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S. Hrg. 112–493 

ACCOUNTABILITY AT FEMA: 

IS QUALITY JOB #1 

HEARING 

BEFORE THE

AD HOC SUBCOMMITTEE ON DISASTER RECOVERY 

AND INTERGOVERNMENTAL AFFAIRS 

OF THE

COMMITTEE ON 

HOMELAND SECURITY AND 

GOVERNMENTAL AFFAIRS 

UNITED STATES SENATE 

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

OCTOBER 20, 2011 

Available via the World Wide Web: http://www.fdsys.gov/ 

Printed for the use of the Committee on Homeland Security 

and Governmental Affairs 

( 

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(II) 

COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS 

JOSEPH I. LIEBERMAN, Connecticut, Chairman 

CARL LEVIN, Michigan 

DANIEL K. AKAKA, Hawaii 

THOMAS R. CARPER, Delaware 

MARK L. PRYOR, Arkansas 

MARY L. LANDRIEU, Louisiana 

CLAIRE MCCASKILL, Missouri 

JON TESTER, Montana 

MARK BEGICH, Alaska 

SUSAN M. COLLINS, Maine 

TOM COBURN, Oklahoma 

SCOTT P. BROWN, Massachusetts 

JOHN MCCAIN, Arizona 

RON JOHNSON, Wisconsin 

ROB PORTMAN, Ohio 

RAND PAUL, Kentucky 

JERRY MORAN, Kansas 

MICHAEL L. ALEXANDER, Staff Director 

NICHOLAS A. ROSSI, Minority Staff Director and Chief Counsel 

TRINA DRIESSNACK TYRER, Chief Clerk 

JOYCE WARD Publications Clerk and GPO Detailee 

AD HOC SUBCOMMITTEE ON DISASTER RECOVERY AND 

INTERGOVERNMENTAL AFFAIRS 

MARK L. PRYOR, Arkansas, Chairman 

DANIEL K. AKAKA, Hawaii 

MARY L. LANDRIEU, Louisiana 

JON TESTER, Montana 

RAND PAUL, Kentucky 

SCOTT P. BROWN, Massachusetts 

RON JOHNSON, Wisconsin 

AMANDA FOX, Majority Professional Staff 

BRANDON BOOKER, Minority Staff Director 

KELSEY STROUD, Chief Clerk 

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(III) 

C O N T E N T S 

Opening statement: Page 

Senator Pryor .................................................................................................... 1 

Senator Johnson ............................................................................................... 2 

WITNESSES 

THURSDAY, OCTOBER 20, 2011 

Hon. Richard Serino, Deputy Administrator, Federal Emergency Management 

Agency, U.S. Department of Homeland Security .............................................. 4 

Matt Jadacki, Assistant Inspector General, Emergency Management Oversight, Office of Inspector General, U.S. Department of Homeland Security ... 6 

Hon. Maurice McTigue, Vice President and Distinguished Visiting Scholar, 

The Mercatus Center, George Mason University .............................................. 8 

Craig Killough, Vice President, Project Management Institute .......................... 10 

ALPHABETICAL LIST OF WITNESSES

Jadacki, Matt: 

Testimony .......................................................................................................... 6 

Prepared statement .......................................................................................... 34 

Killough, Craig: 

Testimony .......................................................................................................... 10 

Prepared statement with attachment ............................................................. 101 

McTigue, Hon. Maurice: 

Testimony .......................................................................................................... 8 

Prepared statement with attachment ............................................................. 43 

Serino, Hon. Richard: 

Testimony .......................................................................................................... 4 

Prepared statement .......................................................................................... 27 

APPENDIX 

Graph referenced by Senator Johnson ................................................................... 112 

Information submitted by Hon. Maurice McTigue on the Peterson-Pew Commission for Budget Reform .................................................................................. 214 

Questions and responses for the Record from: 

Mr. Serino ......................................................................................................... 235 

Mr. Jadacki ....................................................................................................... 253 

Mr. McTigue ...................................................................................................... 257 

Mr. Killough ...................................................................................................... 263 

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(1) 

ACCOUNTABILITY AT FEMA: 

IS QUALITY JOB #1 

THURSDAY, OCTOBER 20, 2011 

U.S. SENATE, AD HOC SUBCOMMITTEE ON DISASTER RECOVERY

AND INTERGOVERNMENTAL AFFAIRS, OF THE COMMITTEE ON HOMELAND SECURITY

AND GOVERNMENTAL AFFAIRS, Washington, DC. 

The Subcommittee met, pursuant to notice, at 10:33 a.m., in 

Room SD–342, Dirksen Senate Office Building, Hon. Mark L. 

Pryor, Chairman of the Subcommittee, presiding. 

Present: Senators Pryor and Johnson. 

OPENING STATEMENT OF SENATOR PRYOR 

Senator PRYOR. All right. I will call our Subcommittee to order. 

I want to thank everyone for being here, thank all the witnesses 

and thank Senator Johnson. 

We may have some other Senators that come in and out during 

the course of the hearing. We have a vote in about an hour and 

a half. So Senator Johnson and I are kind of targeting that for a 

nice end point at about noon, to try to finish before our votes. 

I want to thank all of you all for being at the Subcommittee on 

Disaster Recovery and Intergovernmental Affairs (DRIA). We have 

entitled this hearing ‘‘Accountability at FEMA: Is Quality Job #1,’’ 

and I think it is a question that we should probably ask of all of 

our agencies to try to make sure that they have the quality controls 

and the efficiencies that we want to see and they are managed 

right and run well. We are certainly glad to put Federal Emergency 

Management Agency (FEMA) under a microscope today because all 

government agencies need to do this from time to time. 

We are here today to assess FEMA’s progress in its effort to balance quick disaster response with good stewardship of taxpayer 

money. 

FEMA has responded to 87 major disasters this year, at least 10 

of which caused damages in excess of a billion dollars. In August, 

FEMA had to redirect spending on past disasters in order to cover 

the immediate needs arising from Hurricane Irene and Tropical 

Storm Lee. 

In March, we convened this Subcommittee to examine the 

recoupment of $643 million in post-Hurricane Katrina disaster assistance and also to discuss ways to prevent improper payments in 

the future. We determined that stronger front-end controls are 

needed to identify and prevent waste, fraud and abuse at the outH605-41331-79W7 with DISTILLER

2 

set. Without them, we get stuck with the costly pay-and-chase approach of recovering money after it is out the door. At that point, 

it is often too late. 

Today, I want to make sure quality control is a priority at 

FEMA. My goal is to review the organization and leadership of 

FEMA components, their emphasis on front-end accountability 

processes and how we can make additional improvements so that 

the American people can rest assured that their tax dollars are 

being put to good use. 

The Department of Homeland Security (DHS) Inspector General 

(IG) has examined FEMA’s management and quality controls. It acknowledges that some improvements are being made, but the IG’s 

findings are also troubling. 

For example, FEMA’s Fraud Prevention and Investigation 

Branch had only six employees last year. Of the hundreds of thousands of cases processed by FEMA each year, only 3,108 were referred for review between 2007 and 2010. Although the Post-Hurricane Katrina Emergency Management Reform Act required agencywide employee training to better identify waste, fraud and abuse, 

this has not yet happened. 

In addition, FEMA’s acquisitions processes lack the controls necessary to prevent wasteful spending, resulting in multimillion dollar contracts that do not clear requirements and performance measures. After Hurricane Ike, FEMA paid a million dollars for 60 days 

of access to 2 mobile medical units which they never used. 

The waste does not always end with the initial purchase. In the 

aftermath of the 2005 hurricane season, Hope, Arkansas became 

home to 19,000 unusable travel trailers and mobile homes that had 

cost $25,000 a month just to keep them stored there. Wasting taxpayer dollars in this way is simply unacceptable. 

Preventing inefficiency and abuse through enhanced government 

performance and accountability is a key focus of this Subcommittee. Last month, I included language in the DHS authorization bill to improve financial management and to prevent waste at 

DHS’s acquisition processes. Earlier this year, I introduced the Disaster Assistance Recoupment Fairness Act (DARFA) of 2011 to address the recoupment of improper payments caused by FEMA 

error. 

Today, we will hear from FEMA and the DHS Inspector General. 

We will also get the perspective of two nongovernment witnesses 

from the Project Management Institute (PMI) and George Mason 

University’s (GMU) Mercatus Center. 

I look forward to positive dialog on the lessons learned, improvements made and examples of best practices in accountability that 

are ready to be incorporated from the private sector into the Federal agencies, that can be applied to FEMA. 

With that, I would like to turn it over to Senator Johnson and 

ask for his opening statement if he has one. 

OPENING STATEMENT OF SENATOR JOHNSON 

Senator JOHNSON. Well, Mr. Chairman, thank you for that. I love 

these field promotions. 

Senator PRYOR. That is right. 

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3 

Senator JOHNSON. So now I am Ranking Member. Normally, I 

am down there. 

I do not have a prepared opening statement other than to say I 

appreciate the hearing. I certainly thank the witnesses for coming 

here. 

