Victor Valley Wastewater 

Reclamation Authority in 

Victorville, California, Did 

Not Properly Manage $32 

Million in FEMA Grant 

Funds 

January 24, 2017 

OIG-17-25-D 
 

 

 

 

DHS OIG HIGHLIGHTS
 

Victor Valley Wastewater Reclamation Authority 

in Victorville, California, Did Not Properly Manage 

$32 Million in FEMA Grant Funds 

January 24, 2017 

Why We Did 

This Audit 

The Victor Valley 

Wastewater Reclamation 

Authority in Victorville, 

California (Authority), 

received a $41.3 million 

FEMA grant for damages 

resulting from a flooding 

disaster declared in 

January 2011. We 

audited three contracts 

totaling $31.7 million for 

Project 828, a major 

pipeline construction 

project, or 77 percent of 

the $41.3 million total 

award. 

What We 

Recommend 

FEMA and California 

should disallow $31.7 

million in ineligible costs 

and determine whether 

additional regulatory 

and ethical violations or 

gross mismanagement 

occurred. 

For Further Information: 

Contact our Office of Public Affairs 

at (202) 254-4100, or email us at 

DHS-OIG.OfficePublicAffairs@oig.dhs.gov 

What We Found 

The Authority did not comply with Federal regulations in its 

award and administration of three contracts totaling 

$31.7 million. As a result, FEMA has no assurance that these 

costs were reasonable or that the Authority selected the most 

qualified contractors. Specifically, the Authority did not — 

x	 perform cost/price analyses of bid proposals to
 

ensure fair and reasonable costs;
 

x	 follow its own procurement policy and Federal
 

regulations when evaluating and selecting its 

contractors;
 

x include all mandatory Federal provisions in contracts 

to document rights and responsibilities of the parties; 

x maintain records sufficient to detail the significant 

history of its procurements; 

x maintain an adequate contract administration system 

that included careful review of invoices; or 

x include a ceiling price in time-and-material contracts 

that contractors exceed at their own risk. 

The Authority also did not properly account for contract costs. 

Federal regulations and FEMA guidelines require subgrantees 

to account for costs by project. However, the Authority did not 

issue separate purchase orders to segregate costs for different 

FEMA projects, nor require its contractors to code the costs 

on a project-by-project basis. Commingling costs for different 

FEMA projects increased the Authority’s risk of claiming 

unsupported costs. 

FEMA Response 

FEMA agreed with our findings and recommendations and 

provided us their written response on October 24, 2016 (see 

appendix C). 

www.oig.dhs.gov OIG-17-25-D 
OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Washington, DC 20528 / www.oig.dhs.gov 


January 24, 2017 


MEMORANDUM FOR: Robert Fenton 

Regional Administrator, Region IX 

Federal Emergency Management Agency 

~'N·~ FROM: Thomas M. Salmon 

Assistant Inspector General 

Office of Emergency Management Oversight 

SUBJECT: The Victor Valley Wastewater Reclamation Authority in 

Victorville, California, Did Not Properly Manage 

$32 Million in FEMA Grant Funds 

Audit Report Number OIG-17-25-D 

We audited Federal Emergency Management Agency (FEMA) Public Assistance 

Program grant funds awarded to the Victor Valley Wastewater Reclamation 

Authority in Victorville, California (Authority). The California Governor's Office 

of Emergency Services (California), a FEMA grantee, administered the 

$41.3 million grant FEMA awarded for damages from severe winter storms and 

flooding that occurred from December 17, 2010, through January 4, 2011. The 

award provided 75 percent FEMA funding for four large projects and two small 

projects. We audited three contracts totaling $31.7 million for Project 828 

(see table 1), a major pipeline construction project, or 77 percent of the 

$41.3 million total award. This report focuses on the Authority's contracting 

and accounting practices for Project 828. A subsequent report will focus on 

misleading information the Authority provided to FEMA to develop the scope of 

work for Project 828. 

