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Public Contract Law Journal

Public Contract Law Journal Vol. 51, No. 4

Raising the Alarms for Fraud and Abuse: Improving Federal Emergency Acquisition Processes

Cathie Chen


  • Provides an overview of emergency acquisition regulations as well as explain how these provisions are used during national disasters.
  • Examines a case study on emergency acquisitions post-Hurricane Katrina.
  • Proposes potential measures that could be implemented to reduce waste, fraud, and abuse in emergency acquisitions.
Raising the Alarms for Fraud and Abuse: Improving Federal Emergency Acquisition Processes
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With the rise of natural disasters, the federal emergency acquisition system is being used on a more frequent basis. Yet, there are troubling gaps within the emergency acquisition process that allow for potential waste and fraud at a time when speed and efficiency are needed the most. In particular, Hurricane Katrina demonstrates how waste and fraud can be introduced when full and open competition standards are reduced. Various mechanisms for reducing fraud are in place but need strengthening to see additional progress. This Note builds on existing efforts to limit fraud post-disasters and proposes additional analysis to be conducted by the U.S. Government Accountability Office (GAO), and stricter measures before and after disasters that would further reduce fraud in the emergency acquisition system.

I. Introduction

Since the late twentieth century, there has been a dramatic increase in the frequency of natural disasters. In the last four decades, the Emergency Events Database, which collects international disaster data, recorded an almost three-fold increase in the frequency of natural disasters with a similar three-fold increase in the number of Category 5 storms. In the United States, the frequency of natural disasters has increased six-fold for hurricanes that reach landfall and populated areas, from a single Category 2 hurricane in 1990 to six hurricanes, of which more than half were Category 3 or greater, in 2020. This increase in category directly correlates to an increase in potential property damage, with Category 3 and above hurricanes having significantly longer-lasting impacts on affected communities and being classified as major hurricanes under the Saffir-Simpson Hurricane Wind Scale.

Earthquakes and wildfires similarly take an enormous toll on the West Coast. In 2020, wildfires burned more than four million acres in California, doubling the previous record of approximately two million acres that was set a year prior in 2019. These combined statistics suggest that, in addition to the increase in number of natural disasters, the severity and need for emergency governmental assistance has similarly increased, resulting in billions of dollars earmarked per year for post-disaster grants and relief.

While the current federal emergency acquisition system has provided assistance to victims of natural disasters, prior instances of natural disaster recovery efforts indicate room for improvement. This Note examines the current emergency acquisition processes and looks to identify opportunities to minimize fraud and abuse in the system. The private sector plays an arguably more important role in federal emergency acquisition than it normally does in regular government procurement because of the need to quickly respond to and help communities recover from natural disasters. Due to the large dollar amounts spent in this specific area annually, it is important to balance the need to handle emergency acquisitions in an efficient, effective, and accountable manner with the need to deliver goods and services quickly. Although achieving this balance may be difficult, the need for urgency in emergency acquisitions should not excuse poor contracting practices.

To cure this defect, stricter enforcement of emergency acquisitions, such as increased use of suspension and debarment, the review of legislation, and changes to simplified acquisition thresholds, could be leveraged to increase the effectiveness of emergency appropriations. In addition, there should be a re-examination of available emergency acquisition data from past disasters to sufficiently update executive administrative guides. This re-examination should emphasize a balance between combatting fraud with helping communities respond to and recover from disasters.

Part I of this Note provides an overview of the emergency acquisition regulations and how they differ from the ordinary acquisition system, as it stands today. Part II describes how the federal government, primarily through the Federal Emergency Management Agency (FEMA), utilizes regulations during natural disasters, while Part III details a case study on emergency acquisitions post-Hurricane Katrina. This section analyzes responses and reactions to emergency acquisitions since Hurricane Katrina. The Note concludes by looking at potential measures that can be implemented to reduce waste and the fraud described in Part IV.

