U.S. Virgin Islands Recovery: Additional Actions Could Strengthen FEMA's Key Disaster Recovery Efforts

In September 2017, two major hurricanes—Irma and Maria—struck the USVI, causing billions of dollars in damage. FEMA is the lead federal agency responsible for assisting the USVI to recover from natural disasters. FEMA administers the Public Assistance program and Hazard Mitigation Grant Program in partnership with the USVI government, providing grant funding for response and recovery activities, including life-saving emergency protective measures, the repair or replacement of public infrastructure, and measures to increase the territory's resilience during future disasters.

GAO was asked to review the federal government's response and recovery efforts in the USVI. This report examines (1) the status of Public Assistance program and Hazard Mitigation Grant Program funding and challenges, if any, with implementation, (2) the STEP pilot program, and (3) the oversight of these programs. GAO reviewed documentation and data on the Public Assistance program and Hazard Mitigation Grant Program in the USVI as of June 30, 2019. GAO interviewed FEMA and USVI officials regarding the status of recovery efforts and associated challenges, and conducted site visits to the USVI islands of St. Croix, St. Thomas, and St. John.

As of June 30, 2019, FEMA obligated more than $1.9 billion in grant funding for 640 projects in the U.S. Virgin Islands (USVI) through the Public Assistance program and Hazard Mitigation Grant Program in response to the 2017 hurricanes. However, the limited availability of local USVI personnel to staff key recovery positions and the territory's difficult fiscal situation presented challenges in implementing these programs. Further, FEMA and USVI officials stated they faced challenges with implementing the Public Assistance alternative procedures program, which provides the USVI with flexibility in determining when and how to fund projects. Specifically, these officials stated that developing accurate fixed-cost estimates and using new flexibilities authorized by law delayed longer-term recovery projects. USVI officials told GAO they plan to take a cautious approach when deciding whether to pursue projects using the alternative procedures.

FEMA expanded its Sheltering and Temporary Essential Power (STEP) pilot program in the USVI to address the lack of other sheltering options for survivors, such as hotels. The program aimed to provide minimal, temporary repairs to damaged homes to quickly make them habitable. In May 2019, FEMA decided it would not use the STEP pilot program in the future since it did not provide assistance as rapidly as intended. Historically, the program was used to address survivors' emergency sheltering needs. However, since ending it, FEMA has not evaluated options for providing future emergency sheltering assistance. Doing so could help FEMA plan for when the next disaster inevitably strikes.

The USVI and FEMA established structures for overseeing recovery efforts. For example, the USVI established a new office to oversee federal recovery programs and FEMA has processes in place to oversee recovery projects at the local, regional, and headquarters levels. However, GAO found that FEMA does not have a consolidated standard operating procedures document for monitoring Hazard Mitigation Grant Program projects. Assessing the need for a consolidated document would help FEMA determine whether its existing guidance should be strengthened.

GAO recommends that FEMA (1) evaluate its options for providing emergency sheltering and (2) assess the need for a consolidated standard operating procedures document for the Hazard Mitigation Grant Program. The Department of Homeland Security concurred with these recommendations.

In September 2017, two Category 5 hurricanes—Irma and Maria—struck  the U.S. Virgin Islands (USVI) in the span of two weeks, devastating the  territory’s education and housing sectors, electricity grid, and healthcare  system, among other critical infrastructure, and causing billions of dollars  in damage (see fig. 1). In addition, the hurricanes generated hundreds of  thousands of tons of debris, often blocking roads and making  transportation hazardous. Further, the storms severely impacted the  territory’s economy—especially tourism—exacerbating an already difficult  financial situation in the USVI, which had been operating under severe  fiscal constraints prior to the storm.

The Federal Emergency Management Agency (FEMA)—a component of  the Department of Homeland Security (DHS)—is the lead federal agency  responsible for assisting the USVI as it recovers from these natural  disasters. Among other responsibilities, FEMA works with the USVI  government to administer the Public Assistance grant program and  Hazard Mitigation Grant Program, providing grant funding for a wide  range of eligible response and recovery activities. The Public Assistance  program provides grant funding for debris removal efforts; life-saving  emergency protective measures, such as emergency repairs to private  homes through the Sheltering and Temporary Essential Power (STEP)  pilot program; and the repair or replacement of disaster-damaged  publicly-owned facilities. In July 2018, FEMA approved the USVI’s  request to use the Public Assistance alternative procedures pilot program  in the territory, which offers financial incentives for the timely and cost- effective completion of projects. The Hazard Mitigation Grant Program  provides funding for long-term mitigation solutions, such as elevating  properties in flood-prone areas and retrofitting public infrastructure to  minimize future damage from high winds, flooding, and other effects of  natural or man-made disasters.

We have previously reported on federal disaster response and recovery  efforts in the USVI. In September 2018, we reported our observations of  FEMA’s response to hurricanes Irma and Maria in the USVI, among other  impacted areas. In February 2019, we reported on the status of FEMA’s  Public Assistance program in the USVI, including the USVI’s decision to  pursue the Public Assistance alternative procedures program. Further,  we testified on four occasions in June, July, and October of 2019  regarding our observations on the USVI’s plans for using the alternative  procedures program and challenges with program implementation.

You asked us to review the federal government’s response to the 2017  hurricanes. In this report, we examine:  1.  the status of Public Assistance program and Hazard Mitigation Grant  Program funding in the USVI and any challenges FEMA and the USVI  faced in implementing these programs;  2.  FEMA’s and the USVI’s implementation of the STEP pilot program  and FEMA’s plans for providing future emergency sheltering  assistance; and  3.  the extent to which FEMA and the USVI have structures in place to  oversee the implementation and monitoring of the Public Assistance  program and Hazard Mitigation Grant Program.

To address these objectives, we reviewed relevant laws and FEMA  program documentation on the Public Assistance program and Hazard  Mitigation Grant Program, including the April 2018 Public Assistance  Program and Policy Guide, the September 2018 Public Assistance  Alternative Procedures Permanent Work Guide for the USVI, and the  February 2015 Hazard Mitigation Assistance Guidance. Further, we  conducted site visits to the USVI in May and October of 2018 and March  of 2019 where we visited the USVI islands of St. Croix, St. Thomas, and  St. John. We observed hurricane-damaged areas, as well as specific  Public Assistance program and Hazard Mitigation Grant Program  projects. These site visits were not generalizable to all program projects  across all damaged areas of the USVI. We interviewed relevant FEMA  and USVI officials, as well as contractor and USVI personnel responsible  for implementing these projects. We also examined key program  paperwork and documentation and observed the data systems FEMA  uses to develop, monitor, and oversee individual projects.

To assess the status of Public Assistance program and Hazard Mitigation  Grant Program funding in the USVI and any challenges in the  implementation of these programs, we obtained and analyzed data from  three FEMA systems—the Emergency Management Mission Integrated  Environment, Integrated Financial Management Information System, and  National Emergency Management Information System—on FEMA’s  obligations and the USVI’s expenditures as of June 30, 2019. We  reviewed existing information about these systems, interviewed data  users and managers responsible for these data, and cross-checked data  across sources to ensure consistency. Based on these steps, we  determined these data to be sufficiently reliable for the purposes of  reporting on FEMA obligations and USVI expenditures. In addition, we  interviewed FEMA officials in the USVI to discuss any challenges they  faced with program-wide implementation of the Public Assistance  program and Hazard Mitigation Grant Program, as well as those  associated with specific recovery projects. Further, we interviewed the  USVI Governor and territorial officials in the Office of Disaster Recovery,  the Territorial Emergency Management Agency, and the Department of  Finance, as well as contractor personnel.

To evaluate FEMA’s and the USVI’s implementation of the STEP pilot  program in the USVI and FEMA’s plans for providing future emergency  sheltering assistance, we reviewed relevant program documentation,  including FEMA’s STEP pilot program guide for the USVI, as well as  letters, memoranda, and other documentation FEMA issued to update or  clarify key components of the program. We interviewed FEMA officials  in the USVI, FEMA Region II, and headquarters to discuss FEMA’s  implementation of the STEP pilot program and associated challenges in  the USVI. In addition, we interviewed territorial officials in, among other  agencies, the Virgin Islands Housing Finance Authority—which is  responsible for implementing the STEP pilot program in the USVI—as  well as contractor personnel regarding program implementation and  relevant challenges. Further, during a March 2019 site visit to St. Croix,  we observed ongoing STEP pilot program repairs, as well as inspections  on participating homes. We also reviewed FEMA’s implementation of  the STEP pilot program during other disaster recovery efforts and  assessed the agency’s options for providing emergency sheltering  assistance against federal internal control standards related to identifying,  analyzing, and responding to risks to achieve objectives.