As a small government proponent, I am always looking at where 

the government is more effective. At the local level, State level 

versus Federal level. 

And I am actually making a copy of a chart I have that we will 

circulate to the witnesses a little bit later on to base some questions on, but it really shows that we have really had an explosion 

in things that are being declared Federal emergencies and then requiring a Federal response. So that is going to be sort of the thrust 

of my questions: What is the best level for addressing some of these 

issues, and have we tipped too far in the favor of Federal help in 

too many circumstances? 

But anyway, I look forward to your testimony. Thank you. 

Senator PRYOR. Thank you, Mr. Ranking Member. 

Also, I would like to give the Subcommittee an update. Yesterday, we had a speech on the floor and some other developments 

that relate to some payments made by FEMA in a flood in Arkansas, and this has happened all over the country, where FEMA has 

wrongly paid out money to some people that have suffered damages 

and floods, hurricanes, tornadoes, et cetera. 

The reason I went to the floor yesterday is because FEMA actually has now turned this over to the Internal Revenue Service (IRS) 

for collection. And it was a $27,000 effort for recoupment. Because 

of IRS’s taxes, penalties, interest, et cetera, it is now $37,000. 

And so, I met with Treasury yesterday. I talked to Secretary 

Timothy Geithner this morning, and we are working through that 

issue. He put out a statement last night saying that he is working 

with us, which is very true. So we are working to try to get that 

resolved in a way that makes sense for both parties. 

I do not have any real update on that yet, but as it currently 

stands, I still have those nominees held on the floor. 

What I would like to do now is introduce our witnesses, and each 

of these witnesses could have, and maybe deserves, a long introduction, with lots of interesting background, professional experience, et 

cetera. But in the interest of time, will just submit your full backgrounds and resumes for the record. 

But our first witness today will be the Hon. Richard Serino. He 

is the Deputy Administrator at the Federal Emergency Management Agency—again, lots of background there. 

But let me just move on to the second witness which is Matt 

Jadacki, the Assistant Inspector General for Emergency Management Oversight in the Office of Inspector General at the Department of Homeland Security. 

Third will be Maurice McTigue, Vice President and Distinguished Visiting Scholar at George Mason University’s Mercatus 

Center. And he has a distinction that he is a former member of 

parliament in his home country. So we appreciate you here, and it 

is great to have you here. 

And then, our final witness, Mr. Craig Killough, is the Vice 

President of the Project Management Institute. 

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4 

1The prepared statement of Mr. Serino appears in the appendix on page 27. 

So again, I want to thank all of you. 

We have a timer system today. We are hoping that everyone will 

keep their opening statement to 5 minutes or less. We like less, 

right? Do we not like less? 

Senator JOHNSON. Five minutes is fine. I do not want to put any 

pressure. 

Senator PRYOR. OK, so 5 minutes or less. 

And we will submit your written testimony for the record. Then 

we will have questions. 

So Mr. Serino, would you lead off? Thank you. 

TESTIMONY OF HON. RICHARD SERINO,1 DEPUTY ADMINISTRATOR, FEDERAL EMERGENCY MANAGEMENT AGENCY, 

U.S. DEPARTMENT OF HOMELAND SECURITY 

Mr. SERINO. Thank you, Chairman Pryor, Senator Johnson and 

other Members of the Subcommittee that are not here right now. 

But as stated, my name is Rich Serino. I am the Deputy Administrator for FEMA. And it is an honor to appear before you today 

on behalf of the Department of Homeland Security and FEMA to 

discuss our quality assurance process and our internal financial 

controls. 

The American people and the disaster survivors all over this 

country rely on FEMA to meet our mission. Because of the serious 

responsibility, Administrator William Fugate and I took important 

steps early on in this Administration to, first, establish a culture 

of responsibility within FEMA; second, to engage the whole of community in disaster response and recovery. Our approach included 

a new doctrine, a new mission, a new strategic plan, as well as new 

policies. 

I am pleased to say, Mr. Chairman, that we are now seeing the 

benefits of the new approach in how we are responding to disasters 

and assisting the survivors of these disasters. 

But our responsibility goes beyond the need to provide quality 

service to disaster survivors. The American taxpayer expects and, 

in fact, needs us to meet that mission and to deliver those services 

in an efficient, cost effective manner. This is especially important 

under the current economic conditions that we now face. 

Because of this, FEMA took steps to reduce errors and increase 

effectiveness of how we provide services to disaster survivors as we 

implemented numerous fraud prevention controls designed to verify 

disaster survivors’ information before the applicant receives any 

Federal disaster assistance. For example we now block automatic 

payments to high risk addresses such as check-cashing stores, mail 

drops, cemeteries and jails. 

The result of these efforts has been a reduction in the improper 

payment rate from 14 percent in the aftermath of Hurricane 

Katrina to currently less than one percent, in fact, 0.3 percent in 

fiscal year 2010. 

In addition to improving these efficiencies in how we deliver assistance to disaster survivors, we also took steps to improve the acquisition management process at FEMA. In the past, the Inspector 

General let FEMA know the need to make significant improveH605-41331-79W7 with DISTILLER

5 

ments in this area, and we have changed a lot of our processes to 

comply with those recommendations. For example, we increased 

the number of prepositioned contracts that are frequently used and 

frequently needed in times, to put in place long before a disaster 

strikes. By doing so, we can increase the speed of delivery and also 

the cost of providing these supplies during disaster response. 

FEMA now maintains between 40 and 60 of these prepositioned 

contracts that are in place. 

Another improvement we made is the creation of the Disaster Acquisition Response Teams (DARTs). These teams are made up of 

skilled experts who can quickly deploy to our joint field offices or 

regional offices to provide contract administration and oversight for 

large disaster contracts in the field. 

These teams have already had an impact on how we do business. 

For example, after the flooding in North Dakota, in Minot, the 

DART staff were able to streamline some of the procurement processes of housing of disaster responders from which was an average 

30-day process down to only 3 days, which allowed us to focus the 

need instead on addressing the needs of survivors. 

Following Hurricane Irene, DART members were also 

prepositioned in the field so they could provide contracting support 

for housing inspection missions as soon as they were required, including utility contracts, temporary housing unit pad leases and 

multifamily repair program contracts. 

During the past 2 years, we have worked especially hard to improve how we manage the Disaster Relief Fund (DRF), the main 

budget account we use to assist States as they respond to recover 

from disasters. We took steps to change how we expend the DRF 

resources and improved the closeout process for older disasters so 

we could bring updated funds back to the DRF. In fiscal years 2010 

and 2011, by continually reviewing and identifying and recovering 

from these unobligated funds from previous disasters, FEMA was 

able to recover more than $4.7 billion in unobligated funds to the 

fund. 

FEMA has found other efficiencies to stretch out the DRF relief 

fund dollars. We worked quickly to right-size the number of personnel we need in a disaster field office, but also, working with our 

State partners, we have created some virtual Joint Field Offices 

(JFOs) that are run out of our regional offices. For example, during 

the 4-month period earlier this year—last year, In Region 3, we realized the savings of $9.5 million by using virtual JFOs and physical offices. 

When Administrator Fugate arrived to FEMA, one of the things 

we also created was FEMAStat, which is a new ongoing management process. This tool facilitates performance-based assessments 

by redefining metrics and conducting milestone-based reviews. Included in the new process is our programs have helped identify 

trends and gaps that are important to improving the ability to 

meet our mission. FEMAStat is improving transparency, information sharing and customer support as well as program monitoring. 

In conclusion, FEMA recognizes the need to balance quality customer service and providing disaster assistance quickly but maintains the responsibility to be a good steward of the taxpayers’ 

money. All the while, we still have work to do, and I am proud of 

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1The prepared statement of Mr. Jadacki appears in the appendix on page 34. 

the progress we have made in the last 2 years to ensure FEMA is 

run in a cost efficient, effective manner. 

I look forward to working with this Subcommittee and our many 

partners at the Federal, State and local levels as we continue to 

progress, to improve efficiencies, to increase efforts, to promote disaster response, recovery, and preparedness within the whole community. 

Thank you again for the opportunity to appear before you and 

look forward to answering your questions. 

Senator PRYOR. Thank you. Mr. Jadacki. 

TESTIMONY OF MATT JADACKI,1 ASSISTANT INSPECTOR GENERAL, EMERGENCY MANAGEMENT OVERSIGHT, OFFICE OF 

INSPECTOR GENERAL, U.S. DEPARTMENT OF HOMELAND SECURITY 

Mr. JADACKI. Good morning, Chairman Pryor, Senator Johnson. 

My name is Matt Jadacki. I am the Assistant Inspector General 

for Emergency Management Oversight in the Department of Homeland Security’s Office of Inspector General. Thank you for the opportunity to discuss FEMA’s quality controls and business practices. 

Since the Post-Hurricane Katrina Emergency Reform Act of 

2006, FEMA has made great strides in improving and strengthening disaster preparedness, interacting with other Federal agencies and assisting communities to recover after a disaster. 

