Management Alert -

Observations and 

Concerns with FEMA's 

Housing Assistance 

Program Efforts for 

Hurricane Harvey in Texas 

September 29, 2017 

OIG-17-121-MA 
 

 

Errata page for OIG-17-121-MA
 

Management Alert - Observations and Concerns with FEMA’s

Housing Assistance Program Efforts for Hurricane Harvey in Texas 

Page 1: First sentence in the Background section, we state that “On 

August 23, 2017, Hurricane Harvey made landfall in Texas...” 

The actual date of landfall was August 25, 2017. 

Changed from: “On August 23, 2017, Hurricane Harvey made landfall in 

Texas...” 

Changed to: “On August 25, 2017, Hurricane Harvey made landfall in 

Texas...” 

Page 7: Appendix C 

Report Distribution 

Changed from:	 Appendix C 

Report Distribution 

Changed to:	 Appendix B 

Report Distribution 
 

 

 

 

DHS OIG HIGHLIGHTS
 

Management Alert - Observations and Concerns with

FEMA’s Housing Assistance Program Efforts for Hurricane

Harvey in Texas 

September , 2017 

Why We Did 

This Special 

Report 

This is a Department of 

Homeland Security, Office of 

Inspector General (DHS OIG) 

special report regarding the 

Federal Emergency Management 

Agency (FEMA) direct housing 

assistance program. 

FEMA provides direct housing 

assistance, under section 408 of 

the Stafford Act, to individuals 

and households who are 

displaced from their pre-disaster 

residences, or whose primary predisaster residences are rendered 

uninhabitable as a result of a 

declared disaster. FEMA 

estimates the program for Texas 

will cost approximately $1 billion. 

What We 

Recommend 

This special 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 

FEMA is currently responding to Hurricanes Harvey, 

Irma, and Maria, some of the most catastrophic disasters 

in recent United States history. FEMA’s initial estimates 

of damages from Hurricane Harvey are estimated to 

exceed $100 billion. On September 22, 2017, the State of 

Texas General Land Office (Texas) entered into an 

Intergovernmental Service Agreement (agreement) to 

provide assistance to FEMA in the delivery of Direct 

Housing Assistance (DHA) to Hurricane Harvey survivors 

on a temporary basis. FEMA estimates these costs will 

reach approximately $1 billion. 

The agreement does not clearly identify basic controls to 

ensure (DHA) funds are spent according to Federal 

regulations. For instance, the agreement does not 

include approval authorities and physical inspections, or 

separation of duties and independent certifications. We 

are concerned that without adequate controls in place 

the Federal funds may be at risk of fraud, waste, and 

abuse. Therefore, it is imperative that FEMA ensure 

Texas’ proposed project management plan clearly 

identifies the internal controls needed to ensure that 

Federal funds will be properly spent. It also provides 

observations on the current and past issues with FEMA’s 

use of direct housing assistance programs. 

www.oig.dhs.gov OIG-17-121-MA 
OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

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

September 29, 2017 

MEMORANDUM FOR: Jeffrey Byard 

Associate Administrator 

Office of Response and Recovery 

FROM: John E. McCoy II 

Acting Assistant Inspector General 

Office of Audits 

SUBJECT: Management Alert - Observations and Concerns with 

FEMA’s Housing Assistance Program Efforts for 

Hurricane Harvey in Texas 

Report Number OIG-17-121-MA 

Attached is our final report, Management Alert - Observations and Concerns 

with FEMA’s Housing Assistance Program Efforts for Hurricane Harvey in Texas. 

We are providing this report to emphasize the potential housing challenges and 

risks that FEMA needs to address during Hurricane Harvey’s recovery efforts 

based on our observations and discussions with FEMA officials at the Austin, 

Texas, Joint Field Office (JFO). 

We discussed this with FEMA officials at the JFO and headquarters. This 

report highlights the need for FEMA to develop, maintain, and implement, 

effective controls to ensure its recipients adhere to, and comply with, grant 

management and Federal procurement standards when providing eligible 

disaster victims with direct housing assistance. 

