More than nine years after Hurricane Katrina struck the Gulf Coast, billions of tax dollars in recovery funds remain in limbo because the vast majority of federally backed projects in New Orleans have yet to be properly documented.
It is the job of the Louisiana Governor’s Office of Homeland Security and Emergency Preparedness, which has administered $14.5 billion in recovery grants from the Federal Emergency Management Agency since 2005, to document that the projects were completed according to federal regulations and that there are no outstanding funding issues.
Without such certification, determining how many tax dollars might have been wasted, and by whom, is a nearly impossible task. Some of the uncertified projects have not even been started, even thought the funds were paid.
An estimated 20,000 of the 24,000 projects that were funded with FEMA money have yet to be settled despite years of critical reports by the Department of Homeland Security inspector general.
“What is particularly disturbing about this relatively large percentage of small projects being open for eight years is that GOHSEP has already paid applicants for these projects. As the years pass, confirming whether applicants ever completed these small projects will grow difficult,” said a September 2013 IG report.
The state office has pushed back, saying the IG’s reports have been misleading and denying accusations that it has been slow to address the problems.
Mike Steele, a GOHSEP spokesman, told the Washington Examiner that the state office “has not fallen behind, and it is unfortunate that the DHS OIG’s office has consistently misinterpreted this.”
In any case, the problems are not new. GOHSEP came under fire in 2008 for using a grant-management contractor that retained a $57 million sole-source award that violated federal procurement regulations.
The no-bid contract was meant to be a temporary measure to guide GOHSEP through the early stages of the Katrina emergency until normal procurement processes could be followed.
The IG accused the contractor, James Lee Witt & Associates, of shoddy oversight that left reconstruction projects vulnerable to waste and fraud. IG auditors repeatedly demanded that GOHSEP abandon the contract and rebid the award competitively.
Witt served as FEMA director from 1993 to 2001 after being appointed by President Clinton. He held a similar job in Arkansas state government when Clinton was governor.
Despite the IG’s criticism, Witt’s firm continued working under the 2005 contract long after New Orleans lost its emergency status.
The 2008 IG report called GOHSEP’s continued reliance on the Witt contract “inappropriate” because state officials “were not fully aware of what the contractor was doing or whether billed costs were appropriate and reasonable.”
While GOHSEP staff did check Witt invoices against supporting documentation, they often declined to verify actual charges, the report said.
Auditors cited items such as a first-class airline ticket, chartered airplane use, and “costs to send a Witt employee to an out-of-state conference” among those that the contractor successfully billed to GOHSEP.
FEMA originally estimated the grant management contract would total $29 million. Months after the contract should have ended under federal regulations, FEMA increased the Witt award to $57 million.
Even so, IG auditors said “the majority of sub-grantees we interviewed said they were not satisfied with the level of support provided by Witt personnel.”
GOHSEP finally rebid the contract in April 2007, but the new award went to GlobalOptions Group Inc., a company that bought the Witt firm in March 2006, according to the IG.
Auditors cited familiar project problems in a recent report highlighting the dysfunction of a $19 million sub-grantee award.
FEMA granted $12 million to the University of New Orleans Research and Technology Foundation to fund 12 projects in the wake of Katrina.
Over the next several years, the foundation spent more than $19 million through several contracts without seeking authorization for the overruns, the October IG report found.
The foundation completed all of the projects an average of four years ago, but the grants remain open because GOHSEP “has not made closing projects a priority.”
“Louisiana has not closed a single project,” the IG said.
While the foundation awarded two contracts totaling $10.6 million under urgent circumstances that allowed normal procurement processes to be ignored, the other four were awarded under normal conditions that should have allowed regular contracting steps to be taken, the audit found.
Those four contracts, totaling $7.9 million, were not awarded competitively and FEMA had “no assurance that contract costs were reasonable,” the IG report said.
Years after completing work on the projects, the foundation has accounted for just $5.3 million of the grant money. The rest remains unreconciled.
“There won’t be any comment until this matter is resolved between the university foundation and FEMA,” a foundation spokesman said of the report.
The foundation’s troubled recovery effort is not unique.
A January 2013 IG audit found that work on 20 of 29 planned projects by the Audubon Commission, a City of New Orleans public body responsible for museums and park facilities, had yet to begin more than seven years after the disaster.
The state office had obligated millions of dollars for those projects. The IG questioned whether the projects were necessary given the length of time that had elapsed since the city’s recovery began, and again criticized GOHSEP’s grant management practices.
GOHSEP faulted the Stafford Act, a law designed to help state and local offices work with the federal government to administer disaster assistance, for its difficulty completing projects. Steele claimed the federal law “was not designed to cover a catastrophic event” like Katrina.
“It is important to remember that Hurricane Katrina was the costliest and one of the most damaging natural disasters in the history of the United States,” Steele said, citing the 10 hurricanes that ravaged the Louisiana coast from Katrina in 2005 to Isaac in 2012. “To add nine other disasters to that is an undertaking never experienced by a state before.”