The Department of Homeland Security in response to a congressional request recently audited the way Chambers County spent FEMA funding after Hurricane Ike.

“Their audit objective was to determine whether the County accounted for and expended Federal Emergency Management Agency grant funds according to federal regulations and FEMA guidelines,”county officials explained in a letter to The Hometown Press.

The County Judge’s office responded with a 45- page document detailing why they did not agree with the findings of the Homeland Security audit. 

County Judge Jimmy Sylvia, speaking on behalf of Chambers County and the commissioners court, recounted to The Hometown Press how he responded to some of the audit’s findings.

In the first part of their response to the audit, County officials prefaced with information regarding the impact Hurricane Ike made throughout Chambers County and surrounding Gulf Coast areas, Sylvia explained.

“Response to such a large disaster is beyond the capabilities of local city and county governments to handle,” he noted. “Fortunately, the state of Texas and FEMA responded to assist us not only in disaster relief efforts, but also in the extensive recovery process that followed the storm.”

Besides housing for displaced families, the biggest issue that faced Chambers County was approximately 13,015,500 million cubic yards of debris, which washed in from Galveston County, Sylvia explained. 

“These massive debris piles, dubbed ‘debris fields,’ were composed of approximately 3,300 homes from Bolivar Peninsula,” he added.  “Containing hazardous materials, gasoline cans, refrigerators, pesticides and even human remains, these large accumulations of storm debris plagued landowners, farmers and ranchers. In addition, another 608,021 cubic yards of debris covered homeowner’s property and roadways of Chambers County.”

AUDIT FINDINGS

The Homeland Security Audit found fault with the way Chambers County oversaw the expenditure of federal funding after Hurricane Ike.

Here’s some of those findings:

• County officials did not provide full and open competition or allow market conditions to establish reasonable prices.

• County officials did not monitor its time-and-materials contracts.

• Heavy equipment and hazardous-material contractors consistently charged two hours commuting time each day at overtime rates, between $30 and $188 per hour — even though the heavy equipment contractor and the majority of his sub-contractors lived or worked within Chambers County.

• Paying workers for their daily commute for a year is not reasonable, because commuting time is not normally compensated and it is non-productive time.

• Thus, the audit questioned the ineligibility of $3,681,597 for commuting costs.

• Heavy equipment contractor billed the County for equipment downtime up to 4 hours a day. However, no records were kept of this downtime, so Homeland Security Agency could not determine the amount of ineligible charges. Idle time is not eligible for Public Assistance funding.

• Heavy equipment contractor billed excessive overtime for employees — before they worked 40 hours each week. Basically, billing 28 straight time hours and 44 hours at time and a half of overtime each week for employees.

• Audit found $262,040 in overtime fees ineligible.

• Haz-Mat contractor billed $38,060 in unsupported costs that included overtime claimed, which did not match supporting documents and excessive overtime charges and hours charged for site access control not worked.

• Heavy equipment contractor billed 9.5 to 10 hours on his invoices for all equipment. However, sign-in/out sheets showed only worked nine hours. Difference between billed and hours recorded is not supported. Resulting in $35,700 in questionable costs.

• Although documentation did not reconcile to invoices, County officials never rejected or corrected debris field invoices.

COUNTY'S RESPONSE TO AUDIT

Before Ike slammed into the upper Texas Gulf Coast, Chambers County commissioners were planning for another possible storm like Katrina.

“At the June 24, 2008, Commissioners Court meeting, the Court authorized the County Engineer and the Solid Waste Director to select a debris contractor from the Houston-Galveston Area Council list of pre-approved contractors and to notify the Court for final approval. As of the date of Hurricane Ike, CERES (based in Minnesota) was the only contractor that had been interviewed by the County Engineer and the Solid Waste Director,” Sylva recalled. “Coincidentally, CERES was one of the first debris contractors in the county as the U.S. Corps of Engineers and Texas Department of Transportation had contracted them for the removal of storm surge debris on IH-10.” 

Based upon his previous interview with CERES and their immediate availability for services, the County Engineer negotiated a price for debris removal and CERES was hired to start debris cleanup and removal, Sylva explained.

LOCAL CONTRACTORS BID

As the face of Chambers County, Sylvia refuted allegations that the county failed to bid cleanup projects to local companies.

“Chambers County also had three local contractors expressing interest in working debris. They were Steve Talent, Mark St. Clair, and Cecil Parker,” Sylvia recalled. “They met with the County Engineer and were informed of what they needed to do to be able to start work at the same negotiated rates as CERES. Cecil Parker was the only contractor to return a signed contract.”

However, due to the massive amount of debris —13,623,521 cubic yards countywide — Chambers County desperately needed the additional help, Sylvia said. 

Garner Environmental was also available and had a Master Service Agreement in place with Chambers County since 2006, and they were currently working on cleaning up a large oil spill in Lake Anahuac, Trinity Bay, and East Bay, Sylvia added.