Background 

The Victor Valley Wastewater Reclamation Authority, formed in 1976, provides 

wastewater treatment for the High Desert area of San Bernardino County. It 

treats about 11 million gallons of wastewater per day. On December 29, 2010, 

severe winter storms, flooding, debris flows, and mud flows caused a break in 

the Authority's wastewater pipeline. The Authority, in close coordination with 

its engineering contractor, selected an alternative method of repair instead of 

returning the sewer line to its pre-disaster condition, where a portion of the 

pipeline was located in the Mojave riverbed. This alternative method placed 

most of the pipeline outside of the riverbed and along the streets of the City of 

Victorville, California. FEMA awarded the Authority $33.1 million under Project 

1 www.oig.dhs.gov OIG 17-25-D 
 

OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

828 to construct the new pipeline using this alternative method.1 The Authority 

had generally completed the construction work as of August 2016. 

Results of Audit 

The Authority did not properly account for and expend $31.7 million of FEMA 

grant funds awarded for Project 828 — a major pipeline construction project. 

As a result, FEMA has no assurance that these costs were reasonable or that 

the Authority selected the most qualified contractors. Specifically, the Authority 

did not — 

x perform cost/price analyses of bid proposals to ensure fair and 

reasonable costs; 

x follow its own procurement policy and Federal regulations when 

evaluating and selecting its contractors; 

x include all mandatory Federal provisions in contracts to document rights 

and responsibilities of the parties; 

x maintain records sufficient to detail the significant history of its 

procurements; 

x maintain an adequate contract administration system that included 

careful review of invoices; or 

x include a ceiling price in time-and-material contracts that contractors 

exceed at their own risk. 

The Authority also did not appropriately account for contract costs. Federal 

regulations and FEMA guidelines require subgrantees to account for costs by 

project. However, the Authority did not issue separate purchase orders to 

segregate costs for different FEMA projects, nor require its contractors to code 

the costs on a project-by-project basis. As a result of this commingling, the 

Authority charged duplicate costs to multiple FEMA projects, thereby 

increasing the risk of the Authority overstating its claims for FEMA funding. 

California had informed the Authority of some of these issues in early 2013, 

before the Authority awarded its construction and construction management 

contracts totaling $30,582,785. However, the Authority did not take proper 

steps to correct these deficiencies. Thus, we question as ineligible $31,713,569 

of the funds FEMA awarded to the Authority for Project 828. 

We also determined that the Authority and its main engineering contractor 

(Contractor C) presented misleading data to FEMA that resulted in FEMA 

1 Further, the Authority has recently requested more than $6 million in additional FEMA 

funding. 

www.oig.dhs.gov 2 OIG-17-25-D 
 

OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

providing millions in funding to the Authority.2 We will present these findings 

and recommendations in a subsequent report. 

Finding A: Improper Procurement 

The Authority did not follow applicable Federal regulations in procuring 

contracts totaling $31,713,569 for Project 828. As a result, FEMA has no 

assurance that these costs were reasonable or that the Authority selected the 

most qualified contractors. Table 1 lists the three contracts we reviewed for 

Project 828. 

Table 1: Contracts Reviewed for Project 828 

Contract Type Contract 

Amount 

Amount 

Questioned 

Construction $28,782,129 $28,782,129 

Construction 

Management 1,800,656 1,800,656 

Engineering 1,130,784 1,130,784 

Totals $31,713,569 $31,713,569 

Source: Authority documentation and Office of Inspector General (OIG) analyses 

According to 44 Code of Federal Regulations (CFR) 13.36(b)(1), “Grantees and 

subgrantees will use their own procurement procedures which reflect 

applicable State and local laws and regulations, provided that the 

procurements conform to applicable Federal law and the standards identified 

in this section.” However, for the three contracts we reviewed, the Authority did 

not comply with its own and Federal procurement requirements. 

The Authority did not perform cost/price analyses, as required, in awarding 

and modifying its engineering contract (44 CFR 13.36(f)(1) and (3)). It did 

not develop independent estimates before receiving proposals or perform 

cost analyses for every procurement action, including contract 

modifications. For example, when the Authority approved Contractor C’s 

change order requests, it 

accepted the contractor's The Authority accepted the contractor’s costs without own assessment of costs 

verification. It modified all three contracts multiple times, incurred and funds 

including 15 modifications to the contract with Contractor C needed, without

alone, escalating its value to more than three times the verification. In fact, the 

original price. 

