The private sector is an important partner with the government in responding to and recovering from natural disasters such as Hurricanes Katrina and Rita. As we recently noted, such partnerships increasingly underlie critical government operations. With hundreds of billions of tax dollars spent each year on goods and services, it is essential that federal agency acquisitions be handled in an efficient, effective, and accountable manner. Over $87 billion of federal funding has been appropriated in response to the recent hurricanes. In responding to Hurricanes Katrina and Rita, the government depended heavily on contractors to deliver ice, water, and food supplies; patch rooftops; and provide housing to displaced residents and temporary facilities to local government agencies. Overall, the circumstances caused by the hurricanes created a difficult environment in which agencies had to balance the need to deliver goods and services quickly with the need for appropriate controls. Although achieving that balance is sometimes hard to accomplish, that fact must not be allowed to serve as an excuse for poor contracting practices. The need for strong planning is one of the themes identified by the Comptroller General in regard to the government’s overall response to the hurricanes. Planning also must explicitly address the need for and management of the contractor community. In previous work we said that for federal agencies to be effective they need to develop the knowledge necessary to identify, select, and manage contractors, including having competitively awarded contracts in place prior to a disaster. We found that some key agencies did not always have adequate plans for contracting in a major contingency situation. We also noted the competing tensions between the selection of national contractors and the requirement under the Stafford Act for a preference for contractors from the affected area. Better planning could have alleviated those tensions. While contracts for some items were in place prior to the storm, FEMA did not adequately anticipate needs for such services as providing temporary housing and public buildings. The practice of the Corps is to establish Planning and Response Teams for various missions assigned to it by FEMA prior to an event, with specific responsibilities assigned to team members. However, the Corps indicated it did not know prior to the hurricane that it would be tasked by FEMA with some of the mission assignments it received. In one case, faced with a compressed time frame for acquiring portable classrooms and with no prior knowledge about the classroom mission they were assigned, Corps contracting officials placed an order, under an existing agreement, with a subsidiary of an Alaska Native Corporation under the Small Business Administration’s section 8(a) Business Development Program. The Corps accepted the contractor’s proposed price of $39.5 million even though it had information that the cost for the classrooms was significantly less than that. Based on our analysis of a quote obtained by the contractor from a local Mississippi business, the price the contractor actually paid for the classrooms, and prices for similar units from GSA schedule contracts, our conclusion is that the Corps could have, but failed to, negotiate a lower price. Similarly, better management of requirements development could have avoided costs to house workers and victims. Based on information provided by local officials, FEMA spent $3 million for 4,000 base camp beds that were never used. Preparation was also lacking in implementation of the Stafford Act preference for contractors residing or doing business in the affected area. The Corps staff expressed uncertainty regarding how to apply preferences or determine if a company was in an affected area. Several GSA and FEMA officials indicated they were aware of the Stafford Act, but stated it is difficult to immediately factor in local businesses in such a catastrophic event. GSA officials stated they plan to review the Federal Acquisition Regulation (FAR) to see if additional Stafford Act guidance is necessary. In discussing our findings and observations with FEMA officials, they said they are taking steps to improve in areas such as staffing and premobilization capabilities. However, they also stated that such pre- planning and preparedness has a cost. The Corps commented that contracting staff need to have defined requirements in order to get the right type of contracts put in place, and the contracting staff did not always get defined requirements in a timely manner. Additionally, a Corps official commented that until funding for a particular mission is secured, preparation for it cannot go forward and this also delayed contracting efforts. Finally, both GSA and the Corps noted that they tried to reach out to local and small businesses through forums and other means to make them aware of opportunities to contract with the federal government. Officials that we talked to in the public and private sectors considered pre- identification of commodities, scalable operations, and pre-established vendor relationships to be essential for ensuring adequate planning and preparation for providing needed goods and services following a disaster. For example: Florida’s Division of Emergency Management developed a database that pre-identifies over 200 supplies and services that may be needed to respond to a disaster. Florida also pre-qualifies vendors, recording quantities and locations of vendor supplies, and establishes rates before each hurricane season, giving it the knowledge it needs to quickly procure supplies and