Department of Homeland Security
 

FEMA’s Sheltering and Temporary 


Essential Power Pilot Program
 

OIG-13-15 December 2012
 
OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

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

MEMORANDUM FOR: 

FROM: 

Assistant nspector Gen 

Office of Emergency Management Oversight 

SUBJECT: FEMA's Sheltering and Temporary Essential Power Pilot 

Program 

Attached for your information is our final letter report, FEMA's Sheltering and 

Temporary Essential Power Pilot Program. 

In response to Hurricane Sandy, our office has initiated several rapid response audits 

and reviews. We discussed the results of this audit with FEMA officials during the 

course of the audit. We also provided a discussion draft report to FEMA on December 3, 

2012. The report does not contain any recommendations; therefore, you do not need 

to provide our office with a written response. 

Consistent with our responsibility under the Inspector General Act, we are providing 

copies of our report to appropriate congressional committees with oversight and 

appropriation responsibility over the Department of Homeland Security. We will post 

the report on our website for public dissemination. 

Please call me with any questions, or your staff may contact John Kelly, Deputy Assistant 

Inspector General, Office of Emergency Management Oversight, at (202) 254-4100. 

Attachment 
 

 

 

 

 

 OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Background 

On October 29, 2012, Hurricane Sandy made landfall, affecting coastal and inland 

communities resulting in loss of life, major flooding, structural damage, and power loss 

to more than 8.5 million homes and businesses (directly affecting more than 17 million 

individuals). A dangerous snowstorm followed 9 days later, causing additional damage 

and power outages. Thirteen days after Hurricane Sandy’s landfall, 166,649 residential 

customers across three States - New York, New Jersey, and Connecticut - remained 

without power, in large part because of damage to their electrical systems, which 

prevented the electric utility companies from restoring power to their homes. Without 

additional government assistance, many of these homes could be without power during 

winter months, thus creating an immediate and undue threat to public health and 

safety. 

In response to this need, the Federal Emergency Management Agency (FEMA) 

established the Sheltering and Temporary Essential Power (STEP) pilot program, 

enabling residents to return to or remain in their homes as a form of shelter while 

permanent repairs are completed. This program will reduce the number of people in 

shelters or in the Transitional Shelter Assistance Program. 

The need for innovative FEMA programs and alternative housing solutions has been the 

subject of past congressional testimony. On July 8, 2009, Department of Homeland 

Security Inspector General Richard Skinner testified before the Committee on Homeland 

Security, U.S. House of Representatives, that the task of repairing and restoring housing 

stock is one of the most important challenges facing FEMA and its response and 

recovery partners following a catastrophic disaster, and that all other housing decisions 

and programs hinge on that single variable. Developing alternative housing options in 

response to catastrophic disasters is important for a number of reasons, but a key one is 

the cost of the current approach to post-disaster housing. FEMA does not have 

sufficient tools, operational procedures, and legislative authorities to promote the costeffective repair of housing stocks, which would increase the amount of housing available 

and likely limit increases in the cost of housing, particularly rental rates. 

Results of Audit 

FEMA’s STEP pilot program is consistent with the authorities granted to the agency by 

the Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act) in 

assisting jurisdictions to perform activities that are essential in saving lives, protecting 

public health and safety, and protecting property. In carrying out this program, FEMA 

needs to address the vulnerabilities that are present whenever large sums of money are 

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 OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

disbursed in a new and unique manner. The current situation requires increased 

vigilance to monitor the expenditure of public funds. 

The Stafford Act Provides FEMA the Flexibility to Implement STEP 

Section 403 of the Stafford Act authorizes FEMA to take emergency protective measures 

to save lives and property (Category B), as part of its public assistance program. The 

purpose of the STEP pilot program is “to assist State, local, and Tribal governments in 

performing work and services essential to saving lives, protecting public health and 

safety, and protecting property.” FEMA intends STEP to provide essential power and 

repairs to affected residences, thereby reducing the demand for other shelter options 

and allowing people to return to or remain in their homes. This program is for 

residential properties only, and will provide a maximum of $10,000 per residential unit 

to repair such items as electric meters, blown-out doors and windows, and damaged 

plumbing. Our Office of General Counsel has reviewed FEMA’s guidance regarding the 

STEP pilot program and agreed that it is an appropriate use of public assistance funds. 

Additionally, given the facts and circumstances surrounding Hurricane Sandy, the 

program may substantially reduce the overall long-term costs associated with sheltering 

and disaster housing. 

