requires subgrantees to reeducate new 

FEMA project officers on the damages. 

Revisions to the initial PW. Project delays sometimes occur 

when FEMA does not accurately estimate costs or scope of work 

in the initial PW, thereby creating the need for a significant 

number of PW revisions—sometimes a time-consuming and 

labor-intensive process. In the PWs that we reviewed, FEMA’s 

PW revision rate was 147%. Moreover, FEMA made substantial 

funding revisions to many of these PWs. For example, a PW was 

obligated for about $645,000 and was revised more than 2 years 

later to increase the obligation amount to about $12 million as a 

result of revisions to the damage description and scope of work. 

Although PW revisions may be justified in some cases—such as 

Assessment of FEMA’s Public Assistance Program Policies and Procedures 


Page 9
 
the discovery of hidden disaster damage—revisions can also occur 

as a result of FEMA’s: (1) insufficient communication with the 

grantee and subgrantee throughout the PW determination process; 

(2) inconsistent inclusion of state-assigned PA personnel to 

provide assistance in key meetings with the subgrantee; and (3) a 

focus on speed rather than accuracy in an attempt to improve 

performance measurement results or address subgrantee cash flow 

problems. The number of revisions and supplemental funding 

highlights the need for greater diligence and precision in the initial 

PW preparation process. 

Deferral of decisions. FEMA officials often defer making project 

decisions—particularly those related to substantial cost overruns or 

scope changes—until closeout. These deferrals preclude timely 

site inspections and reviews that would determine cost eligibility 

more reliably, thereby subjecting subgrantees to risks that costs 

and scope changes ultimately will be determined ineligible. 

FEMA’s rules require its officials to take appropriate action upon 

notification of the subgrantee’s request for a budget or scope 

increase. Deferrals may occur as a result of insufficient FEMA 

personnel, especially those who are qualified to make efficient and 

appropriate decisions on issues as they arise. For example, we 

reported in July 2008 that a subgrantee requested that FEMA 

provide supplemental funding (approximately $1.5 million) for 

project management and monitoring of debris removal.1 FEMA 

officials deferred the decision until closeout, more than 3 years 

after the original request was made. The grantee participated in 

this process and did not object to FEMA’s decision. Despite the 

deferral, the subgrantee proceeded with the work without knowing 

whether FEMA would ultimately approve the costs. 

Scope of work clarity. FEMA officials create delays when they 

do not include sufficient detail on scopes of work in the PWs. This 

can cause problems when the grantee requires that the PW scope of 

work exactly match the cost documentation. For example, when a 

PW has a broad scope of work, such as “repair wall damage,” the 

grantee may not reimburse the subgrantee for all the eligible work 

(for example, repainting the wall) because the item of work was 

not specifically mentioned in the PW. 

Negotiations with subgrantees on eligibility. Subgrantees said 

that project officers inappropriately ask for concessions on some 

items of work in exchange for approval of other items. This puts 

subgrantees in a difficult situation and detracts from FEMA’s 

1

 DS-08-04; July 7, 2008. 

Assessment of FEMA’s Public Assistance Program Policies and Procedures 


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professionalism and ability to instill confidence in its customers. 

FEMA is required to determine eligibility based on established 

federal criteria, not through negotiation or deal-making. 

Acceptance of subgrantees’ supporting documentation. FEMA 

does not consistently consider documentation provided by 

subgrantees that would expedite the PW preparation process. For 

example, a subgrantee took photos within 10 days of a disaster and 

prepared thousands of work orders. FEMA officials arrived 

months later and refused to consider the subgrantee’s 

documentation. As a result, this subgrantee is prepared to appeal 

should FEMA’s final determinations conflict with information 

captured within the documentation. Subgrantees said that FEMA 

officials exhibit an attitude of mistrust. 

Repetitive documentation requests. FEMA officials sometimes 

require subgrantees to resubmit documentation that was previously 

provided. Repetitive documentation requests impose a significant 

administrative burden on all parties, as well as project delays. 

Multiple requests for documentation are generally the result of the 

inadequate transition between FEMA officials when turnover 

occurs. 

Codes and standards familiarity. FEMA officials do not 

consistently apply local building codes and standards in 

determining eligible work for PWs, resulting in appeals and 

significant project delays. This is caused by the lack of familiarity 

with specific local building requirements. For example, funding 

for upgrades required by local codes and standards is eligible under 

FEMA’s criteria. However, because of their inexperience with 

local codes, FEMA officials incorrectly determined that damaged 

school buildings were ineligible for roof replacement. 

Hazard mitigation projects. FEMA does not consistently 

identify or properly interpret PA hazard mitigation work eligibility. 

This results in untimely or inaccurate funding determinations after 

work has been completed, and effectively prevents the subgrantees 

from performing eligible mitigation work. For example, FEMA 

officials informed a subgrantee, 18 months after they approved the 

initial PWs, that hazard mitigation was eligible. At that point, the 

subgrantee had already performed the work, thus rendering hazard 

mitigation work infeasible. In another example, a subgrantee spent 

$3.8 million for a repair and hazard mitigation project based on 

FEMA’s recommendations. Later, another FEMA official 

interpreted the project differently and determined that the 

Assessment of FEMA’s Public Assistance Program Policies and Procedures 

Page 11 
mitigation work was ineligible. The subgrantee is awaiting 

resolution of this issue. 

