Bad Watchdog Season 2 launches June 20.


Record-Breaking National Disaster Recovery Budget Should Include Ample Oversight

People in the community of Miñi Miñi wait for the water to reced. The municipality of Loíza, as well as the rest of Puerto Rico was severely affected by category 4 Hurricane Maria. Photo by Yuisa Rios / FEMA)

Last year’s hurricanes and other major disasters caused hundreds of deaths, numerous injuries, and widespread hardships. They resulted in a record-setting $306 billion in damages, according to the U.S. National Oceanic and Atmospheric Administration, which tracks the impacts of major weather disasters in the United States. The victims of those disasters need help—they are awaiting recovery funds to rebuild homes, communities, and businesses, and even just to reestablish basic services such as clean water and electric power. Billions of dollars in federal aid have begun to flow, but strong accountability and oversight will be essential to ensuring timely and effective spending, and that money is not improperly or fraudulently diverted.

Federal Inspectors General (IGs) play a critical role in this process. IGs are tasked with auditing agency spending, examining the effectiveness of programs, and watching out for waste, fraud, and abuse. Each IG from an agency that plays a part in response and recovery, whether the Federal Emergency Management Agency (FEMA) or other federal department, examines and audits disaster spending. IG work on federal spending for past major disasters, such as the 2005 Katrina and 2012 Sandy hurricanes, resulted in important recommendations for disaster-related program improvements. IGs typically see a return on investment of almost 17 dollars for every 1 dollar spent overseeing federal programs.

No surprise, with billions of dollars of disaster spending there are a lot of oversight targets, such as multimillion dollar contracts put together very quickly or rooting out home and business repair scams. The Project On Government Oversight recently blogged that many federal contracts in general are sole-sourced (i.e. not competitively bid) or lack proper accountability provisions, problems that increase the need for oversight when there are surges in contracts in response to disasters.

Will we see strong and effective disaster spending oversight? This depends to a large degree on whether Congress will provide adequate resources to IGs. Recent action in the House of Representatives is a cause for concern.

During the last days of 2017, the House Appropriations Committee introduced, and the full House passed, legislation seeking $81 billion for the recovery efforts (the bill now awaits consideration by the Senate). In September 2017, Congress had already approved an appropriations of $15.2 billion, and then in October an additional $36.5 billion. If Congress ultimately approves the December legislation, the resulting $130 billion total would mark the largest dollar amount devoted by Congress to a single year of disasters.

The good news is that the House’s December bill proposed new funds for agency IGs. The Department of Homeland Security IG, whose purview includes FEMA and the U.S. Coast Guard, would receive an additional $25 million. Other agencies involved in disaster recovery also saw inclusion. For example, the Department of Agriculture IG would see an additional $2.5 million, the Small Business Administration IG $7 million, and the Housing and Urban Development IG $10 million.

The House appropriations language also would direct the IGs to investigate and report to Congress on some specific, notable issues. For example, the DHS IG would audit contracts for plastic tarps used to provide temporary roof covering in Puerto Rico, a necessary function given that a Florida company that had been awarded a $30 million contract after the 2017 hurricanes never delivered, delaying desperately needed plastic tarps by months. This is just one well-known contract failure, likely the tip of a large iceberg of problematic contracting.

Are the new funds for the IGs helpful? Yes. Is this enough to oversee the tens of billions of dollars in new spending? Probably not. For example, the additional $25 million for the DHS IG is far too meager to effectively oversee the $58 billion in additional funds just for FEMA, as well as billions more for other DHS agencies’ disaster recovery spending included in the legislation.

The bill also includes tens of millions, or even billions, of dollars in additional funds for agencies whose IG receives no additional funds for oversight. For example, the Department of Justice will receive more than $85 million in additional funds for disaster-related work. The Department of Defense’s Army Corps of Engineers would receive more than $12 billion. Neither’s IG would receive additional funds.

Proposed Additional Funding for IGs Too Little to Effectively Oversee Additional Agency Disaster Spending

Departments Receiving Additional IG Funds Funds Added for Inspector General (in millions of dollars) Funds Added for Disaster Response and Recovery (in millions of dollars)
Agriculture 2.5 2,600.0
Commerce 1.0 800.1
Small Business Administration 7.0 1,652.0
FEMA 25.0 58,000.0*
Interior 2.5 210.6
Education 4.0 2,900.0
HUD 10.0 26,060.0

*The legislation includes $58 billion for FEMA, as well as additional funds for other DHS disaster-related activities, such as the U.S. Coast Guard. However, the total appropriation for DHS is unclear due to spending and reimbursement streams involving the disaster relief fund.

Source: H.R. 4667, introduced December 18, 2017.

The additional funding for IG oversight is still inadequate. A December POGO blog described dwindling resources for the DHS IG at a time of increasing need for investigation and oversight.

The December House Appropriations bill for additional disaster spending represents a first draft of what will eventually see passage by the full Congress. Ongoing deliberations will hopefully result in more comprehensive resources for adequate oversight.