To assess the extent to which FEMA and the USVI have structures in  place to oversee the implementation and monitoring of the Public  Assistance program and Hazard Mitigation Grant Program, we reviewed  relevant documentation on these programs. Specifically, we reviewed the  December 2013 Public Assistance Program Management and Grant  Closeout Standard Operating Procedure, the July 2016 Hazard Mitigation  Field Operations Guide, and the USVI’s administrative plans outlining the  territory’s programmatic management and project monitoring activities for  these programs, among other relevant documents. We assessed FEMA  guidance for the Public Assistance program and Hazard Mitigation Grant  Program against federal internal control standards and standards for  program management related to defining objectives in specific and  measurable terms so they are understood at all levels of the organization  and documenting success criteria for key milestones. We also  interviewed FEMA officials in the USVI, FEMA Region II, and  headquarters regarding the agency’s responsibilities and processes for  ensuring the USVI implemented the Public Assistance program and  Hazard Mitigation Grant Program in accordance with relevant laws,  regulations, policies, and FEMA guidance. Further, we interviewed USVI  officials in the Office of Disaster Recovery and Virgin Islands Territorial  Emergency Management Agency, as well as USVI contractor personnel,  among others, to assess the structures and processes the territory had in  place to effectively oversee projects.

We conducted this performance audit from June 2018 through November  2019 in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives.

In September 2017, Hurricane Irma struck the islands of St. Thomas and  St. John, and two weeks later, Hurricane Maria struck the island of St.  Croix in the USVI, causing catastrophic damage across the entire territory  and neighboring Caribbean islands (see fig. 2).

The storms severely damaged the USVI’s critical infrastructure, leaving  many of the territory’s 107,000 residents without electricity, phone  service, food, or running water. According to a September 2018 report  from the USVI Hurricane Recovery and Resilience Task Force (USVI  Task Force Report), the hurricanes devastated the territory’s electricity  grid and telecommunications systems, shutting down both for months.  Further, the storms damaged more than half of the territory’s housing  units, as well as its hospitals, government buildings, schools, water and  wastewater facilities, and more (see figs. 3 and 4). Overall, the report  estimated that the hurricanes caused approximately $10.7 billion in total  damages across the USVI.

In response to the request of the Governor of the USVI, the President  declared a major disaster the day after each hurricane struck the  territory. Major disaster declarations can trigger a variety of federal  response and recovery programs for government and nongovernmental  entities and households and individuals, including assistance through the  Public Assistance program and Hazard Mitigation Grant Program.  Under the National Response Framework and National Disaster  Recovery Framework, DHS is the federal department with primary  responsibility for coordinating disaster response and recovery, and within  DHS, FEMA has lead responsibility. The Administrator of FEMA serves  as the principal adviser to the President and the Secretary of Homeland  Security regarding emergency management.

FEMA’s, States’, and Territories’ Roles and Responsibilities for Disaster Recovery

Once the President has declared a major disaster, FEMA, the state or  territorial government (the recipient), and local or territorial entities (the  subrecipient) work together to, among other things, identify and develop  projects through the Public Assistance program and Hazard Mitigation  Grant Program. After a project has completed FEMA’s review process  and is approved, FEMA obligates funding for the project by placing  money into an account where the recipient has the authority to draw  down—or expend—funding to pay for eligible work upon completion.  Further, when a project has been completed, FEMA conducts a close-out  process to certify that all eligible work has been completed and reconciles  the actual cost incurred. If the actual cost of the completed work is less  than the amount of money FEMA obligated for the project, FEMA will  deobligate funding. However, if the actual cost of the completed work is  greater than the amount of money FEMA obligated for the project, FEMA  may reimburse the subrecipient for these additional costs.

A state or territorial governor may designate a governor’s authorized  representative to oversee all aspects of disaster assistance—including  Public Assistance program and Hazard Mitigation Grant Program  funding—to ensure the USVI’s compliance with federal regulations and  FEMA requirements. Among other responsibilities, the governor’s  authorized representative is to confirm that subrecipients submit complete  documentation demonstrating that all eligible work completed is in  accordance with program requirements.

FEMA’s Public Assistance Program and Hazard Mitigation Grant Program

FEMA’s Public Assistance program provides grant funding to state,  territorial, local, and tribal governments, as well as certain types of private  nonprofit organizations, to assist with the repair or replacement of  disaster-damaged public infrastructure. To develop projects under the  Public Assistance program, FEMA and USVI officials collaborate to  identify and document the damage caused by a disaster to a particular  system or facility. These officials then use this damage assessment to  formulate the scope of work—or activities required to fix the identified  damage—as well as the estimated cost of these activities.

As shown in figure 5, Public Assistance grant funds are organized broadly  as “emergency work” or “permanent work.” Within these areas are  separate categories of work. In addition to emergency work and  permanent work, the program includes category Z, which represents  indirect costs, direct administrative costs, and any other administrative  expenses associated with a specific project.

Under the Public Assistance program’s permanent work categories,  FEMA also provides grant funding for cost-effective hazard mitigation  measures to reduce or eliminate the long-term risk to people and property  from future natural and man-made disasters and their effects. FEMA  provides this funding in conjunction with the repair of disaster-damaged  facilities to enhance their resilience during future disasters. For example,  this funding could be used to replace damaged wooden utility poles with  composite fiberglass ones to increase the resilience of an electricity  distribution system and mitigate the potential for future damage from  hurricane-force winds.

FEMA’s Hazard Mitigation Grant Program provides grant funding for long- term mitigation solutions to reduce the risk of loss of life and property  from future disasters. Unlike mitigation measures funded through the  Public Assistance program to further protect disaster-damaged  infrastructure, the Hazard Mitigation Grant Program may fund measures  for systems, facilities, or properties that were not damaged in the disaster.  For example, program funding can be used to construct floodwater  control measures—such as berms and rock linings—that did not exist  prior to the disaster, or to update existing hazard mitigation plans to  accurately reflect current mitigation goals.

The Public Assistance Alternative Procedures Pilot Program in the USVI

In July 2018, FEMA approved the use of the Public Assistance alternative  procedures pilot program for permanent work projects in the territory.  Unlike the standard Public Assistance program wherein FEMA will fund  the actual cost of a project, the alternative procedures require awards for  permanent work projects to be made on the basis of fixed-cost estimates.  As a result, the recipient or subrecipient is ultimately responsible for any  project costs that exceed the agreed-upon fixed-cost estimate at the time  of the close-out process.

However, the alternative procedures program also provides the USVI with  financial incentives for the timely and cost-effective completion of work  and additional flexibilities that are not available through the standard  Public Assistance program. For example, the USVI may use excess grant  funding for cost-effective hazard mitigation measures and, in certain  circumstances, consolidate permanent work projects approved under the  alternative procedures and share obligated funding across these projects.  Further, section 20601 of the Bipartisan Budget Act of 2018 authorizes  FEMA, when using the alternative procedures, to provide assistance to  fund the replacement or restoration of disaster-damaged infrastructure  that provide critical services without regard to pre-disaster condition (see  fig. 6). For example, through the Act, FEMA may fund the restoration of  a disaster-damaged school building—which provides a critical service—to  accepted industry standards applicable to the construction of education  facilities. Therefore, according to FEMA policy, if components of the  school building were not up to industry standards or in poor condition  prior to the 2017 hurricanes, the Act allows FEMA to fund the restoration  of this building to a better condition than it was in prior to the storms.

The Sheltering and Temporary Essential Power Pilot Program

The Sheltering and Temporary Essential Power (STEP) pilot program is  an emergency sheltering program implemented under FEMA’s  emergency work authority and funded through the Public Assistance  program’s category B emergency work. The program—which was  created following Hurricane Sandy in 2012—allows FEMA to fund  emergency, temporary repairs to make damaged homes habitable by, for  example, restoring electricity to a private home and applying temporary  patches to roofs and windows to protect the interior. In funding these  types of repairs, FEMA’s goal is to quickly make damaged homes  habitable in the short term until the homeowner could complete more  permanent repairs independently through other FEMA programs or  private insurance payments. Since 2012, FEMA has implemented the  program as a tool in addressing the unique circumstances and challenges  associated with providing safe sheltering options for disaster survivors.

FEMA Obligated More Than $1.9 Billion through Two USVI Recovery Programs as of June 30, 2019, but Faced Some Challenges in Implementing Recovery Projects

Status of FEMA Public Assistance Program and Hazard Mitigation Grant Program Funding in the USVI

As of June 30, 2019, FEMA obligated more than $1.9 billion in grant  funding for 640 projects through the (1) Public Assistance program and  (2) Hazard Mitigation Grant Program in the USVI. First, FEMA obligated  more than $1.8 billion in Public Assistance grant funding for 618 projects  across the USVI (see fig. 7). Specifically, FEMA obligated more than  $1.1 billion for emergency work projects (categories A and B), about  $588.5 million for permanent work projects (categories C through G), and  about $141.2 million for management costs (category Z). Of the  approximately $1.8 billion FEMA obligated in Public Assistance grant  funding as of June 30, 2019, the USVI had expended nearly $1.1 billion  (59 percent) to reimburse subrecipients for completed work. Appendix I  provides more detailed information on the status of Public Assistance  grant funding in the USVI.

Second, FEMA obligated about $60.6 million for 22 Hazard Mitigation  Grant Program projects in the territory as of June 30, 2019. These  projects are designed to fund mitigation measures to increase the longer- term resilience of the USVI’s infrastructure during future disasters. Of the  $60.6 million FEMA obligated as of June 30, 2019, the USVI expended  about $1.7 million (3 percent) across 5 projects. Appendix II provides  more detailed information on the status of Hazard Mitigation Grant  Program funding in the USVI.