Reasonableness of cost estimates. FEMA sometimes uses 

reasonableness to estimate costs, yet those estimates are 

sometimes substantially lower than the actual costs. Because 

FEMA does not always explain the methodology used in 

determining reasonableness, the estimates may appear, or may 

actually be, arbitrary. FEMA’s policy allows for reasonable cost 

determinations to be made by such means as historical 

documentation for similar work, average costs, published costs, 

and FEMA cost codes. The process could be improved if FEMA 

explained to the subgrantee the specific methodology used. For 

example, following Hurricane Katrina, FEMA estimated unit costs 

for debris removal based on reasonableness, but this estimate was 

substantially lower than the actual costs. FEMA officials would 

not approve the actual costs, yet did not inform the subgrantee of 

the methodology used to determine reasonableness. 

Root Causes of Program Management Deficiencies: Employee 

Turnover, Inexperience, and Lack of Training 

Program management deficiencies are caused principally by 

turnover, inexperience, and lack of training within FEMA’s 

disaster workforce. These issues derive from FEMA’s disaster 

staffing system. In addition, FEMA personnel do not have access 

to a clear and consolidated body of PA guidance that would 

facilitate their comprehension of the program. 

Nearly all of the subgrantee officials interviewed said that turnover 

of FEMA’s disaster personnel creates significant problems in 

program management. FEMA’s workforce is drawn nationwide 

from permanent employees, intermittent employees, and 

contractors. These employees—generally assigned to areas away 

from their homes—may lack the commitment for long-term 

assignments, as well as knowledge of critical local issues such as 

contractor availability and pricing. Further, FEMA sometimes 

transfers these employees to other disaster sites before the recovery 

process is completed at the site to which they were initially 

assigned. Both of these scenarios result in a “revolving door” 

effect. This condition is exacerbated because FEMA has not 

established permanent offices in states most vulnerable to 

recurring, large-scale disasters. 

Turnover also occurs because FEMA’s temporary workforce is 

subject to limitations of availability due to Internal Revenue 

Assessment of FEMA’s Public Assistance Program Policies and Procedures 

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Service (IRS) tax implications and federal annuitant offsets for 

extended temporary duty. These restrictions prompt employees to 

end their employment prematurely, even after only 1 year. IRS 

residency rules require travel reimbursements to be treated as 

taxable income after an employee is assigned to a location for an 

extended period. Federal rules pertaining to retired government 

employees and Social Security recipients require offsets to 

annuities based on compensation. Bills have been introduced in 

Congress, subsequent to Government Accountability Office 

findings, addressing restrictions on hiring and retaining retired 

government employees for critical workforce needs. 

FEMA’s workforce generally lacks sufficient experience and 

training to perform the responsibilities of the PA program 

efficiently. Following a disaster declaration, FEMA employs 

many local, intermittent, and contract personnel who have little 

experience in, or knowledge of, FEMA’s PA program policies and 

procedures. These employees do not receive formal training until 

a disaster has occurred. Moreover, this training provides only 

basic PA program information and is limited to classroom 

instruction, sometimes delivered by temporary personnel. FEMA 

officials’ insufficient experience and training is apparent when 

subgrantees need to explain eligibility rules to them as PWs are 

being developed. 

FEMA acknowledged the problematic nature of employing 

personnel who have little or no previous PA experience, and 

attribute this to budgetary constraints that restrict training of 

intermittent employees prior to their deployment. However, 

FEMA is developing a standardized web-based credentialing 

system to assure that employees deployed to a disaster site are 

qualified to perform their duties. This system is intended to track 

employee qualifications, experience, education, mentoring, and 

training. Credentialing should ensure that employees deployed to a 

disaster site have the qualifications and training to perform their 

assigned duties adequately. 

The lack of a single resource that includes all of FEMA’s PA 

publications and policies leads to inconsistent interpretations and 

understandings of FEMA’s rules. Currently, FEMA has a 

multitude of PA documents that necessitate reference to multiple 

sources. This can prove burdensome, confusing, and untimely for 

disaster officials. For example, FEMA’s policy on debris removal 

is unclear and thus open to interpretation. As a result, some 

communities have been denied eligibility for debris removal costs, 

while others have received reimbursements for identical costs. 

Assessment of FEMA’s Public Assistance Program Policies and Procedures 

Page 13 
About $180 million in debris removal costs after the 2004–2005 

disasters in Florida demonstrate the significance of clarifying the 

debris removal policy. As another example, subgrantees grapple 

with understanding the cost-effectiveness of FEMA rules 

pertaining to replacement in lieu of repairs to damaged property 

when those repairs can cost more than replacement. Although 

FEMA’s policy allows for the replacement of property when 

estimated repair costs exceed 50% of the replacement costs, it does 

not include all eligible costs, such as hazard mitigation, when 

making the determination. 

FEMA’s Public Assistance Division director, acknowledging 

problems, testified before Congress in July 2007 that FEMA is 

updating its policy and guidance.2

 These documents will be 

compiled in a Public Assistance Operations Manual that will be 

available to FEMA, state, and local officials involved in the 

disaster response and recovery process. This manual will include 

all relevant PA guidance and will describe the PA process from the 

initial stage of doing a preliminary damage assessment to the final 

stage of closing the disaster. FEMA officials in the Public 

Assistance Division are in the process of preparing this manual but 

have not set a date for its release. 

Conclusion 

FEMA’s PA program management is in need of improvements in 

initial PW determinations, eligibility clarification, and cost 

estimations. Problems result from employee turnover, limited 

training for disaster personnel, and the absence of a PA operations 

manual. 