Today, I want to focus my remarks on three key areas: fraud prevention and internal controls, acquisitions, and the Remedial Action Management Program. These areas and others are discussed 

in my written statement, are covered in upcoming department-wide 

management challenges reports and in numerous FEMA-specific 

reports we have issued over the last 2 years. 

In March 2011, I testified before the Subcommittee regarding 

FEMA’s efforts to recoup $643 million in potentially improper disaster assistance payments beginning in the aftermath of Hurricanes Katrina and Rita. As of September 29, 2011, almost 33,000 

notices of debt have been mailed, over 500 people had their claim 

debts terminated after utilizing the appeals process, and FEMA 

has recouped more than $3 million. 

The speed at which FEMA disburses assistance to individuals 

through its Individuals and Household Program results in the program’s susceptibility to fraud. This susceptibility was increased 

during the response to Hurricane Katrina because FEMA disabled 

some internal control functions to speed up its response to the catastrophic disaster. More recent reports indicate that FEMA has 

made significant internal control improvements, including identity 

and address verifications, and inspections prior to approving assistance. 

Our review of FEMA’s fraud prevention efforts noted that despite 

the assistance programs’ continued susceptibility to fraud and 

abuse, FEMA has not implemented formal fraud awareness training mandated by the Post-Katrina Reform Act. Further, FEMA has 

not staffed the Fraud Prevention and Investigative Branch nor has 

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it provided the authority necessary to review programs and agencywide recommended improvements in internal controls. 

FEMA has made improvements in its internal controls since 

Hurricane Katrina but more needs to be done. The culture at 

FEMA is to get the money to disaster survivors as quickly as possible, but this commendable attitude needs to be tempered throughout the organization by an increased emphasis on providing assistance to only eligible disaster survivors. 

Although FEMA has developed and strengthened acquisition 

management policies and processes, it continues to face challenges. 

For example, weak internal controls have resulted in multimillion 

dollar contracts with vague and questionable requirements and no 

performance measures. Agency employees responsible for managing 

and monitoring the contractors do not always receive written guidance or training on how to evaluate contractor performance or certify billing invoices. 

FEMA has made progress in recruiting and retaining a workforce 

capable of managing complex acquisition programs. Nevertheless, 

FEMA’s contracting program continues to face workforce challenges. 

FEMA has made great strides in improving its Contracting Officer Technical Representatives (COTRs), cadre. However, many 

trained COTRs have never been assigned to a contract and are unsure of their ability to be effective. 

We have also recommended that FEMA establish an overarching 

sourcing strategy. Headquarters, regional and local FEMA representatives were ordering goods without communicating to their 

counterparts at other locations. As a result, goods were ordered, 

were not needed or purchased from the wrong source or at the 

wrong time. 

We recommended that FEMA implement a single ordering concept to coordinate all sources and decisions made through the logistics section. FEMA is now making progress in adopting a single 

point ordering concept. 

FEMA’s Remedial Action Management Program (RAMP), is intended to identify lessons learned and best practices, manage the 

subsequent remediation of issues, and share lessons learned and 

best practices. FEMA regions are responsible for their after-action 

reports and for collecting and transmitting to FEMA headquarters 

lessons learned and best practices identified in those reviews. 

FEMA officials had not always conducted after-action reviews to 

identify lessons learned and best practices, and when the reviews 

were held, lessons learned and best practices were often not converted into policy. However, in some cases, informal discussions 

were held in lieu of the RAMP review, in other cases due to the 

magnitude of the disaster and other circumstances. 

In May 2010, the server which housed FEMA’s program database 

of lessons learned failed, and FEMA lost access to the lessons 

learned and best practices data. Recently, this was restored, and 

FEMA needs to conduct after-action reviews for all disasters and 

disseminate the data collected more widely. 

FEMA has made progress in many areas we reviewed. However, 

although corrective plans have been developed, implementation has 

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1The prepared statement of Mr. McTigue appears in the appendix on page 43. 

been slow. FEMA needs to increase oversight of key management 

issues to ensure implementation of initiatives is sustained. 

Many recommendations in our audit of FEMA operations remain 

open. We will continue to work with FEMA to ensure that corrective action plans are developed and that progress is made to fully 

implement the recommendations. 

In conclusion, FEMA is an agency that is in a constant state of 

flux. Priorities, plans, initiatives, draft guidance and working 

groups often, understandably, take a back seat to disaster response 

and recovery, and the momentum toward finalization and implementation of key initiatives is slowed or lost. 

Involved in more than 87 Presidentially declared disasters this 

year alone, FEMA must continue to make progress in addressing 

its major management challenges, and must continue to improve in 

areas such as fraud prevention and acquisition, and implement lessons learned and corrective actions if it is to be an effective partner 

in emergency management. 

Mr. Chairman, this concludes my prepared remarks. I would be 

happy to answer any questions you or Senator Johnson may have. 

Senator PRYOR. Thank you. Mr. McTigue. 

TESTIMONY OF HON. MAURICE MCTIGUE,1 VICE PRESIDENT 

AND DISTINGUISHED VISITING SCHOLAR, THE MERCATUS 

CENTER, GEORGE MASON UNIVERSITY 

Mr. MCTIGUE. Thank you, Chairman Pryor and Senator Johnson. 

I have been in the United States for 15 years now, at the 

Mercatus Center at George Mason University. I came to the United 

States from Canada where I spent 4 years as New Zealand’s Ambassador and also Ambassador to the Caribbean, and prior to that, 

spent some time as a member of parliament and as a member of 

the New Zealand Cabinet. Some of my comments are therefore 

based upon that background of experience, and some of those experiences may be valuable to the work that you do here in Congress. 

When I look back at the role of the U.S. Government in disaster, 

that role goes back to about 1803 and the fires that occurred in the 

harbor of Portsmouth in New Hampshire. And the interesting thing 

about that disaster is that it has always been controversial and it 

always will be controversial. So I do not think we are ever going 

to get to a State where the activities of FEMA are going to be without criticism. 

Second, because you are always, in an operation like FEMA, 

dealing with distressed people, mistakes are going to be made, and 

the good should not be prevented by trying to be absolutely certain 

that no mistake is ever made. 

One of the successes, in our view, having looked at FEMA for 

over 10 years and every other major organization in the Federal 

Government, was when we did something called the Scorecard, 

which analyzed and looked at how accurately departments reported 

on their success and whether or not that information was appropriate to the accountability of that organization. We picked out 

FEMA as one of the turnaround organizations of the 1990s. 

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What made it a turnaround organization? I think it was the vision that James Lee Witt came to that organization with. And as 

he said to me on one occasion when I was talking to him, ‘‘our job 

is to put back together the lives of individuals, communities and 

States, and to do that as quickly and as appropriately as possible.’’ 

So, some of the things that he did seemed to be counterintuitive, 

one of which was to spend more time on training and preparing the 

assessors in the field, and then to be prepared to rely more on the 

judgment of those people. And he actually found that too many layers of oversight actually contributed to errors rather than reducing 

them. 

So, I think that is something that should be borne in mind—that 

additional layers of oversight may not necessarily improve the accuracy rate, but they may also, at the same time, destroy the success that you are seeking in terms of putting back together people’s 

lives as quickly as possible. 

Senator Johnson, you made some comments that I agree with, 

and that is that maybe FEMA is being asked to deal with too many 

situations that do not really constitute an emergency or a disaster. 

Some of that may be the definitions that are used by FEMA, but 

some of that may also reside right here with Congress, and that 

Congress has asked FEMA to address more and more issues that 

may not properly fit into that category of being a disaster or an 

emergency. 

There is the danger of unintended consequences by going down 

that course, and that local communities will not do the things that 

they should do to try and make the risk of harm in the face of a 

disaster or adverse event less likely to happen. 

In my view, a wet and windy day is not an emergency event, and 

sometimes we tend to see wet and windy days as something that 

is being supported by FEMA. I think that is inappropriate and, in 

the long run, will probably produce adverse results. 

Can I just finally say that listening to the radio this morning, 

Mr. Chairman—and you talked about the case that has just come 

up—one of the things that might help to deal with that case, and 

something that was used by the New Zealand government back in 

the late 70s when we were trying to deal with adverse payments 

and mistakes, was to make the decision that the government would 

make no payment to anybody who did not have a bank account. In 

the future, we would not write checks to anybody. 

As a result of doing that, and the protections you can put into 

a system like that, the level of adverse payments dropped by 33 

percent. 

It is just something that is worth thinking about. It is not, in my 

view, a real hardship to ask anybody who is going to be the recipient to have a bank account before they can receive moneys from 

the Federal Government. 

Finally, some of the work that we did showed that local networks 

were very good at helping in disasters, whether they be voluntary 

organizations like churches or ethnic groups. The Vietnamese Society in New Orleans was particularly successful in putting back together their social group. Using those groups is probably something 

that FEMA should work on and that they should think about how 

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10 

1The prepared statement of Mr. Killough appears in the appendix on page 113. 

you are able to support and activate those groups, rather than trying to take a command and control approach. 

My final comment is that when I look at FEMA and the things 

that govern it, it has an enormous number of laws that it is responsible for. Some bright people, between now and sometime in the future, should consolidate all of those laws into an emergency management act that deals with all of those laws, makes them comprehensive and understandable, and then repeal all the others 

laws. 