While these data represent the status of grant funding as of June 30,  2019, the amount of FEMA obligations and USVI expenditures for both  programs will likely increase over time as additional projects are finalized  and approved.

Limited Availability of Local USVI Personnel and Territory’s Difficult Fiscal Situation Presented Challenges to Program Implementation

FEMA, USVI officials, and contractor personnel identified challenges  across three areas that affected the implementation of the Public  Assistance program and the Hazard Mitigation Grant Program in the  USVI. Specifically, they cited: (1) the limited availability of local staff in the  USVI to implement and oversee recovery programs, (2) the inability of  local construction crews to undertake the large number of recovery  projects, and (3) the impact of the USVI’s difficult fiscal situation on  recovery efforts.

Limited availability of local staff. USVI and FEMA officials cited the  limited number of local USVI personnel with the knowledge and expertise  necessary to staff recovery-related positions in key USVI agencies as a  significant challenge following the 2017 hurricanes. For example, USVI  officials told us that the Virgin Islands Territorial Emergency Management  Agency—the agency initially responsible for overseeing all aspects of  both the Public Assistance program and Hazard Mitigation Grant Program  in the territory—did not have enough employees on staff to effectively  implement and manage these programs. Further, a senior FEMA official  noted that after the storms, the USVI had only one individual responsible  for managing all aspects of the Hazard Mitigation Grant Program across  the territory. In addition, the limited availability of local staff in the USVI  was exacerbated by the departure of qualified individuals following the  hurricanes as well as competition among recovery agencies to hire  qualified staff that remained in the territory, according to USVI officials.

To address these challenges, the USVI hired two contractors to augment  the territory’s capacity in the shorter term and established a new Office of  Disaster Recovery to oversee recovery efforts in the longer term. First, in  December 2017, the USVI hired two contractors to assist the territory in  planning, developing, implementing, and overseeing recovery projects,  among other responsibilities. Second, in February 2019, the USVI  established the Office of Disaster Recovery as the primary territorial  agency responsible for coordinating and overseeing all disaster recovery  efforts in the USVI, including the Public Assistance program and Hazard  Mitigation Grant Program. The office’s Director told us that while  contractor personnel had been valuable in augmenting the USVI’s  capacity, the territory was prioritizing the hiring and training of qualified  local hires to replace these contractors for the longer term.

Shortage of local construction crews. Due to the territory’s relatively  small population, FEMA and USVI officials stated there were not enough  local construction crews to address the large amount of construction work  required to repair and rebuild damaged infrastructure following the 2017  hurricanes. These officials told us this construction crew shortage  affected the USVI’s ability to keep Public Assistance program and Hazard  Mitigation Grant Program projects proceeding on time. FEMA and  contractor personnel stated that unlike in the contiguous United States,  the USVI does not have neighboring states that can easily send  construction crews to affected areas to augment local crews. In addition,  historically, the USVI relied on Puerto Rico to supplement the territory’s  capacity, but this was not an option as Puerto Rico was undergoing its  own massive recovery effort as a result of Hurricane Maria.

The USVI’s fiscal situation. USVI officials and contractor personnel  stated that the challenging fiscal situation in the territory directly affected  its ability to effectively implement recovery programs. Specifically, USVI  officials told us that the territory’s financial condition made it difficult to  provide initial funding to reimburse subrecipients for completed work prior  to drawing down funding from the account holding FEMA-obligated money. These officials stated this process was problematic because  instead of funding all eligible projects as quickly as possible to move the  recovery forward, the USVI had to prioritize certain recovery projects over  others based on the availability of funding. Further, USVI contractor  personnel told us that the territory often does not have the cash on hand  necessary to provide these reimbursements to subrecipients, which can  result in delays in paying subrecipients and contractors. According to  USVI officials, pursuing projects under the Public Assistance alternative  procedures program may help to address these issues by providing more  flexibility regarding when and how projects are funded.

Challenges Implementing the Public Assistance Alternative Procedures Program Have Delayed Recovery Projects in the USVI

The Public Assistance alternative procedures program provides the USVI  with financial incentives and new flexibilities in implementing recovery  projects that are not available through the standard Public Assistance  program. However, FEMA and USVI officials stated that implementing the  alternative procedures program in the USVI presented challenges that  affected recovery efforts and delayed the obligation of funding for  permanent work projects. Specifically, they cited challenges in (1)  developing accurate fixed-cost estimates for program projects and (2)  implementing the new flexibilities authorized by section 20601 of the  Bipartisan Budget Act of 2018. Senior USVI officials told us that due to  these challenges and the financial risk associated with the use of fixed- cost estimates, the USVI is planning to take a cautious approach in  pursuing alternative procedures projects. As established in FEMA  guidance, USVI officials have a deadline of March 2020 to finalize the  fixed-cost estimates for such projects for inclusion in the alternative  procedures program.

Fixed-cost estimates. As the USVI is financially responsible for any  actual costs that exceed the fixed-cost estimate for any given alternative  procedures project, ensuring the accuracy of these estimates is critical  due to the USVI’s already difficult fiscal situation. However, USVI  officials told us that developing fixed-cost estimates that accurately  forecast the future costs of completing large, complex permanent work  projects in the remote island territory is difficult given the unique  circumstances that influence construction costs in the USVI, such as the  limited availability of local resources and the need to import construction  materials and labor. To address this challenge, in October 2018, FEMA  asked an independent contractor to analyze whether a USVI-specific  “cost factor” should be incorporated into FEMA’s process for developing  fixed-cost estimates to ensure the actual costs of implementing  permanent work projects in the territory were captured. According to  FEMA officials, the independent contractor determined that a cost factor  was appropriate for use in the USVI and the contractor proposed several  options. However, territorial officials contended that these proposals did  not sufficiently or accurately capture the unique circumstances that  influence construction costs in the territory. Further, USVI officials stated  that ensuring the accuracy of the cost factor was critical given the  significant financial risk using fixed-cost estimates posed to the USVI.

Since incorporating a cost factor into the process for developing fixed- cost estimates increases the base cost for any given permanent work  project—and therefore the amount of funding FEMA obligates—FEMA  officials explained the USVI had an incentive to delay the obligation of  projects until FEMA finalized this factor. As a result, FEMA officials told us  in May 2019 that obligations for permanent work projects had been  mostly on hold since October 2018 while the contractor worked to  develop the USVI-specific cost factor. As the USVI is reliant on federal  recovery funding to reimburse subrecipients for completed work, this  delay in obligations directly affected the USVI’s ability to move recovery  projects forward.

In May 2019, the contractor proposed a new cost factor, which FEMA  approved on an interim basis pending further analysis. In July 2019,  FEMA officials told us that while additional analyses are required to  ensure its final process for developing fixed-cost estimates in the USVI  accurately captures construction costs, using this interim cost factor in the  meantime allows FEMA and USVI officials to move forward with the  development and final approval of alternative procedures projects. In  August 2019, a senior USVI official told us the territory plans to begin  using the interim cost factor, where appropriate, to keep projects  progressing forward. However, she stated that the USVI questioned  whether the interim cost factor did, in fact, sufficiently capture the actual  costs of construction in the USVI. Given the uncertainty around these  fixed-cost estimates, USVI officials told us the territory will need to  balance the potential flexibilities provided by the alternative procedures  program with the financial risk posed by cost overruns when deciding  whether to use the alternative procedures or the standard Public  Assistance program for any given permanent work project. We are  currently assessing FEMA’s process for developing cost estimates for  projects under both the standard and alternative procedures programs,  and plan to report our results in early 2020.

The Bipartisan Budget Act of 2018. While FEMA and USVI officials told  us that section 20601 of the Bipartisan Budget Act presented a valuable  opportunity to advance the USVI’s recovery, they also reported  challenges with implementing the new flexibilities authorized by the Act,  which made developing eligible permanent work projects difficult. For  example, USVI officials stated that, at times, they were unclear about the  implementation process for key components of the Act and thus ensuring  subrecipients understood the process was difficult. Further, FEMA  officials in the USVI told us that initially, they had difficulty obtaining  clarification from FEMA headquarters regarding how to implement key  provisions of the Act, such as the process for identifying and incorporating  relevant industry standards for specific alternative procedures projects.  As a result, permanent work projects that were eligible to use the  flexibilities provided by the Act remained on hold until FEMA could clarify  the process for implementing the Act and pertinent industry standards  could be approved.