New Pilot Programs Are Vulnerable to Fraud, Waste, and Abuse 

Introducing new assistance or pilot programs entails start-up risks that require robust 

internal controls to avoid problems involving the expenditure of public funds. The 

Office of Inspector General and the Government Accountability Office, as well as FEMA 

internal assessments, have identified needed improvements to the internal controls of 

the individual and public assistance programs. 

FEMA, in carrying out its mission to support citizens and first responders, disburses 

billions of dollars annually to assist disaster survivors. This mission exposes FEMA to 

potential fraud, waste, and abuse in the execution of routine disaster assistance 

programs. During the implementation of a pilot program such as this one, the risks of 

fraud, waste, and abuse are exacerbated. Consequently, this pilot program requires 

increased vigilance in order to monitor the expenditure of public funds, including the 

need for competitive bidding and for monitoring the costing of single-family and 

multifamily unit price differentials, quality of workmanship, liability of workmanship, 

duplication of benefits, and long-term impact. As part of our legislative mandate to 

review selective FEMA programs, we may look at FEMA’s internal controls over the STEP 

pilot program at a future date. 

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 OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Conclusion 

We determined that FEMA’s actions in promulgating this pilot program are consistent 

with the authorities granted by the Stafford Act. Given the number of individuals 

affected by Hurricane Sandy, FEMA needs to maintain strong internal controls. We 

commend FEMA for its rapid response in designing this urgently needed program less 

than a month after Hurricane Sandy devastated communities on the Atlantic coast. If 

successful, the program can provide the assistance necessary to save lives, protect 

public health and safety, and protect property. Nevertheless, FEMA needs to be mindful 

of the vulnerabilities associated with implementing pilot programs and to institute 

adequate internal controls to protect against those vulnerabilities. 

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 OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Appendix A 

Objectives, Scope, and Methodology 

The 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. 

The objective of this review was to determine whether FEMA’s actions in promulgating 

the STEP pilot program were consistent with the authorities granted by the Stafford Act, 

and if so, what issues FEMA may need to address while implementing this pilot program. 

We conducted this review applying the statutes, regulations, and FEMA policies and 

guidelines in effect at the time of our fieldwork. We interviewed FEMA officials and 

performed other procedures considered necessary to accomplish our objective. We did 

not assess the adequacy of the agency’s internal controls applicable to grant activities 

because it was not necessary to accomplish our audit objective. 

We conducted this performance audit between November 15 and 27, 2012, 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 objectives. We believe that the evidence 

obtained provides a reasonable basis for our findings and conclusions based upon our 

audit objectives. 

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 OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Appendix B 

Report Distribution 

Department of Homeland Security 

Secretary 

Deputy Secretary 

Chief of Staff 

Deputy Chief of Staff 

General Counsel 

Executive Secretary 

Director, GAO/OIG Liaison Office 

Assistant Secretary for Office of Policy 

Assistant Secretary for Office of Public Affairs 

Assistant Secretary for Office of Legislative Affairs 

DHS FEMA Liaison 

Director of Local Affairs, Office of Intergovernmental Affairs 

Acting Chief Privacy Officer 

Federal Emergency Management Agency 

Chief of Staff 

Chief Financial Officer 

Chief Counsel 

Associate Administrator for Policy and Program Analysis 

Director, Program Analysis and Evaluation Division 

Audit Liaison 

Office of Management and Budget 

Chief, Homeland Security Branch 

DHS OIG Budget Examiner 

Congress 

Congressional Oversight and Appropriations Committees, as appropriate 

www.oig.dhs.gov 6 OIG-13-15 
 

ADDITIONAL INFORMATION AND COPIES 

To obtain additional copies of this document, please call us at (202) 254-4100, fax your 

request to (202) 254-4305, or e-mail your request to our Office of Inspector General 

(OIG) Office of Public Affairs at: DHS-OIG.OfficePublicAffairs@oig.dhs.gov. 

For additional information, visit our website at: www.oig.dhs.gov, or follow us on Twitter 

at: @dhsoig. 

OIG HOTLINE 

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other kinds of criminal or noncriminal misconduct relative to Department of Homeland 

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Should you be unable to access our website, you may submit your complaint in writing 

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Murray Drive, SW, Building 410/Mail Stop 2600, Washington, DC, 20528; or you may 

call 1 (800) 323-8603; or fax it directly to us at (202) 254-4297. 

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