2017 Disaster Contracting: Actions Needed to Improve the Use of Post-Disaster Contracts to Support Response and Recovery
Released: 2019-04-24T00:00:00


Highlights: section_title: Why GAO Did This Study
paragraphs: Federal contracts play a key role in timely response and recovery efforts following disasters. While federal agencies, such as FEMA and USACE, may have advance contracts in place for obtaining goods and services following disasters, agencies may also award post-disaster contracts.

GAO was asked to review the federal government's response to three major hurricanes in 2017, as well as the 2017 California wildfires. This report addresses, among other objectives, the extent to which (1) federal agencies obligated funds on post-disaster contracts in response to the these events, and (2) selected agencies experienced challenges in the planning of selected contracts.

GAO analyzed data from the Federal Procurement Data System-Next Generation; selected a non-generalizable sample of 23 post-disaster contracts based on factors such as if the contract was set aside for award to a local contractor; reviewed federal regulations and agency guidance; and interviewed agency officials.

section_title: What GAO Found
paragraphs: Following hurricanes Harvey, Irma, and Maria and the 2017 California wildfires, federal agencies obligated at least $5 billion in post-disaster contracts—which are awarded after disasters hit— to support disaster response and recovery efforts. The U.S. Army Corps of Engineers (USACE) and the Federal Emergency Management Agency (FEMA) comprised over three-quarters of reported post-disaster contract obligations as of June 30, 2018 (see figure).

However, the full extent of post-disaster contracting related to the 2017 disasters is unknown due to the Department of Homeland Security's (DHS) inconsistent implementation of the criteria for closing a national interest action (NIA) code. This code allows agencies to track data on contract actions related to national emergencies, providing government-wide insight into response and recovery efforts. DHS closed the codes for Harvey and Irma on June 30, 2018, less than a year after those hurricanes hit. In contrast, the codes for prior hurricanes were open for at least five years, with Katrina remaining open for 13 years.

Based on a review of 23 contract files from FEMA, USACE, the Defense Logistics Agency, and the Coast Guard, GAO identified challenges in the planning of selected contracts. For example, GAO found USACE officials were not consistently aware of the regulation that defines “local area.” GAO also found that contracting officers at FEMA, USACE, and the Coast Guard did not consistently write justifications for awards to non-local vendors outside the disaster area, as required. FEMA developed guidance to address this, but the Coast Guard and USACE have not issued guidance or tools to address this requirement. Without addressing planning challenges, agencies may miss opportunities to award contracts to local businesses in the disaster area to the extent feasible and practicable, which could help jump-start the local economy.

section_title: What GAO Recommends
paragraphs: GAO is making 10 recommendations, including that DHS reopen NIA codes for Hurricanes Harvey and Irma; USACE provide guidance on the local area definition; and the Coast Guard and USACE provide guidance to ensure contracting requirements for the use of non-local vendors are met. Agencies concurred with 9 recommendations. DHS did not agree that NIA codes should be reopened. GAO continues to believe DHS should do so, to the extent practicable, as discussed in the report.

section_title: Letter
paragraphs: Federal contracts for life-saving or life-sustaining goods and services play  a key role in the immediate aftermath of a disaster and in long-term  community recovery. In 2017, four disasters—hurricanes Harvey, Irma,  and Maria, and the California wildfires—occurred nearly back-to-back and  collectively affected 47 million people, or about 15 percent of the nation’s  population, according to the Federal Emergency Management Agency  (FEMA), a component of the Department of Homeland Security (DHS).  Federal agencies obligated billions of dollars on contracts in response to  those disasters. Our prior work identified issues related to post-disaster  contracts—which are awarded after a disaster hits. For example, in  September 2015, we found that FEMA’s contracting officers displayed  limited awareness of requirements enacted after Hurricane Katrina to  provide a contracting preference to local firms for disaster response  contracts to the extent feasible and practicable and to limit the length of  noncompetitive contracts awarded based on the urgency exception.

You asked us to review the federal government’s contracting efforts for  preparedness, response, and recovery efforts related to the three 2017  hurricanes and California wildfires. This report specifically addresses the  use of post-disaster contracts and: (1) assesses the extent to which  federal agencies obligated funds on post-disaster contracts in response to  the 2017 major disasters; (2) assesses the extent to which selected  agencies experienced challenges in the planning process for selected  post-disaster contracts; and (3) describes selected agencies’ lessons  learned as a result of the 2017 major disasters and assesses the extent  to which they have taken action to address them. In December 2018, we  reviewed and reported on these areas on the use of advance contracts,  which are contracts for life-sustaining goods and services that are set up  prior to disasters to be used in the immediate aftermath of disasters.

To identify the extent to which federal agencies obligated funds on post- disaster contracts in response to the 2017 disasters, we reviewed Federal  Procurement Data System-Next Generation (FPDS-NG) data through  June 30, 2018, the most recent and complete data available at the time of  our review. We identified obligations related to Hurricanes Harvey, Irma,  and Maria using the national interest action (NIA) code, as well as the  contract description. NIA codes are a data field established in FPDS-NG  for the purpose of tracking federal procurement related to a specific  disaster, emergency, or contingency event. We also assessed the  process for establishing and closing a NIA code. Specifically, we  reviewed the criteria in the 2012 and 2018 memorandum of agreement  between DHS, the Department of Defense (DOD), and the General  Services Administration (GSA)—which oversees FPDS-NG—and  interviewed officials involved in the process. Because a NIA code was not  established in FPDS-NG for the 2017 California wildfires, we asked the  agencies with the highest obligations on post disaster contracts for the  three hurricanes—FEMA, U.S. Army Corps of Engineers (USACE),  Defense Logistics Agency (DLA), and the U.S. Coast Guard (Coast  Guard)—to identify contracts that they used to respond to that event.  Therefore, our analysis does not capture whether other agencies’  obligated funds on contracts related to the 2017 California wildfires. We  assessed the reliability of FPDS-NG data by reviewing existing information about the FPDS-NG system and the data it collects— specifically, the data dictionary and data validation rules—and performing  electronic testing. We also compared FPDS-NG data to the contract files  in our review. We determined the FPDS-NG data were sufficiently reliable  for the purposes of describing agencies’ reported obligations on post- disaster contracts.

To assess the extent to which selected agencies experienced challenges  in the planning process—such as recognizing the requirements of  contracting with local vendors—for selected post-disaster contracts, we  reviewed relevant laws and regulations, including the Post-Katrina  Emergency Management Reform Act (PKEMRA), the Federal Acquisition  Regulation (FAR), and the Robert T. Stafford Disaster Relief and  Emergency Assistance Act (Stafford Act), as well as agency policy and  guidance. We identified a non-generalizable sample of 23 post-disaster  contracts from the four agencies with the highest post-disaster  obligations—FEMA, USACE, DLA, and Coast Guard—based on FPDS- NG data as of March 31, 2018. We selected contracts to obtain a range of  contracts across four primary selection criteria: (1) contracts awarded  using the unusual and compelling urgency exception to full and open  competition (“urgency exception”); (2) contracts awarded using a local  area set-aside (wherein only vendors residing or primarily doing business  in the declared disaster area may compete for a contract award); (3)  contracts awarded to small businesses; and (4) contracts terminated for  default or convenience. We also selected contracts across all three  hurricanes and the California wildfires and all four of the selected  agencies. Using these criteria, we selected 12 FEMA, seven USACE, two  DLA, and two Coast Guard contracts (see Table 1).

We assessed planning documentation in these contracts against  applicable regulatory and statutory criteria. For example, we assessed the  eight local area set-aside contracts against the related FAR and Stafford  Act requirements, and we assessed the 11 contracts using the urgency  exception against the relevant FAR and PKEMRA criteria. We met with  officials from FEMA, USACE, DLA, the Coast Guard, and the Office of  Management and Budget’s Office of Federal Procurement Policy.  Findings based on information collected from the 23 contracts cannot be  generalized to all post-disaster contracts.

To describe what lessons learned selected agencies identified related to  the use of post-disaster contracts and assess the extent to which  agencies have taken action to address them, we reviewed available  completed after-action reports for the 2017 disasters from agencies with  the highest obligations on post-disaster contracts for the three  hurricanes—FEMA, USACE, DLA, and the Coast Guard—and  interviewed officials from these agencies. We also reviewed interagency  lessons learned from the Emergency Support Function Leadership  Group—a body of senior officials from each of the national emergency  support functions, along with FEMA headquarters and regional officials,  tasked with coordinating responsibilities and resolving operational and  preparedness issues relating to interagency response activities in support  of the National Response Framework. To obtain perspectives and  examples from state and local government officials involved in disaster  response, we interviewed officials in California on the use of federal  contracts. We also met with state and local officials in Texas, Florida,  Puerto Rico, and the U.S. Virgin Islands to discuss the federal response  to the 2017 hurricanes. The information gathered from these officials is  not generalizable to all officials. Appendix I provides more information  about our overall scope and methodology.

We conducted this performance audit from March 2018 to April 2019 in  accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
subsections: section_title: Background
paragraphs: In 2017, three major hurricanes made landfall in the United States and  historic wildfires struck California. According to FEMA, the 2017  hurricanes and wildfires collectively affected 47 million people—nearly 15  percent of the nation’s population. See figure 1 for a timeline of these  major disasters.
subsections: section_title: Overview of Federal Disaster Response and Recovery
paragraphs: When disasters hit, state and local entities are typically responsible for  disaster response efforts. The Stafford Act establishes a process by  which the Governor of the affected state or the Chief Executive of an  affected Indian tribal government may request a presidential major  disaster declaration to obtain federal assistance. According to the DHS  National Response Framework—a guide to how the federal government,  states and localities, and other public and private sector institutions  should respond to disasters and emergencies—the Secretary of  Homeland Security is responsible for ensuring that federal preparedness  actions are coordinated to prevent gaps in the federal government’s  efforts to respond to all major disasters, among other emergencies. The  framework also designates FEMA as the lead agency to coordinate the  federal disaster response efforts across 30 federal agencies.

The National Response Framework identifies 14 emergency support  functions that serve as the federal government’s primary coordinating  structure for building, sustaining, and delivering disaster response efforts  across more than 30 federal agencies. Each function defines specific  mission areas—such as communication, transportation, and energy—and  designates a federal department or agency as the coordinating agency.  For example, provision of assets and services related to public works and  engineering, such as temporary roofing or power, are coordinated by  USACE within DOD. See Appendix II for more information about  emergency support function responsibilities across the federal  government.

FEMA’s Response Directorate coordinates disaster response efforts  through mission assignments—work orders that it issues to other federal  agencies to direct them to utilize their authorities and the resources  granted to them under federal law in support of direct assistance to state,  local, tribal, and territorial governments. Mission assignments are  authorized by the Stafford Act, and agencies may fulfill these  assignments through federal contracts. FEMA made 1,515 mission  assignments for the 2017 hurricanes and California wildfires, and total  obligations for these mission assignments were more than $7.8 billion as  of January 2018, according to FEMA. See figure 2 for a depiction of the  mission assignment process under a notional scenario of removing  derelict marine vessels—boats and ships damaged during a hurricane  and that are determined to be inoperable.

