Audit of FEMA Grant 

Funds Awarded to the 

Roman Catholic Diocese of 

Brooklyn, New York 

September 29, 2017 

OIG-17-117-D 
 

 

 

 

 

DHS OIG HIGHLIGHTS 

Audit of FEMA Grant Funds Awarded to 

the Roman Catholic Diocese of Brooklyn, New York 

September 29, 

2017 

Why We Did 

This Audit 

The Roman Catholic 

Diocese of Brooklyn 

(Diocese) received an 

$18.3 million award from 

the New York State 

Division of Homeland 

Security and Emergency 

Services (New York), a 

Federal Emergency 

Management Agency 

(FEMA) grantee, for 

damages from Hurricane 

Sandy that occurred in 

October 2012. 

What We 

Recommend 

FEMA should disallow 

$897,955 and direct New 

York to work with the 

Diocese to assist it in 

properly supporting all 

claimed or planned 

claimed costs. 

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 Diocese generally accounted for FEMA funds on a 

project-by-project basis as required by Federal regulations 

and FEMA guidelines. However, it did not follow Federal 

procurement standards in awarding two contracts totaling 

$897,955. The Diocese and its parishes did not provide 

supporting documentation for procurements or their local 

procurement processes. 

This occurred primarily because the Diocese was not familiar 

with certain Federal regulations and FEMA guidelines. As 

FEMA’s grantee, New York should have done more to ensure 

the Diocese was aware of and complied with Federal 

procurement standards and documentation requirements. 

FEMA should emphasize New York’s role in proper grant 

administration. 

FEMA Response

FEMA officials agreed with our findings and 

recommendations. Appendix C includes FEMA’s written 

response in its entirety. 

www.oig.dhs.gov OIG-17-117-D 
 

 

 

OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

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

September 29, 2017 

MEMORANDUM FOR: John Rabin 

 Acting Regional Administrator, Region II 

 Federal Emergency Management Agency 

FROM: John E. McCoy II

 Acting Assistant Inspector General 

 Office of Emergency Management Oversight 

SUBJECT:	 Audit of FEMA Grant Funds Awarded to the Roman 

Catholic Diocese of Brooklyn, New York

 Audit Report Number OIG-17-117-D 

We audited Public Assistance Program grant funds awarded to the Roman 

Catholic Diocese of Brooklyn, New York (Diocese). The New York State Division 

of Homeland Security and Emergency Services (New York), a Federal 

Emergency Management Agency (FEMA) grantee, awarded the Diocese 

$18.3 million for damages resulting from Hurricane Sandy, which occurred in 

October 2012. The award provided 90 percent FEMA funding for debris 

removal, emergency protective measures, and permanent repairs to buildings 

and other facilities. We audited four projects totaling about $8.4 million or 

about 46 percent of the total award (see appendix B, table 1). At the time of our 

audit, the Diocese had completed work related to emergency protective 

measures. 

Background 

The Roman Catholic Diocese of Brooklyn is a private nonprofit organization 

located in Kings County, New York. In October 2012, Hurricane Sandy’s high 

winds, torrential rainfall, and localized flooding caused severe damages to 

different facilities within the Diocese including community centers and schools. 

Results of Audit 

The Diocese generally accounted for FEMA funds on a project-by-project basis 

as required by Federal regulations and FEMA guidelines. However, the Diocese 

did not follow Federal procurement standards in awarding two contracts 

totaling $897,955. Therefore, we question the $897,955 as ineligible. The 

www.oig.dhs.gov	 OIG-17-117-D 
OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Diocese did not provide documentation proving that its decentralized facilities 

followed its policies for procurements. As a result, there is no evidence of open 

and free competition, and FEMA has no assurance that small and minority 

businesses and women’s business enterprises had sufficient opportunities to 

bid on federally funded work. FEMA also has no assurance that costs were 

reasonable. 

Diocese officials believed the diocesan procurement policy permitted them to 

waive normal bidding requirements because of the exigent nature. This 

occurred primarily because the Diocese was not familiar with certain Federal 

regulations and FEMA guidelines. As FEMA’s grantee, New York should have 

done more to ensure the Diocese was aware of and complied with Federal 

procurement standards and documentation requirements. FEMA should 

emphasize New York’s role in proper grant administration to ensure that its 

subgrantee, the Diocese, is aware of and complies with all Federal grant 

requirements. 

Finding A: Grant Management 

New York should have done more as FEMA’s grantee to ensure the Diocese was 

aware of and complied with Federal procurement standards and 

documentation requirements. In its FEMA-State Agreement, New York agreed 

to “comply with the requirements of laws and regulations found in the Stafford 

Act and 44 CFR.” Further, 44 Code of Federal Regulation (CFR) 13.37(a)(2) and 

13.40(a) require grantees to (1) ensure that subgrantees are aware of Federal 

regulations, (2) manage the operations of subgrant activity, and (3) monitor 

subgrant activity to ensure compliance. It was New York’s responsibility to 

ensure the Diocese complied with applicable Federal regulations and FEMA 

guidelines. It is FEMA’s responsibility to hold New York accountable for proper 

grant administration. 

