oversight

FEMA's Advance Contract Strategy for Disasters in Puerto Rico

Published by the Department of Homeland Security, Office of Inspector General on 2020-03-23.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

FEMA’s Advance Contract
Strategy for Disasters in
Puerto Rico




                     March 23, 2020
                         OIG-20-20
                                              DHS OIG HIGHLIGHTS

                                    FEMA’s Advance Contract Strategy
                                       for Disasters in Puerto Rico
 
    March 23, 2020                               What We Found
    Why We Did                                   Following Hurricane Maria, the Federal Emergency
                                                 Management Agency (FEMA) did not maximize the use of
    This Audit                                   advance contracts to address identified capability
                                                 deficiencies and needs in Puerto Rico. Specifically, we
    The Post-Katrina Emergency
                                                 identified 49 of 241 new contracts issued in the aftermath
    Management Reform Act of
                                                 of Hurricane Maria for the same goods or services covered
    2006 requires FEMA to
                                                 by existing advance contracts. In addition, FEMA Region
    maximize the use of advance
                                                 II did not issue any new advance contracts prior to
    contracts to expedite the
                                                 Hurricane Maria and did not perform analysis to identify
    acquisition of supplies and
                                                 goods or services to obtain through advance contracts.
    services during emergencies.
                                                 We attributed FEMA’s limited use of advance contracts to
    FEMA introduced advance
                                                 its lack of strategy and documented planning process for
    contracts as a way to
                                                 ensuring maximum use of advance contracts. Although
    expedite the acquisition of
                                                 FEMA reported to Congress in December 2007 it had a
    supplies and services during
                                                 strategy in place, we determined it was a one-time strategy
    emergencies. Our objective
                                                 that did not meet the intent of the Post-Katrina Emergency
    was to determine to what
                                                 Management Reform Act of 2006. Without advance
    extent FEMA’s planning for
                                                 contracts to expedite acquisitions, goods and services for
    advance contracts in Puerto
                                                 people in need may have been delayed or were more costly
    Rico addresses identified
                                                 to the Government.
    capability deficiencies and
    needs.
                                                 Further, FEMA did not maintain contract files in
                                                 accordance with Federal acquisition regulations and
    What We                                      departmental or its own policy. This occurred because
    Recommend                                    FEMA’s Office of the Chief Procurement Officer did not
                                                 have controls in place to ensure contract personnel follow
    We made four                                 Federal regulations and departmental or its own internal
    recommendations to help                      policy. As a result, FEMA’s ability to hold contractors
    FEMA improve its strategy                    accountable for deliverables is hindered if contract files
    for advance contracts, its                   are not easily located.
    process for identifying
    capability needs and gaps,
    and its contract file
                                                 FEMA’s Response
    management practices.
                                                 FEMA concurred with all four recommendations and
    For Further Information:                     described corrective actions it plans to take. However,
    Contact our Office of Public Affairs at      FEMA’s corrective actions do not meet the intent of the
    (202) 981-6000, or email us at
    DHS-OIG.OfficePublicAffairs@oig.dhs.gov      recommendations. Therefore, we consider all four
                                                 recommendations open and unresolved.



www.oig.dhs.gov                                                                              OIG-20-20
March 23, 2020
	
                            OFFICE OF INSPECTOR GENERAL
                                Department of Homeland Security



Table of Contents

Background .................................................................................................... 2 


Results of Audit .............................................................................................. 4 


        FEMA Region II/JFO Did Not Maximize the Use of Advance Contracts ... 4 


        FEMA Did Not Manage Contract Files in Accordance with Regulations 

        and Policy............................................................................................ 10 


Recommendations......................................................................................... 12 


Appendixes

        Appendix       A:   Objective, Scope, and Methodology ................................. 16                

        Appendix       B:   FEMA Comments to the Draft Report ............................... 19                  

        Appendix       C:   Office of Audits Major Contributors to This Report ........... 22                     

        Appendix       D:   Report Distribution .......................................................... 23     


Abbreviations
        FAR               Federal Acquisition Regulation 

        FEMA              Federal Emergency Management Agency 

        HSAM              Homeland Security Acquisition Manual 

        JFO               Joint Field Office 

        OCPO              Office of the Chief Procurement Officer 

        OIG               Office of Inspector General 





www.oig.dhs.gov                                                                                     OIG-20-20
                   OFFICE OF INSPECTOR GENERAL
                       Department of Homeland Security

                                 Background

The Federal Emergency Management Agency’s (FEMA) mission is to support
citizens and first responders and ensure, as a Nation, we work together to
build, sustain, and improve our capability to prepare for, protect against,
respond to, recover from, and mitigate all hazards. To fulfill its mission, FEMA
must thoroughly plan responses to different natural and manmade disasters.
These disasters require timely response to begin recovery efforts in the affected
communities.

