[Senate Hearing 113-586]
[From the U.S. Government Publishing Office]




                                                        S. Hrg. 113-586

                        THE PATH TO EFFICIENCY:
     MAKING FEMA MORE EFFECTIVE FOR STREAMLINED DISASTER OPERATIONS

=======================================================================



                                HEARING

                               before the

                       SUBCOMMITTEE ON EMERGENCY
                       
 MANAGEMENT, INTERGOVERNMENTAL RELATIONS, AND THE DISTRICT OF COLUMBIA

                                 of the

                              COMMITTEE ON
                              
                         HOMELAND SECURITY AND
                         
                          GOVERNMENTAL AFFAIRS
                          
                          UNITED STATES SENATE


                    ONE HUNDRED THIRTEENTH CONGRESS

                             SECOND SESSION

                               __________

                             JULY 24, 2014

                               __________

                   Available via http://www.fdsys.gov

       Printed for the use of the Committee on Homeland Security
                        and Governmental Affairs
                        
                        
                                    ______

                     U.S. GOVERNMENT PUBLISHING OFFICE 

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        COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS

                  THOMAS R. CARPER, Delaware Chairman
CARL LEVIN, Michigan                 TOM COBURN, Oklahoma
MARK L. PRYOR, Arkansas              JOHN McCAIN, Arizona
MARY L. LANDRIEU, Louisiana          RON JOHNSON, Wisconsin
CLAIRE McCASKILL, Missouri           ROB PORTMAN, Ohio
JON TESTER, Montana                  RAND PAUL, Kentucky
MARK BEGICH, Alaska                  MICHAEL B. ENZI, Wyoming
TAMMY BALDWIN, Wisconsin             KELLY AYOTTE, New Hampshire
HEIDI HEITKAMP, North Dakota

                  Gabrielle A. Batkin, Staff Director
               John P. Kilvington, Deputy Staff Director
               Keith B. Ashdown, Minority Staff Director
                     Laura W. Kilbride, Chief Clerk
                     Lauren Corcoran, Hearing Clerk


SUBCOMMITTEE ON EMERGENCY MANAGEMENT, INTERGOVERNMENTAL RELATIONS, AND 
                        THE DISTRICT OF COLUMBIA

                      MARK BEGICH, Alaska Chairman
CARL LEVIN, Michigan                 RAND PAUL, Kentucky
MARK L. PRYOR, Arkansas              JOHN MCCAIN, Arizona
MARY L. LANDRIEU, Louisiana          ROB PORTMAN, Ohio
JON TESTER, Montana                  MICHAEL B. ENZI, Wyoming
HEIDI HEITKAMP, North Dakota
                     Pat McQuillan, Staff Director
                Brandon Booker, Minority Staff Director
                       Kelsey Stroud, Chief Clerk
                       
                       
                            C O N T E N T S

                                 ------                                
Opening statement:
                                                                   Page
    Senator Begich...............................................     1

                               WITNESSES
                        Thursday, July 24, 2014

Hon. John R. Roth, Inspector General, U.S. Department of Homeland 
  Security.......................................................     2
Joseph Nimmich, Associate Administrator, Office of Response and 
  Recovery, Federal Emergency Management Agency, U.S. Department 
  of Homeland Security...........................................     4
Christopher Currie, Acting Director, Homeland Security and 
  Justice Issues, U.S. Government Accountability Office..........     6
Daniel Sutter, Professor of Economics, Johnson Center for 
  Political Economy, Troy University.............................     7

                     Alphabetical List of Witnesses

Currie, Christopher:
    Testimony....................................................     6
    Prepared statement...........................................    76
Nimmich, Joseph:
    Testimony....................................................     4
    Prepared statement...........................................    63
Roth, Hon. John R.:
    Testimony....................................................     2
    Prepared statement with attachment...........................    25
Sutter, Daniel:
    Testimony....................................................     7
    Prepared statement...........................................    90

                                APPENDIX

An Analysis Report submitted by the Subcommittee.................    97
Responses to post-hearing questions for the Record:
    Mr. Roth.....................................................   153
    Mr. Nimmich..................................................   157
    Mr. Currie...................................................   162

 
                        THE PATH TO EFFICIENCY:

     MAKING FEMA MORE EFFECTIVE FOR STREAMLINED DISASTER OPERATIONS

                              ----------                              


                        THURSDAY, JULY 24, 2014

                                 U.S. Senate,      
              Subcommittee on Emergency Management,        
                         Intergovernmental Relations,      
                          and the District of Columbia,    
                    of the Committee on Homeland Security  
                                  and Governmental Affairs,
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 2:30 p.m., in 
room SD-342, Dirksen Senate Office Building, Hon. Mark Begich, 
Chairman of the Subcommittee, presiding.
    Present: Senator Begich.