Background 

On August 2, 2017, Hurricane Harvey made landfall in Texas as a Category 4 

hurricane that caused catastrophic flooding and widespread destruction along 

much of Texas’ Gulf Coast. In some locations, storm-related rainfall exceeded 

50 inches with top wind speeds in excess of 130 mph. More than 40 

individuals lost their lives as a result of this disaster. FEMA estimates 119,000 

residential structures suffered significant water damage—of those, 

approximately 79,000 were inundated with 18 inches or more of water and 

nearly 24,000 with more than 5 feet of water. On August 25, 2017, the 

President approved a Major Disaster Declaration for Texas (DR-4332-TX) and 

authorized FEMA to provide individual assistance (direct and financial) to 

eligible survivors directly impacted by the disaster and who are unable to meet 

the expenses associated with procuring housing by other means. 

www.oig.dhs.gov OIG-17-121-MA 
OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

FEMA’s initial estimates for Hurricane Harvey recovery costs are as much as 

$100 billion and may ultimately exceed that amount. Therefore, it is imperative 

that FEMA and Texas develop sufficient controls to ensure recipients receive 

timely, accurate, and complete Federal guidance and that only those eligible 

survivors are afforded the benefits under the program. 

Sections 403 and 408 of the Stafford Act – Direct Housing Assistance (DHA) 

program and STEP pilot program 

Under section 408 of the Stafford Act1, displaced individuals and those whose 

primary residences were rendered uninhabitable as a result of the disaster may 

be eligible to receive direct housing assistance. In addition, eligible individuals 

may also receive other sheltering assistance. For instance, under section 403 of 

the Stafford Act, FEMA can implement its Sheltering and Temporary and 

Essential Power (STEP) pilot program to restore power and provide emergency 

temporary repairs to single family, owner-occupied residences. The STEP pilot 

program is designed to enable impacted homeowners the ability to return to or 

remain in their homes while permanent repairs are completed. At the time of 

our report, FEMA estimated its Direct Housing Program costs (section 408, 

only) will reach approximately $1 billion. 

When FEMA began the STEP program, we raised concerns about the need to: 

(1) maintain strong internal controls given the number of individuals affected 

by Hurricane Sandy; and (2) address vulnerabilities associated with 

implementing pilot programs. In a more recent report, we identified where 

FEMA had not instituted adequate policies, procedures and, internal controls 

to prevent waste, fraud and program mismanagement. Because FEMA has not 

yet developed policies and procedures to provide regions with a framework to 

follow, FEMA and regional staff at JFOs have had to develop and implement 

housing assistance on a disaster-by-disaster basis. 

Intergovernmental Service Agreement (Agreement) 

On September 22, 2017, FEMA and the State of Texas General Land Office 

(Texas) signed an intergovernmental service agreement (agreement) that 

requires Texas to develop a project management plan to assist FEMA in the 

delivery of direct housing and direct permanent housing construction 

assistance. After which, FEMA and Texas must approve jointly prior to the 

plan’s execution. In accordance with the agreement, the project management 

1 Robert T. Stafford Disaster Relief and Emergency Assistance Act, Public Law 93-288, as 

amended, 42 U.S.C. 5121, et seq. 

www.oig.dhs.gov 2 OIG-17-121-MA 
 

OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

plan must be completed within 10 business days after the execution of the 

agreement. 

For this disaster, Texas will be responsible for procuring contractors and 

ensuring the delivery of direct temporary housing and permanent housing 

repairs. If successful, FEMA officials said they would consider using this 

housing model prototype, where feasible, for Hurricanes Irma, Maria and other 

future disasters. Therefore, it is imperative that we re-emphasize to FEMA our 

concerns with the agreement and Texas’ forthcoming project management plan. 

However, the agreement, in and of itself, does not clearly define FEMA’s and 

Texas’ responsibilities for monitoring and overseeing the DHA program. Nor 

does the agreement specifically outline FEMA’s duty to monitor and conduct 

quality assurance activities to ensure Texas’ implementation of the DHA 

program is efficient and effective. In particular, because the agreement is not 

specific, Texas’ project management plan should define specific certifications 

and credentialing criteria applicable to Texas’ use of contractors and building 

inspectors. 