The Robert T. Stafford Disaster Relief and Emergency Assistance Act, as
amended, Pub. L. No. 93-288 (1974) (Stafford Act), authorizes the Federal
Government to provide necessary relief and assistance prior to and during a
natural disaster. It directs the Government to provide work and services to
save lives and protect property, such as debris removal, search and rescue,
emergency medical care, shelter, food, water, and essential needs that include
movement of supplies or persons. It also requires awarding contracts to local
businesses to help stimulate the economy.

The Post-Katrina Emergency Management Reform Act of 2006, Pub. L. No.
109-295 (Post-Katrina Act), addressed various shortcomings identified in
preparation for and response to Hurricane Katrina. It requires FEMA to
identify an advance contracting strategy maximizing the use of advance
contracts to the extent practical and cost effective in advance of a natural or
non-natural disaster.

Advance contracts are for recurring disaster response requirements, including
specific goods and services for which FEMA is capable of contracting in
advance of a natural disaster, act of terrorism, or other manmade disaster that,
when used, may be cost effective. FEMA introduced advance contracts as a
way to expedite the acquisition of supplies and services during emergencies.
FEMA must identify these recurring requirements prior to a disaster in order to
enter into advance contracts meeting needs of affected communities.

Advance Contracting Process

The procurement process for awarding advance contracts is the same as any
other contract, because advance contracts are not a separate type of
contracting vehicle. Advance contracts are completed prior to an emergency to
meet the regional or program office requirements. According to FEMA,
contracts, including advance contracts, may be found in the Federal
Procurement Data System-Next Generation, a repository of U.S. Government-
wide procurement data.

www.oig.dhs.gov                         2                                OIG-20-20
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FEMA’s Office of the Chief Procurement Officer (OCPO) requires certain
documentation from its program offices before it moves forward with a
procurement. FEMA program offices route required planning documents
identifying goods and services to be acquired by FEMA OCPO. The documents
include, but are not limited to, statement/scope of work and independent
government cost estimates. FEMA OCPO initiates advance contracts and
authorizes all regional contracting officers to award advance contracts.

Once an emergency occurs, FEMA will set up a Joint Field Office (JFO) to
manage its portion of the emergency response efforts in the devastated area.
During this time, the JFO may use advance contracts or enter into new
post-disaster contracts in order to respond to the state or territory’s needs.

Hurricane Maria

On September 18, 2017, the President approved an emergency declaration for
Puerto Rico. On September 20, 2017, Hurricane Maria made landfall. It was
the strongest hurricane to make landfall in Puerto Rico since 1928. Hurricane
Maria’s powerful winds and heavy rainfall damaged communication and power
grids, destroyed homes, and downed trees leaving Puerto Rico’s 3.7 million
people without power or communication. Almost 4 months after the hurricane
made landfall, approximately 45 percent of the power company’s customers
were still without power.




 Figure 1. Puerto Rico after Hurricane Maria
 Source: DHS OIG


According to FEMA, as of January 31, 2019, it spent more than $1 billion
during its response to Hurricane Maria in Puerto Rico, with more than $550
million spent on advance contracts.

www.oig.dhs.gov                         3                               OIG-20-20
                   OFFICE OF INSPECTOR GENERAL
                       Department of Homeland Security

FEMA Region II services the area encompassing Puerto Rico. During Hurricane
Maria, Puerto Rico provided its requirement shortfalls to FEMA Region II and
the JFO, which in turn used headquarters advance contracts or entered into
post-disaster contracts to meet the needs of Puerto Rico’s residents.

Since Hurricane Maria’s landfall in Puerto Rico, other reports also highlighted
shortcomings in FEMA contracting:

   	 The U.S. Government Accountability Office issued a report titled 2017
      Disaster Contracting - Action Needed to Better Ensure More Effective Use
      and Management of Advance Contracts, GAO-19-93. This report
      discussed an out-of-date advance contract strategy and poor contract file
      management.
   	 The Department of Homeland Security Office of Inspector General (OIG)
      issued a report titled FEMA Should Not Have Awarded Two Contracts to
      Bronze Star LLC, OIG-19-38. According to the report, FEMA did not
      follow procurement laws, regulations, and procedures when awarding
      two emergency contracts to Bronze Star LLC for tarps and plastic
      sheeting, valued at $30 million, in Puerto Rico.

We conducted this audit to determine to what extent FEMA’s planning for
advance contracts in Puerto Rico addressed identified capability deficiencies
and needs.