If you are not going to repeal all the other laws, please do not 

start. It is by adding to but not taking away at the same time, that 

we get the complexity and we often get the contradictions. 

Thank you very much, Mr. Chairman. 

Senator PRYOR. Mr. Killough. 

TESTIMONY OF CRAIG KILLOUGH,1 VICE PRESIDENT, 

PROJECT MANAGEMENT INSTITUTE 

Mr. KILLOUGH. Chairman Pryor and Senator Johnson, my name 

is Craig Killough. I am a Vice President with the Project Management Institute (PMI). I appreciate the opportunity to participate in 

this important hearing and speak to the benefits of effective program management and our extensive research in program management and disaster recovery. 

The Project Management Institute is the world’s largest project 

management membership association, with more than 600,000 active members and credential holders worldwide, including large 

chapters in Arkansas and Kentucky. 

Program management delivers a competitive advantage by producing positive outcomes for organizations both in private industry 

and in government. Adoption of program management standards 

and strong support of the practitioners who are managing programs provide benefits that include increased efficiency and improved decisionmaking, both of which are critical in disaster response and recovery. 

If I were to leave you with three thoughts in the time available 

for me today, they would be: 

First, organizations and governmental bodies that use consistently applied program management standards and qualified program managers are more successful than organizations that do not. 

Second, the rapid response inherent to disaster recovery requires 

prepositioned program management processes and qualified people. 

And third, the entire government would benefit from broad adoption of program management standards and the creation of a job 

classification and defined career path for program and project managers. 

With reference to my first point, utilizing global standards is critical to the program management profession and to government because they ensure that a basic program management framework, 

lexicon and process is applied consistently across public and private 

organizations and agencies charged with disaster recovery. The 

most successful organizations have learned that employing proH605-41331-79W7 with DISTILLER

11 

gram management techniques and creating a culture focused 

around program management is vital. 

PMI’s research found that organizations using standard practices, along with formal training for program management, perform 

better by considerable margins. High performing organizations that 

use standards, and support certification and training, demonstrate 

90 percent success rates on achieving business results while low 

performers achieve just over 34 percent. 

In 2010, PMI conducted an analysis of successful government 

programs. Program managers from a wide variety of government 

agencies shared success factors and best practices. The most successful government programs start with a firm grounding in the 

fundamentals; that being experienced and well trained program 

managers and standardized program management practices. Combining this foundation with clear objectives and domain expertise 

creates a ripple effect of increased team morale and better 

intradepartmental collaboration, which perpetuates a cycle of success. 

The Army Corps of Engineers (ACE) noted a cost reduction of between 20 and 30 percent from implementing a policy of using 

trained program managers and a more systematic approach to 

managing their programs. 

To my second point, relating specifically to disaster relief, program management expertise has many practical applications for 

government, particularly for FEMA’s primary mission. Disaster relief presents unique challenges because of the inherent urgency and 

high risk. Program management practices allow a disaster recovery 

team to stay organized and focused and to implement solutions a 

community needs after being struck by a disaster. Having these capabilities on hand and ready to deploy is critical to adequate response. 

Recognizing this need, PMI published ‘‘Project Management 

Methodology for Post-Disaster Reconstruction,’’ in response to the 

Asian tsunami and Hurricane Katrina. This is a methodology for 

use in a disaster recovery field where providing the kind of leadership and clarity of thought needed to help in the reconstruction effort. Reconstruction project management is about solving problems 

and delivering intended results through an organized, structured 

methodology. 

We also recently published another study on aid relief projects, 

which was submitted to the Subcommittee for the record. 

Finally, we believe that best practices should be adopted in every 

agency. In my written testimony, I have outlined six recommendations for the Subcommittee to consider. We believe creating more 

effective and efficient accountable government can be achieved by 

adopting these suggestions. 

Mr. Chairman, I would like to commend you on being proactive 

in this area by advocating for language to improve program management in the DHS authorization bill approved by the full committee in September. 

Thank you again, Chairman Pryor and the Subcommittee on Disaster Recovery and Intergovernmental Affairs, for the opportunity 

to speak here on behalf of the Project Management Institute. I will 

be happy to answer any questions you may have. 

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12 

Senator PRYOR. Thank you, and I want to thank all of our witnesses for your testimony today. 

Let me start by saying that I want to make sure that FEMA has 

in the agency a culture of accountability. I am not sure that has 

always been the case there. Like Mr. McTigue said a few moments 

ago, I think it probably was the case there when James Lee Witt 

was there, and then it went through kind of a period in the wilderness, so to speak. And I think you are trying hard to get that accountability back. 

And I appreciate all of you—Mr. Jadacki for your work in looking 

at FEMA and making several recommendations on how we can increase that culture of accountability. 

So Mr. Serino, let me start with you if I may. I know that you, 

the agency—it appears to me at least the agency has worked hard 

to reestablish that and really make that a core value in the agency. 

But the Inspector General has made recommendations, and I am 

not sure you guys are following up on one of those. I want to make 

sure there is formal fraud awareness training with your employees, 

with your workforce, to again build that in with your people before 

any disasters happen. I know disasters are going on all the time, 

but we need to make sure that they have fraud awareness training, 

agency-wide. 

Can you give me an update on that? Are you all doing that or 

trying to do that? 

Mr. SERINO. What we have done, Mr. Chairman, is we have for 

all of our personnel that are in the procurement office, all of our 

COTRs, we have increased the amount of training for all those personnel. 

Senator PRYOR. And how much training is involved there? 

When we talk about fraud awareness training, what are we talking about? Is that a 1-hour thing? Is that a weekly thing? 

Mr. SERINO. Well, for the people in that specific office, I can get 

the exact number of hours, but it is pretty in depth and trained for 

the folks that are assigned to that office—the COTRs, the contracting officers. Those folks go through substantial training and 

through what we call our FEMA Qualification System (FQS), specifically for those personnel in that office. I will get you the exact 

number of hours, but it is substantial, that they go through. 

In addition to that, for all of our personnel, we are making them 

aware of that, and we are going through the process of making 

sure that all of our personnel receive that training. 

INFORMATION FOR THE RECORD

Since 2007, in compliance with the Post Katrina Emergency Management Reform 

Act, FEMA’s Fraud Prevention and Investigation Branch has conducted Fraud 

Awareness and Detection training for a diverse audience. The training has been provided to more than 1000 FEMA employees to include PFT’s, CORE’s and DAE’s as 

well as to other Federal and State personnel. Most recently in August 2011, the 

training was provided to approximately 600 employees of FEMA’s Texas National 

Processing Service Center (NPSC). The Agency training is on-ongoing and will be 

provided to the Virginia and Maryland NPSC’s in FY12. 

The training consists of a 2-hour classroom session. It encompasses the identifying, detecting and reporting of fraud in FEMA Programs as follows: 

1. FEMA’s responsibility—Good stewardship of tax payer dollars 

2. The definition of Fraud 

3. The cost and effect of Fraud 

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13 

4. Analysis of Fraud 

5. Detecting Internal and External FEMA Fraud 

6. Preventing Fraud 

7. Reporting Fraud 

Senator PRYOR. And so, that is going on now? 

Mr. SERINO. We are in the process of doing that. Some of our personnel are getting it, yes. 

Senator PRYOR. OK. So you trying to implement it system-wide. 

Is that fair to say? But you are in process? 

Mr. SERINO. Yes. 

Senator PRYOR. Is that a fair characterization? 

And also, in your Fraud Prevention and Investigation Branch, I 

think I said a few moments ago that at one point you had a very 

small staff there. I think it was in the single digits. And has that 

changed, and if so, why and if not, why not? 

Mr. SERINO. What we have done is we have increased the staff 

there. We have also increased the accountability for that. It is part 

of our weekly reports that we get. We have weekly meetings with 

all of our senior staff. In part of that report out, we get what the 

current status is on the fraud, waste and abuse of that fraud unit, 

what they are pursuing, what the current dollar amounts are that 

they are going after, and the number of cases they are after. 

So what we have done is increase the amount of oversight with 

them at the highest level, that they report out on a weekly basis 

to the entire senior staff, including the Administrator and myself, 

on where we are with those current numbers. 

Senator PRYOR. Mr. Jadacki, let me ask you. In your capacity in 

the Inspector General’s office there, on something like this, you 

want to make sure that they are doing the fraud awareness training and those types of things. I know you have made a set of recommendations. Do you monitor those continuously, or do you just 

come back maybe once a year and look and see what kind of 

progress they have made? 

Mr. JADACKI. After we issue a report with formal recommendations, within 90 days, we request and require a corrective action 

plan. And based on the corrective action plan, we will say this plan 

meets the intent of this recommendation or it does not. 

So we resolve the recommendation or leave it unresolved until 

they do it, but we continuously take a look at that periodically. We 

meet biweekly, or every other week, with FEMA—to discuss what 

is the status of the recommendations, what is going on. 

And also, included in our semiannual report to Congress we have 

to report the status of recommendations that we made to the agency, whether they have been implemented or not. 