II. Overview of the Federal Acquisition Regulations and Government Procurement

A. Ordinary Acquisitions Processes Under the Federal Acquisition Regulations and Other Legislation

The government procurement system, based on the Armed Services Procurement Act of 1947 and the Federal Property and Administrative Services Act of 1949, is guided by the Federal Acquisition Regulation (FAR) and the Competition in Contracting Act (CICA) of 1984. The federal acquisition process can generally be broken down into three steps. First, the agency determines its requirements, selects the appropriate method for procuring the goods or services, and starts the solicitation. Second, the agency evaluates each offeror’s submission using the source selection method and criteria described in the original solicitation. Third, after a finding of responsibility, the contract is awarded to a specific private business, and contract performance and contract administration begin. CICA’s full and open competition standards for competitive mandates and other competitive requirements, summarized in FAR 6, apply to all contracts exceeding $25,000, unless there is an applicable exception.

The FAR also defines specific dollar limits for certain categories of thresholds. For example, the micro-purchase threshold is usually limited to $10,000, and the simplified acquisition threshold is usually limited to $250,000. These thresholds allow the agency to use a simplified acquisition procedure set out in FAR 13.

On the contractor side, private businesses that want to compete for federal government contracts must “use the Unique Entity ID created in” SAM helps establish a common database of vendor data for all agencies. Within’s search capabilities, Contracting Officers are able to view contractor-specific personnel and award records, wage determinations, and past performance information—such as exclusions.

B. Federal Emergency Acquisition Processes Under the Federal Acquisition Regulations and Other Legislation

In contrast, FAR 18 is dedicated to federal acquisition processes during times of emergency. FAR 18.001 expressly includes major natural disasters and presidentially declared emergencies as falling under FAR 18. While FAR 18 permits flexibilities in emergency situations, it does not waive the requirements relating to proper practices and personal conflicts of interests detailed in FAR 3.

One of the first provisions under FAR 18 asserts that private businesses do not have to be registered in “at the time of submission of offers or quotations for (1) [c]ontracts awarded without providing for full and open competition due to unusual and compelling urgency; or (2) [c]ontracts awarded by a contracting officer… [i]n the conduct of emergency operations.” Instead, registration in is only required post-solicitation. However, prior registration in SAM is required if the business wants to be included as an entity in the Disaster Response Registry. Contracting Officers are required under the FAR to consult the Disaster Response Registry “to determine the availability of contractors for debris removal, distribution of supplies, reconstruction, and other disaster or emergency relief activities inside the United States and outlying areas,” making it a bonus for businesses to sign up ahead of time.

In addition, another notable allowance in an emergency acquisition includes how “[a]gencies may limit the number of sources and full and open competition” in urgent situations by soliciting from a single source or use of a brand name specification. However, the rationale for why the agency decided to forgo full and open competition must be documented at the time of the decision. Similarly, agencies are given discretion as to whether to “enforce qualification requirements when an emergency exists.” This discretion can be exercised before or after the contract is awarded as long as the agency head documents a concurrent written justification.

Simplified acquisition procedures may also be expanded to commercial item acquisitions—contracts that do not exceed $7.5 million as opposed to the usual limit of $150,000. While FAR 12 policies and procedures apply, which include procedures for evaluation and solicitation, the wait period after notice and before issuance of a solicitation may be reduced if an emergency is declared. The Contracting Officer may also allow for less than a thirty-day response time for receipt of offers. Combined, these allowances are major exceptions to the generally required CICA requirements for full and open competition.

For micro-purchases of $3,000 or less, a purchase card may be used as an acquisition method, and a written contract is not necessary. The Service Contract Act does not apply to purchases of $2,500 or less, and the Davis-Bacon Act does not apply to purchases of $2,000 or less. As a result, construction contracts, for example, may pay laborers less than the prevailing wage. However, the head of an agency may increase the micro-purchase threshold “to support response to an emergency or major disaster.” Likewise, for purchases under the simplified acquisition threshold, which are normally purchases between $3,000 and $150,000, the threshold may be increased for the same purpose by the head of agency. Various flexibilities are provided in bid solicitation as detailed above.

Other solicitation requirements, such as written requests for proposal (RFPs) may be waived during emergencies. FAR 18.111 allows oral RFPs to be made when “written solicitation would delay the acquisition of supplies or services to the detriment of the Government and a notice is not required under [FAR] 5.202.” In addition, response time may be less than thirty days, provided the response time is reasonable, and the contracting activity does not have to adhere to the ninety-day notice requirement. However, during these situations, the Contracting Officer must notify the agency in writing as to the reasons why it cannot meet the notification requirement at the time of change.