                              Results of Audit

FEMA Region II/JFO Did Not Maximize the Use of Advance
Contracts

Following Hurricane Maria, FEMA did not maximize the use of advance
contracts to address identified capability deficiencies and needs in Puerto Rico.
Specifically, we identified 49 of 241 new contracts issued in the aftermath of
Hurricane Maria for the same goods or services covered by existing advance
contracts. In addition, FEMA Region II did not issue any new advance
contracts prior to Hurricane Maria and did not perform analysis to identify
goods or services to obtain through advance contracts. We attributed FEMA’s
limited use of advance contracts to its lack of strategy and documented
planning process for ensuring maximum use of advance contracts. Although
FEMA reported to Congress in December 2007 it had a strategy in place, we
determined it was a one-time strategy and did not meet the intent of the Post-
Katrina Act. Without advance contracts to expedite acquisitions, goods and


www.oig.dhs.gov                         4                          	    OIG-20-20
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                       Department of Homeland Security

services for people in need may have been delayed or were more costly to the
Government.

Limited Use of Advance Contracts after Hurricane Maria

The Post-Katrina Act requires FEMA to maximize the use of advance contracts
to the extent practical and cost effective. However, in the aftermath of
Hurricane Maria, contracting officers in FEMA Region II/JFO did not always
use existing advance contracts, issue new advance contracts, or perform
analysis to identify goods or services for potential advance contracts to meet
Puerto Rico’s needs.

FEMA Region II/JFO Did Not Use Existing Advance Contracts

We identified 49 of 241 contracts FEMA Region II/JFO awarded after Hurricane
Maria for the same goods or services covered by existing advance contracts.
For example:

   	 FEMA Region II/JFO awarded a post-disaster cleaning supply contract
      even though an existing advance contract was available for use.
      Cleaning supplies can be essential in an environment without running
      water or proper waste removal in limiting or stopping the spread of
      disease.

   	 FEMA Region II/JFO awarded new post-disaster housing and lodging
      assistance contracts instead of using the existing advance contract in
      place. Providing available housing and lodging promptly is vital since
      citizens may be without habitable living conditions or may be unable to
      satisfy basic survival needs.

Contracting officers provided several reasons for not using advance contracts.
We interviewed 10 contracting officers associated with 44 of the 49 contracts
(90 percent) to determine whether they considered the advance contracts
already in place. Contracting officers were able to provide documentation
supporting their decision to not use an advance contract for 4 of the 44
contracts. For the other 40 contracts, contracting officers provided reasons for
not using existing advance contracts such as the existing advance contracts
could not provide the goods and services when needed or were not cost
effective. However, when asked, the contracting officers could not provide any
documentation to support their assertions. One contracting officer provided
documentation showing an advance contract was considered, but did not
explain why the scope of the existing advance contract did not meet the
agency’s needs. Contracting officers also said the Stafford Act directs them to

www.oig.dhs.gov                        5                          	    OIG-20-20
                                        OFFICE OF INSPECTOR GENERAL
                                                  Department of Homeland Security

award post-disaster contracts to local vendors. Contracting officers indicated
the priority was to contract with local vendors before using advance contracts.
While the Stafford Act requires FEMA to award contracts to local private
organizations, firms, or individuals, it states that should be done to the extent
feasible and practicable. The Stafford Act does not preclude FEMA from
awarding local advance contracts. Finally, contracting officers believed their
decisions were justified based on a July 19, 2010 FEMA memo, Promoting the
Use of Local Vendors in Disasters. However, this memo reiterates following the
Stafford Act and discusses transitioning from national advance contracts to
local vendors within 6 months of a disaster event or sooner if/when feasible or
practicable.

FEMA Region II Did Not Issue Any New Advance Contracts

In 2007, 10 years before Hurricane Maria, FEMA provided a report1 to
Congress with a list of goods and services suitable for advance contracts.
However, FEMA Region II has not issued any new advance contracts since
2007. The Post-Katrina Act requires FEMA to maximize the use of advance
contracts to the extent practical and cost effective. Maximizing the use of
advance contracts in this context includes expanding the number of advance
contracts based on identified needs.

We determined FEMA Region II contracting officers awarded 49 contracts for
goods or services it previously reported on this list, including items such as box
truck rentals and armed security guards. Table 1 shows examples of suitable
goods and services included in the 2007 congressional report.




