Report: FEMA mismanaged $8.1B in COVID grants

There seems to be ample evidence of massive fraud and waste associated with the COVID-19 pandemic.

FEMA’s Public Assistance Program was no exception to the rule.  During fiscal years 2020–2023, insufficient oversight of the Federal Emergency Management Agency’s COVID-19 emergency protective measures grants resulted in significant financial mismanagement, according to a January 30, 2025 Department of Homeland Security Office of Inspector General (DHS OIG) report.

The DHS OIG investigation found that FEMA over-obligated $1.5 billion for one state’s medical staffing grant and failed to determine the cost allowability of $8.1 billion in funds drawn by the state.  The state in question is not named in the report.  Additionally, a review of six other grants revealed $32.8 million in improper payments during this period.

FEMA administers its emergency protective measures funding through the Public Assistance Program, which is intended to reimburse communities for disaster response and recovery efforts.  However, FEMA did not adhere to established federal requirements (the Stafford Act) when allocating these funds.  For example, it failed to validate the reasonableness of cost estimates before obligating funding. According to the report,

federal regulations require FEMA to “determine whether the applicant, facility, scope of work, and cost for Public Assistance projects are eligible for reimbursement before approving and obligating funds.

The DHS OIG attributed these failures to the “unprecedented circumstances” of the COVID-19 pandemic.  As a result, FEMA allegedly introduced a more “streamlined process” to accelerate the process of distributing COVID-19 money.  The grants in question represented approximately 14% of the $69 billion FEMA obligated nationwide by the end of FY2023.

Specific shortcomings included

• a lack of itemized budget estimates.
• insufficient reviews or documentation of cost estimates.
• a failure to validate costs against industry standards.

The OIG’s analysis of 20 large projects totaling $58 million revealed that six projects (56%) totaling $32,796,131 lacked adequate documentation to justify work completion.  FEMA prioritized rapid fund distribution over thorough oversight, with staff instructed not to conduct detailed reviews.  Staff were allegedly told to “not do a deep dive” when reviewing cost eligibility.  Instead of formal documentation, informal communications such as emails and phone calls were often accepted as evidence.

The six projects shown with examples of missing documentation can be found in Appendix D, page 28 of the report:

FEMA denied that it attempted to “delay action to recoup unsupported costs,” as stated in the report.  FEMA contends that it “tested” 36 disbursements for FYs 2021 and 2022, totaling $6.854 billion, and “validated $6.786 billion or 99 percent of assessed disbursement dollar value as proper.”

FEMA has agreed with all seven of the OIG’s recommendations and has complied with all but two of them.  In addition, FEMA has already “de-obligated $500 million after a discussion” with the OIG “about the high balance of unliquidated obligations.”

As previously stated, two of the OIG’s recommendations remain unresolved.  Recommendation two calls for a complete review of “unliquidated obligations for all COVID-19 project worksheets,” but FEMA contends that the issue should be considered “closed and resolved.”  Recommendation three asks for an “incurred cost audit of all expenditures for the state medical staffing project worksheet,” and FEMA has committed to completing this audit by June 30, 2025.

https://www.americanthinker.com/blog/2025/02/report_fema_mismanaged_8_1b_in_covid_grants.html