Following Hurricane Katrina, Congress required Federal Emergency Management Agency (FEMA) to establish advance contracts for goods and services to enable the government to quickly and effectively mobilize resources in the aftermath of a disaster, like those that affected the United States in 2017.
GAO was asked to review the federal government’s response to the three 2017 hurricanes and California wildfires. GAO’s report, published December 6, assesses FEMA and the U.S. Army Corps of Engineers use of advance contracts, FEMA’s planning and reporting of selected advance contracts, and the challenges with FEMA’s use of these contracts.
For its investigation, GAO analyzed data from the Federal Procurement Data System-Next Generation through May 31, 2018; selected a non-generalizable sample of 14 FEMA and USACE advance contracts that were competed and obligated over $50 million, or non-competed and obligated over $10 million, in response to the 2017 disasters; and interviewed FEMA and USACE officials.
In response to Hurricanes Harvey, Irma, and Maria, as well as the 2017 California wildfires, GAO found that FEMA AND USACE relied heavily on advance contracts. As of May 31, 2018, FEMA and USACE obligated about $4.5 billion for various goods and services through these contracts.
FEMA and USACE procured a variety of goods and services through advance contracts in response to the three hurricanes and wildfires, but about 86 percent of obligations, or $3.8 billion, were used to procure services. For example, all of USACE’s $1.7 billion in advance contract obligations were for services, such as debris removal. FEMA obligated about $2.2 billion on services, such as architect and engineering services to rebuild roads and bridges. FEMA’s obligations on goods totaled $624 million and included prefabricated buildings, such as manufactured housing units to provide lodging, and food and water.
GAO found limitations in FEMA’s use of some advance contracts that provided critical goods and services to survivors, including an outdated strategy and unclear guidance on how contracting officers should use advance contracts during a disaster, and challenges performing acquisition planning.
The report states that FEMA also did not always provide complete information in its reports to congressional committees. Specifically, GAO found 29 advance contract actions that were not included in recent reports due to shortcomings in FEMA’s reporting methodology, limiting visibility into its disaster contract spending.
FEMA identified challenges with advance contracts in 2017, including federal coordination with states and localities on their use. FEMA is required to coordinate with states and localities and encourage them to establish their own advance contracts with vendors. However, GAO found inconsistencies in that coordination and the information FEMA uses to coordinate with states and localities on advance contracts. Without consistent information and coordination with FEMA, states and localities may not have the tools needed to establish their own advance contracts for critical goods and services and quickly respond to future disasters.
GAO is making nine recommendations to FEMA, including that it update its strategy and guidance to clarify the use of advance contracts, improve the timeliness of its acquisition planning activities, revise its methodology for reporting disaster contracting actions to congressional committees, and provide more consistent guidance and information to contracting officers to coordinate with and encourage states and localities to establish advance contracts. FEMA concurred with GAO’s recommendations and agreed to take actions to address them, such as updating guidance on advance contract use and management, adding an addendum to its quarterly report that captures the contract actions that were previously unreported, and better communicating information on advance contracts to states and localities.
FEMA has taken some steps since 2016 to improve competition and develop processes and guidance on the acquisition process for advance contracts, but GAO says shortfalls in acquisition planning have resulted in a number of bridge contracts. At least 10 of FEMA’s advance contracts used in 2017 were bridge contracts. Bridge contracts can be a useful tool in certain circumstances to avoid a gap in providing products and services. GAO has previously reported that when non-competitive bridge contracts are used frequently or for prolonged periods, the government is at risk of paying more than it should for products and services.