We have been watching closely because we get a lot of questions 

about that, not only from this Subcommittee but from a lot of you, 

there is a lot of interest out there, both with Congress and other 

folks, with the fraud prevention unit itself. 

And obviously, we have a vested interest too because a lot of the 

recommendations or things that the fraud prevention unit identifies in FEMA are referred to us, and we ultimately have to resolve 

those things, whether criminal or not. So this is something that is 

near and dear to our heart and we monitor on a regular basis. 

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14 

I do want to expand on one thing. It is great that the contractors 

are getting the fraud awareness, but really, people in the front line 

need to get it too—the folks that are actually taking the input from 

the disaster survivors. There are certain red flags out there. They 

should be trained to identify those and turn them over. 

There is fraud in debris removal. There is also fraud in public 

assistance programs. It is great that FEMA is starting on the contractors, but I think in all aspects of disaster assistance there are 

elements of fraud we have found over the years. 

I think it is critical that FEMA maintain and expand their fraud 

awareness programs. 

Senator PRYOR. Mr. Serino, do you want to comment on that? 

Mr. SERINO. We are going to expand that, as I said earlier. 

Senator PRYOR. OK. And so, what is your timetable in getting 

that fully implemented for all your folks on the ground that are out 

there handling these disasters? 

Mr. SERINO. I do not have the time line for that, but we will certainly get that to you. 

Senator PRYOR. OK. 

Let me ask another question, Mr. Serino. You gave some great 

statistics a minute ago about your error rates. I think that you said 

they went from 14 percent? Was that during Hurricane Katrina 

itself or during that time period? 

Mr. SERINO. After. 

Senator PRYOR. And then, they have gone down to 0.3 percent, 

which those are great numbers. 

Do you attribute the big drop-off there in the fact that the agency 

was so overwhelmed during that Hurricane Katrina period and just 

there was a lot of, I hate to say mismanagement but a lot of bad 

practices that crept in during that time? 

Do you attribute it to that, or the fact that you really do have 

better systems in place now and you are just running like you always should have run, or is it a combination of both? 

Mr. SERINO. I actually think it is the latter. I think it is a combination of both. I think it is a combination that initially people 

were trying to get a lot of aid out to the survivors. 

But in subsequently increasing a lot of the controls that we have 

in place, that we have put in place, before we actually issue any 

money to survivors, I think that is key. But we have been able to 

do that in a very cost efficient way but also have been able to do 

it quickly. 

We are still able to meet the needs of the survivors, that we are 

able to get the housing inspection, somebody actually out there 

looking at their homes, somebody actually through the process and 

getting checks in survivors’ hands who are deserving but doing it 

in an efficient manner in actually a fairly short period of time. The 

average time for a housing inspection is about 31⁄2 days from the 

time they call, and to get a check to a person is about 21⁄2 days. 

But at the same time, we are able to increase the efficiency of 

doing that and decreasing the error rate down to 0.3 percent, which 

is one of the best in the Federal Government. 

Senator PRYOR. Well, that is always the balance that FEMA has 

to strike. You have people that are in severe need and they need 

it very quickly, but at the same time you want to make sure there 

H605-41331-79W7 with DISTILLER

15 

is not fraud and people trying to abuse the system. So it is a hard 

balance. 

And I love the fact that the error rate has gone down so low and 

dropped so dramatically. That is a huge accomplishment. 

Let me ask you about the error rate, Mr. Jadacki. Do you all calculate that or does FEMA calculate it? Do you verify it, or what? 

Mr. JADACKI. Yes, we do not calculate that. FEMA calculates 

that. 

As part of the Improper Payments Elimination and Reduction 

Act (IPERA), the IG will actually have to go in and validate the 

methodology that is used by the agencies in a lot of cases. So this 

year we will be taking a look at their calculations of how they come 

up with their error rate. 

Senator PRYOR. Have you validated it yet? 

Mr. JADACKI. No, we have not validated it yet. The first time we 

are going to do it is this year. We have jobs underway to do that 

right now. So we will take a look at that. 

I will say that part of the reason the error rate dropped is that 

a lot of controls were either circumvented or dropped after Hurricane Katrina. Things that you would normally do, checking Social 

Security numbers, for example, that control was dropped, and that 

is a key control. 

Senator PRYOR. Is that just because they were so overwhelmed? 

Mr. JADACKI. They were so overwhelmed, and they felt there was 

a need to get the money out quickly to individuals. 

And there is always that balancing act. If you are too slow, you 

are criticized for being too slow, but you are checking all the controls. But if you act too quickly, again, the pay-and-chase type 

thing happens. 

Senator PRYOR. So I am not trying to justify for Hurricane 

Katrina, but it was almost like the mind set may have been that 

if you get 10 people that are asking for a need and 9 of them need 

it, let’s get it to the 9. And maybe one does not need it, and maybe 

there is fraud or whatever, but at least you are getting it to the 

9. Is that the decision that was made? 

Mr. JADACKI. I do not know how that decision was made, but 

that seems to be the consequence of whatever decision was made 

to do that. 

A lot of people who were not eligible took advantage of the system for a number of reasons—because the controls were dropped or 

that they were circumvented—and it did result in a number of improper payments. 

Senator PRYOR. Thank you. Mr. Johnson. 

Senator JOHNSON. Thank you, Mr. Chairman. Let me pick up on 

that point in terms of fraud rate with Mr. Serino. How is that 

measured? 

I realize you have to verify methodology, but can you just—I 

mean how do you measure it with any level of accuracy? 

Mr. SERINO. I do not have all the details, but I can get that. 

A lot of the times what we do is we actually look and as we go 

back and look and see how many people that we met, we were able 

to get there. We actually verify, as I mentioned earlier, some of the 

addresses of where people go, what they—whether it is a jail or the 

addresses people use, the Social Security numbers, as well as actuH605-41331-79W7 with DISTILLER

16 

ally sending somebody physically out to the home, which in the 

past was not always done. But somebody actually going to the 

home, looking at the home, speaking to the people—that in itself 

is one of the most controls that we have. 

So a combination of all those is how we actually reach that conclusion. 

INFORMATION FOR THE RECORD

FEMA has performed improper payment testing over identified high risk program 

since 2006, and our Individual Assistance Individuals and Households Program was 

the first tested. Improper payment testing uses agreed-upon audit procedures that 

ensure program compliance with purpose, period of performance, and payment. We 

sample a statistically—valid sample of all disbursements made during the prior year 

and extrapolate the error rate across the population. The Individual Assistance Program is a good example of how a program that relaxed internal controls during a 

disaster recovery resulted in a high improper payments rate. These problems were 

identified through both the DHS Inspector General’s external reviews and FEMA’s 

own Improper payments testing. FEMA implemented the IG’s recommendations 

and, through our corrective action plans, we have been able to improve controls for 

improper payment testing. Today, the program does their own testing throughout 

the year and that testing will be further reviewed in accordance with the Improper 

Payments Information Act of 2002. 

Senator JOHNSON. So it is obviously after the fact. It is more of 

an auditing process and really more statistics-based. Am I correct? 

I mean there is really no certainty to this number. It is an estimate, correct? 

Mr. SERINO. Well, we actually have an audit that is done by the 

National Processing Center (NPC), where people are able to come 

in. And we have a large number of people that can handle the influx, large numbers of those, and we actually have agreements in 

place with the IRS, for example, if we need to increase the number 

of people to take those calls. 

During Hurricane Irene, we were receiving tens of thousands of 

calls a day and then processing those and finding out ahead of 

time. That is where we are able to find out ahead of time whether 

or not there is any potential that people did not meet that. So we 

were able to verify, get all that information right up front. 

Senator JOHNSON. So do you split out then actual fraud versus 

potential fraud? 

I mean do you include that in your—I mean people that are trying to commit fraud. 

Mr. SERINO. Well, we actually look, and those are payments that 

we would not make. If we do not have that right information, those 

are payments that are not made. 

Senator JOHNSON. Then those would not be included in your statistic then. 

Mr. SERINO. No, because these are payments that we made. 

Senator JOHNSON. OK. 

Mr. SERINO. We would not include payments that we did not 

make. 

Senator JOHNSON. OK. 

Mr. Jadacki, let’s talk about that $643 million worth of, I guess, 

fraudulent payments. The figure I have is that is 160,000 people, 

individuals. Is that 160,000 claims? 

H605-41331-79W7 with DISTILLER

17 

Mr. JADACKI. That is correct. Well, they were not potential fraudulent payments. They were improper payments, potential improper 

payments that were made during Hurricanes Katrina and Rita. 

And there was a hold on that because of a court order, because 

apparently due process was not followed and a judge put a hold on 

it, but they were held for several years. 

So in our report, we identified the potential improper payments 

and recommended that FEMA go through their continued due process and identify whether in fact they were proper, improper, and 

if they were fraudulent payments, they would actually turn them 

over to us. We understand that FEMA is in the process of reviewing most of those, and they have made pretty good headway on 

that. 

And I do not know the exact figure based on their review of how 

many cases they turn over for fraud. I think it is pretty low. 