                                                       
1FEMA’s Report to Congress, Advance Contracting of Goods and Services, December 2007, not
currently available online.


www.oig.dhs.gov                                                  6                  OIG-20-20
                       OFFICE OF INSPECTOR GENERAL
                            Department of Homeland Security

Table 1: Examples of Goods and Services Suitable for Advance Contract
 Good/Service Category                           Example
    Cleaning Supplies                        Brooms, Buckets, Mops, Rags, Soap, Trash Bags
    Food Items                               Baby Food, Canned Goods, Ice, Packaged Foods,
                                             Powdered Milk, Water
    Transportation                           All-Terrain Vehicles (ATVs) / 4-Wheel Drive Vehicles,
                                             Bus Rental, Trains, Truck Rental
                                             Communications Improvement, Disaster Satellite
    Communication Services                   Communication, Mobile Communication Power, Private
                                             Sector Calling Services, Satellite Phone Services,
                                             Translation Services, Wireless Services
    Law Enforcement and Security             Automated Personnel Security System Support, Security
    Force                                    Support Services, FEMA Security Office
                                             Commodity Management, Fuel/Fuel Management, Ice
    Logistics and Transportation             Storage, Mortuary Services, Truck Transportation for
    Support                                  Personnel, Water Transport - Potable (Drinkable) Water
Source: FEMA’s Report to Congress on Advance Contracting of Goods and Services, December 2007


According to Region II contracting personnel, they had not issued any new
advance contracts because contracting officers were unaware regions had the
authority to enter into advance contracts and believed only FEMA headquarters
had the authority to do so. However, we identified another FEMA regional
office that had awarded advance contracts in the past.

FEMA Region II Did Not Perform Analysis to Identify Goods or Services for
Potential Advance Contracts

To ensure the Government meets its needs in the most effective, economical,
and timely manner, acquisition planning should begin as soon as an agency
identifies a need. However, FEMA Region II personnel responsible for disaster
planning in Puerto Rico were not required to perform analysis to identify
needed goods or services that could have been obtained through advance
contracts. As part of disaster planning, FEMA’s Region II created several plans
to respond to emergencies. The plans include an All-Hazards Plan, Hurricane
Response Plan, and the Hurricane Annex for Puerto Rico and U.S. Virgin
Islands. These plans discuss prepositioning goods prior to an emergency but
do not discuss gaps or needs in terms of planning in advance of an emergency.

FEMA Region II planning personnel informed us since the Region II Hurricane
Annex for Puerto Rico and U.S. Virgin Islands did not plan for a total island
destruction, FEMA used the June 2012 Puerto Rico Catastrophic Tsunami
Annex and Puerto Rico Catastrophic Earthquake Annex plans in response to
Hurricane Maria. However, these plans only provide guidance for initial
Federal response and long-term recovery from catastrophe. It references
activation of the advanced contract initiative for debris removal, water,

www.oig.dhs.gov                                  7                                       OIG-20-20
                   OFFICE OF INSPECTOR GENERAL
                       Department of Homeland Security

temporary roofing, and emergency power contract support, but does not assess
how the needs for these goods and services were determined. In addition, the
Puerto Rico Catastrophic Earthquake Annex plan does not identify needs and
gaps for advance contracts. The Earthquake Annex plan does mention specific
advance contracts, but does not specify how FEMA identified these contracts to
fulfill its needs. It also uses the term preposition, but it is in reference to
prepositioning of resources and commodities.

According to FEMA planning personnel, they work with the Commonwealth of
Puerto Rico to develop plans before disasters. Specifically, FEMA works with
the Puerto Rico State Agency for Emergency and Disaster Management to make
sure the plans meet Puerto Rico’s needs. FEMA chooses the most realistic
planning scenario using historical data, as well as the Threat and Hazard
Identification and Risk Assessments and the State Preparedness Reports, to
develop each plan. FEMA’s plans describe how it will respond to and recover
from incidents and includes planning assumptions. However, the plans do not
consider the potential for advance contracts to prepare for a disaster. Region II
relies on advance contracts written by headquarters or its own post-disaster
contracts to fulfill their needs.

FEMA Lacks Strategy with a Documented Process and Performance Goals
to Maximize Use of Advance Contracts

We attributed FEMA’s limited use of advance contracts to its lack of:

      strategy for maximizing the use of advance contracts;
      a documented planning and decision-making process, particularly for
       considering state and local needs; and
      performance goals and measures to assess progress.

No Advance Contract Strategy

The Post-Katrina Act requires FEMA to develop an advance contracting strategy
to maximize the use of such contracts. Having an advance contracting strategy
would provide guidance for decision makers on awarding and using advance
contracts, potentially improving the responsiveness and availability of
resources before a disaster strikes. It also allows FEMA to take into
consideration the priorities of the local community affected by disasters and
rapidly mobilize resources. Although the Post-Katrina Act does not specify
what should be included in the advance contracting strategy, FEMA defines a
strategy as a carefully devised plan of action to achieve one or more objectives.

Although FEMA reported to Congress in December 2007 it had an advance

www.oig.dhs.gov                         8                               OIG-20-20
                  OFFICE OF INSPECTOR GENERAL
                      Department of Homeland Security

contracting strategy in place, we determined it was a one-time strategy and did
not meet the intent of the Post-Katrina Act. Instead, this strategy only
identified a list of goods and services deemed appropriate for advance
contracting and a list of fiscal year 2007 advance contracts.