The National Response Framework states that when an Emergency  Support Function is activated in response to an incident, the primary  agency for that emergency support function is responsible for executing  contracts and procuring goods and services as needed, among other  things. For example, DOD and USACE are the coordinators for  Emergency Support Function 3—public works and engineering—and as  part of this role, these agencies are responsible for emergency  contracting support for lifesaving and life-sustaining services. As such,  during the 2017 disasters, USACE obligated funds on contracts in support  of its assigned mission of public works and engineering by restoring the  electrical grid in Puerto Rico following Hurricane Maria and removing  debris following the California wildfires.

section_title: FEMA’s Contracting Workforce
paragraphs: In its role as the lead coordinator of federal disaster response efforts  across federal agencies, FEMA’s contracting workforce plays a key role in  post-disaster contracts. FEMA’s contracting efforts are supported by its  contracting workforce within FEMA’s Office of the Chief Procurement  Officer (OCPO). In our prior work, we found that FEMA’s contracting  workforce had grown significantly since Hurricane Katrina, but the agency  struggled with attrition at times. While the majority of FEMA’s  contracting workforce is located in headquarters, contracting officers are  also located in each of FEMA’s 10 regional offices. See figure 3 for the  location of FEMA’s 10 regional offices as well as the states and territories  for which each one is responsible in terms of fulfilling National Response  Framework duties.

In addition, FEMA can deploy members of its Disaster Acquisition  Response Team (DART), a group whose primary purpose is to support  contract administration for disasters. There are two DART teams under  FEMA’s Expeditionary branch, each comprised of contracting officers,  contracting specialists, and quality assurance specialists. Figure 4 shows  how FEMA’s contracting workforce is organized.

In headquarters, FEMA’s contracting officers support a variety of  functions, such as contracting for information technology needs, activities  to prepare for and mitigate disasters, and disaster response. In the field,  the disaster and field operations division manages contracting for disaster  response efforts including:

Logistics: delivering goods and services to support disaster survivors  and communities, including life-sustaining commodities such as  meals, blankets, and electricity generators,

Response: coordinating capabilities needed immediately following a  disaster, such as air and ground evacuation services and emergency  sheltering, and

Recovery: primarily supporting rebuilding efforts, including technical  assistance programs.
subsections: section_title: Regional Contracting Officers
paragraphs: Regional contracting officers serve as the first response for contracting if  a disaster occurs in their region. During a disaster, the regional offices  can request additional contracting support from headquarters if needed.  Contracting officers are typically located in each regional office’s mission  support division, which provide essential administrative, financial,  information technology, and acquisition support for the region. Each  region is headed by a Regional Administrator who reports directly to the  head of FEMA, the FEMA Administrator.

In response to a 2009 DHS Inspector General Report, FEMA created a  formal agreement to establish a new role for FEMA’s OCPO to oversee  regional contracting staff. The Inspector General report found that  regional contracting officers only reported to their respective supervisor in  the region—who usually are not contracting officers—with no formal link  to FEMA’s OCPO. The Inspector General recommended that only  contracting officials should manage the technical performance of  contracting officers. The report stated that having the contracting officer’s  performance and career advancement controlled by someone who is not  a contracting professional was an internal control risk and created a  potential conflict-of-interest situation for the contracting officer. A  subsequent 2011 agreement between the regions and headquarters  states that a FEMA OCPO official will be the contracting officers’  performance reviewer and that the regional supervisors will continue to  manage regional contracting officials’ day-to-day activities. As a result,  regional contracting officers have a dual reporting chain to both FEMA  OCPO in headquarters and to their supervisor within the region.

In September 2015, we identified challenges with how the agreement was  being implemented, particularly in that it heightened the potential for an  environment of competing interests for the regional contracting officers.  Specifically, we found that being physically located in a regional office  where their regional supervisor is not a contracting professional gave  contracting officers less standing to resist requests to perform duties  outside of a contracting officer’s responsibilities or to resist pressure from  program officials to make certain decisions. Further, we found that FEMA  had not updated its 2011 agreement, even though the agreement states  that FEMA OCPO and the regions will revisit it each year. We  recommended that the FEMA Administrator direct FEMA OCPO and the  regional administrators to revisit the 2011 agreement to, among other  things, add details about the extent of operational control headquarters  and regional supervisors should exercise to minimize potential competing  interests experienced by regional contracting officers, and further detail  headquarters and regional supervisors’ roles and responsibilities for  managing regional contracting officers to improve coordination and  communication. We also recommended, and FEMA agreed, that it  establish a plan to review this agreement on an annual basis. As of  January 2019, FEMA had not implemented these recommendations.

section_title: Joint Field Offices
paragraphs: After a major disaster is declared, FEMA establishes a joint field office, a  temporary office through which it coordinates disaster response and  recovery efforts with state and local governments and organizations.  Once the need for disaster response and recovery ends and a joint field  office is closed, the contracts supporting the disaster are returned to the  cognizant regional contracting office.

section_title: Post-Katrina Emergency Management Reform Act Contracting Requirements
paragraphs: Congress enacted the Post-Katrina Emergency Management Reform Act  of 2006 (PKEMRA) after shortcomings were identified in preparation for  and response to Hurricane Katrina—one of the largest and most  destructive natural disasters in U.S. history, which hit the Gulf Coast in  2005. PKEMRA included several provisions related to contracting,  including:

Contracting preference for local vendors. PKEMRA amended the  Stafford Act to provide a contracting preference for local vendors.  Specifically, for contracts or agreements with private entities, the  provisions of the act state, in part:  in general, for major disaster assistance activities, agencies shall  provide a preference, to the extent feasible and practicable, to  organizations, firms, and individuals residing or doing business  primarily in the area affected by the major disaster or emergency;  they may be set aside for local vendors, which means that only  vendors residing or primarily doing business in the declared  disaster area are allowed to compete for an award;  those not awarded to local vendors shall be justified in writing in  the contract file.

After the enactment of PKEMRA, changes were made to the FAR to  implement provisions regarding the award of set-aside contracts to  local vendors. Figure 5 displays the steps a contracting officer must  take to implement the preference for awarding post-disaster contracts  to a local vendor based on related laws and regulation.

Use of noncompetitive contracts using the urgency exception.

Agencies are generally required to use full and open competition— achieved when all responsible sources are permitted to compete— when awarding contracts. The Competition in Contracting Act of 1984  recognizes that full and open competition is not feasible in all  circumstances and authorizes contracting without full and open  competition under certain conditions, such as in cases with an  unusual and compelling urgency and the government would be  seriously injured unless the agency is permitted to limit the number of  sources from which it solicits offers (“urgency exception”). When  DHS awards disaster contracts non-competitively based on the  urgency exception, PKEMRA, as implemented in the Homeland  Security Acquisition Regulation, restricts the period of performance to  150 days, unless the Head of Contracting Activity determines that  exceptional circumstances apply. For other uses of the urgency  exception, the FAR’s period of performance limit is generally no more  than one year. Generally, exceptions to full and open competition  must be supported by written justifications that contain sufficient facts  and rationale to justify use of the specific exception. Depending on the  proposed value of the contract, the justifications require review and  approval at successively higher approval levels within the agency.

Use of advance contracts. PKEMRA requires FEMA to establish  advance contracts, which are typically needed to quickly provide life- sustaining goods and services, such as tarps and meals, in the  immediate aftermath of disasters. While not required under PKEMRA,  USACE also establishes advance contracts for supplies and services  (e.g., generators for its temporary power mission) using its  independent statutory authorities for emergency management, such  as Section 5 of the Flood Control Act of 1941. In addition, DLA has  an interagency agreement with FEMA to provide disaster commodities  and services, including fuel. As such, DLA also has some advance  contracts in place. In December 2018, we found that FEMA and  USACE were the primary users of advance contracts.

section_title: Federal Agencies Obligated at Least $5 Billion through Post- Disaster Contracts as of June 2018, but More Comprehensive Data on Disaster Contracting Obligations Would Enhance Transparency
paragraphs: As of June 30, 2018, federal agencies obligated at least $5 billion through  post-disaster contracts to support disaster response and recovery efforts  after hurricanes Harvey, Irma, and Maria and the 2017 California  wildfires. USACE and FEMA awarded over three quarters of the reported  obligations on post-disaster contracts. However, data on post-disaster  contracting are not comprehensive due to changes in the criteria for  establishing and closing a NIA code and DHS’s inconsistent  implementation of the criteria for closing codes. Specifically, we found  DHS closed the codes for Hurricanes Harvey and Irma less than a year  after the storms hit, compared to prior hurricanes when the NIA codes  remained open for at least 5 years.
subsections: section_title: Federal Agencies Obligated at Least $5 Billion through Post- Disaster Contracts for the 2017 Disasters
paragraphs: As of June 30, 2018, federal agencies obligated at least $5 billion through  post-disaster contracts in response to the three 2017 hurricanes and the  California wildfires. Data on obligations for the California wildfires are  limited to those contracts identified by two selected agencies in our  review—FEMA and USACE—because no NIA code was established in  FPDS-NG to track contracts specifically for the wildfire events at a  government-wide level. The obligations on post-disaster contracts  accounted for more than half of the $9.5 billion in contract obligations on  contracts related to the three hurricanes and the 2017 California wildfires,  with the remainder of the dollars obligated on advance contracts. See  figure 6 for details on post-disaster and advance contract obligations by  event.

FEMA and USACE accounted for more than three quarters of the total  obligations on post-disaster contracts for the three hurricanes. Because  there was no NIA code for the 2017 California wildfires, we cannot identify  government-wide obligations in FPDS-NG and, therefore, do not know  which agencies had the highest contract obligations for the two wildfire  events. Figure 7 provides details on known obligations on post-disaster  contracts, by agency.

About 63 percent of the obligations on post-disaster contracts, or $3.1  billion, was for services. See figure 8 for a breakdown of services and  products by 2017 disaster.

Five services across the 2017 disasters comprised nearly 80 percent of  total obligations for services on post-disaster contracts. Contracts for  repair and maintenance services comprised 38 percent of total obligations  on post-disaster contracts for services, largely driven by the $1 billion  obligated to support the power restoration effort in Puerto Rico following  Hurricane Maria. Following Hurricanes Harvey and Irma, agencies  primarily awarded post-disaster contracts for management support  functions, such as call center services. See figure 9 for the top post- disaster contract services across the three hurricanes and the California  wildfires.

Of the $1.8 billion agencies obligated on goods through post-disaster  contracts, 28 percent was on contracts for subsistence, such as food and  water. Nearly 30 percent, or more than $530 million, of all obligations on  post-disaster contracts for goods was on contracts for electric wire and  power distribution equipment, almost all of which was for the power  mission in Puerto Rico following Hurricane Maria. See Figure 10.

Across all three hurricanes and the California wildfires, we found that the  competition rate—the percentage of total obligations reported under  competitive contracts—was about 75 percent for post-disaster  contracts. This is an increase from the past since we previously found  that the competition rate in the immediate aftermath of Hurricane Katrina  was about 53 percent. Contracting for disaster relief and recovery  efforts presents unique circumstances in which to solicit, award, and  administer contracts. Under the FAR, agencies are generally required to  use full and open competition when soliciting offers, with some  exceptions. As discussed earlier, an agency may award a contract  without full and open competition, for example when the need for goods  and services is of such an unusual and compelling urgency that the  federal government faces the risk of serious financial or other type of loss,  unless the agency is permitted to limit the number of sources from which  it solicits offers (“urgency exception”). When using the urgency  exception, the FAR requires agencies to request offers from as many  potential sources as practicable.

