Federal regulators frequently find issues with contracts awarded during disasters, and sometimes rescind grants if bidding protocol is not followed, said Marilyn Gally, who helps local governments apply for FEMA aid through the CDHSEM. In Colorado, as elsewhere, audits have found that cities tend to rely on pre-established contracts to handle disaster repairs when the projects should be open to competitive bidding, Gally said. Particularly during the chaos of a disaster, agencies don't record their hiring decisions, which can cost them federal reimbursement money, Gally said.Read the whole article at the link above.
"The procurement part is probably our biggest ongoing challenge to make sure that applicants are following all of those rules," said Kevin Klein, director of the Colorado Division of Homeland Security and Emergency Management (CDHSEM).
Audits are routine when FEMA allocates disaster recovery funding, DeFelice said. In recent years, Colorado has been subject to a several audits, including one released in June that recommended Boulder County return $2.5 million of FEMA funds that it didn't use for recovery from September 2013 floods.
Two years after the Black Forest fire, potential issues with Mountain View's contracts serve as a good lesson to local agencies applying for federal aid after El Paso County's latest federally recognized disaster - spring flooding. Rains in May and June caused more than $24 million in damage across the county, most of which local officials hope will be eligible for federal reimbursement.
During a Monday information session in Colorado Springs, Gally cautioned a packed room of county agencies to get at least two bids for every contract, even in the heat of an emergency. While skipping a bidding process might sometimes be necessary when safety is a concern, "we don't encourage it," Gally said.
"I'd prefer you just didn't resurface contracts," Gally told the audience.
Mountain View Electric Association oversees power to eight of Colorado's southern and eastern counties, including eastern regions of El Paso County. In 2013, the Black Forest fire destroyed 488 homes and damaged 25 miles of overhead power lines that. During the first year after the fire, the association spent about $7.4 million repairing lines and restoring power to hundreds of neighborhoods in Black Forest, according to the report. About $2.9 million went to removing thousands of dead trees around the lines.
All of the projects were approved by FEMA, an approval which promised to bring reimbursement for 75 percent of the projects' costs, if auditors found no issues with the work.
The need for competitive bidding is typically waived when agencies and cities respond to ongoing disasters, the report said. FEMA can grant exceptions to procurement standards, and the agency has no problem if municipalities skip bidding processes for emergency repairs if there is an existing contract for that scope of work, Gally said. But all other projects - those not deemed essential to saving lives and property or do not have existing scope-of-work contracts - should be subject to competitive, well-documented bidding that also considers minority-run or women's businesses, according to federal regulations.
All of these requirements were violated by Mountain View, the report found.
In the first month following the fire, Mountain View did not use competitive bidding to find a contractor to restore power to 250 homes that had survived the blaze. This was an acceptable time to waive competitive bidding, the federal report said. But when Mountain View hired a contractor to restore power to hundreds of destroyed homes in the year after the fire, it relied on a contractor that handled maintenance work for the company before the fire and did not conduct open bidding. Work to remove 19,367 trees near power lines was subject to competitive bidding, but the process did not take into account minority businesses, the report found.
The report claimed that part of the problem in Colorado stems from the state, which is charged with monitoring the procurement processes and making sure federal requirements are being met. While the state did offer education to agencies applying for FEMA money, it did not follow up with Mountain View to make sure that the awarded contracts would pass federal scrutiny, the report said.
See related: When corners are cut, even for great reasons (e.g., war), the way is opened for fraud