It’s been nearly five years, and the total cost of wasteful COVID-era spending is still being realized. A recent Department of Homeland Security’s Office of Inspector General (OIG) report illuminates several examples of waste, fraud, and abuse at the Federal Emergency Management Agency (FEMA).
The OIG found the agency overobligated “at least $1.5 billion in funds for one state’s medical staffing grant.” Additionally, FEMA failed to properly vet funding to the state, leading to $8.1 billion of questionable spending.
During the pandemic, FEMA developed a streamlined process to award reimbursements through its Public Assistance Program. Instead of awarding funding to a project based on actual costs that were comparable to current market rates, the agency offered reimbursements based on cost estimates. The new process, designed to get disaster funding out of the door faster, generated less oversight and more fraudulent spending.
The state, which the OIG does not name, received about $853 million from FEMA in September 2020 to address staffing shortages at over 200 health care facilities statewide. Over the next year, FEMA incrementally increased funding, eventually awarding over $9 billion, which the state did not need. From May 2021 to April 2023, unspent grant funds reached $4 billion, before falling to $1.5 billion. FEMA was unaware of this until April 2023, when an OIG investigation was conducted. The agency subsequently de-obligated $500 million of the state’s funding.
FEMA did not “validate cost estimates or determine cost reasonableness before obligating funds,” according to the OIG. One of the cost estimates, which totaled $1.1 billion, was supported by one sheet of paper, which did not include itemized costs and was not conducted by a “cost-estimating professional” (which is required under FEMA guidelines).
Hellbound and Down 