2 The Authority evaluated three engineering contractors that we refer to as Contractors A, B, 

and C, and it selected Contractor C. We discuss this selection process in finding A. 

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OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Authority was not able to verify Contractor C’s costs billed because 

Contractor C did not itemize the costs by the agreed-upon tasks in its 

invoices. Without knowing actual costs incurred, the Authority was not able 

to determine the amount of additional funds needed for each task. A 

member of the Authority’s Board publicly expressed his frustration with the 

lack of oversight of contract modifications (change orders): “The philosophy 

in that agency is, if you run over a budget, just do a change order ... there 

are so many of them, you can’t even keep track of them.” This statement 

described precisely what happened. The Authority modified all three 

contracts (engineering, construction, and construction management) 

multiple times, including 15 modifications to the contract with Contractor C 

alone, escalating its value to more than three times the original bid price of 

$410,520 to $1,282,809.3 Because of these numerous modifications, 

Authority officials were not able to track the contract ceilings and paid 

Contractor C, on multiple occasions, more than the amount the contract 

authorized.4 

The Authority did not follow its own procurement policy and Federal 

regulations when evaluating contractor proposals and selecting its 

engineering contractor (44 CFR 13.36(d)(3)(v)). The Authority's policy 

requires it to select its professional services (e.g., engineering) contractors 

based on qualifications. Federal regulations require the Authority to identify 

all requirements and 

factors to be used in

The Authority bypassed both sets of requirements: it did not evaluating proposals in comply with Federal requirements and its own policies, and the solicitations (44 CFR did not evaluate the proposals properly or fairly. 13.36(c)(3)) and have a 

method for evaluating the 

technical proposals 

(44 CFR 13.36(d)(3)(iii)). However, the Authority bypassed both sets of 

requirements: it did not comply with Federal requirements or its own 

policies, and did not evaluate the proposals properly or fairly. Specifically, 

the Authority — 

x	 did not involve its Engineering Committee properly. To select the most 

qualified contractors, the Authority’s standard process includes these 

three steps: its Engineering Committee approves the request for 

proposals, reviews the proposals, and recommends a contractor to the 

Authority’s Board for approval. However, in selecting its engineering 

contractor, the Authority did not seek the Committee’s approval of the 

3 This amount included $152,025 for Project 1136.
 4 For example, as of May 2014, the Authority’s Board authorized only $798,672 for Project 828, 

but the Authority paid Contractor C $855,914.
 

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OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

request for proposals nor allow the Committee enough time to 

conduct proper assessments of the proposals.5
 

x allowed one committee member's significantly disproportionate rating 

to be one of the decisive factors in the Authority’s contractor selection 

process. Two of the five committee members scored the three 

proposals very closely; another two did not provide scores; and 

another gave Contractor C a perfect 100 points and the other 

proposals the unusually low scores of 78 and 76, respectively (see 

table 2). This disparity is especially concerning because the rater did 

not justify the scores, and the Authority did not provide us the rating 

sheet or explanations for not providing it. Further, Authority officials 

did not question the validity of these extreme scores or have a process 

to ensure uniformity and fairness in applying the criteria. They simply 

tallied the three scores, allowing the third disproportionate score to 

propel Contractor C's rating from the lowest overall score to the 

highest. 

Table 2: Scores of the Proposals 

Rater Contractor A Contractor B Contractor C 

#1 87 84 85 

#2 87 88 84 

Subtotal 174 172 169 

#36 78 76 100 

Total Score 252 248 269 

Source: Authority documentation and OIG analyses 

x	 did not disclose all factors used in evaluating proposals in the 

solicitation as Federal regulations require (44 CFR 13.36(c)(3)). The 

Authority’s request for proposals did not identify pricing as an 

evaluation criterion. After the evaluators had already scored the 

proposals, the Authority unilaterally added pricing as the decisive 

contractor selection factor. Therefore, the Authority unfairly and 

improperly deviated from its evaluation criterion. 

