Tulane misuses $13 million of FEMA funding after Hurricane Katrina, OIG audit states

Kate Jamison, Print News Editor

A recent audit done by the Office of Inspector General of the U.S. Department of Homeland Security found that the Federal Emergency Management Agency should reclaim $13 million from Tulane for unsupported equipment and contractor costs. The university received a $291.9 million public assistance award for damages caused by Hurricane Katrina in August 2005. 

The FEMA award provided 100 percent funding for 497 projects. The audit states FEMA should reclaim $6.8 million for unsupported labor, equipment and fuel costs, $3.8 million for ineligible equipment billed at rates greater than what the contractor specified and an additional $2.3 million for discounts that the contractor did not apply, fuel markups and items that were billed twice. 

“These findings occurred because the contractor could not show that it actually incurred the costs that it billed Tulane,” the audit states. “Tulane did not ensure that its contractor’s billings were valid, eligible, and supported; and Louisiana, as the grantee, did not effectively execute its responsibilities to ensure compliance with federal regulations and FEMA guidelines.”

The audit, released on Oct. 8, is the third in a series of special audits issued in response to Tulane’s use of FEMA funding. The Hullabaloo covered the previous two audits in September 2013. OIG audited $36.1 million of FEMA funding in the third audit. 

In a statement released in response to the audit on Nov. 3, Executive Director of Public Relations Michael Strecker said Tulane used the award appropriately in accordance with FEMA’s guidelines. 

“Tulane disagrees with the findings and recommendations in the report from the Department of Homeland Security’s Office of the Inspector General,” Stecker said in a statement. “Following this unprecedented natural disaster, Tulane worked collaboratively with FEMA throughout the massive effort to repair its campuses, including 80 damaged buildings. The university worked diligently to secure contracts that were able to meet the aggressive schedule and to do so at fair and reasonable prices.”

Strecker said Tulane has produced the invoices and records that OIG needed for the audit. 

“Tulane has cooperated with the OIG audit, begun six years after Katrina, to support its procurement practices, to substantiate its invoices and to demonstrate that Tulane’s response was appropriate,” Strecker said. 

According to the audit, Tulane was unable to produce contractor invoices necessary to the auditing process. OIG requested that Tulane ask the contractor for the records, but the contractor refused to give Tulane the records. OIG eventually subpoenaed the records.

The contractors and subcontractors were not able to produce records to support or justify the amount they charged Tulane for the projects. A significant portion of the costs Tulane’s contractor billed did not appear valid, prompting OIG to suggest that Louisiana review all costs Tulane incurred to verify that they were valid, eligible, documented and reasonable. 

“Tulane is appreciative of the funds awarded by FEMA and continues to work with FEMA to demonstrate how FEMA’s original conclusions were correct and that the costs incurred in rebuilding the university were fair and reasonable, and appropriately documented under the circumstances prevailing at the time of the disaster,” Strecker said.

To read The Hullabaloo’s coverage of the previous OIG audits and to see the audit in full, visit the links below:

https://www.tulanehullabaloo.com/archives/article_cb09766d-2e04-5230-8a1f-5652ed2b5710.html

http://www.oig.dhs.gov/index.php?option=com_content&view=article&id=25&Itemid=38

http://www.oig.dhs.gov/assets/GrantReports/2015/OIG_15-01-D_Oct14.pdf