Recommendations 

We recommend that the FEMA Administrator: 

Recommendation #8: Restructure FEMA’s disaster workforce 

into sufficiently staffed regional cadres and deploy personnel only 

to the geographic area in which they reside, unless nationwide 

deployment in response to a catastrophic disaster is necessary. 

2 Testimony of James Walke, Director, Public Assistance Division, Disaster Assistance Directorate, 

Federal Emergency Management Agency, Department of Homeland Security, before the Homeland 

Security and Governmental Affairs Committee, Subcommittee on Disaster Recovery, United States Senate, 

Washington, D.C., July 10, 2007. 

Assessment of FEMA’s Public Assistance Program Policies and Procedures 

Page 14 
Recommendation #9: Develop a recruitment plan to target local 

candidates when long-term disaster recovery efforts will be 

needed. 

Recommendation #10: Require that project officers, consistent 

with their overall responsibilities as outlined in federal regulations 

and FEMA PA guidance: (a) document all project activity; 

(b) convey all relevant documentation and information from 

predecessor to successor; and (c) review all appropriate 

documentation prior to visiting the subgrantee. 

Recommendation #11: Expedite the development and 

implementation of a standardized credentialing system to include 

employee qualifications, training, mentoring, and other applicable 

information. 

Recommendation #12: Expedite the completion and 

dissemination of the FEMA Public Assistance Operations Manual 

to all disaster personnel. 

Management Comments and OIG Analysis 

Appendix B provides the complete text of FEMA’s responses to 

these five recommendations. FEMA concurred with 

Recommendations 8 through 12. Thus, we consider these 

Recommendations resolved but open, pending review of corrective 

actions taken. 

Congressional Considerations 

The following proposed actions are presented for congressional 

consideration: 

Congressional Consideration #2: Provide authority for an 

extension or waiver of annuitant and residency stipulations as they 

affect FEMA disaster personnel assisting in the response and 

recovery efforts for large-scale disasters. 

Congressional Consideration #3: Provide funding for FEMA to 

establish a permanent, full-time cadre of professional trainers, and 

direct FEMA to comprehensively educate all FEMA disaster 

personnel—prior to, and independent of, a disaster—on FEMA 

statutes, regulations, policies, and procedures. 

Assessment of FEMA’s Public Assistance Program Policies and Procedures 

Page 15 
Performance Measurement 

FEMA could better identify needs for improving the timeliness of 

PA program funding and closeouts, and the level of customer 

satisfaction with the PA program, through improved assessments 

of the PA program’s performance. Program performance 

assessments are required by the Government Performance and 

Results Act of 1993 (GPRA), and FEMA has established some 

appropriate performance objectives to use in judging the PA 

program’s performance. However, the performance objectives in 

the current assessment methodology need to be clarified and 

improved to produce more meaningful and useful results of the PA 

program’s timeliness and customer satisfaction. 

The GPRA requires federal agencies to evaluate the efficiency and 

effectiveness of programs and ensure continuous improvement. In 

furtherance of GPRA, FEMA established the following objectives 

for measuring PA program performance: (1) obligate 50% of 

funding within 90 days of declaration; (2) Obligate 80% of funding 

within 180 days of declaration; (3) close 90% of disasters within 

2 years of declaration date; and (4) achieve at least a 90% customer 

satisfaction rating. 

FEMA’s current performance measurement methodology does not 

assure meaningful results for the first two objectives because it 

gives equal weight to all disasters, regardless of magnitude. Thus, 

an inability to fund larger, more complex disasters in a timely 

manner could be obscured by timely performance in funding the 

far more numerous, but less complex, small disasters. For 

example, if FEMA were to obligate funding in a timely manner for 

nine small disasters but not provide timely funding for a single 

large-scale disaster, FEMA’s current performance assessment 

methodology would show it to be 90% successful. However, were 

the measurement system to account for the size of each disaster 

effort by categorizing disasters by magnitude (e.g. small, large and 

catastrophic), it would assure more meaningful results. 

FEMA officials have not measured performance in meeting the 

third objective because a reporting function does not exist in the 

National Emergency Management Information System (NEMIS). 

FEMA officials said the Emergency Management Mission 

Integrated Environment (EMMIE) system, which will replace 

NEMIS for PA projects, will provide closeout information and 

allow evaluation of this performance objective. However a 

timeline for when this transition will occur is not available. 

Furthermore, as currently configured, the assessment of this 

Assessment of FEMA’s Public Assistance Program Policies and Procedures 

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objective assigns equal weight to the closeout of a small disaster as 

to that of a large-scale disaster. Thus, the timely closeout of small 

disasters could obscure the untimely closeout of large-scale 

disasters. 

FEMA had not measured performance in meeting the fourth 

objective due to the suspension of data collection pending the 

request for, and the Office of Management and Budget (OMB) 

approval of, the FEMA Public Assistance Program Customer 

Satisfaction Survey. As of March 2009, FEMA had not resumed 

data collection, yet did receive OMB approval for the survey. 

Furthermore, as currently planned, the measurement of this 

objective will make no distinction in the weight given to the views 

of subgrantees with many PWs as opposed to those having few 

PWs. Thus, higher satisfaction levels among the many smaller 

disasters could obscure customer dissatisfaction regarding 

large-scale disasters. 

Conclusion 

FEMA’s performance measurement efforts need to be improved in 

order to provide the accurate and balanced information that is 

needed to assess, and improve as appropriate, the timeliness and 

performance of the PA program. FEMA’s current system for 

evaluating timeliness of funding improperly assigns equal weight 

to all disasters, despite the differences in funding or work load. 

