Evaluation of the 

Federal Emergency Management 

Agency’s 

Alternative Housing Pilot Program

 

DEPARTMENT OF HOMELAND SECURITY 

Office of Inspector General 

OIG-07-39 April 2007 
 Office of Inspector General 

 

U.S. Department of Homeland Security 

 Washington, DC 20528 

April 20, 2007 

MEMORANDUM FOR: R. David Paulison 

 Administrator 

 Federal Emergency Management Agency 

FROM: Richard L. Skinner 

 Inspector General 

SUBJECT: Evaluation of FEMA’s Alternative Housing Pilot Program 

 

At the request of Congressman Bennie G. Thompson, we reviewed the Federal Emergency 

Management Agency’s (FEMA) grant awards under the Alternative Housing Pilot Program (AHPP). 

The Congressman requested we address a number of issues concerning the AHPP grant award 

process. 

Our objectives were to determine whether: 

• The $400 million available for the program was appropriately allocated and hurricaneaffected communities received proportionate shares of the available funds; 

• The decisions of the AHPP awards panel and FEMA officials led to the funding of 

innovative and creative emergency housing solutions; 

• The AHPP awards panel reached fair and balanced decisions; 

• The AHPP panel review process was subject to the basic federal advisory committee 

requirements of openness and transparency; and 

• There were any violations of law in the manner in which the AHPP grant project selections 

and awards were conducted. 

We conducted this review under the authority of the Inspector General Act of 1978, as amended, and 

according to Quality Standards for Inspections issued by the President's Council on Integrity and 

Efficiency. Our review included interviews with FEMA officials, review of contract solicitation and 

award documentation, and other procedures considered necessary under the circumstances. 
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Results of Review 

Of the $6 billion appropriated for Disaster Relief by Public Law 109-234,1

 $400 million was 

available to carry out Section 2403 of the Act. Section 2403 provided that costs for “alternative 

housing pilot programs in the areas hardest hit by Hurricane Katrina and other hurricanes of the 2005 

season” were eligible for funding under FEMA’s Individual Assistance Program. Furthermore, the 

occupants of the housing developed with these funds are to be the victims from those areas hardest 

hit by the 2005 hurricanes. The Senate Committee on Appropriations noted in a June 8, 2006, press 

release that the $400 million was to fund a pilot study to determine “alternative sources of 

emergency housing” that would be evaluated for providing a “better, safer and more cost effective 

housing solution than the exclusive use of travel trailers.”2

 

FEMA officials developed and implemented a grant competition to “identify, develop, and evaluate 

alternatives to and alternative forms of disaster housing.” The competition was limited to the statedesignated agencies of the Gulf Coast states, Alabama, Florida, Louisiana, Mississippi, and Texas. 

By awarding competitive grants, FEMA officials sought to identify the best alternatives for housing 

disaster victims. By restricting the competition to the five Gulf Coast states, FEMA officials sought 

to comply with the Congressional intent that those areas hardest hit by Hurricane Katrina and the 

2005 hurricanes receive the housing developed under these grants. 

When the AHPP Guidance and Application Kit was issued by FEMA on September 15, 2006, the 

designated agencies of the five Gulf Coast states were given 35 days to develop as many project 

proposals as they wished to submit by an October 20, 2006, deadline. A total of 29 project proposals 

were received, consisting of several from each of the eligible states. Some of the proposals 

envisioned developing more than one type of innovative housing, but most were focused on a single 

proposed type of unit. 

After the proposals were received by FEMA and reviewed by a technical review committee, each of 

the proposed projects were reviewed by an 11 member evaluation panel and were scored by each 

panel member on 5 factors or criteria: 

1. The manner and extent to which the alternative housing solution improves upon the 

conditions characteristic of existing temporary housing and improves long term recovery; 

2. The extent to which the option can provide ready for occupancy (RFO) housing (obtained, 

transported, installed, repaired, constructed, etc.) within time frames and in quantities 

sufficient to meet disaster related needs under a range of scenarios, including sudden onset 

catastrophic disasters; 

3. Life cycle cost, including the cost to acquire, transport, install/construct/repair, and maintain 

during the period it is occupied by disaster victims; 

4. The capacity of the proposed alternative approach to be utilized in and adapted to a variety of 

site conditions and locations; and 

 

1

 Emergency Supplemental Appropriations Act for Defense, the Global War on Terror, and Hurricane Recovery, 2006 

(the Act). 