In addition, the Bipartisan Budget Act was signed into law in February  2018 and applies exclusively to federal disaster assistance to the USVI  and Puerto Rico. As a result, FEMA officials faced the challenge of  interpreting the Act’s language and appropriately implementing its  provisions for the first time. For example, the Act allows for a new process  for determining whether a disaster-damaged facility is eligible to receive  funding to (1) repair the existing facility or (2) replace the facility with a  new structure. Under the standard Public Assistance program, this  determination is calculated using the “50 percent rule”—if the cost of  repairing the disaster-related damage sustained by the facility exceeds 50  percent of the cost of replacing it, FEMA may fund the replacement of the  facility. In contrast, the Act does not provide a similar cost estimating  process for use in developing fixed-cost estimates through the alternative  procedures program. In September 2018, FEMA issued guidance for  implementing section 20601 of the Bipartisan Budget Act through the  Public Assistance alternative procedures program, which provides that  critical services infrastructure—such as medical and educational  facilities—is eligible for replacement “if repair is feasible, but replacement  is more prudent.” FEMA officials in the USVI told us that since the agency  did not have further guidance or criteria on the appropriate process for  evaluating repair or replacement under this new standard, they were  responsible for developing the agency’s first justification to support the  replacement of a hospital in St. Croix based on their interpretation of the  new standard. These officials also stated that since their rationale  justifying the facility’s eligibility for replacement was the first of its kind and  would set a precedent for future projects, they submitted it to FEMA  headquarters for review. In May 2019, FEMA officially approved the  replacement of this hospital through the alternative procedures program.  For more information on how the Public Assistance program and the  Bipartisan Budget Act are affecting recovery efforts at this facility, see  appendix III.

The Additional Supplemental Appropriations for Disaster Relief Act of  2019, which was signed into law in June 2019, provides additional  direction to FEMA regarding the implementation of section 20601 of the  Act. Among other things, this legislation includes a provision directing  FEMA to change its process for determining whether a disaster-damaged  facility is eligible for repair or replacement. FEMA evaluated this and  other provisions of the Act and, in September 2019, issued an updated  policy to provide clear guidance moving forward, according to agency  officials.

The USVI Governor and senior territorial officials stated that due to the  challenges outlined above and the financial risk posed by exceeding  fixed-cost estimates, the USVI plans to take a cautious approach in  implementing the Public Assistance alternative procedures program.  Specifically, the Governor told us the territory will most likely pursue  alternative procedures projects that are simple, have clear scopes of  work, and do not include high levels of uncertainty to reduce the financial  risk of potential cost overruns. USVI officials added that if they are not  comfortable with the fixed-cost estimate for any given alternative  procedures project, the territory has the option to pursue the project under  the standard Public Assistance program. Under the standard program,  the USVI cannot take advantage of the flexibilities and financial incentives  provided by the alternative procedures and the Bipartisan Budget Act, but FEMA would reimburse the USVI for the actual cost—including any cost  overruns—of all work completed in accordance with a project’s approved  scope of work, thereby mitigating the territory’s financial risk. The USVI is  ultimately responsible for deciding whether the benefits provided through  the alternative procedures program and the Bipartisan Budget Act  outweigh the financial risk associated with agreeing to fixed-cost  estimates for permanent work projects. Since the territory has until March  2020 to finalize these fixed-cost estimates, it remains too early to  determine the extent to which the alternative procedures program will play  a role in the USVI’s long-term recovery strategy.

FEMA Discontinued the STEP Pilot Program After Expanding It in the USVI, but Has Not Evaluated Options for Providing Future Emergency Sheltering Assistance

FEMA Expanded the STEP Pilot Program in the USVI

In October 2017, FEMA authorized the STEP pilot program in the USVI in  response to the widespread damage to homes that displaced residents  and overwhelmed sheltering and temporary housing resources in the  territory. Through the program, FEMA funded minimal, temporary  protective repairs (or “Phase I” repairs) to private homes to allow  residents a safe place to shelter. For example, Phase I emergency  repairs included applying temporary patches to roofs and windows to  protect the interior from outside weather conditions and ensuring a  functional kitchen and bathroom and safe sleeping area. According to  FEMA documentation, the intent of these minimal temporary repairs was  to quickly make damaged homes habitable in the short term until  homeowners could complete more permanent repairs independently  through other FEMA programs or using private insurance payments.

In August 2018, FEMA expanded the STEP pilot program to include the  “permanent” repair or replacement of damaged roofs (or “Phase II”  work)—the first time in its history that FEMA authorized such work  through this pilot program. Phase II work funded more permanent work on  USVI residents’ damaged roofs—either by repairing damages to the  existing roof or replacing it with a new one. In addition, Phase II work  included incorporating roof hardening measures, such as installing  hurricane clips to the roof berms, to increase the resiliency of the roofs  against hurricane-force winds. Figure 8 provides two examples of USVI  homes that participated in Phase II of the STEP pilot program.

FEMA expanded the STEP pilot program to address the USVI’s unique,  longer-term sheltering needs. Specifically, as the 2018 hurricane season  arrived, FEMA was faced with the challenge of ensuring adequate  sheltering options were available to USVI residents in the event that  another hurricane struck the territory. The following factors contributed to  FEMA’s decision to expand the STEP pilot program:  Infeasibility of other sheltering programs. Alternate sheltering  options were not viable in the USVI due to the unique circumstances  in the territory. For example, the Transitional Sheltering Assistance  program—where FEMA funds non-congregate sheltering (typically in  hotels or motels) for displaced residents who cannot safely return to  their homes—was not a feasible option as there was only one  operating hotel in the USVI capable of sheltering disaster survivors.  Further, FEMA officials told us that temporary housing units—such as  manufactured housing units or recreational vehicles—could not be  deployed to supplement the territory’s available housing stock due to  logistical challenges, including the prohibitive costs of shipping these  units to the remote territory and the limited availability of space to  install them.

Operation Blue Roof caused additional damage to homes.

According to FEMA officials, FEMA’s decision to allow homes that had  received temporary blue tarps as an emergency roofing measure  through Operation Blue Roof to be eligible for the STEP pilot program  led to expanding the scope of allowable work funded by the  program. FEMA and USVI officials told us this change was  implemented to address several issues with the blue tarps installed on  homes, including the temporary nature of the tarps—which had a  post-installation lifespan of only 30 days—and the need to fix the  damage caused by installing the blue tarps on undamaged sections of  roofs. FEMA officials stated that expanding the STEP pilot program  to conduct more permanent roof repairs on these homes helped to  ensure homeowners were able to safely shelter in the event of  another hurricane.

Shortage of construction crews. As previously discussed, FEMA  and USVI officials cited the limited number of construction crews  available to implement recovery work as a challenge, including for the  STEP pilot program. Specifically, this challenge made it difficult for  private homeowners to independently hire qualified contractors to  conduct permanent repairs to their homes, according to FEMA  officials. Therefore, these officials explained that using Phase II of the  STEP pilot program to manage contractors in an official capacity  made it more likely that necessary permanent repairs would be  completed in a timely manner.

Evacuation was not an option. When requested, FEMA is  responsible for providing safe sheltering options following a disaster  and, in the absence of feasible local sheltering options, FEMA is  responsible for evacuating residents to a safe location outside the  potentially affected area. However, according to FEMA  documentation, developing and executing a plan to evacuate the  USVI’s more than 100,000 residents in the event of another hurricane  was impractical.

Given these factors and the risk of another hurricane, FEMA officials  determined that authorizing Phase II roof repairs or replacements of a  permanent nature represented an appropriate solution to ensure eligible  program participants could safely shelter in their homes.

The STEP pilot program in the USVI officially ended on April 15, 2019.  FEMA reported that 7,381 homes ultimately received repairs through the program. Specifically, 6,372 homes received Phase I temporary repairs  and 1,631 homes received Phase II roof repairs or replacements of a  permanent nature. In addition, 622 homes received both Phase I and  Phase II repairs. According to FEMA officials, the agency is now  conducting the close-out process for the STEP pilot program in the USVI,  which includes reviewing the paperwork for each participating home to  ensure all work was completed in accordance with both the home’s  approved scope of work and overall programmatic requirements.

FEMA Has Decided Not to Use the STEP Pilot Program During Future Recovery Efforts, but Has Not Evaluated Its Options for Providing Similar Emergency Sheltering Assistance

In May 2019, FEMA’s Chief Counsel stated that FEMA had decided to  discontinue the STEP pilot program due to significant challenges and  lessons learned from prior experiences implementing the program.  Specifically, FEMA stated that while FEMA had implemented the STEP  pilot program within its authority pursuant to Section 403 of the Stafford  Act, the agency was no longer “comfortable from a legal, policy, or  pragmatic perspective” with implementing the STEP pilot program  following future disasters.

FEMA cited two main challenges in implementing the program in the  USVI and elsewhere: (1) limiting the program’s scope to provide only  minimal, emergency repairs, as intended, and (2) completing these  emergency repairs in a timely manner. First, FEMA stated that in multiple  iterations of the STEP pilot program—including in the USVI—FEMA  officials had “succumbed to the pressure” from state and territorial leaders  to expand the scope of allowable repairs under the program to conduct  more extensive repairs. For example, in the USVI specifically, although  expanding the program to authorize permanent roof repairs was legally  supportable and represented an earnest effort to meet the territory’s  needs, the expansion did “push the boundaries of appropriateness” and  increased FEMA’s risk of interfering with the agency’s authority to provide  assistance through other FEMA programs.