Other legislation provides guidance on emergency acquisitions as well. For example, Local Community Recovery Act of 2006, gives preference “to local organizations, firms, and individuals when contracting for major disaster or emergency assistance activities when the President has made a declaration under the Robert T. Stafford Disaster Relief and Emergency Assistance Act. Preference may take the form of local area set-asides or an evaluation preference.” Local preference has since been written into the FAR. This legislation allows contractors residing or doing business in the same affected area to compete for work, helping simultaneously reboot the local economy.

Contracting Officers are allowed to choose whether or not to determine evaluation preferences based on locality, with the Contracting Officer defining the meaning of “local” for the geographic area impacted by the disaster. In addition, Contracting Officers can set aside contracts for small businesses within the “local” area as defined, further narrowing the scale of competitors down without separate justification. Because Contracting Officers are permitted to set aside contracts based on locality, CICA’s normal full and open standards are bypassed. However, Contracting Officers may evaluate all offers with an evaluation preference for local firms, which does not limit the range of private businesses that can compete.

C. Specific Considerations for Debarment and Suspension in the Federal Acquisition Regulations

When evaluating contractor performance, the agency, through its suspension and debarment officials, is given discretion as to when suspending or debarring contractors is in the government’s best interest. There is no difference in the current regime between suspension and debarment in emergency acquisitions as opposed to ordinary acquisitions.

Each executive branch department usually has a Suspension and Debarment Office that oversees and protects the department from fraud, waste, and abuse. The offices may further categorize suspension and debarment as either statutory or discretionary. Statutory suspension and debarment “refer[s] to congressional enactments . . . created by Congress to further statutory compliance or enforcement schemes,” whereas discretionary suspension and debarment are based on the FAR 9.4 and are “reciprocal to all the Executive Branch agencies.”

FAR 9.402 explicitly describes suspension and debarment as “serious” measures that should not be used for “purposes of punishment.” Contracting Officers are required to insert the suspension and debarment clause in contracts for which the total value exceeds $35,000.

The existence of a cause for debarment alone is not enough to result in a contractor’s debarment. Agency officials are given a list of factors and causes to consider when deciding whether suspension and debarment is proper as opposed to a lesser penalty, including whether the company took remedial steps, cooperated with the government during investigations, or the “management recognize[d] and [understood] the seriousness of the misconduct giving rise to the cause” and implemented prevention programs.

Similarly, the FAR emphasizes that suspension must be “imposed on the basis of adequate evidence, pending the completion of investigation or legal proceedings, when it has been determined that immediate action is necessary to protect the Government’s interest.” Evaluating whether adequate evidence has been presented for suspension requires consideration of “how much information is available, how credible it is given the circumstances, whether or not important allegations are corroborated, and what inferences can reasonably be drawn as a result. This assessment should include an examination of basic documents such as contracts, inspection reports, and correspondence.”

D. Emergency Acquisitions Allowances That May Invite Waste and Fraud

One of the main issues present in emergency acquisitions is the potential for bypassing full and open competition requirements. There is evidence that points to “reduced performance, increased costs, and decreased public trust in the procurement process” in contracts that are awarded through noncompetitive procedures. While the FAR sets out requirements, such as documented justifications for when the agency or Contracting Officer is making discretionary choices, there are specific steps along the way that present an increased risk for waste and fraud.

One of the first of these high-risk steps in the emergency acquisition process is the non-requirement for all emergency contractors to register in’s database prior to bidding. Requiring registration on the database even during emergency situations might allow agencies to better evaluate a contractor’s prior performance and risk to the government prior to contract award. One of the fields in the database is exclusions, which checks an entity’s Unique Entity ID against exclusion records. By waiving this requirement, bad actors are occasionally granted awards for which they are unqualified, and Contracting Officers may not realize this concern until the solicitation process has concluded, necessitating another round of solicitations. Given the need for rapid response and the urgent need for relief post-disaster, potential resolicitation has the overall effect of hindering and negatively impacting critical emergency response and recovery efforts.

Similarly, allowing agencies to adjust the micro-purchase threshold and simplified acquisition threshold for emergency acquisitions opens the door to abuse of the system. At the upper end of the micro-purchase and simplified acquisition thresholds, there could be purchases that are approved using a simplified acquisition procedure that are fifty times the threshold permitted under normal simplified acquisition procedures.

