OIG Audit Report DD-10-08

Citation:   FEMA-1603-DR-LA, Orleans Parish Sheriff’s Office, Office of Inspector General, Audit Report DD-10-08

Cross-Reference:  Reasonable Cost

Summary:  High winds and flooding during Hurricane Katrina damaged 10 correctional facilities owned and operated by the Orleans Parish Sheriff’s Office (Applicant).  As a result, the Applicant’s kitchen facilities, from which meals were prepared for employees and inmates at all 10 facilities, were rendered inoperable.  FEMA documented the costs for both the inmates’ and employees’ catered meals on PWs 1320 and 15882.  On January 31, 2010, the Department of Homeland Security Office of the Inspector General (OIG) issued the results of an audit of the Applicant’s disaster related expenses.  The OIG recommended FEMA reduce the funding for employee meals by $1,000,249 due to lack of competitive contracting that resulted in unreasonable costs.   In addition, the audit noted that the Applicant received $44 million in 2005 and $39 million in 2006 from outside sources for inmate custody and care, and claimed that meal costs were part of the cost for overall care.  The Regional Administrator determined that the Applicant’s argument, that costs for employee meals were reasonable because they were less than the federal per diem rate, was not an acceptable measure for employee or inmate meals.  Additionally, the Regional Administrator stated that the external payments for inmate per diem were not grants or donations but specific payments for the custody and care of their respective inmates which would include meals.  In its second appeal, the Applicant maintains that FEMA should not de-obligate the funding because if the federal per-diem rate for food was considered reasonable for FEMA’s employees, then any daily food rate for the Applicant’s employees which fell below the federal per-diem at that time would have been reasonable.  The Applicant also claimed that there was no duplication in benefits from the City of New Orleans.

Issues:  1. Has the Applicant demonstrated that its employees’ meal costs were reasonable?

              2. Was there a duplication of benefits from the city of New Orleans for inmate meals?

Findings:  1. No.

                  2. Yes.

Rationale:   44 CFR §13.36 (d)(2); 44 CFR §13.43(a)(2)