Based on FPDS-NG data, we found that about 47 percent of obligations  on post-disaster contracts were on contracts citing the urgency exception,  with 63 percent of those obligations on contracts coded in FPDS-NG as  using “limited competition.” Among our selected contracts, we also found  that contracting officers implemented the urgency exception to seek offers  from as many sources as possible in different ways. Of the 11 contracts in  our sample that cited the urgency exception, five included abbreviated  award time frames in the justification documentation.

section_title: More Comprehensive Data Could Provide Increased Transparency on Disaster Contracting
paragraphs: The full extent of disaster contracting—for both advance and post- disaster contracts—related to the 2017 disasters is unknown due to  changes in the criteria for establishing and closing a NIA code in FPDS- NG and DHS’s inconsistent implementation of the updated criteria for  closing codes. The NIA code data element in FPDS-NG was established  following landfall of several major hurricanes in 2005 to enable consistent  tracking of emergency or contingency-related contracting. Contracting  officers select the applicable NIA code in FPDS-NG when entering related  contract information into the system. Officials at GSA—the agency  responsible for operating and maintaining FPDS-NG—stated there is little  to no cost or administrative burden associated with establishing or  maintaining a NIA code.

Based on a memorandum of agreement (the agreement), GSA, DHS, and  DOD are jointly responsible for determining when a NIA code should be  established and closed. DHS delegated its role, on behalf of civilian  agencies for disaster or emergency events, to its Office of the Chief  Procurement Officer (DHS OCPO), and DOD, on behalf of military  departments and defense agencies for contingency operations, delegated  its role to the Defense Contract and Pricing office. The agreement  outlines criteria DHS and DOD should consider in making determinations  to establish and close a NIA code. We identified changes in the criteria  for establishing and closing a NIA code between a June 2012 agreement  and a June 2018 update that superseded and replaced it. According to  DHS OCPO officials, the agencies updated the agreement to incorporate  lessons learned (such as adding that events should have a procurement  impact as criteria for establishing a NIA code), and because it had not  been revisited in 6 years. See table 2 for criteria from the agreements,  changes in 2018, and examples of potential implications of those changes  that we identified related to emergency or disaster events.

The June 8, 2012 agreement criteria applied to the establishment of NIA  codes for the 2017 disasters, while the June 1, 2018 updates applied to  determinations to close or extend the NIA codes after this date for the  2017 disasters. DHS OCPO requested that a NIA code be established for  each of the 2017 major hurricanes (Harvey, Irma, and Maria). However,  the codes for Harvey and Irma closed on June 30, 2018, less than a full  year after the hurricanes hit. The code for Maria was scheduled to close  on December 15, 2018, and in August 2018 we began raising questions  about the planned or actual NIA code closures for the three 2017  hurricanes. Since December 2018, DHS OCPO provided two additional  extensions for Maria, with the code now valid through June 15, 2019,  about 21 months after that hurricane made landfall. In contrast, the NIA  code for Hurricane Sandy, which made landfall in October 2012,  remained open until December 2017, more than 5 years after the  disaster. The NIA code for Hurricane Katrina, which made landfall in  August 2005, remained open until August 2018, 13 years after the  disaster. We observed that DHS OCPO requested NIA codes for  Hurricanes Florence and Michael in 2018, although we did not review the  data associated with those events. After we sent this report to the  agencies for comment on February 15, 2019, the agencies allowed the  codes for Florence and Michael to expire, on March 15, 2019 and April  12, 2019, respectively.

DHS OCPO officials offered several different rationales to support their  decision to close the NIA codes for the 2017 hurricanes and cited the  changes to the criteria in the 2018 agreement for closing the codes.  However, we found that these rationales were inconsistent with the  criteria in the agreement, did not consider key user needs, and did not  fully explain the decisions to close these codes. For example:

DHS OCPO officials told us that NIA codes for disasters should be  closed when agencies no longer use the special emergency  procurement authority such that the procurement thresholds—such as  the simplified acquisition and micro purchase thresholds—return to  the general (non-emergency) procurement thresholds in the FAR.  Further, when FEMA requested to keep the codes open, DHS OCPO  questioned why agencies would need to continue tracking with a NIA  code after the thresholds had returned to general procurement  thresholds. DHS officials stated that the updated agreement put an  emphasis on this criterion; however, our analysis indicated that was  not consistent with 2018 agreement, which includes multiple criteria  and is not limited to this factor. Further, the agreement does not  provide additional emphasis on one criterion over others.

DHS OCPO officials stated that the purpose of the NIA code is to  track federal procurement related to response, not recovery efforts.  However, both the 2012 and 2018 agreements specifically state that  the NIA code is intended to track disaster response and recovery  efforts. Further, according to the National Response Framework and  National Disaster Recovery Framework, we found that there are no  clear lines of distinction between the start and end date of these two  efforts, and often these stages of the process overlap. Additionally,  FEMA officials from the Recovery Support Function Leadership  Group’s Program Management Office stated that they use the NIA  code to track government-wide contracting related to recovery efforts.  The Recovery Support Function Leadership Group, an interagency  body chaired by FEMA, tasked the Program Management Office with  providing accountability and transparency of projects and outcomes  for the 2017 disasters, among other things.

DHS OCPO officials pointed to the Digital Accountability and  Transparency Act of 2014 as providing alternatives to FPDS-NG. The  Digital Accountability and Transparency Act of 2014 required  improvements in the quality of data on federal spending, including  disaster spending, by making data more accessible and transparent,  such as by improving the quality of data submitted by federal  agencies to USASpending—an online tool that tracks federal grant,  loan, contract, and other awards. However, we found that  USASpending provided some information on contract obligations  using disaster response and recovery funds but does not separate  obligations by disaster event. Further, our prior work on the Digital  Accountability and Transparency Act of 2014 has found limitations  with the data agencies provide, notably the completeness and  accuracy of data. Specifically, we found that agencies routinely  provided award descriptions in an abbreviated way and lacked clarity  needed to compare data across the federal government. Moreover,  we found inconsistencies in agencies’ ability to track contract actions  by disaster. While FEMA has the capacity to provide contract  information by disaster through a centralized contract tracking tool,  USACE officials stated that they use a decentralized tracking process  where they reach out to the districts and centers to identify and track  disaster contracts without a NIA code.

Prior to the June 30, 2018 decision to close the NIA codes for Harvey  and Irma, DHS OCPO officials told us they found that the number of  actions FEMA was making for these events had decreased. Our  analysis of the NIA codes showed that components across ten  departments, including within DHS and DOD, were executing  contracts related to Harvey and Irma in June 2018. When we  requested supporting documentation and analysis, DHS OCPO  officials provided some correspondence with FEMA but did not  provide government-wide data analysis to identify what other  agencies were awarding and executing contracts related to these  events. DHS OCPO officials stated they also sought input from DOD  through the Defense Pricing and Contracting Office on whether to  keep the codes open. According to DHS officials, DOD deferred to  DHS on the decision because DHS was responsible for establishing  the codes. Further, DOD officials did not provide evidence that would  allow us to determine whether they assessed which defense  components were executing contracts related to these events or  sought the input of the components that were doing so, such as  USACE and the Navy.

FPDS-NG—a public, government-wide database of federal  procurements—offers a resource the federal government can use to  create recurring and special reports for key users, such as the President,  Congress, executive agencies, and the general public. The NIA code in  FPDS-NG provides consistent tracking and government-wide visibility into  contracting related to disaster events through a publicly available  database. Without clear criteria for establishing and closing NIA codes  that consider the needs of data providers and users, such as FEMA, and  the high visibility of the event being tracked and a mechanism to ensure  consistent implementation of these criteria, insight into disaster  contracting may be limited. Additionally, federal internal control standards  state that management should use quality information, communicate  quality information internally, and communicate quality information  externally to achieve objectives. Management should accomplish this by  considering appropriate methods for communicating externally, such as to  the President, Congress, and the general public.

As noted above, the 2018 agreement no longer includes the 2012 criteria  that a NIA code can be closed if the NIA no longer has high visibility and  there is no other interest in the NIA code. In our discussions with officials,  DHS OCPO could not provide a rationale for these changes and the  rationale is also not included in the updated agreement. Prior to DHS  OCPO’s decision to close the codes for Hurricanes Harvey and Irma, a  senior FEMA procurement official requested that they remain open, in  part because of the high visibility of these events. As such, this official  stated that there will be continued interest in the 2017 hurricanes  including inquiries from Congress, which will require agency officials to  pull data for interested parties, as that data can no longer be tracked and  identified through public databases, such as FPDS-NG and  USASpending. DHS OCPO officials denied FEMA’s request, pointing to  the criteria in the 2018 agreement, which does not include consideration  of the visibility of the event or key user needs. As the federal agency  responsible for coordinating disaster response and recovery, FEMA is  well positioned to understand the level of national and political interest in  tracking procurement information for a disaster or emergency event. Yet,  it is unclear why neither the 2012 nor the updated 2018 agreements  included a role for or consideration of key users, such as FEMA and  Congress. Further, as noted above, FEMA program officials expressed  concern over closing the Harvey and Irma codes because they had  planned to use the codes to assess recovery efforts for the 2017  disasters.

As we have previously reported, it can take years to fully account for  federal contract obligations related to response and recovery after a  hurricane. Once a NIA code is closed, there is no publicly available,  government-wide system to track contract obligations for specific events.  Moreover, DHS OCPO officials were unable to provide data analysis  conducted using available data from prior events to determine historical  patterns in federal contracting obligations for disasters prior to closing the  codes for Hurricanes Harvey and Irma. Figure 11 illustrates the lack of  insight we have into disaster contracting activities related to the 2017  hurricanes, in comparison to what we know about prior storms with high  federal procurement obligations.