Second, FEMA stated that the lengthy process for delivering the STEP  pilot program—including in the USVI—undercut the program’s stated  intent of providing emergency sheltering within 3 to 4 months following a  disaster. For example, while FEMA authorized the program in the USVI in  October 2017, initial repairs did not begin until March 2018 and eligible  work was not completed until April 2019—18 months after the program’s  authorization. According to FEMA, completing STEP pilot program repairs  took longer than intended across most instances of the program’s  implementation due to the amount of time required to develop disaster- specific program guidance, hire a large number of construction crews to  undertake the repair work, obtain the necessary permissions from  homeowners, and ultimately complete the repairs. Given the STEP pilot  program’s protracted period of implementation, FEMA stated the agency  had not been successful in ensuring that program repairs provided  disaster survivors with emergency shelter in a timely manner.

FEMA’s decision to discontinue the STEP pilot program following future  disasters raises questions about how the agency plans to address the  emergency sheltering needs of disaster survivors in the future—especially  in communities that face challenges and circumstances similar to those  the program was specifically designed to address. Since implementing it  in 2012, FEMA used the STEP pilot program to supplement other FEMA  sheltering programs and provide necessary additional capacity to help  address the emergency sheltering needs of disaster-affected  communities, as described below. In certain cases, the program  provided assistance to more disaster survivors than other relevant FEMA  programs, including the Transitional Sheltering Assistance program and  the provision of temporary housing units. FEMA implemented the STEP  pilot program in the following locations:

Louisiana: FEMA authorized the STEP pilot program to supplement  other federal programs implemented in Louisiana following severe  storms and flooding in 2016. Specifically, the Transitional Sheltering  Assistance program was not a viable option for most survivors,  partially due to the limited availability of hotels and motels in the  affected area, and FEMA ultimately used this program for  approximately 4,300 households. In addition, FEMA deployed  temporary housing units for approximately 4,600 households. FEMA  also funded repairs through the STEP pilot program for nearly 11,000  homes.

Texas: FEMA authorized the STEP pilot program to supplement other  federal programs in Texas following Hurricane Harvey in 2017.  Specifically, FEMA determined that implementing the STEP pilot  program provided a useful option since the number of displaced  survivors significantly exceeded the available capacity for sheltering  survivors in local hotels and motels. FEMA used the Transitional  Sheltering Assistance program for approximately 55,000 households  and deployed temporary housing units for more than 3,500  households. FEMA supplemented these programs by funding repairs  through the STEP pilot program for approximately 15,700 homes.

Puerto Rico: FEMA authorized the STEP pilot program to address  the unique emergency sheltering needs in Puerto Rico following  Hurricanes Irma and Maria in 2017. Specifically, FEMA determined  that approximately 80 percent of the island did not have power and  would not have it restored for an extended period of time. As a result,  FEMA implemented the STEP pilot program to, among other repairs,  reconnect homes to a functioning electricity grid or, as necessary,  fund the installation of generators if the grid could not be restored in a  timely manner. Further, similar to what occurred in the USVI, FEMA  authorized the STEP pilot program to repair homes that participated in  Operation Blue Roof to address the roof damage caused by the  installation of the blue tarps. FEMA funded repairs through the STEP  pilot program for nearly 108,500 homes in Puerto Rico. In addition,  due to the lack of available hotels and motels in Puerto Rico,  participation in FEMA’s Transitional Sheltering Assistance program  was limited to approximately 7,000 households, most of which were  relocated to hotels and motels in the contiguous United States.  Further, as detailed below, FEMA implemented its new Voluntary  Agencies Leading and Organizing Repair program for the first time in  Puerto Rico to conduct repairs to approximately 4,600 homes.

North Carolina: FEMA authorized the STEP pilot program to address  the particular emergency sheltering needs in North Carolina following  Hurricane Florence in 2018. FEMA amended the STEP pilot program  to allow both contracted construction crews and voluntary  organizations to conduct the repairs, and ultimately funded repairs  through the program for approximately 2,200 homes. In addition,  FEMA used the Transitional Sheltering Assistance program for more  than 870 households and deployed temporary housing units for  approximately 650 households.

Overall, FEMA authorized the STEP pilot program following 8 declared  disasters since 2012 and obligated approximately $2.6 billion to fund  repairs to more than 167,000 disaster survivors’ homes, according to  FEMA documentation. While the program may not have provided  repairs as rapidly as FEMA intended, these repairs nonetheless played a  significant role in ensuring these disaster survivors could safely shelter in  their homes.

Since discontinuing the program, FEMA has not evaluated its options for  addressing the emergency sheltering needs of disaster survivors. FEMA  stated that it continues to support the use of congregate sheltering and  will consider authorizing the Transitional Sheltering Assistance program,  among other options, to address disaster survivors’ needs following future  disasters. However, as detailed above, FEMA used the STEP pilot  program for the specific purpose of providing necessary additional  capacity to supplement these and other federal programs. Further, in  certain cases, the STEP pilot program was used when implementing  these other programs was unfeasible, such as in the USVI and New York  where the particular circumstances on the ground made using the  Transitional Sheltering Assistance program or deploying temporary  housing units impractical.

FEMA officials also told us the agency could utilize voluntary  organizations to a greater extent than in the past to conduct the same  types of repairs provided through the STEP pilot program. Specifically,  FEMA officials stated that the Voluntary Agencies Leading and  Organizing Repair program—which was implemented in Puerto Rico in  response to the 2017 hurricanes and used to repair about 4,600 homes— could be used for this purpose following future disasters. However, given  the program’s limited implementation, it is too early to determine the  extent to which it represents a feasible solution for addressing emergency  sheltering needs, or is capable of providing assistance on as large a scale  as other federal programs, such as the STEP pilot program that funded  repairs on more than 100,000 homes in Puerto Rico alone. Further, in  North Carolina—where FEMA amended the STEP pilot program to allow  both hired construction crews and voluntary organizations to conduct the  repairs—the number of homes repaired by the construction crews—about  2,000—far exceeded the number of homes repaired by voluntary  organizations—about 150—which raises questions about the ability of  voluntary organizations to undertake the large volume of repairs  necessary following disasters.

Standards for Internal Control in the Federal Government states that  management should identify, on a timely basis, significant changes to  internal conditions that have already occurred, including changes to the  entity’s programs or activities. Further, management should identify,  analyze, and respond to risks related to achieving the entity’s defined  objectives. FEMA has not assessed how its decision to discontinue the  STEP pilot program will affect its ability to provide emergency sheltering  assistance following future disasters. While FEMA officials told us they  plan to use other sheltering programs when the next disaster strikes,  these programs may not be sufficient in addressing the emergency  sheltering needs of disaster survivors, especially in communities where  implementing such programs is not feasible. FEMA officials also stated  that given the agency’s decision to discontinue the STEP pilot program,  conducting a broad evaluation of FEMA’s emergency sheltering programs  and the agency’s options for addressing emergency sheltering needs  would be useful to ensure that FEMA is prepared to respond effectively to  future disasters. Conducting such an evaluation would help FEMA  understand its ability to provide sheltering options and to properly plan for  the provision of effective emergency sheltering assistance to disaster- affected communities.

The USVI and FEMA Established Structures for Overseeing Recovery Efforts, but FEMA Has Not Consolidated Hazard Mitigation Grant Program Monitoring Guidance

The USVI and FEMA Have Structures in Place for Overseeing Recovery Activities

USVI. As the recipient of federal disaster funding, the USVI is responsible  for providing oversight over the Public Assistance program and Hazard  Mitigation Grant Program to ensure they are implemented in compliance  with applicable laws and regulations, as well as FEMA policies and  guidance. Following the 2017 hurricanes, the USVI took steps to  address its responsibilities for receiving grant funding through these  programs, including by: (1) developing administrative plans, (2)  designating two territorial entities to manage the administration of disaster  recovery funding, and (3) establishing the new Office of Disaster  Recovery.

First, as required by FEMA, the USVI developed administrative plans for  the Public Assistance program and Hazard Mitigation Grant Program to  ensure that subrecipients are in compliance with the conditions of these  grant programs. These plans outline programmatic and project monitoring  activities as well as the financial and administrative procedures for both  programs. The plans require, among other things, the USVI to submit  quarterly progress and financial reports on the status of projects to FEMA  and describe the USVI’s specific roles and responsibilities for  implementing and overseeing these two programs.

Second, the Governor of the USVI designated two territorial entities to  manage and oversee the implementation of recovery programs—the Virgin Islands Territorial Emergency Management Agency as the  programmatic manager and the governor’s authorized representative as  the grant administrator for all federal recovery funding in the USVI.  Among other responsibilities, these entities are responsible for ensuring  that Public Assistance program and Hazard Mitigation Grant Program  participants are in compliance with all programmatic and administrative  requirements. For example, the Virgin Islands Territorial Emergency  Management Agency is responsible for, among other things, preparing  and submitting quarterly progress and financial reports to FEMA for  certain Public Assistance program projects and for all Hazard Mitigation  Grant Program projects. In addition, the governor’s authorized  representative is responsible for ensuring the territory’s compliance with  all requirements outlined in the FEMA-approved administrative plans.