“Time was of the essence, due to the 100 percent FEMA reimbursement deadline,” the county judge recalled. “Chapter 418 of the Government Code, combined with the Governor’s Executive Order RP1, allows County Judges to suspend normal procedural rules and regulations for a disaster. Once FEMA granted approval to move into the large debris fields in southern Chambers County (Bolivar debris), FEMA recommended utilizing our current contractors.”

FEMA, the County and the contractors then met to negotiate rates that were deemed reasonable by FEMA, Sylvia said. 

“After approximately two weeks of constant negotiation, FEMA finally approved and set what they deemed as reasonable rates for the contractors to be paid,” he said. “When determining the rates, factors such as the salt-water environment and contact with hazardous materials were taken into account -- something normal equipment operations usually do not entail.”

LOCAL RESIDENTS HIRED

“Chambers County, in its effort to recover from the Hurricane Ike disaster, did everything in its power to assist local citizens that were affected,” Sylvia assured The Hometown Press in a written statement that was also forwarded to the Homeland Security Agency in response to the audit’s findings. “This included making sure as many local people as possible were working and, in turn, stimulating local economy.”

Sylvia cited the The Stafford Act, Section 307,  which states “that preference SHALL be given to individuals residing or doing business in the disaster area.”

“The other option would have been to outsource the entire massive project to big national debris contractors, which would have allowed all of the FEMA recovery money to be taken completely out of Chambers County to other states such as Oklahoma, Florida, Mississippi, and Minnesota (CERES). Chambers County took the opportunity to employ local individuals to assist in the repair of both Chambers County and its economy,” Sylvia said.

A total of 319 citizens, all from Chambers County and the surrounding area, worked in the debris field removal process, he said. Also, 134 pieces of heavy equipment, 39 trucks, and 50 various all terrain vehicles were rented from local persons and companies from Chambers County and the surrounding area, he said.

“In addition, debris problems also plagued homeowners throughout Chambers County,” Sylvia said. “Through its Private Property Debris Removal Program, Chambers County conducted 1,184 private property debris removals, totaling 127,987 cubic yards. Also, 480,034 cubic yards of debris were removed from Right-of-Ways (roadways, drainage areas, etc.)”

'UNPRECEDENTED' DEBRIS

The amount of storm debris in Chambers County was unprecedented, Sylvia reminded the Homeland Security Agency. 

“FEMA stated that the debris field removal program was the first of its kind, and it was piloted here in Chambers County,” he said.  “The persons who had debris removed from their property have expressed many thanks, because the homeowners and landowners in Chambers County could not have afforded to clean their own properties. The total cost for all debris removal operations in Chambers County, debris fields, private property, and right-of-way, was just under $51 million, most of which went directly back into the local area economy.”

AUDIT ALLEGATIONS 'UNFOUNDED'

“Chambers County emphatically denies all the unfounded allegations made (or inferred) with respect to any wrongdoing concerning FEMA contracts for debris removal in Chambers County following Hurricane Ike,” Sylva said in the county’s response to Homeland Security. “Under emergency circumstances as they existed, FEMA contracts for debris removal were handled with our best, good faith effort to follow the law.”

FEMA Guidance 

Sylvia said the audit fails to mention that the county conducted the day-to-day cleanup operation with help from FEMA. “The way the report reads, the county is not getting credit for the fact that a FEMA technical/debris specialist (Clay Kennelly) was sent to us by FEMA to guide us through the process,” Sylvia noted. 

“There were also times when we had phone conferences with persons higher up the ladder than Clay in FEMA regarding the debris operations, to make sure we were on the right track. The county even refused to spend anything on the debris operations until FEMA checked everything out and told us in writing that it was OK to proceed. If FEMA told us to do something that Homeland Security doesn’t approve of, it is not understood how the county is to blame and ultimately suffer.” 

Sylvia acknowledges Chambers County officials are not experts on federal regulations.

“The county is not an expert on the federal regulations applying to this, and we relied on FEMA/the Government to guide us correctly,”he said. “In the audit, Homeland Security contends that the FEMA Technical Assistance Contractor provided inaccurate information to County officials and FEMA contractors do not have the authority to override federal law and FEMA policies. It is the County’s responsibility to remain in compliance with federal regulations.”

REASONABLE RATES

Sylvia also questioned why the audit questioned the fees and rates Chambers County charged for the cleanup when FEMA approved the fees and rates.

“It is unfair to point out recent and normal rates of equipment in the area. FEMA told us that the rates they approved were based on rates they had paid in Florida, Mississippi, Louisiana, etc. for Katrina and past debris operations,” Sylvia said. “Special consideration was given to the environment and conditions in which the equipment would be working, therefore, calling up a local businessman today and asking him what his rate is for a piece of equipment is to do normal work would not be a fair comparison. Again, we did not set or recommend those rates, FEMA did, and they reimbursed for them. FEMA referred to this project as “one of a kind” when we were speaking with them, so it seems rational that normal rates would not apply.”