5 The Authority gave the Committee about 3 business days to evaluate the proposals posted to 

the Authority’s web site. Authority officials, via separate instructions, directed the Committee to 

complete an evaluation form that scores the proposals on a 100-point scale. The Authority 

received only three sets of scores from the Committee’s five members. The two remaining 

members ranked the proposals instead of completing the form; and one of the two had 

difficulty accessing the proposals.

6 Because the Authority did not provide us this rating sheet, we calculated the scores based on 

the other two rating sheets and the total scores recorded in the Authority’s Board meeting 

minutes. 

www.oig.dhs.gov 5 OIG-17-25-D 
 

 

OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

The Authority did not include all mandatory Federal provisions in the three 

contracts we reviewed (44 CFR 13.36(i)). Federal regulations require 

contracts and subcontracts to include specific provisions, such as giving the 

grantee and FEMA the right to examine the contractor's records and 

providing administrative, contractual, or legal remedies in instances where 

the contractor violates or breaches the contract terms. These contract 

provisions document the rights and responsibilities of the parties and 

minimize the risk of contract misinterpretations and disputes. California 

became aware of this issue in early 2013 and promptly advised the 

Authority of the noncompliance. However, the Authority only amended the 

contracts that California had reviewed, and did not take steps to amend any 

other contracts or its procurement policies. Consequently, the Authority did 

not include all required provisions in any of the contracts we reviewed. 

The Authority did not maintain records sufficient to detail the significant 

history of selecting its engineering contractor, as Federal regulations require 

(44 CFR 13.36(b)(9)). The Authority did not maintain one of the three rating 

sheets that were critical in the Authority's selection of Contractor C. The 

missing rating sheet gave Contractor C the highest score, while the 

combined scores of the other two rated Contractor C the lowest (see table 2). 

The Authority did not maintain an adequate contract administration system 

(44 CFR 13.36(b)(2)) because it did not adequately review invoices for the 

engineering and construction management contracts for accuracy, support, 

and eligibility. For example, the Authority — 

x	 overlooked a variety of errors, such as typographical mistakes, 

overstated mileage, and incorrect hourly labor rates within Contractor 

C’s invoices.7 

x	 permitted Contractor C’s charges for computer usage based on total 

staff hours instead of computer usage logs. Because this contractor 

also charged FEMA for vehicle mileages for the same periods, it 

appeared that the staff were driving and operating computers at the 

same time. 

x allowed both contractors to incur costs before the Authority's 

approval. During the period of April 2014 through December 2015, 

the Authority received 12 invoices from Contractor C. The cumulative 

total cost on 11 separate invoices exceeded the contract ceiling at the 

time of the invoice. 

7 For example, Contractor C billed the services of its Engineer II at a rate of $127/hour from 

May to September 2011. Although it began using the correct rate of $107/hour starting in 

October 2011, it did not correct the overbilling. 

www.oig.dhs.gov 6 OIG-17-25-D 
OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

x permitted Contractor C to not itemize costs based on the agreed-upon 

tasks. Without knowing the costs incurred for each task, the 

Authority could not monitor the contractor’s costs or perform 

analyses properly of contract modifications. 

x did not match the invoices with purchase orders to ensure that 

payments were within the amount the contract or purchase orders 

authorized. As a result, the Authority’s payments to Contractor C 

exceeded the purchase order limits. The Authority's practice violated 

its procurement policy requiring the matching of invoices with 

purchase orders. 

The Authority did not comply with Federal regulations that require 

including a ceiling price in time–and–material contracts (44 CFR 

13.36(b)(10)). The Authority increased the value of these time-and-material 

contracts multiple times, including 15 increases to the engineering contract. 

Not only did the Authority neglect to perform the required cost analyses for 

these modifications, it included costs in the modifications to cover costs 

already incurred, shifting the burden of funding cost overruns from the 

contractors to the Authority, California, and FEMA. Instead of ensuring its 

contractors performed in accordance with the contract terms, the Authority 

provided compensation based on the contractors’ terms. Although both 

contracts had not-to-exceed ceilings, the Authority invalidated those ceilings 

by disregarding them. 

