Audit Says FEMA Still Not Ready to Deliver Supplies During Emergencies

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FEMA’s supply chain system might not aid disaster victims effectively, report says.

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During Hurricane Katrina, residents of New Orleans were stranded without necessary supplies for days on end. The Federal Emergency Management Agency (FEMA), which received much criticism for its slow response, has subsequently adopted a new logistics management system to improve its supply chain. Yet a recent report issued by the Inspector General of the Department of Homeland Security (DHS) suggests that this system, which has already cost $247 million, still might not be able to help disaster victims very well.

Providing supplies to survivors in disaster zones presents enormous challenges. Even when local authorities stockpile emergency supplies, a major disaster could still require external sources of supplies. FEMA, an agency within the DHS, plays an important role in coordinating supplies as part of disaster relief. At the time of Hurricane Katrina, FEMA relied on manual processes, such as spreadsheets, to carry out this mission. But following Katrina, Congress passed the Post-Katrina Emergency Management Reform Act of 2006, which requires FEMA to implement a state-of-the-art logistics management system that would allow a “real-time visibility of items at each point throughout the logistics system.”

To comply with the Act, over the past nine years FEMA has worked to implement its new Logistics Supply Chain Management System (LSCMS). The LSCMS program, based on commercially available software, is intended to provide greater quality control by automating FEMA’s internal processes and to integrate FEMA’s partners’ systems, giving FEMA a platform to track supplies from partners. FEMA’s partners include other federal agencies; nongovernmental organizations; state, local, and tribal governments; and the private sector.

However, the Inspector General’s recent report found that LCSMS falls short of the performance, schedule, and cost requirements that were set out at the time LCSMS was created. The program is delayed by at least 19 months, and FEMA estimates that the system will ultimately cost $231 million more than originally estimated. Further, the current LCSMS does not interface with FEMA’s partners’ systems and does not allow real-time visibility into FEMA’s supply chain system.

The report faulted DHS and FEMA for not providing “necessary oversight” or “enforcing acquisition policies” when acquiring LSCMS. It found that DHS and FEMA undermined their ability to ensure that LSCMS could meet all logistics management needs because they failed to comply with the federal guidelines on acquiring information technology in multiple ways.

First, FEMA did not carry out necessary tests. For instance, FEMA was required to analyze alternatives and to identify FEMA’s logistical gaps and how to best remedy them, thus making the program more effective. Yet FEMA did not undertake this analysis; instead, it relied on a prior assessment of existing logistics. Despite not having a complete alternatives analysis, DHS approved the program in 2009.

Second, DHS and FEMA did not assemble all the documentation needed during the acquisition decision process. While DHS held the Acquisition Decision Authority for LSCMS, it noticed that the program lacked updated and approved documentation. However, in 2011 the Acquisition Decision Authority for LSCMS shifted from DHS to FEMA. The acquisition then went ahead under FEMA’s authority, according to the Inspector General’s report.

Finally, the LSCMS program office has not been properly reporting the program’s progress. A DHS policy requires program managers to report on a program’s deficiencies when the cost, schedule, or performance requirements set out in its Acquisition Program Baseline are not met. However, the Inspector General’s report notes that the LSCMS program office failed to report such shortfalls, thereby hindering DHS and FEMA’s “ability to oversee the program was impaired.”

The report also criticized the DHS and FEMA for not making sure that the LSCMS program office was properly staffed. In particular, the Inspector General expressed concerns that too few federal employees were working on acquiring and managing the program, as contractors were employed instead to perform key tasks. The make-up of LSCMS’s staff deviates from guidance issued by the White House Office of Management and Budget, which calls for a “sufficient number of trained and experienced government officials” to administer contracts specialized and technical services.

The rationale behind this guidance is to preserve agency control over program decisions. A 2007 report by the U.S. Government Accountability Office reviewed DHS’s reliance on contractors and cited “acquisition” among particularly high-risk services to assign to contractors. FEMA’s lack of experienced federal staff in the LSCMS program office may have affected “program oversight in areas including budget, acquisition, and contractor oversight,” according to the Inspector General’s report.

In light of these shortcomings of LSCMS, the Inspector General issued eleven recommendations to address the lack of testing and internal controls. DHS and FEMA have concurred with all the recommendations, and all but one are still outstanding. It is still unclear from the report whether LSCMS will be able to meet the program requirements, though the program office has already changed “LSCMS’ operational requirements” because “the system will never meet some requirements as originally written.”