Further, using the description field in FPDS-NG, we found that between  July 1 and September 30, 2018, after the NIA codes were closed,  agencies obligated at least $136 million on contracts for Hurricane Harvey  and $123 million on contracts for Hurricane Irma. While this provides  some important insights regarding the continued contracting activity  related to these hurricanes, the description field in FPDS-NG cannot be  relied on to provide a full picture. Some agencies may include event- specific information in the description field; however, we found that, for  the 2017 hurricanes, about 65 percent of contract obligations linked to a  NIA code did not include event-specific information in the description.  Without reopening the NIA codes for Hurricanes Harvey and Irma, and, to  the extent practicable, retroactively populating the NIA codes for contract  actions supporting response and recovery for these hurricanes during the  period they were closed, decision makers are missing important  information to understand the procurement impact of these disasters.  Retroactively entering NIA code information is not unprecedented. For  example, based on our analysis, the NIA codes for the 2005 hurricanes  were established in October 2005, and contracting officers retroactively  entered data for contracts related to these events which occurred as early  as August of that year to enable full insight into contracting for these  disasters.

section_title: Challenges in Planning Post- Disaster Contracts Hindered Response and Recovery Efforts
paragraphs: Based on the contracts we reviewed and officials we spoke with  responsible for the planning of these contracts, we found that agencies  experienced challenges planning for post-disaster contracts, especially  when it came to contracting with local vendors. Additionally, FEMA also  experienced challenges with requirements development—in that program  officials did not always provide well-defined or sufficiently specific  requirements for post-disaster contracts. However, FEMA has taken  steps to address its challenges with requirements development, but it is  too soon to tell the extent to which these steps will address the  challenges we identified.
subsections: section_title: Agencies We Reviewed Experienced Challenges Contracting with Local Vendors
paragraphs: Steps to Implement Local Vendor  Preference, as Outlined in the Post-Katrina  Emergency Management Reform Act and  the Federal Acquisition Regulation (FAR)  Step 1: Identify the set-aside area in  accordance with FAR § 26.202-1—Local Area  Set-Aside and § 6.208—Set-asides for Local  Firms During a Major Disaster or Emergency  Step 2: Conduct market research to  determine whether there are qualified vendors  in the set-aside area.  Step 3: Issue a solicitation that provides for  local vendor preference to the extent feasible  and practicable either through the use of a  set-aside or an evaluation preference.  Step 4: Review offers based on evaluation  criteria in the solicitation. If using a local area  set-aside, review information from potential  vendors to determine if they reside or  primarily do business in the set-aside area in  accordance with FAR § 52.226-3—Disaster or  Emergency Area Representation.  Step 5: Award contract to qualified vendor. If  the vendor selected is not local or no qualified  vendors are in the set-aside area, justify the  decision in writing. determine that a vendor resides or primarily does business in the local  justify in writing awards that they made to vendors outside the set- aside area.
subsections: section_title: Some Officials We Interviewed Were Not Consistently Aware of the Regulatory Definition of Local Area
paragraphs: For the contracts we reviewed, contracting officials at FEMA correctly  identified the local area for six set-aside contracts across the three  hurricanes, and USACE correctly identified the local area for two set- aside contracts in Puerto Rico. However, based on the interviews we  conducted during our review, USACE contracting officials were not  consistently aware of the specific regulation for doing so and did not  correctly identify the local area for two other USACE contracts awarded in  support of the California wildfires. When awarding a local area set-aside  or using an evaluation preference for local vendors, FAR § 26.202-1  states that a major disaster area can span several counties in several  contiguous states, but need not include all the counties in the disaster  area, and cannot extend beyond the counties designated in a Presidential  disaster declaration.

Figure 12 provides an example of a disaster declaration that depicts  which counties could be included in the set-aside area.

For all six local area set-aside FEMA contracts—awarded in response to  Hurricanes Harvey, Irma, and Maria—we reviewed, FEMA officials  defined the local area in accordance with regulation. This was an  improvement from what we previously found. Specifically, in 2015, we  found that FEMA contracting officers were confused about the definition  of the set-aside area and recommended that the FEMA Administrator  provide new or updated guidance to ensure all contracting officers are  aware of requirements concerning contracting with local vendors, among  other things. DHS concurred, and FEMA updated its annual disaster  contracting webinar training to reiterate the requirement and clarify how to  determine the geographic area using the disaster declaration.

For the two local area set-aside USACE contracts awarded, officials  responsible for those contracts told us that when awarding these  contracts, they were not aware of the regulatory requirements for defining  the geographic area of the local area set-aside. However, as the  presidential disaster declaration for Hurricane Maria included the entire  island of Puerto Rico, the local set-aside area covered the entire island.  As a result, officials met the set-aside area requirement in accordance  with regulation, even though they noted that they were not familiar with  the requirement at the time. Officials told us they became aware of the  regulation after conducting research pursuant to a protest related to the  use of local vendor preference.

We also reviewed two other USACE contracts that were used to support  the debris removal mission following the California wildfires. Contracting  officials stated that they conducted market research on the availability of  local contractors, and they ultimately did not find qualified local firms.  However, based on a review of contract file documentation, we found that  USACE officials did not identify the local area in accordance with  regulation for these contracts. Instead they used congressional districts  that overlapped with impacted areas to identify the local area. We found  that the areas USACE identified included areas outside of the geographic  area defined by the presidential disaster declaration for the California  wildfires. Contracting officials responsible for these debris removal  contracts stated they were not aware of a policy or regulation for how to  identify the geographic area for a local area set-aside, but that their office  had internally determined the use of congressional districts impacted by a  disaster to be the preferred method.

A senior USACE official told us that there is no agency supplemental  guidance or related training regarding the use of local vendor preference  for contracts supporting disaster recovery and response, only that they  expect USACE contracting officials to comply with the FAR. Without  additional guidance or related training, contracting officers may be  unaware of how to define the geographic area for a local area-set aside in  accordance with regulation and may miss opportunities to support  improving the local economies of disaster impacted areas by giving  preference in awarding contracts to local vendors to the extent feasible  and practicable, per the Stafford Act.

section_title: Regulation for Determining Whether a Vendor Resides or Primarily Does Business in the Set-Aside Area Presents Challenges
paragraphs: Despite contracting officers having a high degree of discretion to  determine that an offeror qualifies as a “local firm,”—that is, a firm that  resides or primarily does business in the designated set-aside area— contracting and legal officials at both FEMA and USACE told us they  were unsure what or how much information is sufficient to determine that  an offeror qualifies as a local firm under the FAR. After contracting  officials have identified the geographic boundaries of the local “major  disaster or emergency area” and included required clauses in the  solicitation and issued it as a local area set-aside, offerors must represent  in their offer that they reside or primarily do business in the set-aside  area. Specifically, FAR § 52.226-3(c) outlines two criteria a contracting  officer should use to determine whether an offeror is to be considered  “local.” If an offeror does not meet these first two criteria, FAR § 52.226- 3(d) provides eight additional criteria contracting officers may consider to  make this determination (see sidebar). under FAR § 52.226-3(c)  An offeror is considered to reside or  primarily do business in the set-aside  area if, during the last 12 months, 1) the  offeror had its main operating office in the  area; and 2) that office generated at least  half of the offeror’s gross revenues and  employed at least half of the offeror’s  permanent employees.  If the offeror does not meet the criteria  under FAR § 52.226-3(c) consider other  factors listed in FAR § 52.226-3(d)  including:  1) Physical location(s) of the offeror’s  permanent office(s) and date any office in  the set-aside area(s) was established;  2) Current state licenses;  3) Record of past work in the set-aside  area(s);  4) Contractual history the offeror has had  with subcontractors and/or suppliers in  the set-aside area;  5) Percentage of the offeror’s gross  revenues attributable to work performed  in the set-aside area;  6) Number of permanent employees the  offeror employs in the set-aside area;  7) Membership in local and state  organizations in the set-aside area; and  8) Other evidence that establishes the  offeror resides or primarily does business  in the set-aside area.

Of the eight local area set-aside contracts we reviewed, two were  impacted by bid protests—which is when an offeror challenges an award  or proposed award of a contract or a solicitation—related to the FAR  criteria for determining that an offeror qualifies as a local firm. The  following protests show examples of the criteria agencies reviewed to  determine whether a firm resided or primarily did business in a set-aside  area.

FEMA contract for food: In a protest of the award of a contract for  food on the basis that FEMA improperly determined the protester  failed to meet the requirements in FAR§ 52.226-3(d), the protester  stated it met the requirements of FAR § 52.226-3(d), because it had  (1) done past work in the set-aside area; (2) maintained a warehouse  in the set-aside area; (3) maintained a contractual history with  subcontractors in the set-aside area; and (4) maintained a current  state license and filed a franchise tax return. FEMA denied, the  protest stating that the evidence the protester provided was not  sufficient to qualify as “residing or primarily doing business” in the  local area.

USACE Blue Roof contract: To support the Blue Roof mission— which provides temporary blue plastic roofs for disaster-impacted  residences to prevent further damage and allow homeowners to  arrange for permanent repairs—following Hurricane Maria in Puerto  Rico, contracting officials awarded two post-disaster contracts. In a  protest of the awards filed with GAO, the protestor argued, among  other things, that one of the awardees did not meet local firm criteria  in FAR § 52.226-3(c). USACE had assessed information on the  awardee, including its local business address in the System of Award  Management and other documentation of prior work in Puerto Rico,  prior to award and determined that the awardee met Stafford Act  criteria for award to a local vendor. USACE officials told us that, after  the protest was filed, they further assessed information on the  awardee in question and determined that it was a subsidiary of a  larger national company. According to USACE officials, in order to  quickly continue work on the Blue Roof mission, which had increased  in scale, USACE negotiated pricing with the protestor while the protest  was ongoing and made a third award under the solicitation. The  protestor withdrew the protest.

Contracting and legal officials at FEMA and USACE described difficulty in  determining whether a vendor resides or primarily does business in the  local set-aside area and cited a lack of clarity and different interpretations  of the FAR. Based on conversations with the agencies’ legal officials, we  found that USACE and FEMA applied the eight criteria in FAR § 52.226- 3(d) differently. FEMA officials told us that in determining whether a firm is  local, if the first two criteria are not met, they evaluate an offeror’s  information related to the eight criteria in FAR §52.226-3(d) to see if the  first two criteria can be met with this additional information. They added  that they look to see if the firm’s main operating office is in the set-aside  area and if that office generated at least half of the offeror’s gross  revenues and employed at least half of its permanent employees, but  stated that the eight criteria do not need to be met within the last 12  months. Alternatively, USACE officials told us that in determining if a firm  is local, if the first two criteria are not met, they evaluate an offeror’s  information against the eight criteria in FAR § 52.226-3(d) independent of  the two criteria described under FAR § 52.226-3(c). Legal officials at both  USACE and FEMA stated that the FAR criteria should be clarified.  Further, agencies’ varying application of the criteria increases the risk that  an offeror may be considered local by some agencies, but not others.

FEMA legal officials told us that contracting officers have been instructed  to ask offerors for information on a local firm status in post-disaster  solicitations. USACE legal officials explained that it is not always clear  what specific information or documents provide the necessary information  to meet the criteria under FAR § 52.226-3. For example, it may not be  clear what documentation adequately demonstrates the number of  permanent employees the offeror employs in the set-aside area, or the  percentage of the offeror’s gross revenue earned in the set-aside area.  The Office of Federal Procurement Policy provides overall direction of  government-wide procurement policies, regulations, procedures, and  forms for executive agencies. However, Office of Federal Procurement  Policy staff told us that they have not provided additional guidance or  clarification related to this FAR clause.

Federal internal control standards state that management should use  quality information to achieve objectives. Management should accomplish  this by identifying information requirements, collecting relevant data from  reliable sources, and processing data into quality information to be  communicated internally and externally. Without clarifying guidance,  contracting and legal officials will likely continue to have varying  interpretations on how to implement the FAR criteria for determining that  an offeror qualifies as a local firm.

section_title: Some Agencies We Reviewed Did Not Consistently Write Justifications for the Use of Non-Local Vendors
paragraphs: When contracts for major disaster or emergency assistance activities are  not awarded to local vendors, the Stafford Act, as implemented in the  FAR, requires that the decision be justified in writing in the contract file.  Contracting officers at three of the four agencies included in our review— FEMA, USACE, and the Coast Guard—did not consistently justify in  writing the award of selected contracts to non-local vendors. Specifically,  12 of the 14 contracts in our review that were not awarded to local  vendors did not contain the required written justifications in the files (see  table 3).

