Response To OIG's Report On FEMA's Award Of 36 Trailer Maintenance And Deactivation Of Travel Trailers And Manufactured Housing Contracts

Issue

The DHS Office of the Inspector General released its report on a review of 36 FEMA contracts worth $3.6 Billion for the Maintenance and Deactivation of Travel Trailers and Manufactured Housing (MDCs) for hurricanes Katrina and Rita.

The investigation was at the request of Senators Byron Dorgan and Mary Landrieu following concerns raised by witnesses who testified before the Senate Democratic Policy Committee in May 2006. The senators asked the IG investigate the bid process, order a halt to the destruction of bid material and address other concerns.

These contracts were secured following last year's plans to open contracting opportunities to competitive bidding with the intent of awarding the contracts to small and small disadvantaged businesses registered with the Small Business Administration (SBA) for temporary housing maintenance and support for Gulf Coast hurricane recovery.

The FEMA overall objective during the re-bid process was to maximize competition, conduct a fair competitive procurement, stimulate the local economy by using local contractors, and be responsive to disaster victims needs. 

The findings show that overall FEMA contracting officials "treated bidders fairly during the bid process," but should have established better criteria to determine whether bidders were local to the affected region. The IG claims FEMA officials, "should have analyzed prices more thoroughly before awarding contracts to ensure costs were reasonable."

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The Report

The following provides an example of how FEMA's objectives were met:

FEMA partnered with DHS and conducted extensive outreach efforts with the small businesses in LA, MS, TX, and AL. The Director of Procurement, DHS Small Business Official, and Contracting Officer held personal sessions with local businesses to ensure that local companies understood how to do business with the Federal Government, to include the proposal process.  The extensive outreach with industry resulted in the Agency receiving a total of 258 proposals for evaluations. 

At the time of the solicitations, the Stafford Act did not allow for a local set-aside of requirements in support of disaster response and recovery.  As a result, FEMA gave price preference to firms by adding 30 percent to the total evaluated price of firms determined to be non-local.  This was done to maximize the opportunity for local firms to be considered for award over non-local entities.  

FEMA established a phase-in approach after award of the contracts.  It was imperative that FEMA allow for a transition phase in order to ensure success.  Therefore, FEMA orchestrated a partnership between the incumbent IATAC and the new MDC awardees.  This 30-day transition phase was instrumental in ensuring that disaster victims experienced a seamless transition.

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The Contracting Process

The outreach efforts initially conducted were designed to engage local small, minority, and small disadvantaged businesses. Of the awarded 36 contracts, 31 were to contractors which met FEMA's criteria to be considered local.

Prices were found fair and reasonable based on competition.  All bid prices were examined and the process ensured that the prices offered were firm prices.  The contractors must perform at the offered prices.

FEMA has been conducting ongoing quality assessments of the MDC performance within each of the Gulf Coast States.  FEMA is currently developing a new Quality Assurance Plan designed to measure MDC performance uniformly across the Gulf Coast.  The new plan focuses on ensuring timely delivery of quality services to FEMA housing applicants throughout a trailer life cycle.

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Findings Of The Report

The report looked at:

In all, the report found the following lacking in FEMA's contracting performance:

The following concerns were determined to be unfounded:

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Acquisition Strategy

FEMA determined that 166 proposals were technically acceptable and should be evaluated for price reasonableness.  FEMA recognizes there was some risk associated with its price analysis methodology; however, in order to meet its objectives of stimulating economic growth after the storm and efficiently transitioning from large business non-competitive contracts to competitively-awarded small business contracts, a certain amount of risk was necessary.  It is unequivocally the best decision the Agency could have made at that time. 

Price analysis was conducted on each utilizing historical data.  Additionally, FEMA utilized the efforts of the Defense Contract Audit Agency (DCAA) in evaluating the firms' ability to perform.  FEMA made the overall winning offers publicly available through written debriefings due to the large volume of debriefing requests received.  Whenever possible, FEMA provides comprehensive debriefings that entail face-to-face communications.

To date, all suppliers that received an award are still performing and are now participating in other competitive efforts.  Their performance on this contract over the past year has provided them with the necessary experience to compete on other Gulf Coast Rebuilding opportunities and has created a well-qualified pool of contractors that can meet future government requirements. 

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Current Actions

There are 2 primary actions FEMA is currently accomplishing:

Task Order Proposal Process: FEMA is reevaluating the proposed price structure in conjunction with evaluating the next option period.  The evaluation process is considering:

The selection of task orders is being made on a best value basis.  We are working through the evaluation process to ensure that we do not award task orders to contractors that include line items that are either unfavorably low or excessively high. 

Quality Assurance Surveillance: The initial QASP was difficult to implement given the large number of trailers deployed.  However, FEMA has collected antidotal performance information and meets with contractors on daily basis providing feedback.  Additionally there have been two program review meetings, which included one-on-one meetings with the contractors to discuss performance expectations. 

As part of the next option period the program is implementing more meaningful performance measurement methods to fulfill the intentions of the QASP and capture meaningful performance data. 

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Last Modified: Tuesday, 24-Apr-2007 13:21:22 EDT