Performance measurement methodology for the other two 

objectives has not yet been implemented, but would also not assure 

meaningful results by not differentiating between disasters of 

varying magnitudes or the extent of subgrantee funding. FEMA 

officials need to take appropriate corrective action to improve the 

PA performance measurement system if it is to fulfill its potential 

to identify the need for improvement in PA program management 

and timeliness of efforts. 

Recommendations 

We recommend that the FEMA Administrator: 

Recommendation #13: Use a weighted methodology to assess the 

timeliness of PA funding obligations that will not statistically 

conceal major shortfalls on larger disasters. 

Recommendation #14: Devise and implement a mechanism to 

measure timeliness of PA project closeouts for those disasters not 

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included in EMMIE and revise PA performance objective “close 

90% of disasters within 2 years of the declaration date” to 

differentiate according to disaster magnitude. 

Recommendation #15: Conduct PA program customer 

satisfaction surveys, and revise PA performance objective “achieve 

at least a 90% customer satisfaction rating” to differentiate 

between subgrantee funding amounts. 

Management Comments and OIG Analysis 

Appendix B provides the complete text of FEMA’s responses to 

these three recommendations. FEMA concurred with 

Recommendations 13 and 14 but did not concur with 

Recommendation 15. We consider the first two recommendations 

resolved but open pending review of corrective actions taken. We 

consider Recommendation 15 unresolved. Appendix C provides 

the OIG's analysis of FEMA’s comments and additional details 

concerning the finding and recommendations. 

Congressional Consideration 

The following proposed action is presented for congressional 

consideration: 

Congressional Consideration #4: Provide FEMA the criteria that 

should be used to categorize disasters by magnitude (e.g., small, 

large, and catastrophic). 

Alternatives to Streamline the PA Process 

Congress asked that we identify alternatives to streamline the PA process. 

We identified seven alternatives and considered the potential pros and 

cons for each. These alternatives include: (1) negotiate settlements for all 

projects; (2) negotiate settlements for permanent categories of work; 

(3) negotiate settlements for small projects; (4) increase the large project 

threshold; (5) replace grants with pre-scripted mission assignments; 

(6) transfer other federal disaster programs to FEMA; and (7) provide 

interval payments. 

The current PW process provides for final grant settlements on a 

project-by-project basis after the work is completed. PWs can be changed 

after the initial write up for a variety of reasons, including inaccurate cost 

estimates, cost overruns or underruns, or the discovery of hidden damages 

Assessment of FEMA’s Public Assistance Program Policies and Procedures 

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or other eligible work. This process allows subgrantees to request 

reimbursements, through the grantee, on a project-by-project basis, as 

costs are incurred. Some of the alternatives presented in this section 

would streamline the PW process through final settlements during the 

early stages of recovery instead of settlements after the work is completed. 

Other alternatives would improve the cash flow of subgrantees but would 

retain other aspects of the current PW process.3 

(1) Negotiate Settlements for All Projects. This alternative would 

change the present PW system for all projects to fixed, lump-sum 

negotiated settlements between FEMA and the grantee and 

subgrantee, based on FEMA’s final estimates and any pertinent 

information provided by the subgrantee. Final estimates will be 

binding and not subject to change for any reason. This process will 

be completed no later than 6 months after the disaster declaration. 

Pros (a) The subgrantee’s cash flow would significantly 

improve early in the recovery process, resulting in reduced 

project delays; (b) administrative effort at all government 

levels would greatly decrease, resulting in significant time and 

money savings for all; and (c) reduction in state and local 

administrative requirements would be a basis for FEMA to 

decrease administrative or management fees paid to the grantee 

and subgrantee. 

Cons: (a) FEMA’s estimates for the negotiated settlements will 

likely differ from actual costs, resulting in possible shortfalls or 

windfalls to the subgrantee with no recourse for either party; 

and (b) subgrantees may not complete some of the disaster 

projects and would use that funding for other purposes. 

(2) Negotiate Settlements for Permanent Categories of Work. 

This alternative would provide fixed, lump-sum negotiated 

settlements, for permanent work categories, between FEMA and 

the grantee and subgrantee, based on FEMA’s final estimates and 

any pertinent information provided by the subgrantee. Final 

estimates will be binding and not subject to change for any reason. 

This process will be completed no later than 6 months after the 

disaster declaration. 

FEMA divides disaster-related work into seven categories: 

Categories A and B are classified as emergency work, whereas 

3 Through the implementation of one or more of these alternatives, the current designation of “subgrantee” 

and “grantee” may change. We have, however, retained this designation throughout this section to prevent 

confusion. 

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Categories C through G are classified as permanent work. The 

cost for permanent work is generally more feasible to estimate than 

emergency work because the quantity of work is more definable. 

Pros: (a) The subgrantee’s cash flow would significantly 

improve early in the recovery process, resulting in reduced 

project delays; (b) administrative effort at all government 

levels would greatly decrease, resulting in significant time and 

money savings for all; and (c) reduction in state and local 

administrative requirements would be a basis for FEMA to 

decrease administrative or management fees paid to the grantee 

and subgrantee. 

Cons: (a) FEMA’s estimates for the negotiated settlements will 

likely differ from actual costs, resulting in possible shortfalls or 

windfalls to the subgrantee with no recourse to either party; 

and (b) subgrantees may not complete some of the disaster 

projects and would use that funding for other purposes. 