DLA included written justifications for the use of non-local vendors, as  required. After the 2017 disasters, FEMA identified the absence of  justifications for the use of non-local vendors as an area for improvement.  According to FEMA officials, they subsequently released guidance and a  pre-solicitation memorandum to assist contracting officers in identifying  what documentation related to local vendor preference is required in a  contract file. FEMA officials told us they expect these steps will improve  compliance with the requirement to document the justification for using  non-local vendors going forward. While the Coast Guard provided a  memorandum ahead of the 2017 disaster response that addressed the  use of local vendors, it did not reference the requirement under the  Stafford Act, as implemented in the FAR, to justify in writing the use of  non-local vendors. A senior USACE official told us the agency had not  issued any guidance to address requirements for contracting with local  vendors and was not aware of any guidance issued at the department  level. USACE legal officials noted the lack of written justification may be  due to abbreviated timeframes under which post-disaster contracts are  awarded. However, we found that USACE contracts included  consolidated justification documents outlining rationales for the use of  limited competition or abbreviated solicitation timeframes, but they did not  include justifications for the use of non-local vendors. Without additional  guidance or tools, contracting officials may not be aware that they are  required to include written justifications for the use of non-local vendors in  contract files, and federal agencies are at risk of not complying with the  Stafford Act requirement to do so.

section_title: FEMA Has Begun to Address Challenge with Requirements Development for Post- Disaster Contracts
paragraphs: Contracting officers responsible for the FEMA contracts we selected and  senior procurement officials stated that during disaster response they  received post-disaster requirements packages that were lacking in  technical specificity or were otherwise deficient, but FEMA has begun to  address this challenge. Program officials communicate contract  requirements to contracting officers through requirements documents that  include, among other items, a statement of work describing goods or  services to be provided by an offeror, market research, and an  independent government cost estimate. Contracting officials explained  that when they received deficient documents, they had to conduct  additional work to refine the requirements before soliciting for the  contract—such as spending time assisting program officials to develop  the required documentation. This additional work may add time to already  tight award time frames for post-disaster contracts. When compared to  large dollar value acquisitions, post-disaster contracts are awarded on  significantly abbreviated time frames. For example, among the 12 FEMA  contracts we assessed, time frames between the submission of a  resource request and award date ranged from 1-26 days. This is faster  than suggested; FEMA’s Procurement Administrative Lead Time  guidance suggests preparation time frames of 60-300 days for new  procurements based on the nature and value of an action.

We found instances where FEMA program offices provided inaccurate or  untimely estimates of the quantities of goods or services needed for the  contracts we reviewed, in some cases leading to additional time and  efforts spent to meet the need. For example:

After Hurricane Harvey, FEMA awarded contracts to supply a food  bank. Officials told us the initial requirement from the food bank  through the program office to the contracting officer was expressed in  terms of “truck loads” but did not specify, for example, how large the  truck should be, or how many pallets should be loaded per truck.  FEMA ultimately awarded three contracts to meet the post-disaster  need—the first contract had a period of performance of 4 days and,  according to FEMA officials, was intended to meet initial needs for  food while the program and contracting officials determined the full  scope of the requirement. The second contract—a $37 million  contract with a period of performance of 52 days—was intended to  fulfill the remaining requirement. However, due to miscommunication  of the requirement as documented in the contract files and according  to a program official responsible for the contracts, FEMA needed to  award a third contract for an additional 2.5 months and $23 million to  meet the need. Due to the value of the contracts, FEMA deemed that  the subsequent contract required a new solicitation and award, rather  than a modification to the existing contracts, thereby increasing the  time and effort required of procurement personnel to meet the post- disaster need for food.

In response to Hurricane Maria, FEMA awarded four post-disaster  contracts for self-help tarps—which are used to cover small areas of  roof damage. Of these contracts, two were terminated for  convenience, both of which were included in our sample. The  terminations were due in part to a national supply shortage. FEMA  officials told us that under one of the contracts included in our review,  at the request of the Commonwealth of Puerto Rico through program  officials, FEMA ordered 500,000 40-foot-by-40-foot tarps, which differ  from the size of the tarps normally ordered and stocked by the  agency. Due to the supply shortage, FEMA received none, but  officials noted that the impact of not receiving the tarps was minimal  because the agency had initially overestimated the total number of  tarps needed.

Since the 2017 disasters, FEMA has started to address the issues with  requirements development. Specifically, in 2018, FEMA officials told us  the agency used portfolio managers in the field to assist with developing  requirements for disaster response. Previously, in 2017, portfolio  managers told us they supported the National Response Coordination  Center but did not deploy to the disasters. Organizationally housed within  FEMA’s OCPO, portfolio managers we spoke with told us they provide  general templates for and guidance on acquisition documents for program  officials to use and are primarily responsible for supporting steady-state  acquisitions included in FEMA’s Master Acquisition Planning Schedule.  Additionally, portfolio managers told us they provide informal, optional,  “brown bag” training sessions for program officials. FEMA OCPO officials  told us that they receive more requests for portfolio manager assistance  than they can support, as the portfolio management section only  maintains up to six staff. FEMA OCPO officials noted, however, that the  agency expected to award an acquisition support contract to expand  portfolio management capabilities. While the use of portfolio managers is  an important step, it is too soon to tell the extent to which the use of  portfolio managers in the field will address FEMA’s challenges with  requirements development for post-disaster contracts.

section_title: Agencies in Our Review Have Identified Some Lessons Learned in Disaster Response, but Interagency Contracting Coordination and FEMA Workforce Challenges Remain
paragraphs: The agencies we reviewed each have a process for identifying lessons  learned following a disaster, and we found they used these processes for  the 2017 disasters. While agencies have identified actions they plan to  take in response to the lessons they found following the 2017 disasters,  additional challenges remain. Specifically, the agencies in our review  encountered interagency contracting coordination challenges during the  mission assignment process. Further, FEMA identified disaster  contracting workforce shortages.
subsections: section_title: Selected Agencies Have Processes for Identifying Lessons Learned
paragraphs: FEMA, USACE, Coast Guard, and DLA each have processes for  identifying lessons learned within their agencies through after-action  reports. These reports identify lessons learned and areas for  improvement and may be completed following a training exercise or a  real-world event. Through these processes, agencies identified lessons  learned during the 2017 disasters. Table 4 lays out each agency’s  practice or requirement for identifying lessons learned and key findings— those related to contracting and mission assignments during the 2017  disasters.

section_title: FEMA Established Interagency Lessons Learned Group but the Coast Guard and USACE Could Enhance Information Sharing
paragraphs: FEMA has also taken steps to identify interagency lessons learned by  leading the Emergency Support Function Leadership Group and  developing a mechanism to regularly report to the Secretary of Homeland  Security. This group consists of the national emergency support function  coordinators from each of the functions (such as transportation and  firefighting), along with FEMA headquarters and regional officials. This  body of senior officials is tasked with coordinating responsibilities and  resolving operational and preparedness issues relating to interagency  response activities in support of the National Response Framework.  According to its charter, the group is required to carry out post-incident  and after-exercise critiques, and perform substantive reviews of after- action reports, with recommendations for federal interagency partners to  address shortfalls. Following the 2017 disasters, in May 2018, the  Emergency Support Function Leadership Group identified 19 corrective  actions, including improvements to mission assignment submission  documents.

Federal internal control standards state that communicating internally is  key to an entity achieving its objectives. Further, as part of this  communication, management should receive quality information about the  entity’s operational processes that flows up the reporting lines from  personnel to help management achieve the entity’s objectives. FEMA  officials stated that there are processes, such as data calls, in place to  solicit input from agencies. However, we noted, and FEMA officials  agreed, that there is no formal reporting mechanism to the leadership  group, and that it is up to the representatives from these agencies to raise  issues for the group’s consideration.

However, this is not consistently happening within the Coast Guard  because it does not have a formal reporting process for soliciting input from officials directly involved in responding to these disasters to share  with the Emergency Support Function Leadership Group. Coast Guard  officials stated that they actively collect input during and immediately after  an event or incident response, and that Coast Guard responders are able  to provide input and issues through their chain of command at any time,  but there is no formal process for reporting to the interagency group.

During the course of our review, USACE officials did not provide  information that indicated they had a formal reporting process for  soliciting input from officials directly involved in responding to these  disasters to share with the Emergency Support Function Leadership  Group. Some senior level USACE officials responsible for the agency’s  public works and engineering mission stated that they were unsure of the  process for raising concerns to the Emergency Support Function  Leadership Group and that officials were sometimes hesitant to raise  issues to the group. However, in response to our draft report, USACE  stated it has a formal process called the USACE Remedial Action  Program for soliciting input from officials directly involved in the agency’s  response and recovery following a disaster. As discussed later, we will  follow up with USACE as part of our recommendation follow-up process.

While Emergency Support Function Leadership Group member agencies  may raise issues to the group, additional opportunities exist within these  agencies to enhance the lines of communication from responders to the  senior officials that comprise this leadership group. For example, some of  the interagency challenges we identified in our review were not identified  by this group, such as challenges in managing state and local  expectations of federal response, which is discussed in more detail  below. Also, USACE officials told us that some of the interagency  challenges they cited following the 2017 disasters related to the mission  assignment process were still present during the response to Hurricane  Florence, which struck the Carolina coast in 2018. Formal processes for  Emergency Support Function agencies—such as the Coast Guard and  USACE—to solicit and share input from officials directly involved in the  response and recovery efforts would help ensure the Emergency Support  Function Leadership Group does not miss additional opportunities to  improve disaster response.

section_title: Interagency Contracting Coordination Challenges within the Mission Assignment Process Remain
paragraphs: As the federal disaster coordinator, FEMA obtains requirements from  states and localities and tasks the appropriate federal agencies, based on  their emergency support function, through the mission assignment  process. The agency assigned to a specific mission is then responsible  for fulfilling those requirements, and may use contracts to do so. For  example, the Coast Guard fulfills its pollution mitigation mission by  executing contracts, and utilizes its own workforce to execute its search  and rescue mission.

USACE officials we spoke with raised concerns about the mission  assignment process for the debris removal and power restoration  missions related to the 2017 disasters. Specifically, USACE officials  noted concerns about coordination between state, local, and federal  partners for the contracts we reviewed.

USACE debris removal mission: In December 2018, we found that  USACE and California state officials reported different expectations  related to USACE’s debris removal contracts following the wildfires,  such as what structures would be removed from private properties  and what levels of soil contamination would be acceptable. USACE  removed more than 2.2 million tons of debris from more than 4,500  properties following the northern California wildfires. Due to the size  and scope of this mission, USACE used both its advance contracts  and additional post-disaster contracts for debris removal. According to  USACE officials, they relied on FEMA, the lead for coordinating  federal disaster response, to manage communication with states and  localities and to identify and manage expectations about the scope of  work to be performed using their debris removal contracts.

USACE officials cited challenges with communicating to state and  local officials what the agency was permitted to do under its mission  assignment. For example, USACE officials told us that local officials  believed that USACE would replace soil removed as part of its debris  removal efforts; however, this was not part of the mission assignment  from FEMA. Further, officials added that different environmental  standards created confusion regarding what types of soil should be  removed. For example, Napa County officials said that USACE’s  mission required them to ensure that no contaminated soil remained  on the properties, without regard for the naturally occurring levels of  arsenic and asbestos in Napa area soil. As a result, Napa County  officials said that USACE removed more soil than was necessary.  However, following discussions with Napa County officials, USACE  obtained site-specific samples from some properties to understand  pre-existing contamination levels prior to further debris removal.

