Office Of Inspector General (Oig) Report "Review Of FEMA's Use Of Proceeds From The Sales Of Emergency Housing Units"
Release Date: February 20, 2008
Release Number: FNF-08-013
Retaining Sale Proceeds:
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FEMA considers the sale of units only after it has been determined that they are no longer needed to meet current or future housing needs. When that happens the units are disposed of under the appropriate federal property disposal programs of the General Services Administration (GSA).
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Proceeds obtained for property sold through GSA may be retained only if those proceeds are used to purchase like-kind property under GSA's exchange sale authority.
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Any sales proceeds that are not retained must be deposited as miscellaneous receipts in the U. S. Treasury.
FEMA Initiated A Review of Internal Controls
Upon learning of some potential erroneous use of the mobile home/travel trailer sales proceeds, FEMA Office of the Chief Financial Officer (OCFO) did a preliminary analysis of Emergency Housing Units (EHU) proceeds account in late January 2007. This was a precautionary measure that resulted in immediate actions that could be taken, such as placing a hold on all expenditures using proceeds from the sale of EHUs.
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Due to the dollar amounts involved, the existing uncertainty as to the appropriate interpretation of the GSA regulations concerning this activity, FEMA Deputy Administrator Johnson and the CFO determined that it would be in FEMA's best interest to have an independent assessment on the proper process of sales proceeds authority before taking final actions. Deputy Administrator Johnson requested an independent DHS Office of the Inspector General (OIG) review in early February of FEMA's use of proceeds from the sales of EHU, and FEMA also decided to conduct its own analysis.
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In April 2007, FEMA, through its OCFO, initiated an internal review of the use of GSA's Exchange/Sale Authority related to EHU. In addition, FEMA requested that OIG review the use of proceeds from the sales of EHU. The OCFO and OIG reviews ran concurrently. The OCFO completed its draft report on June 12, 2007. The report:
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Fully disclosed that FEMA did not use the GSA Exchange/Sale Authority in accordance with the regulations established for the program.
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Presented detailed information on disallowed expenditures and proceeds from the use of GSA Exchange/Sale Authority not expended for eligible items by the end of the fiscal year following the fiscal year in which the property was sold.
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Provided corrective actions steps to comply with federal regulations for disallowed expenditures and returning proceeds to the U.S. Treasury.
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Recommended a standardized process for documenting and tracking the receipt and use of GSA Exchange/Sale Authority proceeds to ensure coordination among FEMA elements involved with the use of proceeds.
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Recommended strengthening internal controls, and monitoring and oversight of actions before proceeds of sale are used to ensure compliance with the GSA rules.
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This report was shared with senior FEMA management and DHS OIG. The OIG found our conclusions to be consistent with their own findings and concurred with the recommendations made by FEMA.
Early Actions Taken
FEMA has taken several corrective steps to address the handling of our use of proceeds from the sale of EHUs including:
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Hold on expenditures: At the end of January 2007, the OCFO, recognizing that certain expenditures from proceeds of sales of EHUs did not appear to be consistent with GSA regulations, put a hold on all expenditures using proceeds from the sale of EHUs.
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Interim steps: During the internal and independent review periods, interim steps were taken to ensure accountability and proper management of the EHU sales proceeds or 5011SR account. All pending transactions relative to the EHU proceeds account were reviewed by FEMA's OCFO and Acquisitions.
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Payments to vendors: Subsequently, payments to vendors that had to be made as a result of contracts for certain goods and services obligated with proceeds from sales of EHU were made using other appropriate funds and not proceeds from use of GSA exchange/sale authority. This was done to preclude continued inappropriate use of proceeds of sale funds.
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Written directive: FEMA is developing a written directive governing it's use of exchange/sale authority funds. Expect to launch shortly following the release of DHS OIG final report. When completed?
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Corrective measures: Additional corrective measures, such as . are pending completion of the final OIG review, which will provide FEMA a needed independent assessment with conclusions and recommendations. The agency wanted to make sure that its analysis, findings and conclusions were independently verified and validated.
- Staff training: FEMA sent representatives from headquarters and from the various EHU sites to a three and one half day utilization/donation training course to enhance understanding of GSA Exchange/Sales program. FEMA intends to send these representatives to another utilization/donation training class in April 2008.
Logistics and Acquisitions Reforms
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Created Logistics Directorate: The Logistics Directorate did not exist as a separate directorate until April 2007. Now, Logistics is under the direction of a seasoned and experienced assistant administrator, Eric Smith.
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Requested signatures: Signatures related to the GSA Exchange/Sales process will be required from the Logistics requesting officials, Chief of the Logistics Operations Division and from the Office of the Logistics Assistant Administrator as the approving officials.
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Ongoing quality assessments: FEMA has been conducting ongoing quality assessments of the maintenance and deactivation contracts' (MDC) performance within each of the Gulf Coast Sates. FEMA developed a new standard operating procedure for implementing the Quality Assurance Plan (QASP), which measures timeliness, quality and customer satisfaction of MDC performance uniformly across the Gulf Coast. Each month, all maintenance, emergency maintenance and deactivation work orders are sampled for each contractor and then evaluated against specific criteria outlined in the QASP. The evaluated work orders are assigned a score. Each monthly score is reviewed with the contractor and guidance is given on how to improve. At the end of each quarter, the sampled work orders are evaluated and based on the scores an incentive or disincentive of 15% to -15% of the invoiced amount is applied to each contractor. The new plan focuses on ensuring timely delivery of quality services to FEMA housing applicants throughout a trailer life cycle.
- Added Acquisition Management staff: At the time Hurricane Katrina and Rita, the Office of Acquisition Management (OAM) workforce included only 35 contracting professionals; today OAM has 118. This increase in staffing level, coupled with innovative acquisition programming, organizational realignment, implementation of contracting reforms, and enhanced training have made considerable progress in improving overall contract management and oversight, thus, drastically reducing the potential to engage in procurement activity without having the prerequisite funding in place.
Last Modified: Thursday, 21-Feb-2008 13:41:17