Federal Report Finds Millions in Wasteful Spending on FEMA Trailers

What will $229,000 cover in the Mississippi real estate market?

A five-bedroom, 2,000-square-foot home in the capital city of Jackson, or a 280-square-foot temporary FEMA trailer in the Hurricane Katrina-ravaged zone of the Gulf Coast, according to a government report issued Nov. 16.

The U.S. Government Accountability Office found “ineffective oversight” caused about $30 million in “wasteful and improper or potentially fraudulent payments” to contractors between June 2006 and January 2007 – including expenses for some temporary trailer sites.

The Federal Emergency Management Agency will spend an average of $30,000 on each trailer on a private site through March 2009, when the government plans to close the temporary housing.

But expenses for one trailer could hit $229,000 at a temporary trailer park set up at the Port of Bienville Park in Hancock County, the report said. That covers costs for FEMA to buy, haul and install each trailer and to lay out, construct and maintain the group site.

“Part of the reason for this expense is that FEMA placed only eight trailers at the Bienville site,” the GAO says. “FEMA wastes money when it operates sites with such a small number of trailers because GSM (group site maintenance) costs are fixed whether a site contains 1 or 50 trailer pads.”

Katrina damaged or destroyed 134,000 homes and 10,000 rental units in Mississippi alone, according to the report. The report does not address spending or provide statistics for Louisiana, which also had widespread damage because of the 2005 storm.

FEMA agreed with all of the GAO’s recommendations in the report, including one to evaluate whether money can be saved in the placement and maintenance of trailers.

Steven J. Pecinovsky, director of Departmental Audit Liaison Office for FEMA, wrote that most people who receive temporary housing after a disaster want to stay close to where they had lived.

“As some of the disaster victims are renters, the agency does set up group sites and utilizes existing commercial sites in order to house them in their pre-disaster community,” Pecinovsky wrote in the FEMA response, which was included in the GAO report.

The GAO says FEMA gave contracts for group site maintenance to two companies that did not appear to have met a requirement to submit independent bids. The companies had the same president and accountant, and the companies shared price information before submitting proposals to FEMA, the GAO says.

Pecinovsky said FEMA will evaluate whether contractors were overpaid.

On the Net:

GAO report: http://www.gao.gov/cgi-bin/getrpt?GAO-08-106