2

 U.S. Senate Committee on Appropriations Press Release titled, “Senate, House Conferees Approve Final Supplemental 

Spending Bill,” dated June 8, 2006. 
3

5. The extent to which local officials, local neighborhood associations, and other community 

organizations are part of or support the pilot program in the community in which it will 

occur. 

The panel consisted of eight federal employees and three outside experts, including a state 

government housing official, and architecture and construction experts from private industry. Seven 

of the federal employees were from the Department of Homeland Security, mostly FEMA, and one 

was from the Department of Housing and Urban Development. 

The results of the panel’s review were an evaluation and scoring by each member of each of the 

proposed projects and a consolidated ranking of all of the 29 project proposals. The total scores of 

the 29 projects ranged from a low of 50 to a high of 184. There was one natural break in the scoring 

totals with six of the proposals scoring less than 59 and 23 of the proposals scoring more than 103; 

none of the proposals’ scores were between 59 and 103. 

FEMA Gulf Coast Recovery officials reviewed the panel members’ evaluations and prepared a 

decision paper for a DHS senior manager who, as the AHPP “primary selecting official” decided on 

the projects to be funded and the amount of funding that each project would receive. In this decision 

paper, the selecting official was provided with summary information on the project proposals and the 

panel’s evaluations. The selecting official was also provided with three suggested options for 

selecting and funding projects and the rationale supporting each of the options. 

Option 1. “Fully fund the highest scoring projects, until money is exhausted.” This option would 

have funded only the two highest-scoring project proposals and all of the available funds would have 

gone to the State of Mississippi. 

Option 2. “Optimize the number of housing alternatives funded within the competitive range.” This 

option would have funded 10 project proposals. The increase in projects funded would have been 

achieved by reducing the award amounts of those project proposals that had requested the largest 

budgets, generally for the greatest numbers of units to be constructed. Under this option, the State of 

Mississippi would have received 39.3% of the available funds, Louisiana 36.7%, Alabama 13.1%, 

Texas, 10.9%, and Florida 0%. 

Option 3. “Maximize the number of competitive states that receive funds.” This option funds five 

of the six highest scoring project proposals so that each state having a proposal that scored in the top 

six has at least one proposal funded. Under this option, each of the selected projects are funded at 

85% of the requested budget amount, except for the Mississippi Park Model and Mississippi Cottage 

proposal, which requested all $400 million of the appropriated funds and is instead funded at $275.4 

million, or 68.9% of the budget amount requested. Under this option, Mississippi would receive 

72.5% of the available funds, Louisiana 19.2%, Texas 4.3%, Alabama 4.0%, and Florida 0%. 

The AHPP primary selecting official chose to implement the third option, as described above, from 

the decision paper. Under this selected option, five projects will be funded: 

1. Mississippi’s “Green Mobile” project will be funded for up to $5,890,882 (85% of a 

requested $6,930,450). Under full funding of this proposal, 100 “green mobile” housing 

units would have been constructed of structural insulated panels. 
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2. Mississippi’s “Park Model and Mississippi Cottage” project will be funded for up to 

$275,427,730 (68.9 % of a requested $400,000,000). Under full funding of this proposal, 

7,261 Park Model trailer units, similar to FEMA’s park model travel trailers but with more 

amenities and enhancements and capable of meeting many local building codes, and 1,933 

modular cottages would have been constructed. 

3. Louisiana’s Katrina Cottages and Carpet Cottages (a multi-family unit) project will be 

funded for up to $74,542,370 (85% of a requested $87,696,906). Under full funding of this 

proposal, a total of 475 housing units consisting of a mix of single-family cottages and multifamily “carpet cottages” would have been constructed. 

4. Texas’ Heston Group project will be funded for up to $16,471,725 (85% of a requested 

$19,378,500). Under full funding of this proposal, 250 units of pre-fabricated, panelized 

housing would have been constructed. 

5. Alabama’s City of Bayou La Batre project will be funded for up to $15,667,293 (85% of a 

requested $18,432,110). Under full funding of this proposal, 194 modular homes would have 

been constructed of cement fiber materials. 

FEMA grants and program officials are now working with the state agencies whose project 

proposals were selected to finalize the terms of the grants. 

In response to the five issues Congressman Thompson raised concerning the AHPP grant award 

process, our evaluation follows. 