              OPENING STATEMENT OF SENATOR BEGICH

    Senator Begich. Thank you all very much for being here. I 
appreciate it. Thank you for coming this afternoon. Again, this 
is the Subcommittee on Emergency Management, Intergovernmental 
Relations, and the District of Columbia. I will call the 
meeting to order.
    For the last year-and-a-half, this Subcommittee has 
examined a number of critical issues affecting the emergency 
management community. Today, we are here to assess FEMA's 
progress in its efforts to balance timely disaster response and 
recovery with good stewardship of the taxpayers' money.
    For example, since 2009, the DHS Inspector General (IG) has 
documented the ongoing problem with the management of disaster 
recovery spending, identifying $1.36 billion in potential cost 
savings. Within these IG audits, they have identified almost 
$276 million in wasteful ineligible disaster recovery spending 
from 2009 to 2013.
    Finally, this Subcommittee has reviewed the IG and the 
Government Accountability Office (GAO's) reports on the Federal 
Emergency Management Agency (FEMA) workforce. FEMA's workforce 
is the greatest asset. The knowledge, skills, and expertise of 
FEMA's workforce are critical to successfully working with 
disaster survivors, State, local, and Tribal Governments. Yet, 
challenges such as staff that lack the necessary qualifications 
and training can result in inconsistent application of FEMA's 
recovery policies. This can lead to misspent wasteful spending 
and slower recovery. It is paramount that FEMA's workforce be 
properly trained in order to save taxpayer money.
    Since the massive flooding that resulted from the ice 
breakup on the Yukon last year, the Village of Galena, Alaska, 
has been on the front lines of major FEMA response. Hundreds of 
FEMA responders have been tasked with helping Galena rebuild. 
But, we do not expect every visitor to our State to fully 
understand the unique nature of life in rural Alaska. 
Responders must be able to adapt. Swift and efficient recovery 
cannot be supported by a workforce that lacks experience with 
Tribal communities or has not planned for high shipping costs 
and economic impact of increasing barge traffic along the 
river.
    These are a few of the issues from this Subcommittee's 
research that appear to be ongoing challenges. I am looking for 
further in-depth conversation with our witnesses. We also will 
hear from FEMA about the steps they are taking to fix these 
longstanding issues.
    Today, we will hear from the Department of Homeland 
Security (DHS) Inspector General, FEMA's Associate 
Administrator for Response and Recovery, and the GAO. We will 
also get the perspective from outside government from an 
economist who specializes in the economics of natural hazards. 
I look forward to an informative dialogue on the lessons 
learned, the improvements made, and examples of best practices 
in efficiency and performance that can be applied to FEMA.
    Again, I want to thank all of you for being here today, and 
I would like to go down the line here. I will introduce each 
one, and then if you could give your testimony. And, again, all 
written material will be, as requested, in the record, and I 
appreciate your time here.
    The first is the Honorable John Roth. He is the Inspector 
General for the U.S. Department of Homeland Security. Mr. Roth.