Third, in February 2019, the USVI’s new Office of Disaster Recovery  assumed responsibility for overseeing the Public Assistance program and  Hazard Mitigation Grant Program, including tracking and reporting on the  progress of individual projects and overseeing the submission of  reimbursement requests for completed work. The office is also  responsible for monitoring and publicly reporting the status of federal  recovery funding at http://www.usviodr.com/. In addition, according to  the office’s Director, her team also meets with FEMA officials on a bi- weekly basis to discuss recovery activities more generally and raise any  potential issues for discussion, such as challenges with submitting  quarterly progress and financial reports to FEMA in a timely manner.

FEMA. FEMA officials at the USVI, regional, and headquarters level are  responsible for overseeing the USVI’s implementation of federal recovery  programs. Specifically, once FEMA obligates grant funding for a project,  FEMA officials on the ground in the USVI are responsible for the day-to- day monitoring of individual projects using a variety of tools. For  example, FEMA officials stated they use the information included in  quarterly progress and financial reports to help ensure that subrecipients  are in compliance with applicable federal requirements and that potential  problems are identified and addressed in a timely manner. Further, FEMA  officials are to conduct quarterly meetings with USVI officials to ensure  regular communication and coordination and to discuss program  implementation, raise potential challenges, and identify solutions.

In addition to monitoring ongoing projects, FEMA officials in the USVI are  responsible for managing the process for closing out Public Assistance  program and Hazard Mitigation Grant Program projects that have been  completed. To facilitate this close-out process, the USVI is to compile all  required documentation for an individual project and submit this  paperwork to FEMA. FEMA is to review the documentation to ensure that  all work has been completed in accordance with the project’s scope of  work as well as relevant laws, federal regulations, and program  requirements.

FEMA Region II officials and FEMA officials in the Grant Programs  Directorate in headquarters also provide higher-level oversight of Public  Assistance program and Hazard Mitigation Grant Program  implementation. For example, FEMA Region II officials stated they  analyze the USVI’s quarterly financial reports to identify patterns that may  indicate financial challenges, such as irregularities in the amount of  funding the USVI has drawn down for projects or an excess or lack of  reimbursements to subrecipients for completed work. At FEMA  headquarters, officials in the Grant Programs Directorate stated they  assess the financial condition of projects annually to identify potential  challenges in administering grant funding and may enhance monitoring  efforts as needed. These officials stated they also review the timeliness,  completeness, and accuracy of information submitted in quarterly reports  to help monitor project milestones and identify potential challenges that  require FEMA’s attention.

FEMA Has a Consolidated Standard Operating Procedures Document for Monitoring Public Assistance Projects, but Not for Hazard Mitigation Grant Program Projects

FEMA has issued numerous documents that provide useful information  and guidance for implementing and monitoring the Public Assistance  program and the Hazard Mitigation Grant Program, such as program and  policy documents, fact sheets, job aids, and operational manuals. For  example, one document for monitoring the Public Assistance program is  the Public Assistance Program Management and Grant Closeout  Standard Operating Procedure. This standard operating procedures  document provides FEMA officials across all disasters nationwide with a  common understanding of the expectations and requirements for  managing projects. It also clearly and concisely outlines the roles and  responsibilities, requirements, key tasks and milestones, and  performance measures associated with monitoring and closing out Public  Assistance program projects. However, FEMA has not developed a  similar consolidated standard operating procedures document to provide  a clear and concise roadmap for monitoring and closing out projects  under the Hazard Mitigation Grant Program.

In July 2019, FEMA officials in headquarters and FEMA Region II told us  that guidance on key policies and procedures for managing FEMA’s  varied hazard mitigation efforts can be found across multiple sources.  However, these officials stated that FEMA has not consolidated this  guidance into a single document for FEMA-wide use that focuses on the  oversight of Hazard Mitigation Grant Program projects specifically.  Further, FEMA’s existing guidance documents do not provide a concise  roadmap that outlines roles and responsibilities, key tasks and  milestones, and performance measures for FEMA officials to use when  monitoring and closing out individual program projects for any given  disaster. For instance, the Hazard Mitigation Assistance Guidance  includes information on many topics, such as program eligibility  requirements; roles and responsibilities for recipient and subrecipient  personnel; and oversight requirements spanning three separate FEMA  mitigation programs. Likewise, FEMA’s 250-page Hazard Mitigation  Field Operations Guide includes operating procedures, descriptions of  major tasks for mitigation positions, and job aids, including samples and  templates of tools to help hazard mitigation staff implement defined tasks.  While these and other FEMA documentation collectively provide  important information regarding the agency’s broader hazard mitigation  efforts, they are not focused specifically on the Hazard Mitigation Grant  Program, or the detailed processes FEMA officials on the ground should  use to conduct the day-to-day monitoring of individual projects. Further,  these documents do not detail the use of performance measures in  effectively monitoring Hazard Mitigation Grant Program projects— information that is included in FEMA’s standard operating procedures  document for the Public Assistance program.

When we asked FEMA officials responsible for implementing the program  in the USVI why the agency had not developed a consolidated standard  operating procedures document specific to the Hazard Mitigation Grant  Program, they stated that developing this document had not been a  priority for the agency—which could be due to the relatively small size of  this program compared to larger and more complex recovery programs,  such as the Public Assistance program. Although FEMA obligates more  funding through the Public Assistance program, the Hazard Mitigation  Grant Program nonetheless plays a critical role in ensuring that disaster- affected communities can undertake mitigation measures specifically  designed to enhance the resilience of their infrastructure during future  disasters.

Standards for Internal Control in the Federal Government states that  management should document in policies and procedures each unit’s  responsibility for an operational process’s objectives in the appropriate  level of detail to allow management to effectively monitor the control  activity. In addition, these standards state that management should  define objectives in specific and measurable terms so they are  understood at all levels of the organization. This includes clearly defining  what is to be achieved, who is to achieve it, how it will be achieved, and  the timeframes for achievement. Further, leading practices identified in  the Program Management Institute’s Standard for Program Management  call for agencies to develop a program roadmap outlining information on  the program’s intended direction and providing a set of documented  success criteria for each key milestone and decision point. This  roadmap can be a valuable tool for managing the execution of the  program and for assessing the program’s progress toward achieving its  goals. FEMA’s consolidated standard operating procedures document for  the Public Assistance program provides such a roadmap, stating that  FEMA’s main goal is to provide effective assistance and excellent  customer service necessary to assist disaster-affected communities to  recover while also ensuring the responsible stewardship of public funds.

FEMA does have guidance on key policies and procedures for managing  its hazard mitigation efforts, including through the Hazard Mitigation Grant  Program. However, FEMA could further strengthen its existing guidance  by consolidating this information into a single document for FEMA-wide  use, similar to the one FEMA uses for the Public Assistance program.  FEMA officials told us that having a detailed standard operating  procedures document for the Hazard Mitigation Grant Program that  clearly and concisely outlined roles and responsibilities, key objectives  and tasks, and milestones for conducting monitoring and close-out  activities would be helpful in effectively overseeing program projects. In  addition to FEMA officials, the governor’s authorized representative in the  USVI also told us that such a document would help to ensure that both  FEMA and USVI officials are following the necessary procedures and  guidance when conducting program management and close-out activities.  Assessing the need for such a consolidated standard operating  procedures document for the Hazard Mitigation Grant Program would  help FEMA determine whether existing guidance should be strengthened  to ensure that agency officials across all disasters are using a consistent  approach in carrying out their responsibilities under the program.

As of June 30, 2019, FEMA had obligated more than $1.9 billion in grant  funding through the Public Assistance program and Hazard Mitigation  Grant Program to help the USVI recover from the catastrophic 2017  hurricane season. As part of the Public Assistance program, FEMA  authorized the STEP pilot program in the USVI—and in other locations— to supplement other FEMA programs and provide necessary additional  capacity to help address the emergency sheltering needs of disaster  survivors. While FEMA decided to discontinue the STEP pilot program,  the agency has not evaluated how this decision will affect its ability to  provide emergency sheltering assistance in the future. FEMA has a  responsibility to provide assistance, when requested, to address the  emergency sheltering needs of disaster survivors. Given that FEMA will  no longer use the STEP pilot program, taking steps to evaluate its options  for addressing these needs will help FEMA to assess its capacity for  providing effective emergency sheltering assistance in the future and to  properly plan for when the next disaster inevitably strikes.

In addition, FEMA has issued numerous policy documents, guides, and  other useful documents to assist FEMA officials to effectively monitor and  oversee Hazard Mitigation Grant Program projects. However, FEMA has  not developed a consolidated standard operating procedures document  specific to the Hazard Mitigation Grant Program that provides a clear and  concise roadmap for FEMA officials’ use in monitoring individual projects.  Assessing the need for a consolidated roadmap for agency-wide use  would help FEMA determine whether existing guidance for effectively  monitoring Hazard Mitigation Grant Program projects should be  strengthened.

We are making the following two recommendations to FEMA:  The FEMA Administrator should evaluate the agency’s options for  providing future emergency sheltering assistance. (Recommendation 1)

The FEMA Administrator should assess the need for an agency-wide  consolidated standard operating procedures document for the Hazard  Mitigation Grant Program that provides detailed information on the roles  and responsibilities, requirements, and key tasks and milestones for  monitoring and closing out program projects. (Recommendation 2)

We provided a draft of this product to DHS and the USVI government for  review and comment. DHS provided written comments, which are  reprinted in appendix IV and summarized below. DHS and the USVI  government provided technical comments, which we incorporated as  appropriate.