On March 11, 2016, we provided Authority officials a discussion document that 

outlined our concerns with its contracting practices — specifically the lack of 

cost/price analysis, procurement history documentation, and proper methods 

for evaluating proposals. We also met with the officials to discuss these 

findings and requested the Authority provide us with documentation to support 

any challenges to our 

results. The Authority When the Authority amended these time-and-material declined to discuss the 

contracts, some of the modifications were to cover costs findings with us, saying already incurred. Further, although both contracts had not- that its attorneys would to-exceeded ceilings, the Authority invalidated those ceilings provide us written

by disregarding them. comments, which we 

received on March 24, 

2016. Authority officials 

disagreed with virtually all the issues we presented in our discussion document 

but did not provide any evidence to support their assertions. 

On September 26, 2016, we provided our draft report to Authority officials and 

requested an audit exit meeting. Again they informed us that their attorneys 

would respond to the report. We received their response on October 20, 2016. 

Authority officials generally disagreed with our findings and recommendations, 

www.oig.dhs.gov 7 OIG-17-25-D 
 

OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

and explained that their actions were appropriate, justified as a result of the 

emergency, or did not result in a material impact. The Authority’s response 

also included over 1,300 pages of documentation. We determined that the 

documentation the Authority provided generally included the same records we 

collected and reviewed during our audit fieldwork and did not change the 

finding or conclusions in this report. We are providing the documents to FEMA 

for its consideration in audit follow-up. 

California officials did not comment on this finding. FEMA officials concurred 

with our findings and recommendations. 

Finding B: Improper Accounting 

The Authority did not account for its large project expenditures on a project-byproject basis, as Federal regulations require (44 CFR 206.205(b)). The 

Authority did not issue separate purchase orders to segregate costs for 

different FEMA projects or require its contractors to code the costs on a 

project-by-project basis, resulting in comingled costs for different FEMA 

projects. Contractor C requested, and the Authority approved, at least 

$152,025 for tasks performed for Project 1136.8 However, because Contractor 

C’s invoices did not properly identify costs for these tasks, the Authority 

charged all Contractor C’s costs to Project 828.9 

As a result, the Authority 

overstated the costs for Project By commingling costs, the Authority charged 828, which California and unsupported costs to the FEMA project. Further, FEMA should deduct from the California notified the Authority that its accounting Authority’s claims. California system could not accurately track project costs, yet the and FEMA should also review Authority did not take proper steps to correct the costs associated with the

deficiencies. Authority’s other large 

projects, especially Project 

1136, and disallow any costs 

that are unsupported. 

Authority officials told us that many of the deficiencies we identified were 

immaterial and that they took immediate action to correct them. 

California officials agreed with our finding. They provided us documentation 

demonstrating that they notified the Authority in 2013 and 2015 that its 

8 Because Contractor C did not identify the specific amount requested for Project 1136 on some 

of its change order request, we were not able to determine the additional amount.
 9 In addition, the Authority charged an invoice for $96,003 to both Project 828 and Project
 

1136. 

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OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

accounting system could not accurately track project costs. However, the 

Authority did not take proper steps to correct the deficiencies. 

FEMA officials agreed with our findings and recommendations. 

Conclusion 

The Authority did not comply with Federal requirements, or with its own 

policies, in procuring contracts and accounting for costs for its FEMA grant. 

Our next report on Project 828 will discuss how the Authority and Contractor C 

misled FEMA to fund a significantly more expensive repair methodology for 

work beyond what was needed to bring its pipeline back to pre-disaster 

condition. 

Recommendations 

We recommend that the Regional Administrator, FEMA Region IX: 

Recommendation 1: Disallow $31,713,569 ($23,785,177 Federal share) in 

ineligible contract costs, unless FEMA grants an exception to administrative 

requirements, which include Federal procurement standards, as 44 CFR 

13.6(c) allows and determines the costs are eligible and reasonable. 

Recommendation 2: Review costs associated with the Authority’s other large 

projects, especially Project 1136, and disallow any costs that are ineligible. 

Recommendation 3: Review the process the Authority used to procure its 

engineering contract to determine whether regulatory and ethical infractions or 

gross mismanagement occurred. If such infractions or gross mismanagement 

occurred, FEMA should work with the Department of Homeland Security Office 

of Inspector General and Suspension and Debarment Official to debar the 

responsible organizations and individuals so that they are excluded from 

receiving benefits from Federal programs, as well as prohibited from future 

contracting with any agency in the Executive Branch of the U.S. Government 

for a specified period under 2 CFR 180.125(b). 