USACE power restoration mission: Hurricane Maria destroyed  much of the electricity grid in Puerto Rico, leaving millions without  power and resulting in the longest blackout in U.S. history. To restore  power to its 3.3 million people, Puerto Rico requested federal  assistance with its power grid. To coordinate this effort across all  stakeholders, FEMA established a unified command structure—which  included the federal agencies, the Puerto Rican government and its  contractors, and utility companies providing mutual assistance.  According to FEMA officials, this structure allowed stakeholders to  target priority work, ensure crews could access the work areas, and  identify the needed materials. USACE officials stated that they  received direction from FEMA and had limited direct interaction with  Puerto Rican officials. However, despite this structure, USACE  officials noted that changing direction from FEMA contributed to  inefficiencies in contract management. For example, the scope of  power restoration work Puerto Rico was requesting changed several  times—such as from transmission work to distribution. These changes  necessitated adjustments in contractor workforce configurations and  contributed to idle time and equipment, according to officials.

FEMA’s mission assignment policy designates a Federal Disaster  Recovery Coordinator as the person responsible for facilitating disaster  recovery coordination and collaboration among federal, state, local, tribal,  and territorial governments; the private sector; and voluntary, faith-based,  and community organizations. However, neither FEMA’s mission  assignment policy nor its guide—which provides guidance on how to  open and close mission assignments—provide additional details on how  that coordination is to take place. Further, FEMA’s Response  Directorate—the office that oversees the mission assignment process— was unable to identify at what level this coordination should occur.

USACE and Coast Guard officials also noted that the mission assignment  process does not account for other contracting considerations, such as  demobilization, which occurs when contractor personnel leave the work  site and return to their headquarters. According to USACE and Coast  Guard officials, demobilization is required to be completed by the end of  the contract’s period of performance; therefore, contracting officers need  to know when the mission will end so that they can build adequate time  for demobilization into the contract.

Coast Guard pollution mitigation mission: Under this mission, the  Coast Guard is responsible for responding to threats to public health,  welfare, or the environment caused by actual or potential oil and  hazardous materials incidents. Coast Guard officials told us that  mission timing and the length of requirements were not communicated  by FEMA in a timely manner. They told us that they contacted FEMA  multiple times to determine if its mission assignment would be  continued, but they did not receive an answer until shortly before the  end of a contract’s period of performance. As a result, officials told us  they were unsure whether they would need to demobilize contractors  before completing the work, which created uncertainty about the  availability of subcontractors. A FEMA Response Directorate official  stated that these issues are coordination and planning concerns that  should be worked out in advance between FEMA and the mission  assigned agency. Ultimately, FEMA extended the Coast Guard’s  mission assignment for pollution mitigation following Hurricane Maria  four times. Figure 13 depicts the number of times Coast Guard’s  mission was extended by FEMA.

USACE power restoration mission: USACE officials cited similar  challenges during the power restoration mission in Puerto Rico  following Hurricane Maria. For example, USACE officials stated they  typically begin planning for demobilization as soon as a mission  begins. However, in this instance, officials did not know the eventual  end date in order to plan for demobilization activities. Officials added  that demobilization may take about 30 days, but USACE cannot  extend contracts or obligate funds without a FEMA mission  assignment extension. For example, if the mission assignment is  scheduled to end on June 30, contracting officials would need to  direct the contractor to begin demobilization as early as May 31.  Officials stated that a mission assignment extension or option period  of 30 days beyond the anticipated mission end date would facilitate  demobilization and reduce any undue burden or concern around  demobilization efforts.

FEMA’s mission assignment guide does not provide a process or  mechanism to follow up on the status of a mission once it is assigned. A  FEMA official stated that the Response Directorate is responsible for  informing their leadership of expiring mission assignments and contacting  the mission-assigned agency to make them aware of the impending  expiration, but that there is no standard time frame for doing so. Further,  the official stated that, in some cases, FEMA may be performing this work  a few days before a mission is set to expire. However, officials at USACE  and Coast Guard told us they are dependent upon FEMA to reissue,  clarify, or extend mission assignments. Further, the FEMA official told us  that contracting considerations—such as the time needed for a contractor  to mobilize and demobilize—are not necessarily built into the period of  performance of a mission assignment.

FEMA identified issues related to the mission assignment process, both  during the 2017 disasters and following Hurricane Sandy in 2012. For  example, in its 2013 Hurricane Sandy After-Action Report, FEMA found  that the mission assignment process was not optimally set up to quickly  surge resources to the field in a large-scale incident. To address these  challenges, FEMA convened an Executive Steering Committee to update  the mission assignment process, among other actions, and subsequently  updated its mission assignment policy in 2015. Following the 2017  disasters, the Emergency Support Function Leadership Group identified  challenges related to the mission assignment process and made  recommendations to:  (1) ensure response officials are properly trained on their  department or agency’s statutory authorities and FEMA’s mission  assignment process, and  (2) develop specific recommendations to the FEMA Response  Directorate on ways to reform mission assignment submission  documents.

These recommendations have been assigned to working groups within  the Emergency Support Function Leadership Group, which plans to track  the status until they are implemented. While these actions may improve  the mission assignment process, they do not specifically address the  issues we identified related to coordination and contracting.

While the emergency support functions lay out agencies’ general  responsibilities, agencies are dependent upon FEMA’s mission  assignment process to further define how to perform their roles. Federal  internal control standards state that management should implement  control activities through its policies. These control activities include  periodically reviewing policies, procedures, and related control activities  for continued relevance and effectiveness in achieving the entity’s  objectives or addressing related risks. Further, these standards also state  that communicating internally and externally are key to achieving an  entity’s objectives. As part of its internal controls, entities should evaluate  the methods to communicate quality information throughout and outside  of the entity on a timely basis. While FEMA revised its mission  assignment guide in 2017, it still does not require FEMA to lay out  coordination responsibilities in detail when assigning a mission. Without a  mission assignment policy and related guidance that better incorporates  contracting considerations, such as demobilization, and requires FEMA to  clearly define coordination responsibilities with federal, state, and local  stakeholders during the mission assignment process, federal agencies  may encounter challenges fulfilling their assigned missions and may not  fulfill their disaster response and recovery missions efficiently.

section_title: FEMA Identified Contracting Workforce Shortages, but Has Not Fully Assessed Its Needs
paragraphs: During the 2017 disasters, FEMA leveraged contracting staff from its  regions, headquarters, and the DART teams—FEMA’s deployable  contracting workforce. However, FEMA’s after-action report and officials  we spoke with cited workforce shortages as a continuing challenge for  disaster response and recovery. For example, officials we spoke with in  several regional offices stated that there are only one to three contracting  officers per region. Further, information provided by FEMA OCPO shows  that eight of FEMA’s 10 regional offices have only one permanent full- time contracting official. Some of FEMA’s regional offices have additional  contracting staff through FEMA’s Cadre of On-Call Response/Recovery  Employees, but this varies from region to region. Regional offices are  responsible for managing post-disaster contracts, even if regional  procurement staff were not involved in the initial award of those contracts,  according to FEMA officials.

As noted in table 4 above, FEMA’s after-action report recommended  increasing contract support capacities; however, it did not provide a  specific plan to do so. According to FEMA officials, the agency’s  workforce needs have not been assessed since a FEMA workforce  analysis pilot conducted in 2014. We have identified several key  principles that strategic workforce planning should address, including: determining the critical skills and competencies that will be needed to  achieve current and future programmatic results, and developing strategies that are tailored to address gaps in the number,  deployment, and alignment of human capital approaches for enabling  and sustaining the contributions of all critical skills and competencies.

Further, in our review of FEMA’s 2014 analysis, we found that FEMA  evaluated contracting workforce needs, but did not specifically consider  contracting workforce needs in the regional offices or address DART  employees. The analysis was based on 5 years of workload data and  conducted at the task or activity level, such as performing market  research prior to making a contract award. However, the analysis did not  prioritize skills or mission needs, nor did it identify critical competencies.  In September 2018, FEMA procurement officials told us that, based on  the 2014 analysis, they planned to hire 57 additional contracting staff.  Officials noted that FEMA’s general operation funding does not support  these additional hires, thus the agency plans to hire these staff as  Stafford Act employees for 2-year appointments using disaster funding.  While this is an important step, it is unclear when these staff will be hired  or how they will be allocated across FEMA OCPO. For example, as of  July 2018, FEMA OCPO had 72 vacant positions, including key  leadership positions and contracting specialists. Without assessing its  current contracting workforce needs—including staffing levels, mission  needs, and skill gaps—and developing a plan to address these gaps that  includes time frames, FEMA will not know whether it has the appropriate  number of contracting officials with the key skills needed to meet its  mission and is not likely to be well-positioned to respond to future  disasters.

section_title: Conclusions
paragraphs: Contracting during a disaster can pose a unique set of challenges as  officials face a significant amount of pressure to provide life-sustaining  goods and services to survivors as quickly as possible. Given the scale  and consecutive nature of the 2017 disasters, disaster contracts— particularly post-disaster contracts—played a key role in the response  and recovery efforts. In these situations, it is important that the federal  government be accountable for the contracting decisions it makes and the  money it obligates, support the local economy and survivors as effectively  as possible, and implement lessons learned before the next disaster  strikes.

Regarding accountability for the contracting decisions it makes and  dollars obligated following disasters, without the ability to track disaster  contracts using a NIA code in FPDS-NG, agencies, Congress, and the  public lack full insight into post-disaster contracts. Providing clear criteria  for establishing and closing the NIA code that accounts for the needs of  users and consistently implementing these criteria will help ensure insight  into high-visibility disaster events. Further, the ability to identify and track  contracting dollars for disasters through a publicly available database,  such as FPDS-NG, can reduce the burden on agencies to provide these  data for interested parties, including Congress and other users, and offer  a resource for historical data across major disasters.

To help meet the needs of the local economy as effectively as possible,  using a contracting preference for vendors in a disaster-affected area is  an important component to early recovery efforts. Without guidance or  training to ensure contracting officers are aware of the regulatory  definition of the local area, agencies may miss opportunities to provide  financial support to local vendors. Additionally, without clarifying how  contracting officers determine whether offerors reside or primarily do  business in a disaster area for the purposes of a local area set-aside,  contract officials will remain uncertain on how to implement related FAR  criteria. Similarly, guidance and tools to help ensure contracting officials  are aware of the requirement to provide preference to the extent feasible  and practicable to local vendors, including the need for written  documentation on the use of non-local vendors for post-disaster  contracts, will help ensure agencies comply with the requirement to do so.  Taken together, these actions could enhance compliance with the  Stafford Act provisions related to the award of contracts to local  businesses in the disaster area, which could help jump-start the local  economy.

With regards to implementing lessons learned before the next disaster  strikes, large scale disasters, like those that occurred in 2017, require  effective coordination across emergency support function agencies.  Given the Emergency Support Function Leadership Group’s responsibility  to identify gaps or seams in the federal government’s efforts to respond to  disasters, it is essential that the group have accurate and up-to-date  information. Formal processes for soliciting and sharing information to  communicate lessons learned to this group would help enhance agencies’  abilities to identify and address weaknesses in disaster response.  Further, incorporating contracting considerations, such as demobilization,  into the mission assignment policy, could enhance federal agencies’  ability to fulfill their disaster response and recovery missions efficiently.  Lastly, without an assessment of FEMA’s contracting workforce needs,  FEMA is at risk of not having a sufficient contracting workforce during a  disaster.

section_title: Recommendations for Executive Action
paragraphs: We are making a total of 10 recommendations, including one to DHS, one  to the Office of Federal Procurement Policy, two to FEMA, three to the  Army, two to the Coast Guard, and one to GSA (in coordination with DOD  and DHS).