But it is critical they are not fraudulent payments. They are improper payments that could potentially be fraudulent based on further review by FEMA. 

Senator JOHNSON. Can you typify? I mean improper is a term. 

Can you typify what, put some meat on that bone? 

Mr. JADACKI. Yes. An improper payment is anything that is not 

made for the correct amount to the correct person for the correct 

thing, in a nutshell. 

So it could be an underpayment. It could be an overpayment. It 

could be an ineligible payment if the recipient is not for it. 

A fraudulent payment is where somebody is not eligible and they 

either fabricate an application or they provide information that 

would deem them eligible at a later time. Whether making up a Social Security number or whether they provide a bogus document 

that would provide evidence of residency for a house or something 

like that, or a Social Security number, those would be fraudulent 

payments. 

So an improper payment is something that is not correct for 

whatever reason. A fraudulent payment is when the person is just 

simply not entitled; they are trying to defraud the government. 

Senator JOHNSON. Could either you or Mr. Serino tell me what 

is the No. 1 cause of improper payment? 

Mr. JADACKI. Based on a review of the improper payments, it is 

not validating a lot of the information on an application when you 

are dealing with individuals. 

FEMA had a lot of problems after Hurricane Katrina because, as 

you mentioned, one of the best controls FEMA has is actually going 

to visit property with the property owner. They provide evidence 

that they live there, or it could be a utility bill. It could be a deed, 

something like that. 

In the case of Hurricane Katrina, a lot of the homes were just 

simply washed away. And a lot of people, they literally went to all 

50 States, and it would be impossible to bring them back. 

So as a compensating control, FEMA actually took aerial views 

and said OK: If you establish, if you say you lived in this area and 

it had two feet of water, you would get X number of dollars. If you 

had eight feet of water, you get X number of dollars. 

H605-41331-79W7 with DISTILLER

18 

So it was really they did not have the controls, or the controls 

were not able to be used. They had controls, but they were not able 

to use those controls. 

And then, people found out about that. They found out yes, I 

lived in this place, or there are 10 people using the same thing. 

There were cemeteries that people applied for assistance on. So 

those are the improper payments. 

There are cases where there is insurance information. So somebody can get a payment for FEMA. FEMA later finds out well, that 

property was insured, so they are not eligible. So it is a duplicate 

payment. So that would also be an improper payment, not necessarily fraud, but it would be an improper payment because the 

person was ineligible for duplicate payments. 

Senator JOHNSON. OK. You said that you have—there are 30,000 

notices trying to recover. Is it 30,000 out of 160,000? 

Mr. JADACKI. Yes, as far as I know, there are 30,000 cases that 

have been reviewed. I know they are in the process of reviewing 

others. 

I know there is a significant amount that after FEMA did the review either the payments were adjusted. 

I know there is a small amount—and I do not know the exact 

numbers on that. We can do it as a followup—of actually where 

FEMA sent out notices to collect the funds. And I think the case 

in Arkansas is probably one of those that got caught up in that. 

Senator JOHNSON. How many cases like Arkansas do we have? 

Mr. JADACKI. I would have to defer to FEMA on that one. 

Senator JOHNSON. Mr. Serino. 

Mr. SERINO. It is really hard to say exactly, cases similar to Arkansas that we have. But currently, 35,000 recoupment notices 

have gone out to folks, and that is the vast majority of them. And 

the rest will go out within the next month. In November sometime, 

we will have all of those out. 

So the vast majority of those already have gone out. Out of what 

was originally the number of 168,000, we have—that number has 

gone down quite a bit because we have gone through each one of 

those and looked and seen what the issues are, as well as talking 

to folks ahead of time. 

Senator JOHNSON. So how many do you expect out of the 160,000 

will receive notices? 

Mr. SERINO. As I say, about 35,000 have gone out, and that is 

the majority of those. And then after that I cannot pin the exact 

number because we are still going through them, working through 

them. 

Senator JOHNSON. Are those notices demand for payment then? 

I mean is that going to be a pretty aggressive notice, or is this 

just kind of request for additional information to prove your claim? 

Mr. SERINO. Well, it is both. We actually changed the letter. So 

it is in plain English so folks can understand what we are asking 

them—that if they have to make a payment, but if they have any 

questions at all that there is an opportunity for them to come in 

and to speak with us if there is a need for them to, whether it is 

to compromise the payment or to work out a payment plan or to 

put in an appeal process. 

H605-41331-79W7 with DISTILLER

19 

And we encourage people to really, if there are any questions at 

all, to put in that appeal process within the 30 days, and then we 

can followup with those. And they can do that very simply, and 

they can talk to somebody, and we can do that as an oral hearing 

over the phone if necessary. We have had success that we have 

been able to compromise and terminate a number of those. 

Senator JOHNSON. OK. Thank you. 

We will have another round, right? 

Senator PRYOR. Sure. 

Senator JOHNSON. OK. Thanks. 

Senator PRYOR. Let me followup on that, Mr. Serino, if I can 

since we brought up Arkansas there a few moments ago. 

I am wondering if the way this got started in Arkansas was that 

FEMA was not talking to each other within itself. In other words, 

apparently, the problem began. We had a flood there. That particular county had not passed the proper ordinance. 

FEMA’s people working the flood should have known that, and 

they should have known when they deal with local people who have 

a loss what benefits they might be eligible for and not. 

So to me, that is a breakdown in internal communication. From 

one side of FEMA to the other. I do not know if that is fair, but 

that is my guess is how that started. 

Have we fixed that problem within FEMA? 

I mean now that folks are working on the ground do they understand exactly what benefits people are eligible for and not? 

Mr. SERINO. One of the things that we have been able to do is 

to implement a number of the controls that I talked about earlier, 

and specifically, when people call up we are able to verify the address, and that is able to communicate that to the survivors and 

tell them the information that is needed. If that is not necessarily 

caught on the first time around, we are certainly going to be able 

to catch that when somebody actually goes out. 

So we put in a number of controls over the last couple years to 

actually catch a lot of those that in the past we had missed. 

Senator PRYOR. OK. In that particular situation, FEMA came to 

this one couple. We will just focus on this one couple. FEMA came 

to the couple’s home. FEMA apparently took pictures, gave them 

the forms, helped them fill out everything, said you are entitled to 

this, helped them fill out the form, walked them through the process. 

They got $27,000. They put it all back into their house just like 

they were supposed to. In the meantime, the local couple was foregoing other assistance that was being offered locally because they 

said we have FEMA’s help. 

There were local charities and civic groups and churches, et 

cetera. Let us help you, and they said: No, FEMA is taking care 

of us. Go take care of other people. 

Nonetheless, 3 years later, they get a notice in the mail from 

FEMA: Oh, by the way, we fouled up. We should never have given 

you that money in the first place. So now you have X number of 

days to give us $27,000 back. 

And like I said, now it has been turned over to the IRS, $37,000. 

H605-41331-79W7 with DISTILLER

20 

So just taking that one case, to me, that is money that should 

have never gone out the door in the first place. And so, has FEMA 

fixed that part, of where that money is just not going out the door? 

It sounds like your error rate is much lower. And are you fairly 

confident that you have fixed that? 

Mr. SERINO. I am. I think if you look at where we were, at a 14 

percent rate down to a 0.3 percent. Are we going to say never? I 

would like to be never, but 0.3 percent is the rate that we are currently. 

And I think it is important to realize that we are also required 

by law to go after all improper payments. 

Senator PRYOR. Right. 

Mr. SERINO. As you are well aware, it is something that we are 

required to do for any improper payments. 

If it is fraud, we actually send those away for fraud investigation. 

That is not a part of the recoupment. But part of the recoupment 

for whatever the improper payment is we are required to actually 

go through the process to do that. 

And that is why we work with the survivors. We also work with 

Members of Congress and their staffs to help us educate folks that 

it is important for people to actually take the time to put in those 

appeals because that is absolutely key for us to be able to work 

with them, to see what we are able to do, whether it is compromise 

part of that or all of it. I think that is really important. 

And we thank you and your staff. They have been working with 

us on cases like this, and we want to make sure that the survivors 

know that as much as it is important for them to actually file those 

as well. 

Senator PRYOR. All right. Thank you. 

Then also, all my colleagues need to understand this is not going 

to be limited just to Arkansas. This is going to happen throughout 

the country. 

Mr. McTigue, let me ask you if I may. You mentioned James Lee 

Witt’s FEMA, and you talked about his vision for FEMA. How 

would you rate FEMA during that time period because you have 

studied it, in terms of their preparedness, their morale, their ability to respond. And did they have best practices throughout the 

agency, or were there weak spots even back then? 

Mr. MCTIGUE. It is pretty hard to make a general assessment of 

that, but if we looked at some of the surveys that were done of people working for FEMA in 1990, it was the least desirable place to 

work in the Federal Government and by 2000 it was the most desirable place to work in the Federal Government. I think that tells 

us something about morale. 