(3) Negotiate Settlements for Small Projects. This alternative 

would provide fixed, lump-sum negotiated settlements between 

FEMA and the grantee and subgrantee for small projects, based on 

FEMA’s final estimates and any pertinent information provided by 

the subgrantee. Final estimates will be binding and not subject to 

change for any reason. This process will be completed no later 

than 6 months after the disaster declaration. The existing PW 

system provides expedited payments for projects designated as 

small when the cost estimate is below a certain threshold ($64,200 

for fiscal year 2009), yet such projects are still subject to final 

audit and inspection at closeout. With negotiated settlements, 

original damage estimates would be binding and could not be 

changed for any reason. 

Pros: (a) Administrative effort at all government levels would 

decrease, saving time and money; and (b) reduction in state and 

local administrative requirements may be a basis for FEMA to 

decrease administrative or management fees based on PW 

estimates. 

Cons: (a) FEMA’s estimates for the negotiated settlements may 

differ from eligible costs under the small project system, 

resulting in possible shortfalls to the subgrantee with no 

recourse; and (b) subgrantees may not complete some of the 

disaster projects and would use that funding for other purposes. 

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(4) Increase the Large Project Threshold. This alternative would 

keep the current PW process intact but would increase the large 

project threshold, resulting in a significant increase in the number 

of PWs classified as small projects, as well as in the funding 

amount for small projects. The PA program differentiates between 

small and large projects based on project costs. For FY 2009, the 

large project threshold is $64,200, regardless of the scale of the 

disaster; it is increased annually based on the Consumer Price 

Index. Funding for projects classified as small is generally final, 

and full payment is available upon approval of the original 

estimate although projects are subject to final audit and inspection. 

Funding for projects classified as large is regularly adjusted 

throughout the PW reimbursement process. 

Pros: (a) Administrative efforts and costs for all parties would 

be reduced based on the streamlined process for small projects; 

and (b) subgrantees’ cash flow would improve because they 

would not need to incur costs prior to receiving payment, 

unlike for projects classified as large. 

Con: Under the small project criteria, subgrantees retain the 

total amount of excess funding for all combined small projects, 

whereas excess large project funding must be returned to the 

federal government. 

(5) Replace Some Grants with Mission Assignments. This 

alternative would change the PW system for designated categories 

of work, such as debris removal, to a pre-scripted system of 

tasking other federal agencies to perform such work (i.e., mission 

assignments). Through this alternative, FEMA would assign work 

and provide funding to another federal agency (e.g., the U.S. Army 

Corps of Engineers) rather than issuing PWs to grantees and 

subgrantees. 

Pros: (a) Grantees and subgrantees would avoid the 

documentation, reimbursement, and closeout requirements of 

the current PW system; (b) experienced federal agencies would 

be responsible for work, thus increasing the likelihood of 

improved efficiency and quality control; (c) contracting 

resources may be greater, resulting in faster completion of 

projects; and (d) administrative costs paid by FEMA to 

grantees and subgrantees would be decreased as a result of 

fewer projects funded by PWs. 

Con: Subgrantees may be reluctant to reduce control over work 

performed within their jurisdictions. 

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(6) Transfer Other Federal Disaster Programs to FEMA. This 

alternative would entail Congress permanently authorizing FEMA 

to assume responsibility for all federal disaster projects that 

involve significant hazards to life and property. Currently, other 

federal agencies—such as the U.S. Department of Agriculture’s 

National Resources Conservation Service and the U.S. Department 

of Transportation’s Federal Highway Administration—perform 

work that, if delayed, could affect public safety and property. 

Subgrantees experience delays and additional costs because of 

insufficient funding by the responsible federal agency and 

difficulty in comprehending the various federal rules of each 

agency. 

Pros: (a) Risks to life and property would be reduced through a 

more immediate response; (b) subgrantees would not have the 

burden of learning and adhering to various rules and 

procedures of other federal agencies immediately after a 

disaster event; and (c) subgrantees could reduce costs through 

economies of scale and increased efficiency by having fewer 

contracts for similar work (e.g., debris removal). 

Con: Potentially less funding for subgrantees because of 

FEMA’s cost-share provisions. 

(7) Provide Interval Payments. This alternative would entail the 

automatic disbursement of funding to subgrantees at specified 

intervals of the recovery period based on PW estimates as opposed 

to the present system of requesting cash reimbursements after costs 

are incurred. At closeout, FEMA would reconcile eligible project 

costs with the amount disbursed and determine a final settlement 

with the subgrantee. 

Pros: (a) Administrative and paperwork requirements for the 

grantee and subgrantee would be reduced as a result of the 

need to process only a few large payments instead of numerous 

payments; (b) grantees’ responsibility for ensuring that 

subgrantees’ reimbursements are accurate would be reduced; 

(c) subgrantees’ cash flow would be improved early in the 

recovery process; and (d) reduction of state and local 

administrative efforts may be a basis for reducing 

administrative or management fees based on PW estimates. 

Con: Automatic payments based on estimates would require a 

subgrantee to repay FEMA at project closeout for the amount 

of interval payments that exceeds actual costs on recovery 

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activities. This could place a burden on the subgrantee if it has 

inappropriately expended payments on non-recovery items. 

Conclusion 

The current PA process is a practical system in theory, yet its 

administrative requirements entail significant time and expense. 