Although the agreement requires Texas to comply with Federal procurement 

regulations 2 Code of Federal Regulations (CFR) 200.317 through 2 CFR 

200.326, in conjunction with Texas’ emergency procurement laws, the 

procurement-related issues that we have identified in several prior audit 

reports clearly highlight our concerns with grant subrecipients complying with 

Federal procurement requirements. Non-compliance with Federal procurement 

standards often result in high-risk contracts that can, in turn, lead to excessive 

and ineligible costs ultimately borne by U.S. taxpayers. 

In order to ensure eligible disaster survivors receive this much needed housing 

assistance and to reduce the potential for fraud, waste, and abuse, FEMA must 

ensure Texas’ project management plan includes sufficient monitoring and 

oversight controls, especially for time and materials contracts. In addition, 

FEMA must ensure Texas officials fully understand their grant management 

responsibilities as well as their duty to adhere to Federal procurement 

requirements before any disaster-related contract is awarded. 

Texas – Hiring and Training of Additional Staff 

Although Texas officials acknowledge their need to adequately manage and 

oversee the DHA program, they had concerns over the hiring, training and 

contracting for additional staff and said it will take time and additional 

resources. Therefore, it is imperative that FEMA ensure Texas’ proposed project 

management plan address Texas’ concerns for hiring, training, and contracting 

for additional staff to ensure the DHA program delivers assistance to survivor 

victims timely and effectively. 

www.oig.dhs.gov 3 OIG-17-121-MA 
OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Personally Identifiable Information (PII) and Local Communities’ Resources 

During the implementation of the DHA program, FEMA will need to share 

Personally Identifiable Information (PII) with Texas and its local communities. 

However, this agreement does not identify the precautionary processes 

currently in place to ensure that PII is protected. Additionally, it is likely that 

Texas will subcontract with local communities to help provide DHA assistance. 

While some communities may have the capacity to manage and oversee this 

program, others will need assistance from FEMA and Texas to ensure PII is 

secured and properly protected. Therefore, it is imperative that Texas’ project 

management plan assess local communities’ capacities to manage Federal 

funds and address how FEMA and Texas will assist these communities when 

appropriate. 

We believe the direct housing assistance is a high risk program that, without 

adequate controls in place, could be vulnerable to favoritism, collusion, and 

fraud, waste and abuse. It is critical for FEMA to ensure that Texas and its 

local communities are fully aware of and comply with all applicable Federal 

procurement requirements for all disaster-related procurements. 

In prior reports, we highlighted our concerns with the use of the STEP program 

describing deficiencies in the manner in which the STEP program was 

managed. While FEMA has the authority to initiate this program, as noted in 

our prior STEP report, FEMA's Sheltering and Temporary Essential Power Pilot 

Program, (OIG-13-15, issued December 2012), introducing new assistance 

programs entails start-up risks that require robust internal controls to avoid 

problems involving the expenditure of public funds. 

Specifically, we raised concerns about the need to: (1) maintain strong internal 

controls given the number of individuals affected by Hurricane Sandy; and (2) 

address vulnerabilities associated with implementing pilot programs. In a more 

recent report, DHS’ FEMA Needs to Improve Its Oversight of the Sheltering and 

Temporary Essential Power Pilot Program, (OIG-17-38-D, issued in February 

2017), we found that, notwithstanding our 2012 findings, FEMA had not 

instituted adequate policies, procedures and, internal controls to prevent 

waste, fraud and program mismanagement. Because FEMA has not developed 

policies and procedures that provide a framework for the regions to use when 

they intend to use this program, regional staff and FEMA officials at the Joint 

Field Offices have had to develop and implement housing assistance on a 

disaster by disaster basis. As part of our oversight efforts, we may review this 

area and would like to ensure that any further plans provide DHS OIG access 

to all invoices and access to contractor records. 

www.oig.dhs.gov 4 OIG-17-121-MA 
 

OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Conclusion
 

This program is high risk and requires increased vigilance in order to monitor 

the procurement of direct housing assistance services. If FEMA plans to use a 

similar plan in the future, it needs to put in place policies and procedures to 

ensure that the State has the capabilities and expertise to manage and oversee 

the program. If FEMA and Texas do not provide timely and adequate oversight, 

significant amounts of Federal funding could be at risk of fraud, waste and 

abuse. 