Issue #1 - Since the funds under these special AHPP grants will not be allocated on a state-by-state 

basis or through a needs-based formula, could the communities hardest hit by the 2005 hurricanes 

fail to receive a proportionate share of the $400 million appropriated for the program? 

Congress authorized the use of the Individual Assistance program to fund alternative housing pilots 

in areas hardest hit by Hurricane Katrina and the other hurricanes of the 2005 season. While 

providing AHPP funds on a state-by-state basis or needs-based formula would have complied with 

Section 2403 of the Act, neither would have been the most effective way of developing new and 

innovative types of disaster housing. FEMA officials’ decision to conduct a grants competition 

among the hurricane-affected states is a logical approach to implement a pilot program. 

As a consequence of the FEMA decisions, the communities hardest hit by the 2005 hurricanes did 

not receive proportionate shares of the $400 million appropriated for the program. The State of 

Mississippi was awarded $281.3 million or 72.5% of the available funds, a share greater than its 

proportion of the damages from the 2005 hurricanes. Consequently, the other Gulf States, which 

have to make do with the remaining 27.5% of funds among them, did not receive funds 

proportionate to the damages their communities sustained. 

However, the cause of this lack of balance between needs and awards was not a result of the 

competitive grant process or the work of the evaluation panel. Four of the five competing states 

actually scored well in the panel’s evaluations and rankings. Officials in the State of Florida, the 

only state that did not score well in the panel’s evaluations, attributed this ranking to what they 

considered to be discrepancies between the announced purposes of the grants and the FEMAdesigned factors that were used in scoring the proposals - not to the competitive process or the work 

of the evaluation panel. The award amounts that were decided upon and the decision to award 
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70.9% of the available funds to one project, the Mississippi Park Model and Mississippi Cottages 

project, were solely the decision of the AHPP primary selecting official. 

Had the FEMA guidance and application information to the applicant states requested that each 

project proposal include a budget that showed the minimum amounts required to implement each 

concept with some adequate-for-testing-and-evaluation number of units, such as 25 or 50, rather than 

just allowing the applicants to submit a “wish-list” budget for each proposal, it would have been 

easier for FEMA officials to compare the costs of each proposal. FEMA officials could then have 

distributed the funds more proportionately among the competing states, while also more effectively 

achieving the innovative disaster housing goals of the program. 

Issue #2 - In the absence of pre-determined formulas or concrete and objective criteria to guide the 

panel review process, will the panel decisions result in the funding of “innovative and creative” 

housing solutions or of “ad hoc, discretionary, and subjective determinations?” 

Any competitive grant process results in somewhat discretionary determinations and this particular 

process has to be considered somewhat “ad hoc” because the FEMA Competitive Grant Standard 

Operating Procedures are still in draft and have never been formally implemented. The panel review 

process appeared thorough and consistent and evaluated and rated the proposed projects in a manner 

that judged their innovation and creativity as well as the practicality and cost-effectiveness of the 

submitted proposals. The panels also provided the FEMA officials with the information that would 

be needed to effectively carry out the goals of the program. At least 11 of the project proposals were 

given support for funding by the evaluation panel. 

However, FEMA officials did not fund an optimum number of “innovative and creative” disaster 

housing solutions because they awarded the vast majority of the available funds (70.9 %) to one 

project – the Mississippi Park Model and Mississippi Cottage proposal. This decision did not allow 

ample funds for the remaining projects that qualified for funding. Had the selecting official chosen 

the second option presented in the decision paper, which would have funded 10 of the top-scoring 11 

project proposals (excluding one that was mostly a duplicate of another project), the AHPP grant 

funds would be much more effective in exploring and testing “innovative and creative” alternative 

solutions to disaster housing. Instead, the selecting official chose the option that expended all of the 

available funds on only five project proposals. 

The official who prepared the decision paper for the AHPP senior manager told us that he agreed 

with the selecting official’s decision to fund only the five projects because he believes that in a 

competitive grant process most of the funds should go to the top-scoring competitors. However, we 

are not aware of any standard competitive grant procedure that prevents funding as many qualified 

competing proposals as possible, and the draft FEMA Competitive Grant Standard Operating 

Procedures do not contain such a requirement or guidance. 