Many of the grantees’, subgrantees’, and other interested parties’ 

concerns could be addressed by implementing the recommendations 

and considerations proffered throughout this report. This is 

especially true for those who consider the current program design 

fundamentally sound, yet principally flawed as a result of inexpert 

execution. Moreover, a more proactive approach by grantees in 

assuring the timeliness and accuracy of project worksheets—albeit 

not a focus of this report—would likewise improve the current 

system. Nevertheless, wholesale change may occur only through a 

shift in the current PA paradigm. Although there is no panacea for 

the inherent challenges derived from a multibillion-dollar program 

that provides assistance for communities to quickly respond to and 

recover from major disasters or emergencies, alternatives to the 

current system could improve the efficiency and economy with 

which FEMA delivers this assistance. The implementation of the 

alternatives presented herein—either on their own or in concert— 

could effect these improvements, and thus certainly warrant further 

FEMA and congressional analysis and consideration. 

Recommendation 

We recommend that the FEMA Administrator: 

Recommendation #16: Prepare a detailed report that analyzes the 

costs and benefits of various alternatives to the current PA 

program, including those identified in this report, and provide an 

action plan for each of these alternatives or provide justification for 

why the alternatives are not viable. 

Management Comments and OIG Analysis 

FEMA generally concurred with Recommendations 16. Thus, we 

consider this recommendation resolved but open, pending review 

of corrective actions taken. Appendices B and C, respectively, 

contain the entirety of FEMA’s management comments and the 

OIG's analysis of FEMA's comments to the draft report. 

Assessment of FEMA’s Public Assistance Program Policies and Procedures 

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Appendix A 

Purpose, Scope, and Methodology 

We audited FEMA’s PA program policies and procedures pursuant 

to a request from the U.S. House of Representatives Committee on 

Transportation and Infrastructure. The Committee noted that 

Members have raised concerns over FEMA’s implementation of 

the PA program, particularly regarding delays in project approval 

and reimbursement to state and local governments. 

The objectives of our audit were to determine the efficacy of 

processes and procedures used to generate PWs—including the 

completeness, accuracy, and timeliness of the PWs—and identify 

alternatives to streamline the current PW process. 

We interviewed more than 200 officials from: FEMA 

headquarters, two FEMA regional offices, two FEMA transitional 

recovery offices, one FEMA recovery office, and five state 

government offices responsible for developing and administering 

the PA program, as well as 14 local government entities that are 

PA program grant recipients. Our fieldwork was conducted in the 

District of Columbia and in California, Washington, Louisiana, 

Mississippi, and Florida. The fieldwork sites were judgmentally 

selected to include a broad, national selection of subgrantees with 

varying degrees of experience with FEMA’s PA program. Those 

states most affected by hurricanes Katrina and Rita—where FEMA 

obligated more than $11 billion in PA grants—were included to 

assess the PA program for catastrophic events. 

We researched federal laws, regulations, executive guidance, 

testimony, published reports, and other information related to 

FEMA’s PA program to establish criteria and obtain background 

information. We examined selected data from NEMIS, such as 

copies of PWs and related information, to observe matters such as 

clarity of scopes of work, as well as the timeliness of PW 

approvals. 

We analyzed FEMA’s PA program data to determine: (1) the 

timeliness and management of data for appeals; (2) the timeliness 

and accuracy of PW determinations; (3) the effect that increasing 

the large project threshold would have on the classification of 

projects; and (4) the achievement of FEMA’s PA performance 

objectives regarding customer satisfaction, as well as timeliness of 

obligations and closeouts. We obtained data from the PA Appeals 

Database, NEMIS, Regional FEMA offices, and FEMA’s Disaster 

Assistance Directorate. Various data were unavailable or 

incomplete. 

Assessment of FEMA’s Public Assistance Program Policies and Procedures 

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Appendix A 

Purpose, Scope, and Methodology 

We conducted this performance audit under the authority of the 

Inspector General Act of 1978, as amended, and according to 

generally accepted government auditing standards except as 

regards the Alternatives to Streamline the PA Process section, 

which is conceptual in nature. 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 and used to 

develop the Results of Audit section provides a reasonable basis for 

our findings and conclusions based on our audit objectives. 

Assessment of FEMA’s Public Assistance Program Policies and Procedures 

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Appendix B 

FEMA Management Comments to the Draft Report 

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Appendix B 

FEMA Management Comments to the Draft Report 

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Appendix B 

FEMA Management Comments to the Draft Report 

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Appendix B 

FEMA Management Comments to the Draft Report 

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Appendix B 

FEMA Management Comments to the Draft Report 

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Appendix B 

FEMA Management Comments to the Draft Report 

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Appendix B 

FEMA Management Comments to the Draft Report 

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Appendix B 

FEMA Management Comments to the Draft Report 

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Appendix B 

FEMA Management Comments to the Draft Report 

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Appendix B 

FEMA Management Comments to the Draft Report 

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Appendix C 

OIG Analysis of Management Comments to the Draft Report 

The Federal Emergency Management Agency (FEMA) generally 

concurred with the majority of the recommendations presented in this 

report. Our analysis of FEMA's comments to the draft report and our 

position on the six recommendations which we consider unresolved are 

provided below. 

The fundamental purpose of our assessment was to determine the efficacy 

of FEMA’s Public Assistance program and to identify alternatives to 

streamline the process. We accomplished this task, in part, through 

identifying and exploring challenges within the program as described by 

grantee and subgrantee officials whom we interviewed. This assessment, 

however, was not—nor ever was purported to be—a scientific, statistical 

analysis of every facet of the PA program. The breadth of our objectives 

precluded such an undertaking. FEMA, nevertheless, has expressed 

concern that we generalized findings based on interviews with a limited 

number of subgrantees in relation to the multiplicity of subgrantees with 

whom we did not interview. Although we never made generalizations on 

the ubiquity of any particular issue, our audit disclosed recurrent issues 

among the subgrantees that we interviewed, suggesting that the 

occurrences were not uncommon and not simply anecdotal. Therefore, we 

maintain that FEMA should determine the frequency of program 

shortfalls—particularly those recurrent issues raised by the subgrantees 

that we interviewed, and take appropriate corrective action as 

recommended. The expediting of customer satisfaction surveys by 

FEMA, previously restricted by Office of Management and Budget 

requirements, should be useful in this process. 