Recommendation 4: Direct California to provide increased guidance to the 

Authority and more closely monitor its performance to ensure the Authority 

complies with mandatory Federal regulations and FEMA guidelines. 

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OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Discussion with Management and Audit Follow-up 

We discussed the results of this audit with Authority officials during our audit 

and briefed FEMA, California, and the Authority on our audit findings. We also 

provided a draft report in advance to FEMA, California, and Authority officials, 

and discussed it at exit conferences with FEMA on September 26, 2016, and 

with the Authority and California on October 5, 2016. 

FEMA Region IX officials provided a written response on October 24, 2016, 

agreeing with our findings and recommendations (see appendix C). The 

response indicated that FEMA expects to implement its proposed corrective 

actions to address recommendations 1, 2, and 3 by July 31, 2017, and 

recommendation 4 by January 31, 2017. Therefore, we consider all four 

recommendations resolved but open. We will close the recommendations when 

we receive and review documentation that FEMA has completed its proposed 

corrective actions. Please email closeout documentation and request 

to Humberto.Melara@oig.dhs.gov. 

The Office of Emergency Management Oversight major contributors to this 

report are Humberto Melara, Director; Devin Polster, Audit Manager; 

Arona Maiava, Senior Auditor; Connie Tan, Senior Auditor; and 

Curtis Johnson, Senior Auditor. 

Please call me with any questions at (202) 254-4100, or your staff may contact 

Humberto Melara, Director, Western Regional Office, at (510) 637-1463. 

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OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Appendix A

Objective, Scope, and Methodology 

We audited FEMA Public Assistance grant funds awarded to the Victor Valley 

Wastewater Reclamation Authority, California, Public Assistance Identification 

Number 071-UI89M-00, for Project 828. Our audit objective was to determine 

whether the Authority accounted for and expended FEMA Public Assistance 

Program grant funds according to Federal regulations and FEMA guidelines for 

FEMA Disaster Number FEMA-1952-DR-CA. California, a FEMA grantee, 

administered the $41.3 million grant FEMA awarded for damages resulting 

from severe winter storms, flooding, debris and mud flows from December 17, 

2010, through January 4, 2011. The award provided 75 percent FEMA funding 

for four large projects and two small projects (see table 3).10 We audited three 

contracts totaling $31.7 million for Project 828 (see table 3), a major pipeline 

construction project, or 77 percent of the $41.3 million total award. 

Table 3: Schedule of Projects and Questioned Costs 

Project 

Number 

Category 

of Work11 

Award 

Amount 

Costs Audited 

and 

Questioned 

Project Audited 

828 F $ 33,124,002 $ 31,713,569 

Subtotal $33,124,002 $31,713,569 

Projects Not Audited 

890 A $1,010 $0 

891 F 65,029 0 

892 F 163,387 0 

906 F 23,930 0 

1136 B 7,954,740 0 

Subtotal $ 8,208,096 $ 0 

Totals $41,332,098 $31,713,569 

Source: OIG analyses of FEMA and Authority documentation 

10 Federal regulations in effect at the time of the disaster set the large project threshold at 

$63,900 [Notice of Adjustment of Disaster Grant Amounts, Vol. 75, No. 194 (Oct. 6, 2010)].

11 FEMA identifies type of work by category: A for debris removal, B for emergency protective 

measures, and F for public utilities. 

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OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Appendix A (continued) 

This report focused on the Authority’s procurement and accounting practices. 

We reviewed the award and administration of three contracts (engineering,12 

construction, and construction management) valued at $31,713,569, or 

96 percent of the $33,124,002 FEMA awarded to the Authority for Project 828. 

The audit covered the period from December 17, 2010, to December 27, 2015. 

A subsequent report will focus on information the Authority provided to FEMA 

to develop the scope of work for Project 828. 

