Linn County Road 

Department, Oregon, Has 

Sufficient Policies, 

Procedures, and Business 

Practices to Manage Its 

FEMA Grant Funding 

June 22, 2017 

OIG-17-79-D 
 

 

 

 

 

 

DHS OIG HIGHLIGHTS 

Linn County Road Department, Oregon, Has 

Sufficient Policies, Procedures, and Business 

Practices to Manage Its FEMA Grant Funding 

June 22, 2017 

Why We Did 

This Audit 

In December 2015, Oregon 

experienced severe winter 

storms, straight-line winds, 

flooding, landslides, and 

mudslides. These events 

caused severe damage to 

the Department’s roads. 

The Department received a 

$1.3 million FEMA grant 

award to repair the 

disaster-related damages. 

We conducted this audit 

early in the grant process 

to identify areas where the 

Department may need 

additional technical 

assistance or monitoring to 

ensure compliance with 

Federal regulations and 

FEMA guidelines. 

What We 

Recommend 

This report contains no 

recommendations. 

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 

Linn County Road Department, Oregon (Department) 

has adequate policies, procedures, and business 

practices in place to account for and expend Federal 

Emergency Management Agency (FEMA) Public 

Assistance grant funds according to Federal regulations 

and FEMA guidelines. The Department, however, did 

not always use the lowest of FEMA and local rates for 

equipment costs. Department officials agreed with this 

finding and took immediate corrective action by 

notifying Oregon that they would revise and resubmit 

payment reimbursement claims with correct equipment 

rate costs. 

The Department also has adequate procurement 

policies and procedures that conform to Federal 

procurement standards. However, the Department did 

not have written procedures for small procurements 

that included affirmative steps to ensure the use of 

disadvantaged business enterprises (DBE), such as 

small and minority firms and women’s business 

enterprises when possible. During our audit, the 

Department revised its procurement procedures for 

small contracts to include affirmative steps and ensure 

the use of DBEs when possible as 2 Code of Federal 

Regulations Section 200.321 requires. 

Therefore, if the Department conforms to its policies, 

procedures, and business practices, FEMA has 

reasonable, but not absolute, assurance that the 

Department will properly manage the Public Assistance 

grant funds it receives. 

FEMA Response 

Because the audit does not identify any issues requiring 

further action from FEMA Region X, we consider this 

audit closed. 

www.oig.dhs.gov OIG-17-79-D 
OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

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


June 22, 2017 


MEMORANDUM FOR: Sharon Loper 

Acting Regional Administrator, Region X 

Federal Emergency Management Agency 

FROM: John E. McCoy /£~~~ Acting Assistant Inspector General 

Office of Emergency Management Oversight 

SUBJECT: Linn County Road Department, Oregon, Has Sufficient 

Policies, Procedures, and Business Practices to Manage 

Its FEMA Grant Funding 

Audit Report Number OIG-17-79-D 

We audited Federal Emergency Management Agency (FEMA) Public Assistance 

grant funds awarded to the Linn County Road Department, Oregon 

(Department). We conducted this audit early in the Public Assistance process 

to identify areas where the Department may need additional technical 

assistance or monitoring to ensure compliance with Federal regulations and 

FEMA guidelines. In addition, by undergoing an audit early in the grant cycle, 

grant recipients have the opportunity to correct noncompliance before they 

spend the majority of their grant funding. It also allows them the opportunity 

to supplement deficient documentation or locate missing records before too 

much time elapses. 

As of January 31, 2017 (our audit cutoff date), the State of Oregon Office of 

Emergency Management (Oregon), a FEMA recipient, awarded the Department 

$1.3 million for damages resulting from severe winter storms, straight-line 

winds, flooding, landslides and mudslides during December 6 through 23, 

2015. The award will provide 75 percent funding for debris removal, emergency 

protective measures, and permanent work. l At the time of our audit, the 

Department had completed and filed a cost reimbursement claim to Oregon for 

two large projects and one small project totaling $378,531. Department officials 

estimate that disaster-related costs for the remaining large project will be 

$741,855 and the Department is in the process of accounting for those costs. 