FEMA PROVIDED OVERSIGHT

To prove his point, Sylvia recited an emailhis office received from FEMA: 

“As it stands right now, all of your current contracts, CERES, Beck, Cecil, Garner, and all associated Force Account Labor and Equipment costs and operations have been deemed eligible, reasonable, and reimbursable. 

The email from FEMA cites the Stafford Act, Sec. 307 regarding the use of local firms and individuals:

(a) Contracts or Agreements With Private Entities —

(1) In General — In the expenditure of Federal funds for debris clearance, distribution of supplies, reconstruction, and other major disaster or emergency assistance activities which may be carried out by contract or agreement with private organizations, firms, or individuals, preference shall be given, to the extent feasible and practicable, to those organizations, firms, and individuals residing or doing business primarily in the area affected by such major disaster or emergency.”

URGENCY OF CLEANUP

Sylvia said the county was pressed to move quickly because the debris fields posed health problems for citizens.

“We have several letters from federal, state, and local agencies stating the debris fields posed a widespread threat to health and public safety,” he said in his response. “The report does not reflect this and to discredit the fact that this was an emergency is inappropriate. In addition, the fact that several persons were still missing from Bolivar Peninsula, and their bodies were believed to be in the debris fields, created a local sense of urgency. The debris field operations weren’t just about removing hazardous materials; it was about finding human remains and helping families find closure.”

Audit points questioned

In retrospect, Sylvia said, the state and federal government needs to provide more technical assistance and oversight at the county level when it comes to disaster cleanup and the awarding of disaster contracts.

“FEMA’s technical assistance consultant asked only if contracts were in place and no other FEMA official verified how the County awarded their contracts,” Sylvia noted.  “FEMA and the Texas Department of Emergency Management should verify how applicants award their contracts and take a more proactive role in reviewing applicant contracting procedures. FEMA and Texas Department of Emergency Management should also make clear to future applicants as soon as possible after the disaster that reimbursement of disaster-related costs is contingent on compliance with federal contracting regulations.”

He said the Homeland Security Agency also pointed out “that FEMA has a fiduciary duty to protect federal funds, and (FEMA) and the state are responsible for ensuring that sub-grantees (applicants) are aware of requirements imposed upon them by federal statue and regulation.”

Sylvia noted that FEMA Region VI’s Public Assistance Branch Manager responded that FEMA and the states generally do not have sufficient staffing to review applicant-contracting practices after major disasters. Region VI relies on a combination of educational and outreach efforts to promote compliance.

Also, Sylvia noted, Homeland Security “agrees that FEMA’s education and outreach efforts are important. HSA also acknowledges the staffing challenges following major disasters, but adds if FEMA Region VI and TDEM do not take more assertive actions towards contracting compliances, problems like the ones described in their report will occur again.”

FEMA DISAGREES WITH AUDIT, TOO

“For the record, FEMA Region VI officials did not agree with the findings of the HSA findings and viewed their conclusions as subjective,” Sylvia said. 

He said FEMA officials did not believe this audit was valid for many reasons, including:

 (1) FEMA made all applicants aware of contracting procedures at applicant briefings and kick-off meetings,

(2) FEMA provided access to websites describing contracting requirements, and 

(3) FEMA sent a letter from the Federal Coordinating Officer to applicants reinforcing requirements. Further applicants had access to toll-free call-in line to answer questions. Finally FEMA Region VI said responsibility for communicating contracting requirements rested with TDEM, although FEMA partners with TDEM to disseminate information.

CHAMBERS COUNTY FINDS FAULT  WITH AUDIT

Likewise, Sylvia concludes, “Chambers County officials did not agree to the HSA findings and recommendations. “

“County officials emphasized that they were not experts on federal regulations and relied on the guidance provided by FEMA’s technical assistance consultant, who told them that all of their contracts had been ‘deemed eligible, reasonable and reimbursable’ by FEMA,” he said. 

The Homeland Security Agency acknowledged that FEMA’s consultant did provide inaccurate information to County officials, Sylvia said.

However, the agency maintains the County remained responsible for compliance with federal regulations because FEMA contractors do not have the authority to override federal law and FEMA policies, Sylvia noted.

WHAT HOMELAND SECURITY WANTS

The Homeland Security Agency made the following recommendations following the audit review:

•  Disallow $40,552,422 for improper contracting costs.

• Disallow $3,681,597 for ineligible commuting costs.

• Disallow $262,040 for ineligible overtime costs.

• Disallow $73,760 for unsupported costs.

• Establish, strengthen, and implement Public Assistance program oversight procedures to proactively identify and correct contracting compliance problems. FEMA should coordinate its efforts with Texas Department of Emergency Management.