services at a reasonable price. Similarly, Wal-Mart uses a database to review historical buying trends to identify what goods will be in demand both before and after a hurricane, and to stock the merchandise in its stores accordingly. The Corps awards Advanced Contracting Initiative (ACI) contracts to fulfill its anticipated disaster response missions. ACI contracts are used to jump start the missions following a disaster, with the Corps bringing in other contracts as necessary to complete the work. Part of Mississippi Power’s operations plan is to identify multiple potential staging areas, and multiple housing and food supply options for its own and outside workers, which enables the company to expand or reduce its operations depending on the size of the disaster. After Hurricane Katrina, Mississippi Power’s scalable operations plan enabled it to shelter and manage more than twice the number of outside personnel it had planned for, but that were needed to restore service as quickly as possible to all customers able to receive power. We also found that processes for executing contracts were hindered by poor communication of responsibilities. As envisioned under the National Response Plan (NRP), federal agencies responding to a disaster carry out their acquisition functions through a network of federal, state, and local agencies. In some instances, the local or state officials determine the requirements and communicate them to FEMA; FEMA may write and award the contract or communicate the requirements to another agency that writes and awards the contract; and then FEMA or another agency oversees contract performance. This approach puts a premium on aligning roles and responsibilities clearly and maintaining good communications to ensure effective execution of the contract. Our fieldwork identified examples where unclear responsibilities and poor communications resulted in poor acquisition outcomes. For example: FEMA officials stated that a contractor spent approximately $10 million to renovate 160 rooms and furnish another 80 rooms in military barracks in Alabama that a FEMA survey team identified for use as temporary housing. To renovate the facility, FEMA headquarters awarded a contract without consulting local FEMA officials in Alabama. According to FEMA officials in Alabama, however, the facility was not needed and they tried to stop the renovation. These same FEMA officials stated that few evacuees agreed to live at the facility, and when officials decided to close the facility, it had only six occupants. The process for ordering and delivering ice heavily depends on effective communications between FEMA and the Corps. However, according to Corps officials, FEMA did not fully understand the contracting approach used by the Corps and ordered at least double the amount of ice required, resulting in an oversupply of ice and a lack of distribution sites available to handle the volume ordered. Additionally, the local Corps personnel were not always aware of where ice might be delivered and did not have the authority to redirect ice as shipments arrived, resulting in inefficient distribution and receipt at the state level. FEMA tasked GSA to write three contracts in Louisiana for base camps, hotel rooms, and ambulances, with a total value of over $120 million. GSA contracting officers awarded the contracts, but could not tell us which FEMA officials would be responsible for overseeing contractor performance. The FEMA official identified as the main point of contact by GSA did not have any knowledge of these contracts or who was responsible for oversight. Only after contacting multiple FEMA officials over a 3-week period were we able to determine the agency officials responsible for contract oversight. In commenting on our findings, GSA officials stated that their role is to provide resource support in the response phase of a disaster, meaning they are responsible for executing contracts under the NRP, and FEMA is responsible for monitoring the contracts. FEMA officials commented that there needs to be more clarity regarding procurement roles and indicated one of their goals is to work with GSA to clarify procurement responsibilities for the future. GSA officials indicated that the current memorandum of understanding between GSA and FEMA is being updated to reflect the standards of the new NRP as well. To clearly establish and communicate disaster-related responsibilities, public and private sector officials told us they use such practices as conducting joint disaster response training for agency employees and contractors and formally assigning their employees specific disaster- related responsibilities. For example: The employees at CSX Transportation Railroad and their suppliers participate jointly in both disaster planning and training exercises. This allows each supplier to know its responsibilities and the railroad’s expectations in the event of a natural disaster. As a part of its preparation for disaster response, the Florida Division of Emergency Management holds joint state-wide training exercises every year with suppliers. Management-level personnel at Mississippi Power are assigned disaster director roles aligned to their day-to-day functions, which they assume during the company’s storm preparation phase. Each disaster director has a designated backup and directs all disaster-related activities within his or her functional areas. Each functional area has a specific disaster plan that is integral to the overall corporate disaster recovery plan. Each Mississippi Power employee also has a storm assignment and receives annual training on that assignment.