In addition, FEMA officials might have been able to solicit and fund more innovative and creative 

disaster housing solutions had they allowed applicants more time. FEMA allowed applicants only 

35 days to submit completed grant proposals. Given the amount of time necessary to complete the 

paperwork required for a grant submittal, little time was left for developing innovative and creative 

ideas. If all of the competing states had been given more than 35 days to develop submittals, the 

states may well have come up with more and better concepts for disaster housing that could have 
6

been funded. Several of the competing states indicated that more time was needed to prepare 

adequate proposals. FEMA officials told us that such time for developing new and innovative 

concepts was not needed because states had already spent a lot of time and effort developing such 

housing concepts. We do not doubt that such may be true for the states of Louisiana and 

Mississippi, which have had extensive numbers of panels and discussion groups related to these 

issues because of the extensive damage they suffered. However, the other three states eligible for the 

grants competition may not have had as much focus on developing and discussing such alternatives, 

and were probably placed at a competitive disadvantage by the tight time frames of the proposal 

submittal requirements. 

Issue #3 - Is the review panel as constituted able to reach fair and balanced decisions, unimpeded by 

real or apparent conflicts of interest? 

We reviewed all of the documentation that FEMA provided concerning the operation of the 

evaluation review panel. The panel conducted extensive reviews and evaluations of each project 

proposal. We did not note any lack of fairness or balance. Although the majority of panel members 

were FEMA employees, there was no obvious bias in how they conducted their reviews. The 

reviews were possibly unbalanced in that every factor was given the same weight as all of the other 

factors rather than being “weighted” as is often the case. It is unusual when some evaluation factors 

are not considered to be more important than other factors. FEMA officials made the decision for 

each factor to have the same weight, not the panel members. The panel members did complete 

conflict of interest forms, and we did not detect any noticeable conflicts of interest in our reviews of 

the panel’s evaluations. 

Issue #4 - Will the panel review process meet the basic requirements of openness and transparency 

required of all federal advisory committees? Specifically, will the panel review process comply with 

the requirements of the Federal Advisory Committee Act (FACA) for openness, public access to 

records, and fairness? 

The FEMA Counsel’s office concluded that the FACA requirements did not apply to this panel 

review process because FACA only applies when the agency establishes a committee with members 

who are not federal employees to obtain consensus advice or recommendations. FEMA officials 

considered the panel members to be providing individual recommendations and advice to the 

selecting official for the award of potential grant recipients. We reviewed the FEMA position 

concerning FACA compliance and concluded that it was justified. In addition, the panel process was 

not the key process that determined how many projects would be funded, what projects would be 

funded, or how much funding each of the selected projects would receive. Those decisions were the 

sole purview of the AHPP selecting official. More openness or transparency in the panel process 

would not necessarily have had any noticeable effect upon the FEMA decision-making process. 

Issue #5 - Were any violations of law found in the conduct of the AHPP grant project selections and 

awards? 

We did not find any violations of law in the AHPP grant process, although the grant awards could 

have been made to fund and assess a greater variety of alternative disaster housing options, and 

while doing so would have resulted in a more proportionate distribution of AHPP funds to the states. 

Moreover, the projects that have been funded should expand the alternatives available for disaster 
7

housing in the future and should provide improved interim housing for many residents of the 

hurricane-stricken areas of the Gulf Coast. FEMA officials said they intend to closely monitor the 

funded projects to ensure these projects are carried out in compliance with applicable laws and the 

terms of the AHPP grants. 

 

We discussed the report with FEMA management and provided them with a copy. However, this 

report contained no recommendations and does not require a formal response. 

Should you have any questions, please call me, or a member of your staff may contact Matt Jadacki, 

Deputy Inspector General for Disaster Assistance Oversight, at (202) 254-4100. 

cc: Audit Liaison, DHS 

 Audit Liaison, FEMA 

 
Appendix ? 

Major Contributors to this Report 

Additional Information and Copies 

To obtain additional copies of this report, call the Office of Inspector General (OIG) 

at (202) 254-4100, fax your request to (202) 254-4285, 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 misconduct relative to department programs or operations, call the OIG 

Hotline at 1-800-323-8603; write to DHS Office of Inspector General/MAIL STOP 

2600, Attention: Office of Investigations – Hotline, 245 Murray Drive, SW, 

Building 410, Washington, DC 20528; fax the complaint to (202) 254-4292; or 

email DHSOIGHOTLINE@dhs.gov. The OIG seeks to protect the identity of each 

writer and caller.