Therefore, to determine whether the Department is properly managing the 

FEMA grant, we assessed the policies, procedures, and business practices the 

Department used to support the $378,531 cost claimed.2 

1 The Department opted to participate in the Alternative Procedures Pilot Program for Debris 


Removal and could receive an increased Federal cost share up to 85 percent of debris removal · 


costs. 


2 The cost reimbursement claim was $193,769 less than the FEMA award amount (see 


appendix A, table 1). 


www.oig.dhs.gov 1 OIG-17-79-D 
 

 

 

OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Background 

The Linn County Road Department’s mission is to provide safe and efficient 

transportation to the citizens and visitors of Linn County, Oregon. The 

Department is responsible for the maintenance of approximately 1,139 miles of 

roadway and 326 bridges. During the period December 6 through 23, 2015, 

widespread damage resulting from severe winter storms, straight-line winds, 

flooding, landslides and mudslides occurred in certain areas of the state. These 

events left debris or caused damage to the Department’s roads. 

The President signed a major disaster declaration (DR-4258-OR) on February 

17, 2016, to provide Oregon and local governments, assistance with recovery 

efforts for the incident period of December 6 through 23, 2015 [Federal 

Register, Major Disaster and Related Determinations, 81 Fed. Reg. 14873 

(March 18, 2016)]. The declaration authorized Federal assistance for Public 

Assistance in the designated areas and Hazard Mitigation throughout Oregon.3 

Results of Audit 

The Department has adequate policies, procedures, and business practices in 

place to account for and expend FEMA Public Assistance grant funds according 

to Federal regulations and FEMA guidelines. During our audit, we determined 

the Department did not always use the lowest of FEMA and local rates for 

equipment costs. Department officials agreed with this finding and took 

immediate corrective action by notifying Oregon that they would revise and 

resubmit payment reimbursement claims with correct equipment rate costs. 

The Department also has adequate procurement policies and procedures that 

conform to Federal procurement standards. Nevertheless, the Department did 

not have written procedures for small procurements that included affirmative 

steps to ensure the use of disadvantaged business enterprises (DBE), such as 

small and minority firms and women’s business enterprises when possible. 

During our audit, the Department revised its procurement procedures for small 

contracts to include affirmative steps and ensure the use of DBEs when 

possible as 2 Code of Federal Regulations (CFR) Section 200.321 requires. 

Therefore, if the Department conforms to its policies, procedures, and business 

practices, FEMA has reasonable, but not absolute, assurance that the 

Department will properly manage the Public Assistance grant funds it receives. 

3 FEMA’s Public Assistance program awards grants to State, local, and federally recognized 

tribal governments and certain private non-profit entities to assist them with the response to 

and recovery from federally declared disasters. Hazard mitigation is an action taken to reduce 

or eliminate long-term risk to people and property from natural hazards. 

www.oig.dhs.gov 2 OIG-17-79-D 
 

OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Finding A: Accounting Policies and Procedures 

The Department has adequate policies, procedures, and business practices in 

place as the following Federal regulations and FEMA guidelines require: 

x Recipients must account for large project expenditures on a project-byproject basis (44 CFR § 206.205(b)). FEMA requires subrecipients to keep 

all documentation pertaining to each project with the corresponding 

Project Worksheet (Public Assistance Program and Policy Guide, 

FP 104-009-2/January 2016, p. 134). 

x Subrecipients must maintain accounting records that adequately identify 

the source and application of Federal funds and maintain source 

documentation to support those accounting records (2 CFR § 

200.302(b)(3)). 