The Office of Emergency Management Oversight major contributors to this 

report are: Paul Wood, Acting Deputy Assistant Inspector General, Paige 

Hamrick, Director; Judy Martinez, EMOT Coordinator; David Fox, Audit 

Manager; Carlos Aviles, Audit Manager; Anthony Colache, Audit Manager; 

Dwight McClendon, Senior Auditor; Emma Peyton, Auditor; Rickey Smith, 

Auditor; Patricia Epperly, Senior Program Analyst; and Tai Cheung, Senior 

Program Analyst. 

Please call me with any questions, or your staff may contact Paul Wood, Acting 

Deputy Assistant Inspector General or Paige Hamrick, Director, at 

(214) 436-5200. 

www.oig.dhs.gov 5 OIG-17-121-MA 
OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Appendix A 

Objective, Scope, and Methodology 

The objective of this special review was to proactively remind FEMA of prior 

subrecipient procurement and grant management issues based on our 

observations and discussions with FEMA officials during the weeks of 

September 11 to September 28, 2017, at the Austin, Texas, JFO in response to 

Hurricane Harvey. To accomplish our objective, we reviewed the 

intergovernmental service agreement between FEMA and The State of Texas 

General Land Office, and compiled, summarized, and analyzed findings and 

recommendations disaster assistance reports issued in fiscal years 2012 

through 2017; identified and quantified types of frequently reported 

procurement findings in grant reports; quantified the potential monetary 

benefits of report findings related to non-compliance with Federal procurement 

regulations; and performed other procedures we considered necessary to 

accomplish our objective. In addition, we reviewed: 

x FEMA's Sheltering and Temporary Essential Power Pilot Program, OIG-13-

15, issued December 7, 2012, 

x Summary and Key Findings of Fiscal Year 2015 FEMA Disaster Grant and 

Program Audits, OIG-17-13-D, issued November 29, 2016, and 

x FEMA Needs to Improve Its Oversight of the Sheltering and Temporary 

Essential Power Pilot Program, OIG-17-38-D, issued February 10, 2017. 

We conducted this special review in September 2017, pursuant to the Inspector 

General Act of 1978, as amended, and according to the Standards for Internal 

Control in the Federal Government, issued by the U.S. Government 

Accountability Office. The objective of our review was not to audit FEMA or its 

grant recipients and subrecipients. Therefore, we did not conduct our review or 

prepare this report in accordance with generally accepted government auditing 

standards. 

DHS OIG reports can be found under the “Reports” tab at 

http://www.oig.dhs.gov/. 

www.oig.dhs.gov 6 OIG-17-121-MA 
OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Appendix %
 

Report Distribution
 

Department of Homeland Security 

Secretary 

Deputy Secretary 

Chief of Staff 

Deputy Chiefs 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 

Federal Emergency Management Agency 

Administrator 

Chief of Staff 

Chief Financial Officer 

Chief Counsel 

Director, Risk Management and Compliance 

Chief Procurement Officer 

Audit Liaison, FEMA (Job Code G-17-039-EMO-FEMA) 

Regional Administrator, FEMA Region VI 

Audit Liaison, FEMA Region VI 

Office of Management and Budget 

Chief, Homeland Security Branch 

DHS OIG Budget Examiner 

Congress 

Congressional Oversight and Appropriations Committees 

www.oig.dhs.gov 7 OIG-17-121-MA 
Additional Information and Copies 

To view this and any of our other reports, please visit our website at: 

www.oig.dhs.gov. 

For further information or questions, please contact Office of Inspector General 

Public Affairs at: DHS-OIG.OfficePublicAffairs@oig.dhs.gov. 

Follow us on Twitter at: @dhsoig. 

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: 

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Attention: Hotline 

245 Murray Drive, SW 

Washington, DC 20528-0305