DHS concurred with both our recommendations and described the  actions it plans to take in response. With regard to our first  recommendation, DHS stated that it will evaluate FEMA’s options for  providing emergency sheltering assistance through its Individual  Assistance Division and provide any recommendations for action, as  appropriate, to FEMA’s Assistant Administrator for Recovery. DHS  anticipates completing this evaluation by February 2020. This action, if  fully implemented, should address the intent of the recommendation.

With regard to our second recommendation, DHS stated that FEMA will  assess the need for an agency-wide consolidated standard operating  procedures document for the Hazard Mitigation Grant Program and, if  deemed necessary, FEMA will develop this document. DHS anticipates  this effort will be completed by August 2020. This action, if fully  implemented, should address the intent of the recommendation. In the  meantime, DHS noted that FEMA will consider updating its website to  include a single portal providing access to all existing guidance  documents relevant to monitoring and overseeing Hazard Mitigation  Grant Program projects. We will monitor DHS’s and FEMA’s efforts to  address these two recommendations.

We are sending copies of this report to the appropriate congressional  committees, the Secretary of Homeland Security, the FEMA  Administrator, the USVI government, and other interested parties. In  addition, the report is available at no charge on the GAO website at  http://www.gao.gov.

If you and your staff have any questions, please contact me at (202) 512- 8777 or curriec@gao.gov. GAO staff who made key contributions to this  report are listed in appendix V.

Appendix I: Status of Public Assistance Program Funding in the U.S. Virgin Islands

The Federal Emergency Management Agency (FEMA) obligated more  than $1.8 billion in Public Assistance grant funding for 618 projects across  the U.S. Virgin Islands (USVI) as of June 30, 2019. Specifically, FEMA  obligated more than $1.1 billion for emergency work projects (categories  A and B), about $588.5 million for permanent work projects (categories C  through G), and about $141.2 million for management costs (category  Z). As of that date, the USVI expended nearly $1.1 billion—about 59  percent of total Public Assistance obligations to the USVI—to reimburse  subrecipients for completed work. Of this nearly $1.1 billion, the USVI  expended about $857.5 million (78 percent) for emergency work projects,  $211.3 million (19 percent) for permanent work projects, and $29.9 million  (3 percent) for management costs.

The majority of FEMA’s obligations and the funding the USVI expended  as of June 30, 2019, are for emergency work because these projects  began soon after the disasters struck and focused on debris removal and  providing assistance to address immediate threats to life and property. In  contrast, permanent work projects take time to identify, develop, and  ultimately complete as they represent the longer-term repair and  restoration of public infrastructure. While the data below represent the  status of Public Assistance funding as of June 30, 2019, the amount of  grant funding FEMA obligates and the USVI expends will likely increase  over time as additional projects are finalized and approved.

Emergency work. Of the more than $1.8 billion FEMA obligated as of  June 30, 2019, more than 1.1 billion (61 percent) was obligated for 410  emergency work projects in Public Assistance program categories A and  B.

Category A: Debris removal. FEMA obligated about $139.9 million for  88 projects focused on debris removal activities across the territory.  For example, FEMA obligated $81.8 million to the USVI Water and  Power Authority for territory-wide debris removal efforts (see fig. 9). Of  the $139.9 million FEMA obligated for debris removal, the USVI  expended about $76.9 million (55 percent) as of June 30, 2019.

Category B: Emergency protective measures. FEMA obligated about  $985.6 million for 322 projects focused on emergency measures. For  example, FEMA obligated about $278.2 million for the Sheltering and  Temporary Essential Power (STEP) pilot program as of June 30,  2019, to fund certain types of temporary repairs to private homes. In  addition, FEMA obligated approximately $111.9 million for the  purchase and installation of modular units to be used as temporary  classrooms and other facilities while permanent school buildings are  repaired or replaced (see fig. 10). Of the $985.6 million FEMA  obligated for emergency protective measures, the USVI expended  about $780.7 million (79 percent) as of June 30, 2019.

Permanent work. Of the more than $1.8 billion in Public Assistance grant  funding FEMA obligated as of June 30, 2019, about $588.5 million (32  percent) was obligated for 200 permanent work projects across  categories C through G. These permanent work projects included more  than $383.1 million for cost-effective hazard mitigation measures to  reduce the future risk of disaster damage to infrastructure.

Category C: Roads and bridges. FEMA obligated about $5.9 million  for 40 projects focused on repairing roads and bridges in the territory,  9 of which included hazard mitigation measures totaling about $1.6  million. For example, FEMA obligated about $233,000 for one project  to repair a road on St. Croix damaged by floodwaters. This project  included approximately $61,000 for hazard mitigation measures to  reduce the likelihood of erosion during future flooding events. Of the  $5.9 million FEMA obligated for category C, the USVI expended about  $86,000 (1.5 percent) as of June 30, 2019.

Category D: Water control facilities. As of June 30, 2019, FEMA did  not have any projects in this category. According to FEMA officials,  the USVI does not have water control infrastructure—such as berms  or levees—that would fall under category D.

Category E: Buildings and equipment. FEMA obligated about $68.3  million for 101 projects focused on repairing damaged structures in  the territory, 49 of which included hazard mitigation measures totaling  about $3.1 million. For example, FEMA obligated about $59.7 million  for one project to replace 5 heavily damaged buildings in a public  housing facility in St. Thomas (see fig. 11). While FEMA obligated this  project through the standard Public Assistance program, FEMA and  the USVI plan to work to develop a fixed-cost estimate with the  intention of transitioning this project to the alternative procedures  program, according to FEMA documentation. Further, this  documentation states that hazard mitigation measures will be  incorporated into the new structures by implementing internationally  adopted building codes and standards for wall and window  replacements. Of the $68.3 million FEMA obligated for Category E,  the USVI expended about $533,000 (0.8 percent) as of June 30,  2019.

Category F: Utilities. Of the $588.5 million FEMA obligated for  permanent work projects, $505.6 million (86 percent) was obligated  for 23 projects focused on repairing utilities, 13 of which included  hazard mitigation measures totaling about $378.2 million.  Specifically, FEMA obligated $481.8 million—or 95 percent of the  $505.6 million—through the standard Public Assistance program for  projects focused on territory-wide permanent electrical distribution  system repairs. This includes replacing damaged wooden utility poles  with more resilient composite fiberglass poles that can withstand 200  mile per hour winds as well as power transmission lines and  transformers (see fig. 12). Of the $505.6 million FEMA obligated for  category F, the USVI expended about $210.4 million (42 percent) as  of June 30, 2019.

Category G: Parks, recreational, and other facilities. As of June 30,  2019, FEMA obligated about $8.8 million for 36 projects focused on  repairing parks, playgrounds, and other facilities, 5 of which included  hazard mitigation measures totaling about $214,000. For example,  FEMA obligated about $1.5 million in March 2019 for two projects to  repair the USVI’s Tsunami Early Warning System, which comprises a  network of warning stations that alert residents of a potential tsunami  event (see fig. 13). As of September 2019, these were the only  projects FEMA had obligated under the Public Assistance alternative  procedures program in the territory, according to FEMA officials.  These projects included about $185,000 for hazard mitigation  measures to replace wooden poles with higher-rated steel poles that  are able to withstand high winds and impacts from flying debris during  a storm. Of the $8.8 million FEMA obligated for category G, the USVI  expended about $246,000 (3 percent) as of June 30, 2019.

Appendix II: Status of Hazard Mitigation Grant Program Funding in the U.S. Virgin Islands

As of June 30, 2019, the Federal Emergency Management Agency  (FEMA) obligated about $60.6 million for 22 Hazard Mitigation Grant  Program projects in the U.S. Virgin Islands (USVI) and the USVI  expended about $1.7 million (3 percent) across 5 projects. Unlike Public  Assistance program projects that, in many cases, are focused on rapidly  providing emergency services or repairing critical disaster-damaged  infrastructure and systems, Hazard Mitigation Grant Program projects are  designed to fund a variety of measures to increase the longer-term  resilience of the USVI’s infrastructure during future disasters. Information  on selected Hazard Mitigation Grant Program projects in the USVI that  received obligations as of June 30, 2019, is detailed below.

Virgin Islands Territorial Emergency Management Agency and  Bureau of Information Technology Emergency Operations Center  and Safe Room Retrofit. FEMA obligated about $22.5 million to fund  the retrofit of the USVI Territorial Emergency Management Agency’s  Emergency Operations Center. The new facility will serve as the  headquarters for both the USVI Territorial Emergency Management  Agency and the USVI Bureau of Information Technology and house a  911 Emergency Call Center. According to FEMA documentation, the  facility will include a safe room to allow emergency personnel to  shelter in place during disasters and will contain sufficient space to  house FEMA and other federal personnel, as necessary. Further, the  facility will include a hardened communications system to ensure  emergency responders are able to effectively communicate during  emergency events, among other improvements.