Oral RFPs are normally limited to contracts with a value of up to $30,000 in non-emergency situations. While speed is necessary for soliciting and awarding contracts post-disaster, the expanded use of oral RFPs further limits full and open competition to the government’s detriment.

Lastly, the preference given to local businesses for post-disaster response and relief may be too broad. A business is considered local if, in the past year (1) the business operated mainly in the area, and (2) the local office generated at least half of the business’s gross revenues and employed the majority of its permanent employees. Additional factors can be considered by the Contracting Officer if a business does not meet the above criteria. While businesses are required to self-certify if they are local, the discretion Contracting Officers have in defining “local” is overly broad. For example, if a hurricane makes landfall in three states, causing damage in each, a Contracting Officer has the discretion to nonetheless define “local” as applying to only one of the three states or expanding the definition to apply to all three.

III. The Federal Emergency Management Agency’s Responses to Natural Disasters

The Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act) gave FEMA the responsibility of responding to and helping recovery efforts in response to disasters. More specifically, the Stafford Act authorizes the President to direct federal resources to address immediate threats to life and property resulting from a major disaster. The Stafford Act has been incorporated into FAR 18.

FEMA itself was created by President Jimmy Carter’s executive order in 1979 and immediately took on responsibilities ranging from responding to disasters to preparing civil defense plans if war broke out. In 2003, FEMA was incorporated into the newly created Department of Homeland Security along with twenty-one other organizations.

For a major disaster to be declared, the state governor must first make an official request for a disaster declaration based on state and local damage assessments. While FEMA can make recommendations, only the President can declare a disaster. After an emergency or natural disaster has been declared by the President, the burden then shifts to FEMA to take charge over the physical and financial situation. FEMA liaises between different federal agencies, states, local governments, and private businesses to distribute supplies, manage resources, and execute a response and recovery plan.

FEMA’s direct disaster relief can generally be summed up in three categories: (1) housing, (2) medical assistance, and (3) property recovery. For housing, FEMA supplies grants for individuals to cover rent or provides a government housing unit, home repairs, and replacements for uninsured homes that are completely destroyed. For medical assistance, FEMA helps with medical treatments and prescriptions when necessary, covers dental bills, and most importantly, helps defray the cost of funeral expenses related to the disaster. For property recovery, FEMA assists with removing debris, repairing and rebuilding infrastructure such as bridges and sewage lines, and storing, transporting, and replacing personal property.

In addition to direct disaster relief, FEMA oversees the federal disaster relief, which is divided into fifteen Emergency Support Functions (ESFs). During emergencies, different federal agencies may lead different ESFs, while FEMA is the purser who helps distribute appropriations.

Congress appropriated approximately $121.7 billion in hurricane relief from 2005 to 2008 for five different hurricanes. Of the total appropriation, forty-four percent ($53.8 billion) of the funding went to the Department of Homeland Security. Most of these funds were later administered by FEMA through its Disaster Relief Fund (DRF), which funds recovery and disaster preparedness projects and reimburses other federal agencies for their work as well. FEMA is required by statute to report obligations, allocations, and expenditures for hurricanes, including Katrina, Rita, and Wilma, to Congress. This requirement forces FEMA to be accountable with its emergency acquisitions.

However, “scant data exist,” and reporting has not been required for other emergencies and major disasters nor other federal agencies, which often receive more than half of hurricane relief appropriations.

IV. Analyzing Hurricane Katrina as a Case Study

One of the most recent and prominent natural disasters in United States history is Hurricane Katrina. In August 2005, Hurricane Katrina made landfall on the Gulf Coast, causing catastrophic damage after “killing over 1,000 people and obliterating homes and entire towns through wind and rain damage, flooding, and the destruction of roads, bridges, and water and sewer lines.” It is estimated that Hurricane Katrina caused approximately $100 billion in property damage.

Even though disaster analysts and weather forecasters warned government officials about Hurricane Katrina, FEMA, along with other governmental agencies, was not prepared to handle the scale of response and recovery efforts required in Katrina’s wake. Hurricane Katrina exposed failures in the federal government’s disaster preparedness and response systems, many components of which centered around federal procurement, leading to “significant reevaluation of the execution of federal disaster response efforts and resource allocation.”

