Fast Facts

The 2017 disaster season was unlike anything the U.S. had experienced: 15% of the population was affected by 3 back-to-back hurricanes and catastrophic wildfires.

The law requires, where practical, that federal agencies give preference to local businesses in disaster areas for the contracts used to clean up and rebuild. The idea is to jumpstart the local economy.

Among other things, we reviewed contracts 4 agencies used to respond the disasters. We found officials didn't always know how they should give local businesses preference.

We made 10 recommendations, including that agencies clarify rules that give preference to local businesses.

Canal debris in the Florida Keys following Hurricane Irma

Marine debris in a canal, Florida Keys

Marine debris in a canal, Florida Keys

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Highlights

What GAO Found

Following hurricanes Harvey, Irma, and Maria and the 2017 California wildfires, federal agencies obligated at least $5 billion in post-disaster contracts—which are awarded after disasters hit— to support disaster response and recovery efforts. The U.S. Army Corps of Engineers (USACE) and the Federal Emergency Management Agency (FEMA) comprised over three-quarters of reported post-disaster contract obligations as of June 30, 2018 (see figure).

Known Post-Disaster Contract Obligations in Response to the 2017 Disasters, in Fiscal Year 2018 Dollars, as of June 30, 2018

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However, the full extent of post-disaster contracting related to the 2017 disasters is unknown due to the Department of Homeland Security's (DHS) inconsistent implementation of the criteria for closing a national interest action (NIA) code. This code allows agencies to track data on contract actions related to national emergencies, providing government-wide insight into response and recovery efforts. DHS closed the codes for Harvey and Irma on June 30, 2018, less than a year after those hurricanes hit. In contrast, the codes for prior hurricanes were open for at least five years, with Katrina remaining open for 13 years.

Based on a review of 23 contract files from FEMA, USACE, the Defense Logistics Agency, and the Coast Guard, GAO identified challenges in the planning of selected contracts. For example, GAO found USACE officials were not consistently aware of the regulation that defines “local area.” GAO also found that contracting officers at FEMA, USACE, and the Coast Guard did not consistently write justifications for awards to non-local vendors outside the disaster area, as required. FEMA developed guidance to address this, but the Coast Guard and USACE have not issued guidance or tools to address this requirement. Without addressing planning challenges, agencies may miss opportunities to award contracts to local businesses in the disaster area to the extent feasible and practicable, which could help jump-start the local economy.

Federal contracts play a key role in timely response and recovery efforts following disasters. While federal agencies, such as FEMA and USACE, may have advance contracts in place for obtaining goods and services following disasters, agencies may also award post-disaster contracts.

GAO was asked to review the federal government's response to three major hurricanes in 2017, as well as the 2017 California wildfires. This report addresses, among other objectives, the extent to which (1) federal agencies obligated funds on post-disaster contracts in response to the these events, and (2) selected agencies experienced challenges in the planning of selected contracts.

GAO analyzed data from the Federal Procurement Data System-Next Generation; selected a non-generalizable sample of 23 post-disaster contracts based on factors such as if the contract was set aside for award to a local contractor; reviewed federal regulations and agency guidance; and interviewed agency officials.

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Recommendations

GAO is making 10 recommendations, including that DHS reopen NIA codes for Hurricanes Harvey and Irma; USACE provide guidance on the local area definition; and the Coast Guard and USACE provide guidance to ensure contracting requirements for the use of non-local vendors are met. Agencies concurred with 9 recommendations. DHS did not agree that NIA codes should be reopened. GAO continues to believe DHS should do so, to the extent practicable, as discussed in the report.