To accomplish our objectives, we interviewed FEMA, California, and Authority 

officials; gained an understanding of the Authority’s procurement policies and 

procedures and its method of accounting for disaster-related costs; 

judgmentally selected and reviewed (generally based on dollar amounts) 

project costs and procurement transactions for Project 828; reviewed 

applicable Federal regulations and FEMA guidelines; and performed other 

procedures considered necessary to accomplish our audit objective. As part of 

our standard audit procedures, we also notified our Office of Information 

Technology Audits of all contracts the subgrantee awarded under the grant 

that we reviewed to determine whether the contractors were debarred or 

whether there were any indications of other issues related to those contractors 

that would indicate fraud, waste, or abuse. As of the date of this report, the 

Office of Information Technology Audits’ analysis of contracts was ongoing. 

When it is complete, we will review the results and determine whether 

additional action is necessary. We did not perform a detailed assessment of the 

Authority’s internal controls applicable to its grant activities because it was 

not necessary to accomplish our audit objective. 

We conducted this performance audit between June 2015 and 

September 2016, pursuant to the Inspector General Act of 1978, as amended, 

and according to generally accepted government auditing standards. Those 

standards require that we plan and perform the audit to obtain sufficient, 

appropriate evidence to provide a reasonable basis for our findings and 

conclusions based upon our audit objective. We believe that the evidence 

obtained provides a reasonable basis for our findings and conclusions based 

upon our audit objective. We conducted this audit by applying the statutes, 

regulations, and FEMA policies and guidelines in effect at the time of the 

disaster. 

12 We included $1,130,784 of the engineering contract for Project 828 in our audit scope. This 

contract also included $152,025 for Project 1136 (for construction of a temporary bypass 

pipeline), which was not part of our audit. 

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OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Appendix B

Potential Monetary Benefits 

Table 4: Summary of Potential Monetary Benefits 

Type of Potential Monetary Benefit Total Federal Share 

Questioned Costs – Ineligible $31,713,569 $23,782,177 

Questioned Costs – Unsupported 

Funds Put to Better Use 

Totals $31,713,569 $23,782,177 

Source: OIG analyses of findings in this report 

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OFFICE OF INSPECTOR GENERAL 

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Appendix C 

FEMA’s Comments to the Draft Report 

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Department of Homeland Security 

Appendix C (continued)
 

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Appendix C (continued)13 

13 FEMA has recently revised its Estimated Completion Date for Recommendation 4 to 

January 31, 2017. 

www.oig.dhs.gov 16 OIG-17-25-D 
OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Appendix D

Report Distribution 

Department of Homeland Security 

Secretary 

Chief of Staff 

Acting Chief Financial Officer 

Under Secretary for Management 

Chief Privacy Officer 

Audit Liaison, DHS 

Federal Emergency Management Agency 

Administrator 

Chief of Staff 

Chief Financial Officer 

Chief Counsel 

Chief Procurement Officer 

Director, Risk Management and Compliance 

Associate Administrator for Policy, Program Analysis, and International Affairs 

Audit Liaison, FEMA Region IX 

Audit Liaison, FEMA (Job Code G-15-026) 

Office of Management and Budget 

Chief, Homeland Security Branch 

DHS OIG Budget Examiner 

Congress 

Congressional Oversight and Appropriations Committees 

External 

Director, California Governor's Office of Emergency Services 

Audit Liaison, California Governor's Office of Emergency Services 

California State Auditor 

Board of Commissioners, Victor Valley Wastewater Reclamation Authority, 

California 

General Manager, Victor Valley Wastewater Reclamation Authority, California 

Accounting Supervisor, Victor Valley Wastewater Reclamation Authority, 

California 

Auditor-Controller, San Bernardino County, California 

www.oig.dhs.gov 17 OIG-17-25-D 
 

 

 

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OIG HOTLINE 

To report fraud, waste, or abuse, visit our website at www.oig.dhs.gov and click on the red 

"Hotline" tab. If you cannot access our website, call our hotline at (800) 323-8603, fax our 

hotline at (202) 254-4297, or write to us at: 

Department of Homeland Security 

Office of Inspector General, Mail Stop 0305 

Attention: Hotline 

245 Murray Drive, SW 

Washington, DC 20528-0305