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Saturday, June 22, 2024

OIG Tells FEMA to Increase Oversight to Prevent Misuse of Humanitarian Relief Funds

At OIG’s request, the government entity requested the supporting documentation for the reimbursed labor expenses, but the contractor could not provide documentation to prove it actually paid the employees the amount it was reimbursed.

The Office of Inspector General (OIG) at the Department of Homeland Security (DHS) is concerned about the misuse of federal humanitarian relief funds. 

Congress appropriated $110 million to the Federal Emergency Management Agency (FEMA) Emergency Food and Shelter Program (EFSP) to provide humanitarian relief to families and individuals encountered by DHS in communities most impacted by the humanitarian crisis at the Southwest border.

As of September 8, 2021, the National Board awarded $80.6 million of the funds to 25 local recipient organizations (LRO) in California, New Mexico, Arizona, and Texas. OIG reviewed $12.9 million from 18 LROs and found they did not always use the funds consistent with the American Rescue Plan Act of 2021 (ARPA) Humanitarian Relief Funding and Application Guidance. 

Specifically, OIG found that the LROs did not always provide the required receipts or documentation for claimed reimbursements. In addition, some of the LROs were unable to provide supporting documentation for families and individuals to whom they provided services. 

One LRO, a local government entity, did not adequately support $7.3 million in labor charges paid to a contractor that provided COVID-19 testing, a secondary service, between May and September 2021. The National Board awarded a local government entity $30.6 million, or 28 percent of the $110 million humanitarian relief funds, to conduct COVID-19 testing at the Southwest border. The local government entity entered into a time and materials contract with a private company (contractor) to test migrants for COVID-19, which required the contractor to provide qualified staff to work two 8-hour shifts anytime within a 24-hour period.

Between May and September 2021, the local government entity paid $11.7 million in contractor invoices, which included more than $8.9 million in labor expenses. Instead of providing supporting documentation for its labor charges, the contractor simply calculated the labor expenses on its invoices by multiplying 24 hours per day for every employee deployed to the testing site by each employee’s labor rate. At OIG’s request, the government entity requested the supporting documentation for the reimbursed labor expenses, but the contractor could not provide documentation to prove it actually paid the employees the amount it was reimbursed. The contractor did provide records for some employees deployed to the testing site, which amounted to about $1.5 million. However, OIG questioned the remaining $7.3 million in labor expenses because the contractor did not provide supporting documentation.

In addition, one LRO received duplicate reimbursements for claimed expenses, and two LROs miscalculated or failed to support expenses in humanitarian relief services.

OIG also determined that some families and individuals did not have a DHS encounter record. One LRO did not respond to OIG’s requests for supporting documentation for the number of families and individuals served. Two LROs did not maintain supporting documentation for the number of families and individuals served. Two LROs maintained supporting documentation for the number but did not include the names of the families and individuals served.

OIG attributes the failings to FEMA’s insufficient oversight of the funds and reliance on local boards and fiscal agents to enforce the funding and application guidance. Consequently, OIG said that FEMA, as the National Board Chair, cannot ensure the humanitarian relief funds were used as intended by the funding and application guidance. 

Without additional oversight and enforcement from FEMA and the National Board, OIG is concerned that LROs may continue to use the funds for services without providing the required supporting documentation for reimbursement, increasing the risk of misuse of funds and fraud. 

As a result of its findings, OIG recommended that FEMA ensures that the EFSP National Board resolves the questioned costs and incorporates controls in the ARPA Humanitarian Relief Funding and Application Guidance to minimize future reimbursements of unsupported costs. Additionally, the watchdog called for FEMA to ensure the labor hour reimbursements made to the COVID-19 testing contractor are appropriately supported.

FEMA concurred and reported that the EFSP in coordination with FEMA proactively issued guidance to disallow “on-call” labor hour terms in contracts using humanitarian relief funds and to require fiscal agents to report reimbursements quarterly. FEMA proposed additional guidance to require the EFSP National Board to report quarterly how funds are used and require LROs to provide additional information regarding migrants encountered by DHS. 

OIG also recommended that FEMA ensure that the EFSP National Board implements oversight measures to enforce the ARPA Humanitarian Relief Funding and Application Guidance for future supplemental appropriations. Specifically, this would include developing a risk-based methodology to review a sample of ongoing funding execution for future supplemental appropriations to ensure funds approved are reviewed and reconciled for completeness and accuracy; and supported with appropriate documentation, including rosters or other documentation for the number of people served.

FEMA agreed and said it has coordinated with the EFSP National Board to develop guidance to enhance the oversight of humanitarian relief funds by requiring the EFSP and LROs to report expenditures quarterly. In addition, FEMA plans to issue guidance and policy to verify humanitarian relief funds are used as intended. 

FEMA’s estimated completion date to implement all the corrective actions is June 30, 2023.

Read the full report at OIG

author avatar
Kylie Bielby
Kylie Bielby has more than 20 years' experience in reporting and editing a wide range of security topics, covering geopolitical and policy analysis to international and country-specific trends and events. Before joining GTSC's Homeland Security Today staff, she was an editor and contributor for Jane's, and a columnist and managing editor for security and counter-terror publications.
Kylie Bielby
Kylie Bielby
Kylie Bielby has more than 20 years' experience in reporting and editing a wide range of security topics, covering geopolitical and policy analysis to international and country-specific trends and events. Before joining GTSC's Homeland Security Today staff, she was an editor and contributor for Jane's, and a columnist and managing editor for security and counter-terror publications.

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