Below, we provide specific comments on the three recommendations that 

FEMA believes should be closed (Recommendations 1, 4, and 6) as well 

as the three recommendations with which FEMA did not concur 

(Recommendations 3, 5, and 15). We disagree with FEMA’s position in 

all such instances and have clarified the recommendations and/or the 

related findings with additional detail. We consider the remainder of the 

recommendations in this report resolved but open pending evaluation of 

corrective actions taken by FEMA. 

Recommendation #1: We recommended that FEMA establish a 

complete set of standards for achieving timeliness in the appeals 

process. FEMA considered this recommendation closed, stating 

that timelines for responding to appeals already exist in 

regulations. Although timelines are established for various phases 

of the appeal process, we do not concur that timelines are specified 

for all aspects of the process. For example, FEMA’s regulations 

do not specify timeline requirements on appeals while waiting to 

receive additional information from an independent technical 

Assessment of FEMA’s Public Assistance Program Policies and Procedures 

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Appendix C 

OIG Analysis of Management Comments to the Draft Report 

expert whom FEMA has requested to analyze the subject matter, or 

from the subgrantee. The absence of timelines for any phase of the 

process may result in a protracted period of time before a final 

determination is reached. Thus, timeliness is not ensured. Our 

recommendation seeks to ensure efficiency within the appeals 

process—a critical quality that the majority of the subgrantees with 

whom we interviewed did not believe to be present. 

Recommendation #3: We recommended that FEMA establish an 

Agency-wide mediation or arbitration process for appeals that have 

reached an impasse. FEMA did not concur with this 

recommendation, stating that the appeals process does not present 

any opportunities for an impasse to occur. We used impasse to 

denote a significant delay in the appeals process, and our data 

showed that there were indeed significant delays—sometimes 

several years. 

We agree with FEMA's comments that once filed, an appeal 

decision will ultimately be rendered. Our recommendation was 

intended to ensure that appeals with significant delays be referred 

to a mediation or arbitration process for prompt resolution. Our 

finding alludes to FEMA's Appeals Arbitration Panel available to 

the Gulf Coast states as an example of how to move projects 

forward. We agree that FEMA's arbitration process is being 

implemented as an alternative to the appeals process. However, 

independent arbitration only became necessary after FEMA and 

subgrantees failed to come to agreement -- years after the Gulf 

Coast hurricanes -- on work eligibility. Since project worksheets 

had not been finalized and funding obligated, there was no 

opportunity for subgrantees to file an appeal since no appealable 

administrative action had been taken by FEMA. 

Subgrantee officials whom we interviewed suggested an arbitration 

or mediation option due to extended delays in obtaining appeal 

determinations from FEMA. If timeframes were established for 

grantees and subgrantees to submit additional information when 

requested by FEMA, and appeal determinations were made within 

a complete set of timeframe standards (as we suggested in 

Recommendation #1), arbitration may not be required. However, 

when extended delays occur, an independent arbitration panel 

would put scope of work and funding issues to rest and recovery 

work could then proceed. 

In response to this recommendation, FEMA said it intends to 

evaluate the arbitration process in the fourth quarter of FY 2010 to 

Assessment of FEMA’s Public Assistance Program Policies and Procedures 

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Appendix C 

OIG Analysis of Management Comments to the Draft Report 

determine if it accelerates applicants' recovery and is appropriate to 

implement in other disasters. As it evaluates the arbitration 

process and reassesses its position on Recommendation #1, FEMA 

should consider whether arbitration is appropriate when appeal 

determinations are not made in a timely manner. 

Recommendation #4: We recommended that FEMA initiate and 

triage Environmental and Historic Preservation (EHP) workload, 

based on importance and not necessarily sequence, immediately 

following a disaster. FEMA considered this recommendation 

closed, stating that this practice has been in place as part of EHP’s 

Standard Operating Procedures (SOP) since the 1990s. FEMA 

commented that based on its review of PA projects for disasters in 

all 10 Regions, EHP reviews were completed in less than 30 days 

for 91% of the projects. While this statistic is noteworthy, it 

includes those projects that are subject to the statutory or 

categorical exclusions authorized by 44 CFR, Part 10 – 

Environmental Considerations. Our assessment of PA–related 

activities was not a scientific, statistical analysis and was based on 

those projects requiring extensive EHP reviews or assessments 

which are most likely part of the 9% that required in excess of 

30 days to complete. 

Our recommendation was based, in part, on the narrow window for 

performing work near the habitat of certain species for which only 

a few months of each year would not be endangering to them, and 

various construction windows. Thus, it is critical that these 

projects are identified quickly, and prioritized, to take advantage of 

the limited timeframe. From the responses received from the 

subgrantees, we are not confident that the SOP addresses all of 

these issues, or that FEMA employees are familiar with the SOP to 

properly implement it. It is important to note that we specifically 

recommended that FEMA initiate and triage the EHP process, and 

did not make any recommendations regarding FEMA’s SOP. As 

such, in addition to our initial—action-oriented, not policyoriented, recommendation—we suggest that FEMA consider 

clarifying the SOP, as well as providing increased training to its 

EHP employees to ensure compliance. 