Finding B: Improper Procurement 

The Diocese did not provide evidence that it followed all Federal procurement 

standards in awarding $897,955 in disaster-related contract costs. These costs 

include $883,055 for building security and $14,900 for permanent repairs. 

Diocese officials disclosed they entered into an $883,055 contract for building 

security under what they believed to be exigent circumstances. According to 

New York Fire Code when a facility’s required fire protection system was out of 

service, the applicant was required to utilize guards to protect the facility, 

because it was exposed to safety and security risks. The guards protected 

properties from looting and provided a fire watch detail to facilities while alarm 

systems were not functioning. 

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OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Additionally, the Diocese was unable to provide any evidence to support the 

procurement of permanent repairs at Saint Francis De Sales School totaling 

$14,900 damaged by Hurricane Sandy. Sustained high winds, floodwaters, and 

storm surge compromised exterior doors and windows producing damage to the 

interior ceiling, walls, and flooring of the facility. These high winds also 

removed parts of aluminum rooftop, edge capping, aluminum gutters, and 

downspouts. The building’s close proximity to the Atlantic Ocean, Jamaica 

Bay, and low elevation (six feet above sea level) made it vulnerable to 

floodwaters and storm surge. 

Federal regulations at 2 CFR 215, in part, require that subgrantees — 

1. conduct all procurement transactions in a manner to provide, to the 

maximum extent practical, open and free competition. (2 CFR 215.43); 

2. include in procurement records and files for purchases in excess of the 

small purchase threshold the following at a minimum: (a) Basis for 

contractor selection; (b) Justification for lack of competition when 

competitive bids or offers are not obtained; and (c) Basis for award cost or 

price. (2 CFR 215.46); 

3. include, in addition to provisions to define a sound and complete 

agreement, required provisions in all contracts. (2 CFR 215.48); and 

4. use the services and assistance, as appropriate, of such organizations as 

the Small Business Administration and the Department of Commerce’s 

Minority Business Development Agency in the solicitation and utilization of 

small businesses, minority-owned firms, and women’s business enterprises. 

(2 CFR 215.44(b)(5)). 

Open and Free Competition 

The Diocese awarded contract work totaling $883,055 under Project 2596 for 

emergency protective measures for security guards and $14,900 under Project 

4461 for permanent repairs to numerous facilities at Saint Francis De Sales 

School. The Diocese was not able to provide evidence that it took the required 

actions to promote open and free competition. 

Open and free competition usually increases the number of bids received and 

increases the opportunity for obtaining reasonable pricing from the most 

qualified contractors. 

Procurement Records 

The Diocese did not provide evidence that it solicited bids or performed cost 

comparisons for approximately $897,055 in contracts it awarded for security 

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OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

services and permanent repairs. In addition, the Diocese did not provide 

evidence of meeting socioeconomic goals as required by Federal procurement 

regulations. The Diocese attributed the lack of documentation to its 

decentralized organizational structure that hindered its efforts to procure the 

source documentation from local parishes, schools and other facilities to 

support its procurement activities. The Diocese was not able to provide 

evidence that it based the awards on a cost or price analysis to decrease the 

risk of unreasonable contract costs and misinterpretations or errors in pricing 

relative to scopes of work. Officials told us that, because they believed the 

Diocese was operating under exigent circumstances, it was problematic to use 

competitive methods of procurement. 

Contract Provisions 

The Diocese provided no evidence that the contracts it awarded contained the 

federally required provisions including those for remedies and termination, 

non-discrimination, compliance with labor laws, and prohibitions of 

“kickbacks.” These provisions describe the rights and responsibilities of the 

parties and minimize the risk of misinterpretations and disputes. 

Disadvantaged Businesses 

In addition, the Diocese did not provide evidence that it took the required steps 

to include qualified small and minority businesses and women’s business 

enterprises on solicitation lists or that it used the services and assistance of 

agencies such as the Small Business Administration and the Minority Business 

Development Agency of the Department of Commerce to solicit and use these 

firms. As a result, FEMA has no assurance that small and minority firms, 

women’s business enterprises, and labor surplus area firms received sufficient 

opportunities to bid on federally funded work. 

Therefore, because the Diocese did not provide evidence that it adhered to 

Federal procurement standards, FEMA has no assurance that costs were 

reasonable and all potential contractors received an opportunity to bid, 

including small businesses, minority-owned firms, and women’s business 

enterprises. We question $897,955 in ineligible costs as follows: 

x $883,055 under Project 2596 beyond the exigency period for emergency 

protective measures for security guards. 

x $14,900 under Project 4461 for permanent repairs to numerous 

properties at St. Francis De Sales School. 

www.oig.dhs.gov 4 OIG-17-117-D 
 

OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Recommendations 

We recommend the Regional Administrator, FEMA Region II: 

Recommendation #1: Direct New York to provide additional technical 

assistance to the Diocese and verify that the Diocese complies with Federal 

procurement standards and documentation requirements (finding A). 

