Contractor Payments
Release Date: July 25, 2007
Release Number: HQ-07-147
Washington, D.C. -- In recent news reports, FEMA has been criticized for delayed payments to contractors for their work in assisting Louisiana recover, specifically in parishes in and around the city of New Orleans.
FEMA does not pay contractors directly. Instead, local parishes are the entities that hire and ultimately pay contractors for their work. Local governments that hire contractors and are seeking federal funds must follow all federal, state and local procurement practices. FEMA obligates funding to the Louisiana Governor's Office of Homeland Security and Emergency Preparedness (GOHSEP). In turn, local parishes must work with GOHSEP to ensure that documentation meets the state's requirements to draw down the available funds or receive advancements of already obligated funds from GOHSEP.
One news article credits local officials saying a "big" reason for payment delay is FEMA underestimating cleanup costs. FEMA funds all fair and reasonable costs associated with public assistance projects which includes debris and demolition removal activities. The project worksheets that capture the scope of work are living documents that are constantly revised to reflect all actual and eligible costs.
Slow payments often stem from incomplete documentation of work submitted by the parishes to GOHSEP. Whenever possible, FEMA coordinates with local and state officials to ensure proper documentation is maintained to expedite the reimbursement process. Administrative fees obligated by FEMA are available to local government agencies to hire staff to ensure documentation requirements are being met.
In St. Bernard Parish alone, FEMA has obligated more than $272 million for demolition and debris cleanup. It must also be noted that, as of June 28, 2007, the parish had only drawn down $126 million of this obligated funding to St. Bernard.
FEMA's public assistance program has obligated more than $8 billion to state and local governments and nonprofits in the four states - Alabama, Louisiana, Mississippi and Texas - damaged by hurricanes Katrina and Rita. This funding is more than the total amount of public assistance monies provided after hurricanes Ivan, Georges and Andrew and the Northridge earthquake combined.
FEMA coordinates the federal government's role in preparing for, preventing, mitigating the effects of, responding to, and recovering from all domestic disasters, whether natural or man-made, including acts of terror.
Last Modified: Wednesday, 01-Aug-2007 08:21:46