The Comprehensive Territorial Hazard Mitigation and Resilience  Plan Project. FEMA obligated nearly $5.0 million to fund the  development of an in-depth, comprehensive hazard mitigation and  resilience plan for territory-wide use. FEMA officials stated that unlike  in the contiguous United States, the USVI does not have any entities  responsible for formally developing similar plans to guide operations  and mitigation activities across various sectors, such as protecting the  potable water supply and assessing economically feasible options for  development. As a result, FEMA officials told us that this project  represents an important effort to develop a holistic, territory-wide  hazard mitigation plan that would cover all relevant sectors.

The Spring Gut Watershed Green Space Acquisition and  Stormwater Management Project. FEMA obligated nearly $1.0  million to fund the first phase of a $2.0 million project to purchase 50  acres of undeveloped land and develop storm water retention  measures—such as berms and rock linings—to reduce downstream  flooding and the associated damages to roads, homes, and  infrastructure (see fig. 14). FEMA officials told us that the first phase  of the project included an environmental and historical preservation  review of the target locations to confirm program eligibility before  actual construction activities can begin.

Fortuna/Bordeaux Fire Station Retrofit. FEMA obligated more than  $470,000 to fund the first phase of a nearly $5.0 million project to  retrofit a fire station in St. Thomas. Specifically, the project will  upgrade the facility’s structure to applicable codes and standards to  mitigate the risks posed by hurricane-force winds, including the  dangers posed by flying debris. Further, the retrofit will include the  installation of a steel-reinforced concrete safe room and a back-up  emergency power generator to ensure the safety and protection of  emergency personnel and the continuity of emergency response  activities during a disaster, according to FEMA documentation.

Appendix III: The Governor Juan F. Luis Hospital and Medical Center in St. Croix, U.S. Virgin Islands

The Governor Juan F. Luis Hospital and Medical Center (JFL hospital) in  St. Croix provides an illustrative example of the processes and challenges  associated with developing and implementing Public Assistance program  projects in the U.S. Virgin Islands (USVI). In September 2017, Hurricane  Maria’s strong winds and torrential rains caused severe damage to the  facility’s roof; heating, ventilation, and air conditioning system; and  electrical, water, and sewage systems, according to Federal Emergency  Management Agency (FEMA) documentation. Further, the infusion of  water—both during and after the storm—saturated the interior of the  hospital, destroyed medical equipment and hospital furnishings, and  facilitated the growth of hazardous mold. Figure 15 details selected  hurricane damage to the facility.

Due to the extensive damage, the JFL hospital has been operating at  reduced capacity since the hurricane and certain functions have been  relocated to undamaged areas, according to FEMA documentation. This  documentation states that while the hospital continues to provide limited  medical services to St. Croix residents, it is no longer capable of providing  critical care services. Since alternate options were either limited or  unavailable on the island following the storms, St. Croix residents in need  of life sustaining medical treatments such as chemotherapy infusions or  who are experiencing life-threatening health events such as cardiac  failure or trauma must be transported out of the territory to receive life- saving care, according to FEMA documentation.

Public Assistance Program Emergency Work Projects at the JFL Hospital

Following Hurricane Maria, FEMA obligated grant funding for several  Public Assistance emergency work projects to help keep the JFL hospital  functioning and capable of providing limited medical services to St. Croix  residents. For example, in August 2018, FEMA obligated $119,000 in  grant funding to reimburse the JFL hospital for the use of an emergency  backup generator through Public Assistance program category B, which  provides funding for emergency protective measures. According to JFL  personnel, this funding covered the cost of using the backup generator  until the facility’s primary electrical system could be restored. In another  example, FEMA obligated about $2.4 million in August 2018—also  through Public Assistance program category B—to fund the rental of  mobile dialysis trailers (see fig. 16). According to JFL personnel, these  trailers were acquired to replace all 14 of the facility’s dialysis units that  were destroyed during the storm.

In addition to Public Assistance projects focused on maintaining the  existing facility, FEMA obligated $43.2 million in January 2018 to fund the  purchase and installation of modular units to serve as a temporary  medical facility through category B emergency work. According to FEMA  documentation, this temporary facility is intended to provide critical  medical services to St. Croix residents—including an emergency room,  pediatric care, a labor and delivery ward, and an intensive care unit,  among other services—until a permanent facility is completed (see fig.  17). JFL personnel told us that completing this project is a key priority as  it will enable them to transition all medical services from the main facility,  which continues to deteriorate over time. However, they stated that  implementing this project has been challenging.

For example, JFL personnel told us that when former JFL administrators  were developing the project, they incorporated the cost of procuring and  installing the modular units, but omitted the costs associated with  acquiring, installing, and certifying new medical equipment for use in the  interim facility. These personnel stated that these costs should have been  incorporated into the original project paperwork and clarified that the  acquisition and certification of new equipment was critical in ensuring the  hospital’s provision of medical services would not be disrupted.  Specifically, they explained that relocating the facility’s existing medical  equipment was not a feasible option as it would result in an unacceptable  lapse in medical services during the time-consuming process of  deconstructing, transferring, reinstalling, and recertifying this equipment in  the modular facility. JFL personnel stated they worked closely with  FEMA officials and contractor personnel to update the project’s  paperwork and request additional program funding for this new medical  equipment. In August 2019, FEMA approved the updated paperwork and  obligated additional funding for this project, according to FEMA  documentation.

JFL personnel also stated they have limited capacity to effectively  manage and oversee the construction of the temporary facility due to  competing responsibilities. In addition to managing this project, they  stated they were occupied with the continuous maintenance challenges  associated with keeping the deteriorating main facility functioning while  also working to develop options for a permanent facility through the Public  Assistance alternative procedures program, as discussed below. They  told us FEMA officials and contractor personnel had been helpful in  providing assistance, but stated they would benefit from a larger hospital  management team that could focus specifically on planning and  implementing the facility’s numerous recovery efforts. As of July 2019,  JFL personnel stated their aim is to officially open the temporary facility in  the spring of 2020.

Public Assistance Alternative Procedures Permanent Work at the JFL Hospital

In conjunction with the temporary facility’s construction, FEMA officials  and JFL personnel are working to develop a permanent work project  under the Public Assistance alternative procedures program to replace  the damaged hospital. Further, in providing a critical service, the JFL  hospital is eligible to use the new flexibilities provided by the Bipartisan  Budget Act of 2018. This Act allows FEMA—when using the alternative  procedures—to fund the repair or full replacement of the hospital to  accepted industry standards regardless of any pre-disaster damage or  wear and tear the facility may have sustained prior to the 2017  hurricanes. FEMA officials and JFL personnel stated the Act therefore  provides a valuable opportunity to restore the facility to a better condition  than it was in prior to the storms. However, JFL personnel told us that  pursuing this permanent work project included challenges. For example,  JFL personnel told us that maintaining the damaged facility while FEMA  determined whether the hospital was eligible for repairs to the existing  structure or a complete replacement under the Bipartisan Budget Act was  challenging. Specifically, they explained that while FEMA worked to  finalize this determination, management was in the difficult position of  deciding where and how to invest its finite resources to keep the  constantly deteriorating facility functioning. For example, these personnel  explained that if FEMA determined that the facility is ineligible for  replacement under the Act, they would immediately invest money into the  existing facility to address critical components that require urgent  attention, such as the water and wastewater systems. In contrast, if  FEMA determined that the facility is indeed eligible for replacement,  management would strategically invest the minimum amount of resources  required to keep the facility functioning with the full knowledge that it  would eventually be demolished. Figure 18 details selected examples of  temporary fixes JFL personnel implemented to keep the facility  functioning.

In May 2019, FEMA officially determined that the JFL hospital was eligible  under the Bipartisan Budget Act of 2018 for a complete replacement  through the Public Assistance alternative procedures program. JFL  personnel told us they are working with FEMA officials and medical  industry experts to ensure that they take advantage of the flexibilities  provided by the Bipartisan Budget Act when developing the project. As of  July 2019, these personnel explained they are in the early stages of  working with FEMA officials and territorial stakeholders to assess options  for the replacement facility and are designing a strategy to ensure the  future hospital is able to sufficiently address the healthcare needs of USVI  residents.

Appendix IV: Comments from the Department of Homeland Security

Appendix V: GAO Contact and Staff Acknowledgments

Chris Currie, (202) 512-8777 or curriec@gao.gov.

In addition to the contact named above, Joel Aldape (Assistant Director),  Bryan Bourgault (Analyst in Charge), Aaron Gluck, Eric Hauswirth, Brian  Lipman, Amanda Miller, Heidi Nielson, and Kevin Reeves made key  contributions to this report.

In September 2017, two major hurricanes hit the U.S. Virgin Islands, causing billions of dollars in damage. In response, the Federal Emergency Management Agency provided more than $1.9 billion in grant funding to help repair damaged infrastructure, among other efforts.

FEMA also expanded a pilot program that funded home repairs to allow survivors to shelter in their homes because other emergency shelters weren’t available. FEMA has since decided not to use this program in the future because it was slower to provide help than expected. However, FEMA has not evaluated emergency shelter options for future disasters. We recommended it do so.