No Documented Planning and Decision-making Process

FEMA’s December 2007 advance contract strategy did not include a
documented planning process that considered the possibility of updating the
number of advance contracts to address ongoing demands and changing
needs.

According to FEMA OCPO personnel, they did not use a documented planning
process and primarily identified new advance contracts based on the needs of
the previous disasters. FEMA OCPO stated it collaborated with other program
offices to identify needs, but did not have documentation to support its
decisions. In the same report to Congress, FEMA also stated it had developed
an acquisition tracker to help define future requirements; however, we could
not identify anyone in FEMA who knew whether the acquisition tracker existed.
In addition, FEMA’s strategy lacked a documented process for contracting
officers to justify not using existing advance contracts.

Further, the Post-Katrina Act requires FEMA to coordinate with state and local
governments and other Federal agencies, and establish a process to ensure
Federal pre-negotiated contracts for goods and services are coordinated with
state and local governments, as appropriate. FEMA’s advance contract strategy
did not include a documented process for considering the needs of its state and
local partners. According to FEMA planning personnel in Region II, they work
with the Commonwealth of Puerto Rico before disasters to develop plans on
how it will respond and recover from disasters. However, documentation did
not exist to show FEMA Region II considered local community needs in
deciding how to use advance contracts to help those communities quickly
respond and recover from disasters.

No Performance Goals and Measures

Finally, FEMA’s advance contract strategy did not include any performance
goals and measures to assess progress of maximizing advance contracts.




www.oig.dhs.gov                        9                              OIG-20-20
                    OFFICE OF INSPECTOR GENERAL
                        Department of Homeland Security

According to the GPRA Modernization Act of 2010, Pub. L. No. 111-352,
performance plans covering program activities shall include:

      performance goals to define the level of performance to be achieved;
      goals expressed in an objective, quantifiable, and measurable form;
      a description of how the performance goals are to be achieved; and
      performance indicators to be used in measuring or assessing progress
       toward performance goals.

Since FEMA did not have an advance contract strategy, we cannot be certain it
had enough advance contracts in place to provide assistance to the residents of
Puerto Rico after Hurricane Maria made landfall. In addition, FEMA may have
missed opportunities to provide goods and services promptly to citizens affected
by Hurricane Maria, and those goods and services may have been more costly.

FEMA Did Not Manage Contract Files in Accordance with
Regulations and Policy

FEMA did not maintain contract files in accordance with the Federal
Acquisition Regulation (FAR) and departmental or FEMA policy guidance. FAR
Part 4.800 prescribes the Federal requirement for establishing, maintaining,
and disposing of contract files. The FAR requires the head of each office
performing contracting, contract administration, or paying functions to
establish contract files containing all contractual actions. In addition,
according to FAR Part 4.802, if contract files are decentralized, responsibility
for their maintenance must be assigned. A central control and, if needed, a
locator system should be established to ensure the ability to promptly locate
any contract files.

The FAR is not strict about having a paper contract file and allows for contract
files to be maintained in any medium (paper, electronic, microfilm, etc.).
However, the Homeland Security Acquisition Manual (HSAM), section 3004.803­
70, requires DHS components to have an official contract file folder for every
contract awarded. Further, FEMA’s standard operating procedure for contract
file management requires contracting officers and contract specialists to create
and maintain official contract files. It also requires headquarters contract files
be stored in a central file room within 5 business days after award of a contract
or issuance of an order. The same standard operating procedure requires field
offices to establish a central file location (where practicable) for all active files.

We requested 133 task orders associated with 9 advance contract files from
FEMA to determine the completeness and accuracy of Region II/JFO
procurement logs, which are lists of all contracts, including advance and post-

www.oig.dhs.gov                          10                                 OIG-20-20
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                       Department of Homeland Security

disaster contracts, Region II/JFO used during Hurricane Maria. Requests for
all contract files and associated task orders were made to FEMA OCPO. We
made these requests more than a month in advance to afford FEMA OCPO
enough time to gather the requested files. We sent multiple follow-up emails,
indicating these files would be needed and should be made ready for our
review. However, FEMA OCPO did not make all the requested task orders
available.

We were provided access to 18 task orders associated with 7 contract files — 4
hardcopy task order files located in FEMA headquarters and 14 electronic task
order files from FEMA Region II. FEMA OCPO did not provide us the remaining
99 FEMA headquarters task order files, which should have been located in the
headquarters central file room, as required by FEMA’s standard operating
procedure. In addition, FEMA OCPO did not produce the remaining 16 task
order files that should have been available in hardcopy at a central file room
located at FEMA Region II. Overall, FEMA OCPO did not produce 115 of the
133 task orders we requested.