A. FEMA’s Response in Hurricane Katrina

Even though FEMA’s role as a post-disaster organizer is well-recognized, organization is not a word anyone would associate with the disaster response following Hurricane Katrina. Some of the key criticisms launched against FEMA focused on the confusion and indecision over responsibilities under the National Response Plan and National Incident Management System due to inexperienced officials, notable communications breakdown between federal agencies, general failure to timely provide supplies, improperly blocking private relief efforts, and well-publicized cases of fraud and abuse. Some of these areas are further explored below.

B. Criticism over Waste and Fraud Following Hurricane Katrina

With the shock of such a widescale disaster came the public scrutiny and outcry over disaster relief efforts. Congress was quick to allocate Katrina aid. However, “[f]ederal auditors estimated that $1 billion or more in aid payments for individuals were invalid.” As of June 2006, 1,395 cases of alleged criminal activity related to Hurricane Katrina contracts, including cases of procurement fraud and abuse, were under investigation. In one case, two FEMA officials, Andrew Rose and Lloyd Holliman, pled guilty to accepting bribes from a food service contractor. Both officials admitted that they accepted a lump sum of $20,000 plus $2,500 per week to inflate the number of meals provided by a contractor when reporting to the agency. Artificially inflated data on the number and value of services provided in response to this disaster allowed private contractors to defraud the government, to the detriment of those in genuine need of critical assistance.

Focusing in on emergency acquisitions, some of the key aspects resulting in post-Katrina contract performance failures included the overly permitted use of reduced competition standards and the lack of formal contract performance monitoring. For example, only seventeen out of twenty-seven technical monitor positions meant to oversee the installation of temporary housing units were staffed. In addition, inconsistent monitoring only increases the risk of fraud and unfair evaluations, especially when one contractor is monitored while another contractor is not. In addition, out of the thirteen key contracts awarded, the Government Accountability Office (GAO) noted that agency officials in four contracts were unaware of their oversight responsibilities. This ignorance is particularly concerning because, when services are carried out at a rapid pace, having informed agency officials with knowledge of authorization requirements is needed to maximize efficiency.

When examining post-Hurricane Katrina acquisitions on a broader scale, contract mismanagement becomes even more evident. While exceptions to normal practices are expected during emergency situations such as in the case of a natural disaster, “the percentage of contract dollars awarded without full and open competition actually increased” as “the immediate emergency receded.” Immediately following Hurricane Katrina in September 2005, fifty-one percent of contracts were awarded through limited competition. This number increased to ninety-three percent in October 2005 and remained around fifty-six percent in December 2006, a full year from the hurricane. It makes sense that, immediately following a disaster, full and open competition standards might be lowered to increase the speed of contract performance. However, allowing the widescale use of limited competition standards to remain in place more than a year following a disaster seems to go against CICA’s competition policies and its respective FAR requirements.

Narrowing in on FEMA’s post-Hurricane Katrina emergency acquisitions response in Mississippi, FEMA provided up to 150,000 temporary housing units to Mississippi residents. Originally, FEMA awarded single-source contracts to four major firms for the set up and maintenance of these units and sites. Even a year removed from the disaster, FEMA awarded additional contracts at $250 million each to the same four contractors, notwithstanding that government auditors had found significant problems with the original contractors’ contract performance, management, and cost control. Following public criticism and investigations into the costs claimed by these four contractors, FEMA moved to a limited competition system in which it awarded an additional fifteen contracts for housing.

The GAO found that FEMA spent $30 million in wasteful or potentially fraudulent payments for the contracting of Mississippi’s temporary housing, which likely led to additional unnecessary spending for reprocurement or fixing of inadequate work. Of the $30 million, about half was attributable to the failure to include cost as a key factor in bid solicitations, and the other half was attributable to the approval of improper or potentially fraudulent invoices submitted by contractors. GAO’s report highlights the two key strategies to prevent fraud and abuse: oversight and competition.

In a separate report prepared by the Special Investigations Division of the House Committee on Government Reform, nineteen contracts are specifically pointed out as being involved in waste, abuse, and mismanagement. The cumulative estimated value of all contracts, as calculated from contract ceilings and the costs cited by federal auditors, is $8.75 billion. This total further emphasizes the staggering sum of appropriated funds that are not reaching their intended targets as a result of flaws in the procedural safeguards placed on emergency acquisitions.