The Administrator of the General Services Administration, in coordination  with the Secretaries of Defense and Homeland Security, should jointly  revisit and assess the extent to which the criteria in the 2018 NIA code  Memorandum of Agreement, including criteria for closing NIA codes,  meet long-term visibility needs for high visibility events and account for  the needs of users, such as FEMA, other agencies, and the Congress. At  a minimum, the agreement should include criteria that take into account  the roles of the federal agencies involved in response and recovery and  provide a process that ensures consistent consideration and  implementation of the criteria. (Recommendation 1)

Until the NIA code Memorandum of Agreement between the General  Services Administration and the Departments of Defense and Homeland  Security is revised, the Secretary of Homeland Security should, in  coordination with the Department of Defense and the General Services  Administration, keep the existing NIA code for Hurricane Maria open,  reopen the other NIA codes established for 2017 and 2018 hurricanes  (Hurricanes Harvey, Irma, Florence, and Michael), and request that  agencies retroactively enter NIA codes for contract actions for Hurricanes  Harvey and Irma made after June 30, 2018, for Hurricane Florence made  after March 15, 2019, and for Hurricane Michael made after April 12,  2019 into FPDS-NG to adequately capture contract obligations, to the  extent practicable. (Recommendation 2)

The Secretary of the Army should direct the Commanding General of the  U.S. Army Corps of Engineers to provide guidance or related training to  ensure contracting officers are aware of the regulatory definition of “local  area”. (Recommendation 3)

The Administrator of the Office of Federal Procurement Policy should  provide additional clarification on how contracting officers should  determine whether offerors reside or primarily do business in a disaster  area for the purposes of a local area set-aside contract.  (Recommendation 4)

The Commandant of the Coast Guard should provide guidance and tools  for contracting officials to use to ensure requirements concerning  contracting with local vendors, including justification requirements for the  use of non-local vendors, are consistently met. (Recommendation 5)

The Secretary of the Army should direct the Commanding General of the  U.S. Army Corps of Engineers to provide guidance and tools for  contracting officials to use to ensure requirements concerning contracting  with local vendors, including justification requirements for the use of non- local vendors, are consistently met. (Recommendation 6)

The Secretary of the Army should direct the Commanding General of the  U.S. Army Corps of Engineers to establish a formal process to solicit  input from officials directly involved in the agency’s response and  recovery following a disaster and to share that input with the Emergency  Support Function Leadership Group. (Recommendation 7)

The Commandant of the Coast Guard should establish a formal process  to solicit input from officials directly involved in the agency’s response and  recovery following a disaster and to share that input with the Emergency  Support Function Leadership Group. (Recommendation 8)

The FEMA Administrator should take the lead to work together with the  Coast Guard and the U.S. Army Corps of Engineers to revise the mission  assignment policy and related guidance to better incorporate  consideration of contracting needs, such as demobilization, and to ensure  clear communication of coordination responsibilities related to  contracting. (Recommendation 9)

The FEMA Administrator should assess its workforce needs—including  staffing levels, mission needs, and skill gaps—for contracting staff, to  include regional offices and DART; and develop a plan, including  timelines, to address any gaps. (Recommendation 10)

section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft of this report to DOD, DHS, GSA, and OMB for  review and comment. In written comments provided by DOD, DHS, and  GSA (reproduced in appendixes III, IV, and V), as well as an email  response from OMB, the agencies concurred with nine of the 10  recommendations. They generally provided steps they plan to take to  address these recommendations. As discussed further below, USACE  described actions it stated were sufficient to fully address the seventh  recommendation, the steps described by FEMA would not fully meet the  intent of the tenth recommendation, and DHS did not concur with our  second recommendation.

In response to the seventh recommendation as written in our draft  report—to establish a formal process to solicit input from officials directly  involved in the agency’s response and recovery following a disaster and  to share that input with the Emergency Support Function Leadership  Group—in its comments, USACE concurred and stated it has a formal  process and it considered the recommendation completed. USACE noted  that its Remedial Action Program solicits input from officials involved in  response and recovery efforts and added that USACE shares findings  from this program with the Emergency Support Function Leadership  Group throughout the year and annually during the senior leaders  seminar. During the course of our review, USACE did not provide  information that indicated that they had such a formal process. As part of  our recommendation follow-up process, we will request documentation  regarding the process and how it solicits and shares information to the  Emergency Support Function Leadership Group.

In response to the tenth recommendation that FEMA assess its workforce  needs—including staffing levels, mission needs, and skill gaps—for  contracting staff, to include regional offices and DART; and develop a  plan, including timelines, to address any gaps, FEMA stated that its Office  of the Chief Component Procurement Officer assesses its workforce on  an annual basis, with the last assessment conducted in January 2019.  FEMA also noted that it entered into a contract for acquisition support  services and plans to hire Cadre of On-Call Response and Recovery  employees to provide dedicated support during disasters. Following  FEMA’s response, we requested and received the FEMA Office of the  Chief Component Procurement Officer’s 2019 workforce assessment. As  with FEMA’s 2014 workforce analysis, the 2019 assessment calculated  the number of employees needed based on the estimated time to  complete a task. However, the assessment did not include an analysis of  mission needs or skill gaps, and the assessment provided does not  specify whether it includes the needs of regional offices and DART.  FEMA estimates that it will implement this recommendation in September  2019, and we will continue to monitor FEMA’s planned efforts through our  recommendation follow-up process.

DHS did not concur with the draft report’s second recommendation  regarding NIA codes. In its response, with regards to extending existing  NIA codes and reinstating expired NIA codes, DHS stated that it is bound  by the memorandum of agreement with GSA and DOD, unless or until all  three signatory agencies agree to revise or suspend the agreement. We  recognize that all three agencies are bound by the agreement, and also  recommended in the first recommendation that GSA, DOD, and DHS  jointly revisit the agreement. GSA concurred with this recommendation in  its written comments reproduced in Appendix V. In an email sent from an  official within DOD’s Defense Pricing and Contracting Office, DOD  concurred. DHS did not respond to our first recommendation. As such, we  have revised the second recommendation to state that DHS take action in  coordination with DOD and GSA. We also note that the memorandum of  agreement states that extending expiring or already expired NIA code end  date is appropriate, in part, when two or more agencies do not have a  reasonable alternative method of identifying and internally tracking those  emergency acquisitions. We discuss in our report how once the NIA code  is closed, there is no publicly available, government-wide system to track  contract obligations for specific events. We also discuss how, using the  description field (which does not provide a full picture) in FPDS-NG,  agencies obligated more than $250 million on contracts for Hurricanes  Harvey and Irma during the three months after the NIA codes for these  two hurricanes were closed. Given this, we continue to believe DHS  should consider reopening the codes for Hurricanes Harvey and Irma, in  coordination with DOD and GSA.

Moreover, in its response to the second recommendation DHS further  stated that FEMA’s Office of the Chief Component Procurement Officer  (who is not currently a party to the memorandum of agreement), believes  the recommendation to extend the NIA codes for 2018 Hurricanes  Michael and Florence goes beyond the scope of this audit. While the  main focus of this report is the 2017 hurricanes and California wildfires,  we discuss Hurricanes Florence and Michael in this draft with respect to  the NIA codes, as the same issues and concerns we raised apply  regardless of the year of the hurricane. However, after we sent the draft  to the agencies for comment, the agencies let the codes for Hurricanes  Florence and Michael expire on March 15, 2019 and April 12, 2019,  respectively. We therefore revised the second recommendation to  recommend that the codes for Hurricanes Florence and Michael should  be reopened (rather than kept open).

In its written comments, DHS also stated that neither DHS nor FEMA can  unilaterally direct other agencies to retroactively enter FPDS-NG data for  Hurricanes Harvey and Irma. We acknowledge this and have revised the  recommendation to recommend that DHS request, rather than direct,  other agencies to retroactively enter the information, to the extent  practicable. As we state in the report, the NIA codes for the 2005  hurricanes were established in October 2005, and contracting officers  retroactively entered data for contracts related to these events to enable  full insight into contracting for these disasters. DHS further stated that  retroactively entering data into FPDS-NG is not practical and places an  unreasonable burden on contracting staff, and that the draft did not  support the case that there were any benefits to be gained. We recognize  that there is some burden associated with the recommendation, thus we  recommended that DHS request agencies take action to the extent  practicable. In terms of benefits, the report identifies benefits in terms of  providing decision makers with important information to understand the  procurement impact of such disasters.

DOD and DHS also provided technical comments, which we incorporated  as appropriate.

We are sending copies of this report to the appropriate congressional  committees, the Secretary of Defense, the U.S. Army Corps of Engineers  Director of Contracting, the Director of the Defense Logistics Agency, the  Secretary of Homeland Security, the Administrator of the Federal  Emergency Management Agency, the Federal Emergency Management  Agency’s Chief Procurement Officer, the Commandant of the Coast  Guard, the Administrator of the General Services Administration, the  Director of the Office of Management and Budget, and the Administrator  of the Office of Federal Procurement Policy. In addition, the report is  available at no charge on the GAO website at http://www.gao.gov.

If you or your staff have any questions about this report, please contact  me at (202) 512-4841 or makm@gao.gov. Contact points for our Offices  of Congressional Relations and Public Affairs may be found on the last  page of this report. GAO staff who made key contributions to this report  are listed in appendix VI.

section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: This report specifically addresses the use of post disaster contracts and:  (1) assesses the extent to which federal agencies obligated funds on  post-disaster contracts in response to the 2017 major disasters; (2)  assesses the extent to which selected agencies experienced challenges  in the planning process for selected post-disaster contracts; and (3)  describes selected agencies’ lessons learned as a result of the 2017  major disasters and assesses the extent to which they have taken action  to address them.

To identify the extent to which federal agencies obligated funds on post- disaster contracts in response to the 2017 disasters, we reviewed Federal  Procurement Data System-Next Generation (FPDS-NG) data through  June 30, 2018, the most recent and complete data at the time of our  review. We adjusted the obligation data to constant fiscal year 2018  dollars using the Fiscal Year Gross Domestic Product price index. We  identified hurricane obligations using the national interest action (NIA)  code, as well as the contract description.

Data on obligations for the California wildfires is limited to those contracts,  if any, identified by the agencies with the highest obligations on post- disaster contracts for the hurricanes—the Federal Emergency  Management Agency (FEMA), U.S. Army Corps of Engineers (USACE),  Defense Logistics Agency (DLA), and the U.S. Coast Guard (Coast  Guard)—because no NIA code was established in FPDS-NG. Coast  Guard officials stated that they did not execute any contracts in response  to the 2017 California wildfires. DLA officials stated that they maintain  contracts, which for the most part provide inventory replenishment for  DLA and the U.S. Forest Service within the U.S. Department of  Agriculture, but they were unable to provide data on contracts awarded or  executed specifically for the two wildfire disasters in the scope of our  review. Therefore, our analysis only captures obligations for FEMA and  USACE reported contracts related to the 2017 California wildfires.