I think we also have to take cognizance of the fact that during 

the decade of 1990s there were not major disasters that occurred 

in the first decade of the 2000s. So it was not really tested, but 

what we could see was that the feedback from everybody was that 

there was a much greater level of satisfaction of the performance 

of FEMA. 

Then if we move to the 2000s, we saw the shock of September 

11, 2001, which turned everything upside down, and FEMA then 

placed a great deal of emphasis on preparing for terrorist acts and, 

unfortunately, at the expense of being prepared for natural disasH605-41331-79W7 with DISTILLER

21 

ters. And along came Hurricane Katrina, and they were not as well 

prepared as they had been in the past. 

I think that was part of the problem at that time, and also, I 

have to say a failure of leadership at that time. It did not have that 

leadership that is necessary to be able to get on top of major problems like those that were demonstrated during Hurricane Katrina. 

Mr. Chairman, can I just volunteer another comment from the 

discussion that has just gone past? And that is that from my experience with having to deal with some of these as a minister in my 

own country, one of the things that we did to try and get out of 

the problem that you have at the moment with the number of recipients of support now being asked to repay it. 

In disaster situations, we would go in and assess the damages 

that were to be paid to the individuals. And at the conclusion of 

that, we would actually sign a contract between that individual and 

the government’s agent, and that was full and final. And unless 

there was malfeasance or fraud or outright lies, that could not be 

opened again. 

So if the government made a mistake, it had to live with that. 

And if the person used that guarantee from the government in good 

faith, you could not take it away. 

I think it is worth thinking about. This kind of event, I think 

does do a great deal to break down public trust in government generally and to destroy the reputation of the organization. 

This is going to be bad if you have 35,000 or 40,000 people who 

are going to be subjected to this process over the next whatever period of time. Finding a way forward would be a good way of dealing 

with that. Thank you. 

Senator PRYOR. Yes, thank you for that. 

I am going to turn it over to Senator Johnson because he has to 

leave in just a few moments. 

Senator JOHNSON. Thank you, Mr. Chairman. 

Just a quick question on a point you brought up, how many payments do we make to people who do not have checking accounts? 

I mean do we have any stats on that? 

Mr. SERINO. I, honestly, do not know right now. 

Senator JOHNSON. OK. 

Mr. SERINO. I can get that for you. 

INFORMATION FOR THE RECORD

FEMA does not track whether or not applicants have a personal bank account, 

only how they were issued payments. When no personal banking information is provided, FEMA issues U.S. Treasury Checks in lieu of an ACH payment. 

• In FY 2010, FEMA made 124,176 payments to individuals with a Treasury 

Check instead of an ACH payment. 

• In FY 2011 to date, FEMA made 148,341 payments to individuals with a Treasury Check instead of an ACH payment. 

Senator JOHNSON. That would be a good idea. I mean if that 

worked well. You said that in New Zealand that occurred? 

OK. That is a common-sense approach. 

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22 

1The graph referenced by Senator Johnson appears in the appendix on page 112. 

Sorry I did not have this on a big blowup, but I passed out this 

graph1 in terms of number of declarations by FEMA in terms of the 

history of it, and it is pretty interesting. 

Back in the Eisenhower Administration, we had a yearly average 

of about 13 declarations; Carter Administration, about 44; now 

under George W. Bush, 129; and then President Obama, 141. 

I have been living during that phase, and yes, we have had years 

with big hurricanes and other types of disasters, but I did not 

think there has been that dramatic a difference. So obviously, what 

we consider a Federal emergency, something that requires Federal 

assistance, has grown. 

And I guess, Mr. McTigue, I would like to ask you in terms of 

your evaluation of that, particularly based on your comments about 

the ineffectiveness of layer after layer after layer. And obviously, 

when the Federal Government comes in that is a necessary additional layer to the problem. 

Mr. MCTIGUE. In response to your questions, Senator, I am going 

to start from saying there are certain things that are my responsibility and certain risks that I should be aware of. If I am going to 

build my house on the flood plain or beside the river because I like 

the view, I do not really expect, or I should not expect, that you 

are going to bail me out when it gets flooded every 2 or 3 years. 

That is something I should deal with. 

If there are other things that are risks that might be dealt with 

by my local community, in terms of putting up flood walls or doing 

something or other to ameliorate that risk, and then if we go further it might be done at a State level. 

If the Federal Government comes into those situations very readily, you take away the accountability and the responsibility for 

mitigating against those risks. 

One of the things that were interesting for FEMA during the period of James Lee Witt was that he became quite aggressive in 

mitigating risk. And one of the facts that he used to use was that 

for every dollar that they spent on risk mitigation they saved two 

dollars in disaster recovery. 

What kind of things was he talking about? In different places, 

changed building codes, seeing that houses were more securely fastened to their foundations than they had been if you were in tornado alley, doing different things about how sea walls were built 

and how dam protection and river protection was done—all of those 

things learned from disasters and passed on and saying if we do 

this, then the bill next time around is going to be significantly less. 

Taking that risk and putting it all on the shoulders of the Federal Government just makes everybody else say ‘‘Well, thank God, 

I do not have to do that any longer.’’ And I think that is wrong. 

Senator JOHNSON. OK. Anybody else want to just comment in 

terms of the number of things, number of declarations, the increase 

of that? 

Mr. SERINO. Well, I think a couple of points. I think this year 

specifically has been a very busy year, percentage-wise. If you actually look at this percentage-wise, at the number of requests versus 

the number of disasters actually declared, we are in the range of 

H605-41331-79W7 with DISTILLER

23 

pretty much the last 10 years. We have pretty much been consistently in that range for the number of requests for disasters as well. 

This year, as mentioned, there have been 10 and now up to 12 

billion dollar disasters, not that FEMA has done, but it has been 

a very busy year, some historic disasters—the flooding of the Mississippi, the Missouri River, tornadoes that have broken records, 

Hurricane Irene which is the second deadliest hurricane to hit this 

country. So it has been a very busy year for the natural disasters 

that have struck this country. 

With that, I think it goes along with the number of actual disasters that we have to clear. But percentage-wise, we went back and 

looked at this actually, and it is actually for the last 10 it is pretty 

consistent. 

But one other point I think is important, to followup on Mr. 

McTigue’s, it was about we have engaged what we call the whole 

community because we believe that along with the mitigation purposes. But it is also a combination of not just Federal, State and 

local and tribal governments, but it is also bringing together the 

entire community. We have to bring together the faith-based community. We have to bring together the private sector. We have to 

work together with the Red Cross. 

And most important part of the team is the public and how we 

are actually able to engage the public to take responsibility for 

themselves, to work together so that they can be prepared, so that 

they can have neighbor helping neighbor. 

What I have seen in disaster after disaster that I have been to 

over the last couple of years and for my 37 years prior to that is 

we talk a lot about first responders, but the first people on-scene 

are usually neighbors and family and bystanders that do make a 

difference—that if you have somebody who can go, if they are prepared, and go help a neighbor, that in itself is going to decrease 

the pull and the response on the local first responders and emergency management up and down the chain. 

So it is really important for us to really look at this whole community and to bring together the team of folks. And the mitigation 

is a very important part of that. It can be on the scales for tornadoes, but it can also be on individual preparedness. And that is one 

thing that we are stressing, that we have to do this together as a 

team. 

Senator JOHNSON. OK. Well, I totally agree with that comment, 

but to a certain extent the reality is different because if you are 

really going to rely on local districts or local governments we would 

not be increasing the size of FEMA. And we have received back in 

2000 the number of full-time employees was about 3,400, and now 

that has risen to—well, in 2008, it was over 8,000. We have backed 

that down a little bit. 

So going to Mr. McTigue’s point, the number of layers I think can 

actually make things less effective. And again, we pulled it into a 

Federal responsibility as opposed to more local control. So I guess 

I just want to ask that question. 

I mean we have doubled the number of employees of FEMA. I 

mean have we really gotten the bang for the buck there, or has 

that actually created more problems? 

H605-41331-79W7 with DISTILLER

24 

And I would first like to go to Mr. McTigue and then listen to 

the agency. 

Mr. MCTIGUE. Well, I think it would be disingenuous to suggest 

that those 8,000 people do not have something to do. They clearly 

do, and that is because Congress has been putting more and more 

responsibility on them and States and communities have been asking for them to do more and more. So we have to take that into 

account. 

I think the definition of what this agency is going to do actually 

has to come from this institution here and decide what is appropriate rather than say to FEMA you are not interpreting the decisions of Congress in the right way. I think they probably are. I 

think that you are asking them to do things that should still be 

local responsibilities rather than Federal responsibilities. 

Senator JOHNSON. OK. I just want to quick give you an opportunity. 

Mr. SERINO. Well, I think one of the things that we have done 

is to decrease some of the layers, to actually put a lot of the responsibility, authority and resources down closer to the States and to 

the cities, and pushed a lot of that down to our regional level so 

our regional administrators actually have some of the authority in 

order to do that. 

As far as the agency, over the past number of the years, some 

of the times that you are talking, actually, a number of areas came 

in from other parts of the government into FEMA, specifically, our 

entire grants agency which brought in large numbers of folks into 

the agency. That is cause for some of that influx. We actually took 

some things that were not part of FEMA, that actually came, to increase that number during that period of time as well. 