This occurred because FEMA OCPO does not have controls to ensure contract
personnel are following the FAR, HSAM, and FEMA’s standard operating
procedure. For example, a Region II Contracting Officer stated personnel are
behind on printing hardcopy files. They print the hardcopy files as needed or
requested for audits and do not have enough storage space for the hardcopy
files. Further, a FEMA OCPO staff member informed us there are no
requirements in place to perform any checks on contracting officers to ensure
they are following the FEMA OCPO policy requiring all contracting officers to
store contract files in the central file room. As a result, FEMA may not be able
to hold contractors accountable for deliverables if contract files are not easily
located.




www.oig.dhs.gov                         11                               OIG-20-20
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                       Department of Homeland Security

                            Recommendations

Recommendation 1: We recommend the Regional Administrator, FEMA
Region II develop and implement a formal documented process to identify
capability needs and gaps for potential advance contracts in Puerto Rico.

Recommendation 2: We recommend the Head of Contracting Activity for
FEMA develop and implement an advance contract strategy that:

      • 	 includes a documented planning process to support the addition or
          removal of available advance contracts;
      • 	 encourages awarding advance contracts at the regional level;
      • 	 provides clear guidance for when a contracting officer should defer to
          the Post-Katrina Act or the Stafford Act;
      • 	 incorporates a formal process to identify capability needs and gaps for
          potential advance contracts;
      • 	 includes a schedule for updating its guidance and processes;
      • requires state, territory, and local input; and 

       specifies performance measures. 


Recommendation 3: We recommend the Head of Contracting Activity for
FEMA direct all contract personnel to follow the FAR, HSAM, and their
standard operating procedure for creating and maintaining contract files.

Recommendation 4: We recommend the Head of Contracting Activity for
FEMA implement controls to ensure FEMA personnel are following the FAR,
HSAM, and their standard operating procedure for creating and maintaining
contract files.

FEMA Comments and OIG Analysis

The Department concurred with all four of our recommendations. However,
FEMA’s planned actions do not meet the intent of the recommendations. We
have included a copy of the management comments in their entirety in
appendix B. According to FEMA, it is committed to ensuring contracting for
preparedness, response, and recovery efforts against all hazards are in full
compliance with laws, regulations, and policies. FEMA is equally committed to
maintaining updated information on the availability and use of advance
contracts for the FEMA acquisition workforce.

In addition, FEMA provided technical comments to our draft. We evaluated
those comments but did not make changes to our report.


www.oig.dhs.gov                        12	                              OIG-20-20
                  OFFICE OF INSPECTOR GENERAL
                      Department of Homeland Security

Response to Recommendation 1: Concur. FEMA’s OCPO agrees with the
need for a formal process to identify capability needs and gaps for potential
advance contracts, and claims one already exists. Specifically, FEMA OCPO
establishes advance contracting on a nation-wide basis, not region-by-region.
It is not a function of FEMA Region II to develop and implement a formal
documented process for potential advance contracts in Puerto Rico, since
FEMA’s nation-wide establishment of advance contracts to meet the agency’s
mission-essential needs includes the Regions. To improve the existing process,
OCPO established an agency-wide Disaster Strategy Forum in February 2019,
which brings together FEMA’s major disaster operational functions, including
FEMA Regions, on a bi-weekly basis. This forum allows these functions to
strategize future approaches to disaster contracting issues and needs, such as
mitigating mission shortfalls and identifying capability gaps. FEMA requested
this recommendation be closed and resolved.
 
OIG Analysis:  The agency’s response does not address the intent of the
recommendation. The agency describes actions taken at the agency-wide level
to establish advance contracts. However, the agency does not specify how it
will address identifying capability needs and gaps, specifically in Puerto Rico,
that can then be shared at the regional level via the newly developed Disaster
Strategy Forum to guide national discussions. Therefore, this recommendation
is considered open and unresolved until FEMA can provide a documented
process identifying capability gaps and needs for potential advance contracts in
Puerto Rico.

Response to Recommendation 2: Concur. According to FEMA, OCPO has
been assessing the advance contracts list as an ongoing activity since well
before the 2017 hurricane season. Based on this activity, OCPO took steps,
beginning in October 2018, to improve the planning, management, and
visibility of advance contracts. These steps include regularly assessing the
advance contracts list, in consultation with headquarters and regional
partners, to ensure commodities and services are available to meet the mission.
Further, the issuance of new advance contracts is now based on known
recurring goods and services that will be used in advance of natural or
manmade disasters, as a result of the FEMA Disaster Strategy Forum. FEMA
OCPO is memorializing this process to manage and track advance contracts by
creating a FEMA Acquisition Manual, and updating its current Disaster
Contracting Desk Guide to ensure clear guidance is given to contracting
personnel on the proper use of advance contracts. The estimated completion
date is August 31, 2020.