Recommendation #5: We recommended that FEMA establish and 

enforce formal time limits for the EHP process. FEMA did not 

concur with this recommendation, stating that although it is the 

goal of FEMA to accelerate EHP timeframes, the process is 

influenced by too many factors to prescribe additional deadlines. 

Although a variety of factors could reasonably create delays to the 

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Appendix C 

OIG Analysis of Management Comments to the Draft Report 

EHP process, we believe that procedures must be implemented to 

prevent excessive delays, such as those that subgrantees have 

experienced. Presently, there is nothing to prevent the EHP 

process from spanning years, and it is not uncommon for that to 

occur. While FEMA did not concur with the recommendation, 

officials commented that in FY 2011, priority will be given to 

developing and maintaining national, regional, and state 

streamlining initiatives which will further streamline EHP 

timeframes. Additionally, FEMA intends to add deputy regional 

environmental positions within each of its regions to provide 

another resource to execute the pre-disaster agreements we 

discussed in Recommendation #6. FEMA should continue to be 

proactive in this area by streamlining the EHP process as early as 

possible, including establishing and enforcing formal time limits to 

ensure subgrantee response and recovery efforts are not 

significantly delayed due to EHP shortfalls. 

Recommendation #6: We recommended that FEMA coordinate 

the EHP process through programmatic or similar pre-disaster 

agreements with other federal agencies and state entities involved 

in the process. FEMA considered this recommendation closed, 

stating that this course of action has been employed since the 

1990s. We find it disconcerting that FEMA has had this option 

available to them for many years, and supported its use, yet 

subgrantees commented on the lack of, and need for, these very 

arrangements. For example, subgrantee officials said that FEMA 

will not accept state reviews, and that improved cooperation and 

communication among the different agencies is needed. Thus, in 

addition to our initial recommendation, we also suggest increased 

training for FEMA employees in establishing and implementing 

such agreements, as well as increased dissemination of 

programmatic agreement concepts to all relevant parties. 

Recommendation #15: We recommended that FEMA conduct PA 

program customer satisfaction surveys and revise the PA 

performance objective “achieve at least 90% customer satisfaction 

rating,” to differentiate between subgrantee funding amounts. 

FEMA did not concur with this recommendation, stating that 

customer satisfaction standards should be the same for all disasters. 

We believe that FEMA did not understand this recommendation, 

particularly because FEMA concurred with our preceding and 

intrinsically similar recommendations regarding performance 

measurement. Therefore, to clarify, we are not recommending that 

FEMA employ different customer satisfaction standards for 

disasters of greater magnitude but, rather, use a weighted 

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Appendix C 

OIG Analysis of Management Comments to the Draft Report 

methodology in determining customer satisfaction across all 

disasters. We believe, for example, that if FEMA (according to its 

customers) adequately responds to nine small-scale disasters, but 

inadequately responds to one catastrophic disaster that requires 

greater efforts, FEMA’s customer satisfaction ratings should not 

reflect a 90% overall satisfaction rating. By doing so, ratings 

would be misleading and would obscure customer dissatisfaction 

on large-scale disasters. Thus, we reiterate our recommendation 

that FEMA revise its performance objective so that the customer 

satisfaction ratings on large-scale disasters will be transparent. 

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Appendix D 

Major Contributors to This Report 

Robert Lastrico, Western Regional Office Director 

Jack Lankford, Audit Manager 

Devin Polster, Auditor-in-Charge/Team Leader 

Paulette Solomon, Auditor 

Venetia Gatus, Auditor 

Tony Fajardo, Auditor 

Gloria Conner, Auditor 

Jeff Flynn, Program Analyst 

Assessment of FEMA’s Public Assistance Program Policies and Procedures 

Page 41 
Appendix E 

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 Secretary 

Under Secretary for Management 

Assistant Secretary for Office of Policy 

Assistant Secretary for Office of Public Affairs 

Assistant Secretary for Office of Legislative Affairs 

Chief Procurement Officer 

Chief Privacy Officer 

Director, DHS GAO/OIG Liaison Office 

FEMA Administrator 

FEMA Deputy Administrator 

FEMA Audit Liaison (DP8W09/08-126-EMO-FEMA) 

FEMA Director of Management and Chief Acquisition Officer 

FEMA Chief Procurement Officer 

Office of Management and Budget 

Chief, Homeland Security Branch 

DHS OIG Budget Examiner 

Congress 

U.S. House of Representatives Committee on Transportation and 

Infrastructure 

Congressional Oversight and Appropriations Committees, as 

appropriate 

Assessment of FEMA’s Public Assistance Program Policies and Procedures 


Page 42
 
ADDITIONAL INFORMATION AND COPIES 

To obtain additional copies of this report, please call the Office of Inspector General (OIG) at (202) 254-4100, 

fax your request to (202) 254-4305, or visit the OIG web site at www.dhs.gov/oig. 

OIG HOTLINE 

To report alleged fraud, waste, abuse or mismanagement, or any other kind of criminal or noncriminal 

misconduct relative to department programs or operations: 

• Call our Hotline at 1-800-323-8603; 

• Fax the complaint directly to us at (202) 254-4292; 

• Email us at DHSOIGHOTLINE@dhs.gov; or 

• Write to us at: 

DHS Office of Inspector General/MAIL STOP 2600, 

Attention: Office of Investigations - Hotline, 

245 Murray Drive, SW, Building 410, 

Washington, DC 20528. 

The OIG seeks to protect the identity of each writer and caller.