C. Emergency Acquisition Reform Efforts Post-Katrina

President Bush promised to “make sure [taxpayer] money is being spent wisely. And [the government is] going to make sure that the money is spent honestly” following Hurricane Katrina. Recognizing the importance of preventing waste and fraud in emergency acquisitions, Representative Waxman (D-CA) and then-Minority Leader Pelosi (D-CA) introduced the Hurricane Katrina Accountability and Clean Contracting Act on September 20, 2005.

While the Hurricane Katrina Accountability and Clean Contracting Act bill was not ultimately passed, portions of it were incorporated into a broader piece of legislation designed to reform emergency management more generally, titled the Post-Katrina Emergency Management Reform Act of 2006. In addition to restructuring FEMA, an entire title is dedicated to preventing fraud, waste, and abuse.

The Post-Katrina Emergency Management Reform Act of 2006, unlike Representative Waxman’s bill, neither prescribes limitations on simplified acquisition thresholds nor directly prohibits certain actions. Instead, the fraud reform efforts center around agency heads promulgating standards and GAO conducting targeted reviews on post-disaster assistance. This focus introduces the potential for updating emergency acquisitions legislation to better reflect changes in emergency acquisition and initiate a more complete review process by Congress that goes beyond GAO reports. Even years after Hurricane Katrina, chronic problems with emergency acquisitions, including procurement fraud, are a mainstay issue flagged in the Post-Katrina Emergency Management Reform Act-mandated GAO reports.

D. Effects of Reforms on Disasters Post-Katrina

Other hurricanes have affected the United States in the years following Hurricane Katrina. In 2017, Hurricanes Irma, Maria, and Harvey made landfall in quick succession on the southeastern coast, Puerto Rico, and the U.S. Virgin Islands.

In a 2014 report, the GAO analyzed the impact that emergency and FEMA reforms had on disaster aid verification since Katrina. The GAO found that instances of corruption and fraud tainted an estimated 10–20% of total payments made for recovery efforts post-Katrina and may have resulted in losses of $1.4 billion out of the total $6.3 billion spent on recovery efforts in 2006. The percentage of contracts found to include corruption or fraud decreased in the post-Sandy era to approximately 2.7%. This figure is a promising decrease in fraud for grants that are closely tracked.

However, in the report, the GAO only analyzed possible fraud on individual grants given by FEMA. Portions of the Post-Katrina Emergency Management Reform Act, such as the creation of federal guides by OMB, the creation of individual agency guides for Contracting Officers on how to approach emergency acquisitions, and the creation of the Disaster Response Registry in SAM, produced visible results and have helped combat fraud. Nonetheless, public data on how much fraud has actually been reduced within emergency acquisitions is difficult to locate. In addition, the tangible products of the Act restate existing requirements from FAR 18 and fail to caution Contracting Officers on the steps within the procurement process that present the highest risk for introducing fraud.

Looking more closely at emergency acquisitions following Hurricane Maria, there are still notable gaps in fraud prevention, including in the contractor selection and bid solicitation processes. For example, FEMA awarded a $155 million contract to Tribute Contracting, LLC, for the company to deliver thirty million emergency meals. However, FEMA terminated the contract for cause merely twenty days later and twenty-nine million meals short. FEMA’s decision to contract with Tribute is questionable to begin with, considering that the Federal Prison System and the Government Publishing Office both cancelled at least five contracts with Tribute since 2013, with the Government Publishing Office “determin[ing] in 2016 that Tribute would be ineligible for any contracts worth more than $30,000 through January 7, 2019.”

V. Improvements to Emergency Acquisitions to Reduce Waste and Fraud

A. Creating Thresholds and Factors Post-Disasters to Revert to Full and Open Competition

While limited competition and single-source contracts are understandable and often necessary immediately following natural disasters, there comes a time where it makes sense to pull back these emergency measures and return to CICA-mandated full and open competition. In addition, emergency acquisitions are utilized during emergencies, which tend to have a higher profile than the average government procurement contract. If there is a perception that the competitive process is being circumvented, there may be public outcry and pressure for lawmakers to implement more restrictive guidelines rather than follow the factors set out in the FAR for Contracting Officers to consider.