To determine which obligations were made through the use of post- disaster contracts versus advance contracts, we reviewed documentation  provided by FEMA and USACE identifying the advance contracts they  have in place and that were used in support of the 2017 disasters. We  analyzed the FPDS-NG data against these contracts to identify  obligations on post-disaster contracts and compared these to obligations  on advance contracts by disaster. We analyzed competition procedures  used and the types of goods and services procured for post-disaster  contracts. In addition to advance contracts for disaster response,  agencies can leverage other existing contract vehicles. For example, to  respond to its pollution mitigation functions under emergency support  function 10, the Coast Guard awards task orders off of its portfolio of  basic ordering agreements. For the purposes of this report, post-disaster  contracts include all contract awards and orders that were not identified  by FEMA or USACE as advance contracts.

To assess the extent to which disaster contract obligations can be tracked  through FPDS-NG using the NIA code, we identified prior hurricane  events with the highest contract obligations from 2005 through September  2018. We analyzed the data to determine when the highest level of  federal contract obligations occurs following a hurricane. We also  assessed the process for establishing and closing a NIA code.  Specifically, we reviewed the criteria in the 2012 and 2018 memorandums  of agreement between DHS, DOD, and the General Services  Administration, and interviewed officials involved in the process.

We assessed the reliability of FPDS-NG data by reviewing existing  information about the FPDS-NG system and the data it collects— specifically, the data dictionary and data validation rules—and performing  electronic testing. We also compared FPDS-NG data to the contract files  in our review. Specifically, to review our selected post-disaster contracts  for data reliability, we compared items such as, the extent competed, the  use of a local area set-aside, NIA code, and termination status, based on  the contract information and the information in FPDS-NG. Based on the  steps we took, we determined the FPDS-NG data were sufficiently  reliable for the purposes of describing agencies’ post- disaster contract  obligations.

To assess the extent to which agencies experienced challenges in the  planning of selected post-disaster contracts, we reviewed relevant laws  and regulations, including the Post-Katrina Emergency Management  Reform Act (PKEMRA), the Federal Acquisition Regulation (FAR), the  Robert T. Stafford Disaster Relief and Emergency Assistance Act  (Stafford Act), as well as agency policy and guidance. We identified a  non-generalizable sample of 23 post-disaster contracts from the four  agencies with the highest post-disaster obligations based on FPDS-NG  data as of March 31, 2018—DHS’s FEMA, DOD’s USACE, DOD’s DLA,  and DHS’s Coast Guard. We selected contracts across the four major  2017 disasters included in our scope (Hurricanes Harvey, Irma, and  Maria, as well as the California wildfires) based on four selection  criteria—(1) contracts using the urgency exception to full and open  competition; (2) contracts using a local area set-aside; (3) contracts  awarded to small businesses; and (4) contracts terminated for cause or  convenience. Our goal in this selection was to ensure we selected a  range of contracts within each of these four criteria so as to assess the  extent to which these contracts implemented certain laws and regulations.  Specifically, we selected contracts based on the use of urgency and local  area set-asides in order to assess agencies’ implementation of relevant  PKEMRA, Stafford Act and FAR criteria for post-disaster contracts.  Because the obligations for local area set-aside contracts was low across  all federal agencies, about 5 percent of total post-disaster obligations, we  selected contracts that were awarded to small business vendors as a  proxy to identify other awards to local vendors. Finally, we selected  terminated contracts to assess additional challenges related to post- disaster contracts, such as the availability of contracted services and  supplies and the requirement setting process. Based on these criteria, we  selected 12 FEMA, 7 USACE, 2 DLA, and 2 Coast Guard contracts.  Findings based on information collected from the 23 contracts cannot be  generalized to all post-disaster contracts. Additional details on our  selected contracts can be found in table 5.

To assess how agencies used the urgency exception to full and open  competition, we reviewed selected contracts for the inclusion of a  justification and approval for other than full and open competition  including sole source justifications and exclusion of sources justifications.

To assess the extent to which agencies provided preference to local  vendors for post-disaster contracts, we reviewed selected contract files  for the use of a set-aside or an evaluation preference listed in the contract  solicitation, and the inclusion of justifications for contracts not awarded to  local vendors. Additionally, we reviewed applicable agency guidance and  interviewed contracting and senior procurement officials across all four  agencies regarding their use of local area set-asides, including the means  by which they define the geographic set-aside area and determine that an  offeror primarily resides or does business in the set-aside area. We also  met with officials from the Office of Management and Budget’s Office of  Federal Procurement Policy to discuss relevant FAR criteria.

To assess how FEMA program offices develop and deliver requirements  packages for use by contracting officers and the extent to which those  packages are sufficiently specific to allow contracting officers to issue a  contract solicitation, we interviewed contracting, program, and senior  procurement officials responsible for the contracts in our selection  sample. We discussed the specificity of initial versus final requirements,  the nature of requirements changes, the process of requirements  development, and training provided to program officials regarding the  requirements development process. We also reviewed new post-disaster  awards at FEMA to determine time frames between resource request to  award on average for post-disaster contracts. We compared these  findings to relevant agency guidance on acquisition planning.

To describe lessons learned selected agencies identified related to the  use of post-disaster contracts and assess the extent to which agencies  have taken action to address them, we reviewed available completed  after-action reports from the 2017 and prior disasters, including the  Hurricane Sandy FEMA After-Action Report, the 2017 Hurricane Season  FEMA After-Action Report, USACE’s Temporary Emergency Power  Mission After Action Review for Hurricane Matthew, USACE’s Puerto  Rico After Action Review, USACE’s Northern California Wildfires Debris  Removal Mission After Action Review, the Coast Guard’s 2017 Hurricane  Season Strategic Lessons Learned After Action Report, and the Defense  Logistics Agency’s 2017 Hurricane After Action Meeting papers. We also  reviewed findings from the Emergency Support Function Leadership  Group related to interagency lessons learned. As part of our review, we  identified requirements for agencies to document or practices agencies  use to document lessons learned following a disaster, agency specific  and interagency lessons learned specific to post-disaster contracts and  mission assignments, and recommendations or actions planned by the  agencies to address them. We reviewed federal internal control standards  and the Emergency Support Function Leadership Group charter and the  standard operating procedures for its Preparedness Evaluation/Corrective  Action Working Group.

To describe challenges related to coordination with state and local  officials on the use of post-disaster contracts, we interviewed FEMA,  USACE, DLA, and Coast Guard officials. To obtain perspectives and  examples from state and local government officials involved in disaster  response, we interviewed officials in California on the use of federal  contracts. We also met with state and local officials in Texas, Florida,  Puerto Rico, and the U.S. Virgin Islands to discuss the federal response  to the 2017 hurricanes more broadly. The information gathered from  these officials is not generalizable to all officials.

To describe challenges related to the mission assignment process, we  interviewed FEMA, USACE, and Coast Guard officials, including officials  from FEMA’s Response Directorate and the contracting officials from  USACE and the Coast Guard that awarded the contracts these agencies  used to fulfill their missions. We also reviewed the mission assignment  documents, where FEMA assigned USACE and Coast Guard missions  and laid out their responsibilities.

To assess workforce challenges, we reviewed DHS’s 2014 workforce  assessment, which identified gaps in FEMA’s contracting workforce. We  also obtained information from FEMA on its current contracting workforce  in headquarters, regional offices, Disaster Assistance Response Team,  and joint field offices. We also interviewed FEMA contracting officials to  obtain their perspectives and experiences during the 2017 disaster  season.

We conducted this performance audit from March 2018 to April 2019 in  accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.

section_title: Appendix II: Emergency Support Functions Responsibilities across the Federal Government
paragraphs: The National Response Framework identifies 14 emergency support  functions (ESF) and designates a federal department or agency as the  coordinating agency for each function. ESFs are the federal government’s  primary coordinating structure for response, and under this structure, the  Federal Emergency Management Agency (FEMA) acts as the federal  coordinating agency.

section_title: Appendix III: Comments from the Department of Defense

section_title: Appendix IV: Comments from the Department of Homeland Security

section_title: Appendix V: Comments from the General Services Administration

section_title: Appendix VI: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact

section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, Janet McKelvey (Assistant  Director), Katherine Trimble (Assistant Director), Caryn E. Kuebler  (Analyst in Charge), Lindsay Taylor, and Sarah Tempel were principal  contributors. In addition, the following people made contributions to this  report: Emily Bond, Lorraine Ettaro, Suellen Foth, Julia Kennon, Carol  Petersen, Sylvia Schatz, Alyssa Weir, and Robin Wilson.

Fast facts: The 2017 disaster season was unlike anything the U.S. had experienced: 15% of the population was affected by 3 back-to-back hurricanes and catastrophic wildfires.

The law requires, where practical, that federal agencies give preference to local businesses in disaster areas for the contracts used to clean up and rebuild. The idea is to jumpstart the local economy.

Among other things, we reviewed contracts 4 agencies used to respond the disasters. We found officials didn't always know how they should give local businesses preference.

We made 10 recommendations, including that agencies clarify rules that give preference to local businesses.

Question-summary annotations: questions: question: Why is the full extent of post-disaster contracting unknown?
answer: However, the full extent of post-disaster contracting related to the 2017 disasters is unknown due to the Department of Homeland Security's (DHS) inconsistent implementation of the criteria for closing a national interest action (NIA) code.
child_questions: question: How does the NIA code work?
answer: This code allows agencies to track data on contract actions related to national emergencies, providing government-wide insight into response and recovery efforts.

question: How have NIA codes been used for hurricanes in the past?
answer: DHS closed the codes for Harvey and Irma on June 30, 2018, less than a year after those hurricanes hit. In contrast, the codes for prior hurricanes were open for at least five years, with Katrina remaining open for 13 years.

questions: question: How did GAO identify challenges in planning?
answer: Based on a review of 23 contract files from FEMA, USACE, the Defense Logistics Agency, and the Coast Guard, GAO identified challenges in the planning of selected contracts.
child_questions: question: What were GAO's findings on USACE officials?
answer: For example, GAO found USACE officials were not consistently aware of the regulation that defines “local area.”

question: What problem did GAO find with justification writing?
answer: GAO also found that contracting officers at FEMA, USACE, and the Coast Guard did not consistently write justifications for awards to non-local vendors outside the disaster area, as required.
child_questions: question: How have agencies addressed this issue with justification writing?
answer: FEMA developed guidance to address this, but the Coast Guard and USACE have not issued guidance or tools to address this requirement.

question: How can failure to address planning challenges be detrimental to agencies?
answer: Without addressing planning challenges, agencies may miss opportunities to award contracts to local businesses in the disaster area to the extent feasible and practicable, which could help jump-start the local economy.

questions: question: What are GAO's recommendations?
answer: GAO is making 10 recommendations, including that DHS reopen NIA codes for Hurricanes Harvey and Irma; USACE provide guidance on the local area definition; and the Coast Guard and USACE provide guidance to ensure contracting requirements for the use of non-local vendors are met.
child_questions: question: How did agencies respond to these recommendations?
answer: Agencies concurred with 9 recommendations. DHS did not agree that NIA codes should be reopened.

question: How does GAO view the agency response?
answer: GAO continues to believe DHS should do so, to the extent practicable, as discussed in the report.