OIG Analysis: The agency’s response does not fully address the intent of the
recommendation. FEMA indicated it has taken steps toward an advance

www.oig.dhs.gov                        13                              OIG-20-20
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contracting strategy by creating an acquisition manual and providing clear
guidance on the proper use of advance contracts. However, the Post-Katrina
Act of 2006 requires FEMA to maximize the use of advance contracts to
expedite the acquisition of supplies and services during an emergency.
According to FEMA, it is basing its decision to issue new advance contracts on
recurring goods and services that will be used in advance of a disaster.
Therefore, this recommendation is considered open and unresolved until FEMA
provides documentation of an advance contract strategy describing the process
to be followed to address all elements our recommendation.

Response to Recommendation 3: Concur. According to FEMA, OCPO
personnel, including contract personnel, are instructed through the standard
operating procedure, Labeling and Organizing Official Contract File Folders,
dated August 31, 2009, to manage all contract files in accordance with the FAR
and HSAM. In addition, FEMA will transition to an Electronic Contract Filing
System by March 31, 2020. In April 2019, OCPO also drafted an Acquisition
Alert, Contract File Accountability, requiring the use of the Electronic Contract
Filing System as the system of record. This alert is scheduled for issuance
during the third quarter of fiscal year 2020. The estimated completion date is
June 30, 2020.

OIG Analysis: The agency’s response does not fully address the intent of the
recommendation. FEMA stated an August 31, 2009 standard operating
procedure instructs personnel to manage all contract files in accordance with
the FAR and HSAM. However, FEMA did not address its standard operating
procedure for contract file management, which requires contracting officers
and contract specialists to create and maintain official contract files in
hardcopy. It also requires headquarters contract files to be stored in a central
file room within 5 business days after award of a contract or issuance of an
order. The same standard operating procedure requires field offices to
establish a central file location (where practicable) for all active files. Until
FEMA transitions to an Electronic Contract Filing System, the current
standard operating procedure to maintain hardcopy contract files must be
followed. Therefore, this recommendation is considered open and unresolved
until the Head of Contracting Activity for FEMA directs all contract personnel
to follow all current regulations and policies until the acquisition alert
requiring use of an Electronic Contract Filing System is issued.

Response to Recommendation 4: Concur. According to FEMA, the standard
operating procedure, Labeling and Organizing Official Contract File Folders,
dated August 31, 2009, instructs FEMA OCPO personnel to manage all
contract files in accordance with the FAR and HSAM. From April 29 to May 2,
2019, FEMA OCPO provided training to OCPO personnel for creating and

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maintaining contract files during the Mission Rehearsal Training. The FEMA
OCPO also drafted an Acquisition Alert, Contract File Accountability, in April
2019 to reiterate existing controls ensuring all OCPO personnel comply with
the contract filing process, including the use of the Electronic Contract Filing
System. This alert is scheduled for issue during the third quarter of FY 2020.
The estimated completion date is June 30, 2020.

OIG Analysis: The agency’s response does not fully address the intent of the
recommendation. FEMA stated it trained staff on the creation and
maintenance of contract files. FEMA also stated the acquisition alert that has
been drafted, but not released, reiterates existing controls ensuring all OCPO
personnel comply with the contract filing process. However, we did not find
any evidence that such controls were in place. Therefore, this recommendation
is open and unresolved until FEMA provides documentation it has
implemented controls to ensure personnel are following all current regulations,
policies, and standard operating procedures for creating and maintaining
contract files.




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Appendix A
Objective, Scope, and Methodology

The Department of Homeland Security Office of Inspector General was
established by the Homeland Security Act of 2002, Pub. L. No. 107−296, by
amendment to the Inspector General Act of 1978.

FEMA introduced advance contracts as a way to expedite the acquisition of
supplies and services during emergencies. Our objective was to determine to
what extent FEMA’s planning for advance contracts in Puerto Rico addresses
identified capability deficiencies and needs. The scope of our audit included
reviewing advance and post-disaster contracts used between
September 20, 2017 and May 31, 2018. This includes contract modifications,
task orders, requisition forms, and other file documentation.

FEMA provided a list of 121 advance contracts. This list became our universe
for selecting a judgmental sample. We judgmentally selected 40 advance
contract files for review in consultation with the OIG statistician. We reviewed
documents in the contract files to determine whether FEMA identified
capability deficiencies and needs.

We reviewed requisitions (FEMA form 143) for supplies, equipment, personnel,
and/or teams; statements of work; performance work statements; statements
of objective; and independent government cost estimates to determine whether
FEMA may have documented identified capability deficiencies and needs on
these forms instead of including this information in contract files.

