FEMA

Action Needed to Improve Administration of the National Flood Insurance Program

GAO-11-297, Jun 9, 2011

Additional Materials:

Share This:

  1. Share on Facebook 
  2. Share on Twitter 
  3. Share on E-Mail 

Contact:

Orice Williams Brown
(202) 512-5837
contact@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

The National Flood Insurance Program (NFIP) has been on GAO's high-risk list since March 2006 because of concerns about its long-term financial solvency and related operational issues. Significant management challenges also affect the Federal Emergency Management Agency's (FEMA) ability to administer NFIP. This report examines (1) the extent to which FEMA's management practices affect the administration of NFIP; (2) lessons learned from the cancellation of FEMA's attempt to modernize NFIP's insurance management system; and (3) limitations on FEMA's authority that could affect NFIP's financial stability. To do this work, GAO reviewed internal control standards and best practices, analyzed agency documentation, reviewed previous work, and interviewed relevant agency officials.

FEMA faces significant management challenges in areas that affect NFIP, including strategic and human capital planning; collaboration among offices; and records, financial, and acquisition management. For example, because FEMA has not developed goals, objectives, or performance measures for NFIP, it needs a strategic focus for ensuring program effectiveness. FEMA also faces human capital challenges, including high turnover and weaknesses in overseeing its many contractors. Further, FEMA needs a plan that would ensure consistent day-to-day operations when it deploys staff to federal disasters. FEMA has also faced challenges in collaboration between program and support offices. Finally, FEMA lacks a comprehensive set of processes and systems to guide its operations, in particular a records management policy and an electronic document management system. FEMA has begun to address some of these challenges, including acquisition management, but the results of its efforts remain to be seen. Unless it takes further steps to address these management challenges, FEMA will be limited in its ability to manage NFIP's operations or better ensure program effectiveness. FEMA also faces challenges modernizing NFIP's insurance policy and claims management system. After 7 years and $40 million, FEMA ultimately canceled its latest effort (NextGen) in November 2009 because the system did not meet user expectations. As a result, the agency continues to rely on an ineffective and inefficient 30-year old system. A number of acquisition management weaknesses led to NextGen's failure and cancellation, and as FEMA begins a new effort to modernize the existing legacy system, it plans to apply lessons learned from its NextGen experience. While FEMA has begun implementing some changes to its acquisition management practices, it remains to be seen if they will help FEMA avoid some of the problems that led to NextGen's failure. Developing appropriate acquisitions processes and applying lessons learned from the NextGen failure are essential if FEMA is to develop an effective policies and claims processing system for NFIP. Finally, NFIP's operating environment limits FEMA's ability to keep the program financially sound. NFIP assumes all risks for its policies, must accept virtually all applicants for insurance, and cannot deny coverage for high-risk properties. Moreover, additional external factors--including lapses in NFIP's authorization, the role of state and local governments, fluctuations in premium income, and structural and organizational changes--complicate FEMA's administration of NFIP. As GAO has previously reported, NFIP also faces external challenges that threaten the program's long-term health. These include statutorily required subsidized premium rates, a lack of authority to include long-term erosion in flood maps, and limitations on FEMA's authority to encourage owners of repetitive loss properties to mitigate. Until these issues are addressed, NFIP's long-term financial solvency will remain in doubt. GAO makes 10 recommendations to improve the effectiveness of FEMA's planning and oversight efforts for NFIP; improve FEMA's policies and procedures for achieving NFIP's goals; and increase the usefulness and reliability of NFIP's flood insurance policy and claims processing system. GAO also presents three matters for congressional consideration to improve NFIP's financial stability. DHS concurred with all of GAO's recommendations.

Status Legend:

More Info

Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

  • In Process
  • Open
  • Closed - implemented
  • Closed - not implemented

Matter for Congressional Consideration

Matter: As Congress considers NFIP reforms and reauthorization, it may wish to consider ways to better ensure the long-term financial stability of the program, such as 1) allowing NFIP to charge full-risk premium rates to all property owners and providing assistance to some categories of owners to pay those premiums; 2) authorizing NFIP to account for long-term flood erosion in its flood maps; and 3) clarifying and expanding FEMA's ability to increase premiums or discontinue coverage for owners of repetitive loss properties who do not mitigate their properties or refuse FEMA's mitigation offers.