Senator JOHNSON. OK. Great. That answers the question. Thank 

you, Mr. Chairman. 

Senator PRYOR. Thank you, Senator Johnson, and thank you for 

being here today and pinch-hitting. You did a great job. 

I just have a few more questions, and this will be our final 

round. We are going to have some questions that come in after the 

hearing, I am sure. So we will talk about that in just a few moments. 

But let me start with you if I may, Mr. Jadacki. You have heard 

Mr. McTigue talk about this idea of a bank account and tying a 

payment to a bank account. Have you looked at that from the IG’s 

perspective to see if that makes sense, if that would cut down on 

problems? 

Mr. JADACKI. No, we actually have not looked at that. 

I know there was a number of ways FEMA provided expedited 

assistance before—just cutting checks on the fly, the debit card debacle that I have talked about before. But actually requiring people 

have bank accounts, I think for the most part, it would be a very 

good idea. 

I still think you are going to get some reluctance by individuals 

when the government is going to get their banking information in 

order to qualify for assistance. I still think that would be a problem, especially in some of the more rural parts of the country 

where big government is a bad thing, as is asking for that type of 

information. 

H605-41331-79W7 with DISTILLER

25 

So I think it is a good idea. I think it is worth looking at, but 

I suspect you will get some pushback from certain individuals. 

Senator PRYOR. Without having studied it at all, one initial concern I might have is the actual percentage of people in this country 

that have bank accounts because I do know that I talked to 

Walmart a couple of years ago. And I do not remember the exact 

statistic, but they have a number, and it is something like 30 percent of the people that shop at Walmart do not have a bank account. It is a big number, whatever the number is. I have forgotten 

the exact number. 

I think it is an idea that we ought to talk about and think about 

and see if it is feasible and see if it would help. If it helps, we 

ought to consider it. That is a good point. 

Now Mr. Killough, I do not want you to feel like you have been 

left out of this conversation. 

Mr. KILLOUGH. Thank you, Mr. Chairman. 

Senator PRYOR. So let me just ask a question about—and I hope 

I am directing it at the right person—about lessons learned. I assume that part of what your organization does is try to learn from 

experience and lessons learned. 

Does FEMA have—I hate to say reputation. But do they have a 

reputation of learning from past mistakes and past difficulties? 

Mr. KILLOUGH. FEMA, specifically, sir, I cannot talk specifically 

about specific organizations because we do not participate in that, 

but I can provide a little bit of insight into some of the things that 

do work. 

I was reading Mr. Serino’s testimony on page 6, and there is a 

section that says in there about improving coordination strategies 

and developing doctrine. 

And there is a vehicle that we can use here that is called the Disaster Recovery Framework that allows for the definition and what 

I call, or what I would refer to, horizontal and vertical integration 

of dependent agencies and Federal, State, local and Indian government agencies, in trying to coordinate and understand responsibilities for actions in disaster activities—the programmatic approach 

to defining those responsibilities combined with adequate training 

and the integration of training among the different layers of government, all the way down to the individual citizen. 

Now a couple of very good examples that are done that way in 

the government right now are you have the Red Cross Center, 

Clara Barton Center for Disaster Recovery Training in Pine Bluff, 

and you have the DHS Training Center for Disaster Preparedness 

in Anniston, Alabama. And what these two organizations have effectively done is taken a programmatic approach to first responders 

and training of first responders to respond to chemical, biological 

and nuclear disasters, domestic or outside domestic terrorism. 

What they have done is they go through all levels of the government in State, Federal, local, Indian territories, and also through 

all of the organizations that would have the occasion to respond, 

and have developed a program to react to these potential huge disasters and then have integrated that across governments throughout our country. 

And I think it is a fine example. I mean it is right in the Department of Homeland Security, that they are doing right now. 

H605-41331-79W7 with DISTILLER

26 

And to be able to take that from the administrative aspect of how 

we respond in general to disasters, take a programmatic approach, 

define what we need to do and adequately train people. 

The big issue here is people being prepared and trained and having processes that are known throughout all of the agencies that 

are responding, and appropriate responsibilities assigned. The aspect of training is a very important one, especially in one of these 

incidents. 

I am a graduate of the Naval Academy and went through the 

Navy Nuclear Propulsion Program. I could not dream of placing an 

unqualified operator, not using approved procedures, in charge of 

a nuclear propulsion plant. 

Senator PRYOR. Right. 

Mr. KILLOUGH. Likewise, there are areas of the government that 

ask untrained people to use, to create their processes, to manage 

mission-critical programs of billions of dollars. And I am not calling 

out FEMA. This is in general. 

Senator PRYOR. Right. 

Mr. KILLOUGH. So the aspect of generally understanding that 

managing these disasters takes definite skills, and they take definite defined programs and processes. 

So having people understand those processes, are trained to execute them, can bring a little bit of sanity to chaos when you are 

responding to disasters like this. 

Senator PRYOR. Right. That makes sense. 

Well, listen, thank you all for coming today. 

Like I said, we are going to leave the record open for 14 days, 

and I am almost certain that we will have a few questions from at 

least a couple of the Senators that will come in, in writing. So we 

would love a rapid turnaround on that. 

But I want to thank you all for doing what you do, and we all 

want a very strong, healthy, robust FEMA and great response and 

great preparation for all kinds of disasters, including all the mitigation that we can do. 

So I want to thank all of you for being here and thank the staff 

here for always doing a great job. 

And with that, we will adjourn, and we will keep the record open 

for 14 days. Thank you. 

[Whereupon, at 11:45 a.m., the hearing was adjourned.] 

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H605-41331-79W7 with DISTILLER


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H605-41331-79W7 with DISTILLER


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H605-41331-79W7 with DISTILLER


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H605-41331-79W7 with DISTILLER


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H605-41331-79W7 with DISTILLER


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H605-41331-79W7 with DISTILLER


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H605-41331-79W7 with DISTILLER


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H605-41331-79W7 with DISTILLER


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H605-41331-79W7 with DISTILLER


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H605-41331-79W7 with DISTILLER


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H605-41331-79W7 with DISTILLER


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H605-41331-79W7 with DISTILLER


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H605-41331-79W7 with DISTILLER


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H605-41331-79W7 with DISTILLER


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H605-41331-79W7 with DISTILLER


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H605-41331-79W7 with DISTILLER


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H605-41331-79W7 with DISTILLER


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H605-41331-79W7 with DISTILLER


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H605-41331-79W7 with DISTILLER


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H605-41331-79W7 with DISTILLER


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H605-41331-79W7 with DISTILLER


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H605-41331-79W7 with DISTILLER


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H605-41331-79W7 with DISTILLER


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H605-41331-79W7 with DISTILLER


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H605-41331-79W7 with DISTILLER


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H605-41331-79W7 with DISTILLER


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H605-41331-79W7 with DISTILLER


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H605-41331-79W7 with DISTILLER


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H605-41331-79W7 with DISTILLER


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H605-41331-79W7 with DISTILLER


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H605-41331-79W7 with DISTILLER


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H605-41331-79W7 with DISTILLER


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H605-41331-79W7 with DISTILLER


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H605-41331-79W7 with DISTILLER


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H605-41331-79W7 with DISTILLER


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H605-41331-79W7 with DISTILLER


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H605-41331-79W7 with DISTILLER


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H605-41331-79W7 with DISTILLER


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H605-41331-79W7 with DISTILLER


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H605-41331-79W7 with DISTILLER


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H605-41331-79W7 with DISTILLER


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H605-41331-79W7 with DISTILLER


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H605-41331-79W7 with DISTILLER


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H605-41331-79W7 with DISTILLER


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H605-41331-79W7 with DISTILLER


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H605-41331-79W7 with DISTILLER


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H605-41331-79W7 with DISTILLER


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H605-41331-79W7 with DISTILLER


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H605-41331-79W7 with DISTILLER


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H605-41331-79W7 with DISTILLER


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H605-41331-79W7 with DISTILLER


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H605-41331-79W7 with DISTILLER


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H605-41331-79W7 with DISTILLER


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H605-41331-79W7 with DISTILLER


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H605-41331-79W7 with DISTILLER


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H605-41331-79W7 with DISTILLER


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H605-41331-79W7 with DISTILLER


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H605-41331-79W7 with DISTILLER


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H605-41331-79W7 with DISTILLER


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H605-41331-79W7 with DISTILLER


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H605-41331-79W7 with DISTILLER


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H605-41331-79W7 with DISTILLER


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H605-41331-79W7 with DISTILLER


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H605-41331-79W7 with DISTILLER


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H605-41331-79W7 with DISTILLER


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H605-41331-79W7 with DISTILLER


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H605-41331-79W7 with DISTILLER


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H605-41331-79W7 with DISTILLER


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H605-41331-79W7 with DISTILLER


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H605-41331-79W7 with DISTILLER


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H605-41331-79W7 with DISTILLER


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H605-41331-79W7 with DISTILLER


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271 

Æ 

H605-41331-79W7 with DISTILLER


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