Recommendation #2: Disallow as ineligible $897,955 (Federal share 

$808,159) for contracts that did not comply with Federal procurement 

standards unless FEMA decides to grant an exception for all or part of the 

costs as 2 CFR 215.4 allows and determines that the costs are reasonable 

(finding B). 

www.oig.dhs.gov 5 OIG-17-117-D 
 

OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Discussion with Management and Audit Follow-up 

We discussed the results of our audit with the Diocese, New York, and FEMA 

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

officials and discussed it at an exit conference on August 14, 2017. FEMA 

officials agreed with our findings. 

The Office of Emergency Management Oversight major contributors to this 

report are William H. Johnson, Director; Carlos Aviles, Audit Manager; 

John Jadick, Auditor-in-Charge; Richard Kotecki, Auditor; 

Katherine McPherson, Auditor; Omar Russell, Auditor; and Nathaniel 

Nicholson, Independent Referencer. 

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

Paul Wood, Acting Deputy Assistant Inspector General, or William H. Johnson, 

Director, Eastern Regional Office - North at (404) 832-6703. 

www.oig.dhs.gov 6 OIG-17-117-D 
 

OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Appendix A 

Objective, Scope, and Methodology 

We audited Public Assistance grant funds awarded to the Diocese (FIPS Code 

047-UGYD-00). Our audit objective was to determine whether the Diocese 

accounted for and expended FEMA grant funds according to Federal 

regulations and FEMA guidelines for FEMA Disaster 4085-DR-NY. The Diocese 

received a Public Assistance gross award of $18.3 million from New York, a 

FEMA grantee, for damages resulting from Hurricane Sandy. The award 

provided 90 percent FEMA funding for debris removal, emergency protective 

measures, and permanent repairs to buildings and equipment. The award 

consisted of 29 large projects and 25 small projects.1 Table 3 provides a 

summary of potential monetary benefits identified during this audit. 

We audited the four largest projects totaling $8,364,515 or about 46 percent of 

the total award (see appendix B, table 1). The audit covered the period 

September 16, 2015 to February 1, 2017, the cutoff date of our audit. 

To accomplish our objective, we interviewed Diocese, New York, and FEMA 

officials; gained an understanding of the Diocese’s method of accounting for 

disaster-related costs and its procurement policies and procedures; 

judgmentally selected (generally based on dollar value) and reviewed project 

costs and procurement transactions for the projects in our audit scope; 

reviewed applicable Federal regulations and FEMA guidelines; and performed 

other procedures considered necessary to accomplish our objective. We did not 

assess the adequacy of the Diocese’s internal controls applicable to grant 

activities because it was not necessary to accomplish our audit objective. 

We conducted this performance audit between September 2015 and February 

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 objectives. We believe that the evidence 

obtained provides a reasonable basis for our findings and conclusions based 

upon our audit objectives. 

1 Federal regulations in effect at the time of Hurricane Sandy set the large project threshold at 

$67,500. 

www.oig.dhs.gov 7 OIG-17-117-D 
 

 

 

 

 

 

 

 

OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Appendix B 

Potential Monetary Benefits 

Table 1: Projects Audited and Costs Questioned 

Project 

Number 

2596 

FEMA 

Category of 

Work* 

B

Awarded 

Amount 

Project

 $918,539

s Au

Claim Amount 

 $918,539

dited 

Total Costs 

Questioned 

 $883,055 

4461 E 573,756 573,756 14,900 

4680 E 1,586,095 0 0 

4686

Totals 

E 5,286,125 

$8,364,515 

0 

$1,492,295 

0 

$897,955 

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

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

measures, and C – G for permanent work. 

Table 2: Project Questioned Cost Breakdown 

Project 

Number 

2596 

Contractor 

Work 

Security 

FEMA Work 

Category 

Project

B 

s Au

Amounts 

$918,539 

dited 

Total Questioned 

$883,055 

4461

Totals 

 Construction E 573,756 

$1,492,295 

14,900 

$897,955 

Source: OIG analyses of report findings 

Table 3: Summary of Potential Monetary Benefits 

Type of Potential Monetary Benefit Total Federal Share 

Questioned Costs – Ineligible $897,955 $808,159 

Totals $897,955 $808,159 

Source: OIG analysis of findings in this report 

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OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Appendix C 

FEMA Region II Audit Response 

www.oig.dhs.gov 9 OIG-17-117-D 
OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Appendix C (continued) 

www.oig.dhs.gov 10 OIG-17-117-D 
OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Appendix D 

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 

Associate Administrator, Response and Recovery 

Director, Risk Management and Compliance 

Audit Liaison, FEMA (Job Code G-15-043) 

Audit Liaison. FEMA Region II 

Office of Management and Budget 

Chief, Homeland Security Branch 

DHS OIG Budget Examiner 

Congress 

Congressional Oversight and Appropriations Committees 

External 

New York State Division of Homeland Security and Emergency Services 

Executive Director, Governor’s Office, New York 

State Auditor, New York 

Attorney General, New York 

Director of Finance, Roman Catholic Diocese of Brooklyn, New York 

www.oig.dhs.gov 11 OIG-17-117-D 
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