The Comptroller General should investigate when limited competition standards should revert to normal, including when local preferences should be lifted. The GAO, as a trusted government entity, could recommend possible threshold ranges with a list of factors that agencies and Contracting Officers can consider before returning to full and open competition.

However, seeing how a more prescriptive bill to reform emergency acquisitions was ultimately abandoned in 2005, it may be more practical to allow agency heads to establish thresholds, provided that written justifications explaining the use of such thresholds are included. This step would also prompt agencies to update their emergency acquisition guidebooks, which could include practical examples of how Contacting Officers monitor for cases of waste and fraud.

Changes could also be made to the FAR or in agency regulations by amending each agency supplements’ thresholds of recovery, providing spending thresholds at which competition would return to normal or at which percentages would be adjusted. Taking this kind of piecemeal approach and using agency FAR Supplements that could be reviewed each year against projected disasters for that year might help minimize the potential for fraud and abuse while maximizing efficiency during the acquisition process itself.

If agencies start to implement thresholds and other facts at which to revert back to full and open competition, as applied to Hurricane Katrina, $250 million may have been saved by a year after the hurricane. By allowing other businesses to compete for the same contracts, more responsible and responsive contractors might have to be selected, avoiding problems with contract performance, management, or cost control seen with the original contractors.

Current regulations governing locality or set-aside areas should also be re-examined. By allowing the Contracting Officer to define “local,” there is potential for businesses to be excluded from helping out with disaster relief or recovery even though they are seemingly local and clearly affected by the given disaster. At a minimum, “local” should be defined as the areas affected by disasters. Contracting Officers should still be given discretion to expand “local” to additional regions or states, with a written justification as to why they are doing so. This option allows for the inclusion of areas that might not have readily available emergency services nearby, without sacrificing giving local preference to businesses in the surrounding disaster zones.

B. Requiring Businesses to Pre-Register in

On a similar note, businesses should be required to pre-register in, especially if they want to take advantage of the Disaster Response Registry. Under the current regime, Contracting Officers are permitted to select contractors not yet registered in SAM, permitting contractors to escape initial scrutiny for exclusions of the principal or the entity. There may be a concern that smaller businesses who want to compete for emergency acquisition contracts may not know about SAM. However, this issue could be remedied with better advertising of the database.

C. Balancing Leniency at Solicitation with Stricter Suspension and Debarment at Contract Performance

Looking up businesses in SAM would not be helpful unless records were up-to-date and accurately reflected each business’s exclusions. Given the leniency at the solicitation stage of emergency acquisitions, stricter enforcement of suspension and debarment at the contract performance stage should be imposed.

The language in current regulations on suspension and debarment heavily discourages both measures. However, it is to the government’s detriment to allow companies with poor contract performance during disaster response to continue competing for government contracts.

For example, Whitefish Energy was awarded a $300 million single-source contract following hurricane relief efforts in Puerto Rico in 2017. It was subsequently unable to perform the contract, which was ultimately cancelled, delaying efforts to restore landlines and electricity in Puerto Rico. The business was not ultimately suspended or debarred, despite the contract being a “sole-source deal,” the contractor lacking consultation with the proper federal government officials, and Whitefish’s management having personal connections directly to Interior Secretary Ryan Zinke.

If stricter suspension and debarment measures were regularly leveraged to balance out the increased risk of fraud and abuse from single-source contract award from the very start of the emergency acquisition process, businesses engaging in fraudulent activities could be more readably identified, monitored, and labelled as such on the relevant national databases.

VI. Conclusion

While the federal government has made attempts to improve the emergency acquisition system post-Katrina, improvements reduce instances of fraud and abuse. Since the private sector plays such an important role in emergency relief, a more in-depth examination of the procurement processes is necessary to protect the government’s interests and to ensure that disaster relief efforts are effective. The proposed agency thresholds for reverting back to full and open competition and the requirement for contractor preregistration in SAM would work together to reduce the risk of potential bad actors entering the contract process during the solicitation phase. Likewise, stricter evaluation for and the use of suspension and debarment would help catch and remove bad actors during and after contract performance. Together, these measures would work in synergy to reduce the pool of bad actors involved in the procurement process while creating a stronger emergency acquisition system to better serve affected populations and maintaining the spirit of non-punishment in government acquisitions.