Sen. Chuck Schumer and local politicians gathered in Port Washington on Tuesday to push for the Federal Emergency Management Agency not to take back more than $10.5 million in superstorm Sandy money that federal audits questioned.
In audits released in September, the Office of Inspector General for the Department of Homeland Security, which oversees FEMA, scrutinized spending and contracts awarded by the Town of North Hempstead and Long Beach public schools.
The audit of North Hempstead recommended FEMA should recover $9.9 million in disaster recovery funds that were “ineligible, unsupported or unused.” The report questioned contracts for debris removal, duplicate costs, insurance benefits and documentation for equipment use.
The inspector general also recommended FEMA disallow $668,430 in costs awarded by Long Beach schools because a contractor tagged on overhead and profits in violation of federal rules.
Schumer said the costs were previously “deemed reasonable by FEMA” and should not fall on local taxpayers to repay unless fraud is uncovered.
“Most of the dollars were already spent,” Schumer said. “To make matters worse, they were already approved by FEMA.”
In a letter sent Tuesday to FEMA Administrator W. Craig Fugate and regional administrator Jerome Hatfield, Schumer said the agency “should set aside the [inspector general’s] recommendations and not claw back millions in costs from North Hempstead and the Long Beach School District.”
The audit recommendations are not binding and FEMA has until Oct. 31 to respond to the North Hempstead report and Nov. 30 for Long Beach.
Auditors evaluate if federal rules are followed and they are privy to published guidance, not what applicants may have been told, said William H. Johnson, the inspector general’s eastern region audit director.
“When you accept federal dollars you have to accept the rules of federal procurement,” he said.
FEMA spokesman Don Caetano said the agency had not yet filed a response to either audit.
“We continue to work with federal, state and local officials to address the compliance issues in both these cases,” he said in an email. “We look forward to a resolution in each case.”
When the audit for North Hempstead was released, town officials said it was shoddy, politically motivated and misleading. The town never received millions of dollars the audit said should be recovered or disallowed because claims were fixed before they were paid or they were never paid at all, North Hempstead Town Supervisor Judi Bosworth said.
The town received $36.6 million for 30 projects but the inspector general’s office audited four of those projects totaling $20.9 million.
“We followed FEMA procedures and we were careful custodians of the FEMA relief funds,” Bosworth said.
Chief among the concerns was $4.8 million spent for three debris removal contracts. In some cases the town paid costs for time-and-materials contracts longer than the 70-hours federal regulations allow, Johnson said.
Those type of contracts — which can bill by the hour — are expected right after a storm to get work done quickly but are discouraged after the immediate danger has passed. “There really is a disincentive to conserve costs,” Johnson said. “The longer it takes to do something the more you will be able to bill.”
One North Hempstead debris removal contract ran from January 2013 through September of that year. The town also did not have provisions in place to provide business opportunities to disadvantaged firms, the audit said.
In Long Beach, the inspector general’s office audited $17.1 million worth of spending by the school district, recommending FEMA disallow $668,430 in costs because a contractor tagged on 20 percent for overhead and profits in violation of federal rules.
School Superintendent David Weiss said the district consulted with FEMA about its contracts and believed it had done nothing wrong.
“We worked closely with the FEMA team and followed their direction,” Weiss said. “We can’t afford to replace that money without otherwise tapping into reserves, which affects students.”