At the time of our audit, the Department was in the process of accounting for 

disaster costs and had submitted three cost reimbursement claims to Oregon 

totaling $378,531. We reviewed the cost reimbursement claims, determined 

that the Department was adequately tracking disaster-related costs in its 

accounting system on a project-by-project basis and had maintained 

appropriate documentation to support the costs. We identified that the 

Department included some equipment costs that exceeded the allowable FEMA 

equipment rates. Department officials acknowledged that they strictly applied 

their local rates without using FEMA equipment rates. Federal regulations at 

44 CFR § 206.228(a)(1)(ii) stipulates that “where local guidelines are used to 

establish equipment rates, reimbursement will be based on those rates or rates 

in a Schedule of Equipment Rates published by FEMA, whichever is lower.” 

After discussing with Department officials the requirement to use the lowest of 

local or FEMA equipment rates, these officials agreed with the finding and took 

corrective actions. Department officials notified Oregon of the revised costs 

claims and that they included corrected equipment rate costs. 

Because of the efforts taken by the Department during the time of our audit to 

address this finding, we consider this finding resolved and closed. 

Finding B: Procurement Practices 

The Department has procurement policies, procedures, and business practices 

that conform to Federal procurement standards at 2 CFR § 200.317-326. 

Nevertheless, the Department did not have written procedures for small 

procurements that included affirmative steps to ensure the use of DBEs such 

as small and minority firms, women’s business enterprises, and labor surplus 

area firms when possible, as 2 CFR § 200.321 requires. 

www.oig.dhs.gov 3 OIG-17-79-D 
OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

By our audit cutoff date, January 31, 2017, the Department had awarded two 

small contracts, but no large contracts. Therefore, we reviewed the 

Department’s procurement policies and procedures, and the process 

Department officials used to award the two small contracts. We determined 

that the Department’s written procurement policies align with Federal 

standards, except for not having written procedures to ensure the use of DBEs 

under small procurements. 

We are not questioning the costs pertaining to the two small contracts, because 

the Department awarded one of the two contracts to a women’s business 

enterprise. Department officials stated when they are awarding small contracts 

their practice is to give consideration first to minority firms and women’s 

business enterprises. 

Department officials explained that in practice they implement “affirmative 

steps” required by 2 CFR § 200.321 when contracting for small and large 

procurements. These officials added that for procurements less than $100,000, 

the Department’s practice is to solicit DBEs and invite them to participate in 

the bidding process, when possible. In addition, for those procurements over 

$100,000, the Department uses the County’s Civil Rights Manual of 2011, 

adapted from Oregon’s Civil Rights-Title VI, to provide opportunities for DBEs 

to participate in bidding for large contracts. 

Department officials acknowledged that although they had practices to provide 

opportunities for DBEs to compete for small federally funded contracts, they 

had not incorporated these practices into the Department’s written 

procurement procedures. Department officials took corrective action for this 

finding and revised their procurement procedures for small contracts to include 

affirmative steps to ensure the use of DBEs when possible, as required by 2 

CFR § 200.321(b)(1)-(6). 

Because of the efforts taken by the Department to address this finding during 

the time of our audit, we consider this finding resolved and closed. 

Recommendations 

We recommend that the Regional Administrator, FEMA Region X: 

Recommendation #1: Direct Oregon to ensure the Department corrects its 

equipment rate costs, and submits future claims with only appropriate 

equipment rates (finding A). Because of our audit efforts, the Department took 

corrective actions and revised its equipment rate costs; therefore, we consider 

this recommendation resolved and closed. 

www.oig.dhs.gov 4 OIG-17-79-D 
OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Recommendation #2: Request Oregon to work with Department officials to 

ensure their understanding and compliance with all Federal procurement 

standards and documentation (finding B). Because of our audit, Department 

officials initiated corrective actions and revised their procurement procedures 

for small contracts to include affirmative steps to ensure the use of DBEs when 

possible; therefore, we consider this recommendation resolved and closed. 

Discussion with Management and Audit Follow-Up 

We discussed the results of our audit with FEMA, Oregon, and Department 

officials during our audit. We also provided a draft report in advance to these 

officials and discussed it at exit conferences with FEMA on March 13, 2017; 

with Oregon on March 16, 2017; and with the Department on March 17, 2017. 