We compared post-disaster contracts awarded from September 20, 2017,
through May 31, 2018 by Region II/JFO to the advance contract list in order to
identify whether FEMA maximized its use of advance contracts in lieu of post-
disaster contracts. In addition, we compared the goods and services acquired
through post-disaster contracts by Region II/JFO with the list of goods and
services appropriate for advance contracts FEMA reported to Congress in 2007.

We identified and reviewed pertinent Federal criteria related to our audit
objective, which included the Post-Katrina and Stafford Acts. We reviewed
related DHS and FEMA policies and FEMA standard operating procedures.
FEMA and the government of Puerto Rico identified and provided disaster
planning documents, which included:

      Threat and Hazard Identification and Risk Assessment;
      State Preparedness Report;
      Puerto Rico Catastrophic Tsunami Annex;

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      Puerto Rico Catastrophic Earthquake Annex; 

      Puerto Rico Catastrophic Planning Annex; 

      FEMA Region II Hurricane Annex for Puerto Rico and U.S. Virgin Islands; 

      Incident Management Assistant Team Reports; and 

      Puerto Rico Hazard Mitigation Plan.
 

We interviewed personnel responsible for identifying needs and acquisition
planning at the Federal, regional, and state levels. We met with various FEMA
and Puerto Rico offices including:

FEMA:
   Office of the Chief Procurement Officer, Washington, D.C.;
   Response and Recovery, Washington, D.C.;
   Logistics, Washington, D.C.;
   Region II, New York;
   Mission Assignments and Operations, Puerto Rico;
   Logistics, Puerto Rico;
   Federal Coordinating Officer, Puerto Rico;
   Region II Caribbean Office, Puerto Rico; and
   Finance and Administration, Puerto Rico.

Puerto Rico:
   Departamento de Transportacion y Obras Publicas (Department of
      Transportation), Puerto Rico;
   Agencia Estatal para el Manejo de Emergencias y Administración de
      Desastres (Puerto Rico State Agency for Emergency and Disaster
      Management), Puerto Rico;
   State Coordinating Officer, Puerto Rico; and
   Central Office for Recovery, Reconstruction, and Resiliency (COR3),
      Puerto Rico

We attempted to obtain and identify the complete universe of FEMA’s advance
contracts in order to address our audit objective. We requested a list of
advance contracts available for use in Puerto Rico after Hurricane Maria to
select our sample. We were unable to identify a complete universe of FEMA’s
advance contracts from which to select our sample. Based on discussions with
key FEMA personnel, we found the advance contract list is manually
generated. There were no databases or documentation to verify completeness
of the advance contract list.

To identify advance contracts used in Region II/JFO, we obtained Region
II/JFO procurement logs and compared them with the FEMA headquarters’

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advance contract list. We assessed the reliability of Region II/JFO
procurement logs for the audit by attempting to review contract files and
associated task orders. However, FEMA did not provide all requested task
orders, which prevented us from determining whether Region II/JFO
procurement logs were complete. Therefore, we used Federal Procurement
Data System-Next Generation to determine whether contracts and select task
orders were used in Puerto Rico during Hurricane Maria. We found advance
contracts used in Puerto Rico for Hurricane Maria not on the Region II/JFO
procurement log. Although the data provided was incomplete, we believe the
data was sufficient to meet our audit objectives and conclusions.

We conducted this performance audit between April 2018 and June 2019
pursuant to the Inspector General Act of 1978, as amended, and according to
generally accepted government auditing standards. Those standards require t
we plan and perform the audit to obtain sufficient, appropriate evidence to
provide a reasonable basis for our findings and conclusions based upon our
audit objectives. We believe the evidence obtained provides a reasonable basis
for our findings and conclusions based upon our audit objectives.




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Appendix B

FEMA Comments to the Draft Report




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Appendix C
Office of Audits Major Contributors to This Report

Carolyn Hicks, Director
Cheryl Jones, Audit Manager
Duane Albert, Analyst-in-Charge
Aneet Marwaha, Program Analyst
Quentien Brewington, Program Analyst
Areti Bruno, Program Analyst
Jessica Jackson, Auditor
Marc Cruz, Program Analyst
Lindsey Koch, Communications Analyst
Alfonso Dallas, Independent Referencer




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Appendix D
Report Distribution

Department of Homeland Security

Secretary
Deputy Secretary
Chief of Staff
Deputy Chiefs of Staff
General Counsel
Executive Secretary
Director, GAO/OIG Liaison Office
Assistant Secretary for Office of Policy
Assistant Secretary for Office of Public Affairs
Assistant Secretary for Office of Legislative Affairs
FEMA Audit Liaison

Office of Management and Budget

Chief, Homeland Security Branch
DHS OIG Budget Examiner

Congress

Congressional Oversight and Appropriations Committees




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