Status: In Process

Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

Recommendations for Executive Action

Recommendation: To improve strategic planning, performance management, and program oversight within and related to NFIP, the Secretary of DHS should direct the FEMA Administrator to provide strategic direction and guidance to the process for developing a comprehensive strategy for FIMA operations; establish a firm timeframe for and complete the development of this strategy; and take steps to ensure that this strategy has appropriate performance goals and measures to track NFIP's progress.

Agency Affected: Department of Homeland Security

Status: In Process

Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

Recommendation: To improve strategic planning, performance management, and program oversight within and related to NFIP, the Secretary of DHS should direct the FEMA Administrator to develop a comprehensive workforce plan according to PKEMRA that identifies agency staffing and skills requirements, addresses turnover and staff vacancies, and analyzes FEMA's use of contractors.

Agency Affected: Department of Homeland Security

Status: In Process

Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

Recommendation: To improve strategic planning, performance management, and program oversight within and related to NFIP, the Secretary of DHS should direct the FEMA Administrator to direct the FEMA Administrator to develop guidance for continuing operations when staff are deployed to respond to federal disasters and direct FIMA Acting Assistant Administrator to develop such a plan.

Agency Affected: Department of Homeland Security

Status: In Process

Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

Recommendation: To improve strategic planning, performance management, and program oversight within and related to NFIP, the Secretary of DHS should direct the FEMA Administrator to direct the FIMA Acting Assistant Administrator and the FEMA Mission Support Associate Administrator to develop protocols to encourage and monitor collaboration between FIMA and relevant support offices, including those for information technology, acquisition management, and financial management.

Agency Affected: Department of Homeland Security

Status: In Process

Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

Recommendation: To improve FEMA's policies, procedures, and systems for achieving NFIP's program goals, the Secretary of DHS should direct the FEMA Administrator to consider the costs and benefits of implementing an interim system for FEMA and updating its document management policies and procedures while waiting for DHS to implement an agencywide electronic document management system.

Agency Affected: Department of Homeland Security

Status: In Process

Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

Recommendation: To improve FEMA's policies, procedures, and systems for achieving NFIP's program goals, the Secretary of DHS should direct the FEMA Administrator to ensure that FEMA regularly reviews unliquidated obligations within NFIP-related funds.

Agency Affected: Department of Homeland Security

Status: In Process

Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

Recommendation: To improve FEMA's policies, procedures, and systems for achieving NFIP's program goals, the Secretary of DHS should direct the FEMA Administrator to establish timelines for and complete the development and implementation of FEMA's revised acquisition process, in line with the DHS Acquisition Directive 102-01, including a rollout process with staff training and a mechanism to better ensure that all acquisitions undergo the necessary reviews.

Agency Affected: Department of Homeland Security

Status: In Process

Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

Recommendation: To improve FEMA's policies, procedures, and systems for achieving NFIP's program goals, the Secretary of DHS should direct the FEMA Administrator to ensure that FEMA Mission Support's business process improvement efforts are expeditiously completed.

Agency Affected: Department of Homeland Security

Status: In Process

Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

Recommendation: To improve the usefulness and reliability of NFIP's flood insurance policy and claims processing system, the Secretary of DHS should direct the DHS Deputy Secretary, as the Chair of DHS's Acquisition Review Board (ARB), to provide regular oversight of FEMA's next attempt to modernize this system.

Agency Affected: Department of Homeland Security

Status: In Process

Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

Recommendation: To improve the usefulness and reliability of NFIP's flood insurance policy and claims processing system, the Secretary of DHS should direct the FEMA Administrator to ensure that FEMA's Chief Information Officer (CIO) applies lessons learned from the NextGen experience to the next modernization attempt. At a minimum, this effort should ensure that (1) all levels of system requirements are complete and clear and that key stakeholders are adequately involved in requirements development and management, (2) key test events are effectively planned and executed and problems identified during testing effectively managed, (3) project risks are proactively identified and mitigated, and (4) project office staffing needs are properly assessed and met.

Agency Affected: Department of Homeland Security

Status: In Process

Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.