Because the audit did not identify any issues requiring further action from 

FEMA, we consider this audit closed. 

The Office of Emergency Management Oversight major contributors to this 

report are Humberto Melara, Director; Louis Ochoa, Audit Manager; 

Renee Gradin, Auditor-in-charge; Willard Stark, Auditor; Daniel Flores, 

Auditor; and Victor Du, Independent Referencer. 

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

Paul Wood, Acting Deputy Assistant Inspector General at (202) 254-4100, or 

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

www.oig.dhs.gov 5 OIG-17-79-D 
 

 

 

 

 

OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Appendix A 

Objective, Scope and Methodology 

We audited the capability of the Department (Public Assistance Identification 

Number 043-UNE2N-00) to manage FEMA Public Assistance grant funds. We 

audited FEMA Public Assistance grant funds awarded to the Department. Our 

audit objective was to determine whether the Department’s policies, 

procedures, and business practices are adequate to account for and expend 

FEMA Public Assistance Program grant funds according to Federal regulations 

and FEMA guidelines for FEMA Disaster Number 4258-DR-OR. 

The Department expects to receive a Public Assistance grant award of 

$1,314,155 from Oregon, the FEMA grant recipient. The award will provide 75 

percent FEMA funding for an estimated three large projects and one small 

project (see table 1).4 As of January 31, 2017, our audit cutoff date, the 

Department has submitted to Oregon costs claimed totaling $378,531 for 

reimbursement of Public Assistance funding. Our audit covered the period of 

December 6, 2015, the first day of the incident period, through January 31, 

2017, our audit cutoff date. We assessed the policies and procedures the 

Department used to account for and expend FEMA funds, and audited the 

$378,531 cost claimed. 

Table 1: Department Projects and Award Amounts 

Project 

Number 

Category 

of Work5 

Award 

Amount 

Reimbursement 

Claims 

Difference 

(Award less 

Claim) 

10* C $ 741,855 $ 0 $ 0 

154 B 418,795 225,026 193,769 

315 A 145,140 145,140 0 

316** B 8,365 8,365 0 

Total $1,314,155 $378,531 

Source: Office of Inspector General (OIG) and Department project listing 

 *The Department has yet to submit a reimbursement claim for Project 10

 **Small project 

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

$121,800 [Federal Register, Notice of Adjustment of Disaster Grant Amounts, 80 FR 61836 (Oct. 

14, 2015)].
 5 FEMA identifies type of work by category: A for debris removal, B for emergency protective
 

measures, and C–G for permanent work.
 

www.oig.dhs.gov 6 OIG-17-79-D 
 

 

 

 

 

OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Appendix A (Continued) 

To accomplish our objectives, we interviewed FEMA, Oregon, and Department 

officials; assessed the adequacy of the policies, procedures, and business 

practices the Department uses and plans to use to account for and expend 

Federal grant funds, and to procure and monitor contracts for disaster work; 

reviewed applicable Federal regulations and FEMA guidelines; and performed 

other procedures considered necessary to accomplish our objective. We limited 

our review of the Department’s internal controls to what was necessary to 

accomplish our audit objectives. 

We conducted this performance audit between October 2016 and 

January 2017 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 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. 

www.oig.dhs.gov 7 OIG-17-79-D 
OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Appendix B 

Report Distribution 

Department of Homeland Security 

Secretary 

Chief of Staff 

Chief Financial Officer 

Under Secretary of Management 

Executive Secretary 

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 

Audit Liaison, FEMA Region X 

Audit Liaison, FEMA (Job Code G-16-057) 

Office of Management and Budget 

Chief, Homeland Security Branch 

DHS OIG Budget Examiner 

Congress 

Congressional Oversight and Appropriations Committees 

External 

Director, Infrastructure Branch, Oregon Emergency Coordination Center 

Engineer, Linn County Road Department, Linn County, Oregon 

www.oig.dhs.gov 8 OIG-17-79-D 
 

 

 

 

 

 

 

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