Recommendations for Executive Action

Agency Affected Recommendation Status
General Services Administration The Administrator of the General Services Administration, in coordination with the Secretaries of Defense and Homeland Security, should jointly revisit and assess the extent to which the criteria in the 2018 NIA code Memorandum of Agreement, including criteria for closing NIA codes, meet long-term visibility needs for high visibility events and account for the needs of users, such as FEMA, other agencies, and the Congress. At a minimum, the agreement should include criteria that take into account the roles of the federal agencies involved in response and recovery and provide a process that ensures consistent consideration and implementation of the criteria. (Recommendation 1)
Closed - Implemented
The General Services Administration (GSA) and the Department of Defense (DOD) concurred with the recommendation and the need to regularly review the memorandum of agreement (MOA) and make revisions as applicable. The Department of Homeland Security (DHS) did not respond to the recommendation. In March 2021, GSA, DHS, and DOD revised the MOA to include additional information on closing NIA codes, including for example, providing general criteria for what constitutes a "significant decrease" in contracting activity. The revised MOA also provides a process for GSA to request input from NIA code users on the extension or closure of codes.
Department of Homeland Security Until the NIA code Memorandum of Agreement between the General Services Administration and the Departments of Defense and Homeland Security is revised, the Secretary of Homeland Security should, in coordination with the Department of Defense and the General Services Administration, keep the existing NIA code for Hurricane Maria open, reopen the other NIA codes established for 2017 and 2018 hurricanes (Hurricanes Harvey, Irma, Florence, and Michael), and request that agencies retroactively enter NIA codes for contract actions for Hurricanes Harvey and Irma made after June 30, 2018, for Hurricane Florence made after March 15, 2019, and for Hurricane Michael made after April 12, 2019 into FPDS-NG to adequately capture contract obligations, to the extent practicable. (Recommendation 2)
Closed - Not Implemented
The Department of Homeland Security (DHS) did not concur with the recommendation in the draft report sent for agency comment. GAO revised the recommendation for the final report to address DHS's response. While DHS, the Department of Defense, and the General Services Administration revised the Memorandum of Agreement (MOA) governing the national interest action code in August 2019, the revised MOA did not fully address GAO's first recommendation, upon which this recommendation builds. In an October 2019 letter DHS stated it cannot comply with GAO's recommendation to reopen the closed national interest action codes, further stating that none of the codes meet the necessary criteria to be reopened under the current MOA. Since June 2018, DHS extended the national interest action code for Hurricane Maria multiple times, however that code expired on October 15, 2019, and the others were never reopened. Given that DHS has indicated it does not plan to address this recommendation, we are closing it as "not implemented". However, we continue to believe it is important to maintain the ability to identify and track contracting dollars for disasters through a publicly available database, such as FPDS-NG, to better inform decision makers and to provide a resource for historical data across major disasters.
Department of the Army The Secretary of the Army should direct the Commanding General of the U.S. Army Corps of Engineers to provide guidance or related training to ensure contracting officers are aware of the regulatory definition of "local area". (Recommendation 3)
Closed - Implemented
The US Army Corps of Engineers (USACE) concurred with the recommendation. Its Director of Contracting issued a policy alert directing contracting professionals to follow the guidance in the Federal Acquisition Regulation when making the determination on the local area and local firms when contracting for major disaster or emergency assistance activities under the Robert T. Stafford Disaster Relief and Emergency Assistance Act. In October 2019, USACE also created training on the proper use of the Stafford Act, including the use of local vendors, and instructed districts to provide this training.
Office of Federal Procurement Policy The Administrator of the Office of Federal Procurement Policy should provide additional clarification on how contracting officers should determine whether offerors reside or primarily do business in a disaster area for the purposes of a local area set-aside contract. (Recommendation 4)
Open
The Office of Federal Procurement Policy concurred with this recommendation. In September 2019, officials identified the Emergency Acquisition Guide as a vehicle to address this recommendation. The Emergency Acquisition Guide, last updated in 2011, is intended to assist the federal contracting community with planning and carrying out procurement activities during contingency events. As of May 2021, the Office of Federal Procurement Policy staff stated that the agency plans to update the Emergency Acquisition Guide to include information on how contracting officers should determine whether offerors reside or primarily do business in a disaster area, but did not provide a timeline for doing so.
United States Coast Guard The Commandant of the Coast Guard should provide guidance and tools for contracting officials to use to ensure requirements concerning contracting with local vendors, including justification requirements for the use of non-local vendors, are consistently met. (Recommendation 5)
Closed - Implemented
The US Coast Guard concurred with this recommendation. In January 2020, the Coast Guard issued a job aid outlining steps to comply with local area preference and a template for justification of expenditures to non-local vendors. These resources were distributed to contracting officials in the Coast Guard to ensure requirements concerning contracting with local vendors are consistently met.
Department of the Army The Secretary of the Army should direct the Commanding General of the U.S. Army Corps of Engineers to provide guidance and tools for contracting officials to use to ensure requirements concerning contracting with local vendors, including justification requirements for the use of non-local vendors, are consistently met. (Recommendation 6)
Closed - Implemented
The US Army Corps of Engineers (USACE) concurred with this recommendation. Its Director of Contracting issued a policy alert directing contracting professionals to follow the guidance in the Federal Acquisition Regulation when making the determination on the local area and local firms under the Robert T. Stafford Disaster Relief and Emergency Assistance Act. Additionally, in October 2019, USACE created a tool for contracting officials to use to help ensure requirements for contracting with local vendors, including the requirement to justify the use of non-local vendors, are consistently met.
Department of the Army The Secretary of the Army should direct the Commanding General of the U.S. Army Corps of Engineers to establish a formal process to solicit input from officials directly involved in the agency's response and recovery following a disaster and to share that input with the Emergency Support Function Leadership Group. (Recommendation 7)
Closed - Implemented
The US Army Corps of Engineers concurred with the recommendation and stated that it has a formal process called the USACE Remedial Action Program to solicit input from officials directly involved in the agency's response and recovery following a disaster. In July 2020, USACE updated its guidance for the USACE Remedial Action Program to specify how lessons learned with regards to response and recovery efforts following a disaster are to be communicated to FEMA's Emergency Support Function Leadership Group.
United States Coast Guard The Commandant of the Coast Guard should establish a formal process to solicit input from officials directly involved in the agency's response and recovery following a disaster and to share that input with the Emergency Support Function Leadership Group. (Recommendation 8)
Open
The US Coast Guard concurred with this recommendation. In its agency response, the Coast Guard stated that it was reviewing its current policies and processes to update its After Action Report Policy or to identify and implement other policy improvements. As of April 2021, these actions were still in progress with an expected completion date of early 2022.
Federal Emergency Management Agency The FEMA Administrator should take the lead to work together with the Coast Guard and the U.S. Army Corps of Engineers to revise the mission assignment policy and related guidance to better incorporate consideration of contracting needs, such as demobilization, and to ensure clear communication of coordination responsibilities related to contracting. (Recommendation 9)
Open
The Federal Emergency Management Agency (FEMA) concurred with the recommendation. In its response, FEMA stated it would work with its federal partners and develop mission assignment project management tools and training. In addition, FEMA is developing a Mission Assignment Project Manager Guide to provide guidance to address the issues GAO identified. As of March 2021, FEMA officials said that FEMA had developed an initial draft of the Mission Assignment Project Manager Guide and expect the guide to be finalized in the summer of 2022.
Federal Emergency Management Agency The FEMA Administrator should assess its workforce needs—including staffing levels, mission needs, and skill gaps—for contracting staff, to include regional offices and DART; and develop a plan, including timelines, to address any gaps. (Recommendation 10)
Open
The Federal Emergency Management Agency (FEMA) concurred with this recommendation. FEMA identified a number of actions it would take to address this recommendation, including competency modeling for its contracting staff and a workforce analysis to identify skill gaps. As of May 2021, these actions were still in progress.

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