  TESTIMONY OF HON. JOHN R. ROTH,\1\ INSPECTOR GENERAL, U.S. 
                DEPARTMENT OF HOMELAND SECURITY

    Mr. Roth. Thank you, Chairman Begich, and thank you very 
much for inviting me here today.
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    \1\ The prepared statement of Mr. Roth appears in the Appendix on 
page 25.
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    My testimony today will focus on some high-risk management 
challenges that we have identified in our recent audit reports 
and in our ongoing work with regards to FEMA. I will also 
discuss our new, more proactive approach to audits designed to 
identify problems earlier in the disaster recovery cycle.
    As I know you are keenly aware, FEMA faces a daunting task: 
To be ready for anything, anywhere in the United States and its 
Territories. FEMA's Public Assistance Program is immense, with 
FEMA reporting over 100,000 applicants with projects worth 
approximately $50 billion. FEMA has obligated about $10 billion 
annually from the Disaster Relief Fund (DRF) to deal with these 
disasters. This does not count Hurricane Sandy, which will cost 
the Fund many more billions of dollars.
    We audit about $1.2 billion of these costs each year. We 
have determined that, generally, communities improperly spend 
about 23 percent of the grant funds that we audit. Therefore, 
we estimate for this year, our Disaster Grant Audits will 
identify or prevent about $300 million in improperly spent 
disaster assistance.
    Attached to my testimony today is our most recent Capping 
Report, summarizing the work we have done in fiscal year (FY) 
2013. As we have in the past, we continue to find problems with 
grant management and accounting, ineligible and unsupported 
costs, and noncompliance with Federal contracting requirements. 
A significant issue this year was insufficient insurance 
required to protect grant recipients from future losses. We 
also noted a sharp increase in questioned costs for ineligible 
contracting procedures.
    In the past, my office has focused much of its efforts on 
auditing past transactions. This, as you note, has led to more 
than a billion dollars in questioned costs and funds pout to 
better use. Unfortunately, once that money is spent, it is 
often too late to recover the funds or correct the underlying 
problems.
    Therefore, we are in the process of transitioning to a more 
balanced audit portfolio approach. Our new proactive approach 
is in four phases.
    First, we deploy our Emergency Management Oversight Teams. 
These teams accompany FEMA during the initial response to 
Presidentially declared disasters. We expect to do about five 
of those this year.
    Second, we anticipate conducting about 20 Capacity Audits 
early in the recovery phase, before applicants have spent 
significant amounts of Federal funding. These audits will 
assess whether communities and other applicants have the 
capacity to properly administer the grant funds. Our 
recommendations will focus on correcting weaknesses to prevent 
applicants from misspending Federal funds before they are 
spent.
    Third, we anticipate conducting about 20 Early Warning 
Audits later in the recovery phase. These audits will determine 
whether applicants are, in fact, accounting for and expending 
FEMA grant funds correctly. The early reporting of 
noncompliance should enable communities to take actions to 
correct or at least mitigate the financial impact of 
noncompliance.
    And then, last, we anticipate conducting about 20 
traditional Disaster Grant Audits. We typically perform these 
audits once the applicant completes most of the disaster work.
    Thus, under our new approach, fewer than a third of our 
audits would be considered to be traditional audits done after 
the money was spent, and the bulk of our work is done to try to 
prevent misspending of FEMA funds.
    I am encouraged by the fact that FEMA officials have 
implemented corrective measures to address issues we identified 
in our past reports. FEMA recognizes that applicant 
noncompliance with Federal procurement standards continues to 
be a significant source of findings and questioned costs.
    As a result, FEMA has developed and is implementing a new 
Procurement Disaster Assistance Team. The team will provide 
assistance to applicants in advance of contract awards to 
reduce procurement violations.
    Additionally, FEMA's Recovery Directorate plans to 
establish a section dedicated to responding to, implementing, 
and learning from the Office of Inspector General (OIG) audits. 
FEMA has already completed a 3-year look-back analysis of our 
audits to help set policy priorities and plans to activate the 
new section by the end of this fiscal year.
    Mr. Chairman, this concludes my prepared statement. I 
welcome any questions you or other Members of the Subcommittee 
may have.
    Senator Begich. Thank you very much.
    Let me move to the next speaker, if I can, Joseph Nimmich, 
who is the Associate Administrator for Response and Recovery at 
the Federal Emergency Management Agency, which is part of the 
Department of Homeland Security.

TESTIMONY OF JOSEPH NIMMICH,\1\ ASSOCIATE ADMINISTRATOR, OFFICE 
OF RESPONSE AND RECOVERY, FEDERAL EMERGENCY MANAGEMENT AGENCY, 
              U.S. DEPARTMENT OF HOMELAND SECURITY

    Mr. Nimmich. Good afternoon, Chairman Begich. Thank you for 
the opportunity to testify before you today.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Nimmich appears in the Appendix 
on page 63.
---------------------------------------------------------------------------
    I appreciate the oversight that this Committee provides. 
Your guidance, along with the recommendations of the Government 
Accountability Office and the DHS Inspector General, reinforces 
FEMA's ability to provide critical service to the American 
people while eliminating waste, fraud, and abuse. You are the 
voice of those we serve, and your findings enable us to better 
meet the critical needs of survivors, States, Tribes, and local 
communities to prepare for, protect against, respond to, 
recover from, and mitigate the impacts of disasters.
    Increased efficiency is a worthwhile goal for any and all 
organizations and we are committed at FEMA to streamlining our 
processes to improve the services we provide. While the 
challenge of increased efficiency crosses all sectors, it is 
important to realize the unique challenges associated with the 
rapid delivery of lifesaving and life sustaining services in 
disasters.
    Many of the issues raised by this Committee are symptoms of 
more systemic problems. I want to assure you that we are 
committed to addressing the underlying causes and not just the 
symptoms. With a firm understanding of these issues, FEMA is 
developing solutions to our most significant challenges. We 
continue to seek ways to be more efficient stewards of 
appropriated resources. But, we must balance that need with the 
need to quickly and directly provide services to disaster 
survivors to help them recover and rebuild.
    FEMA's reforms are focused in three major areas: Building 
the capacity, competency, and capability of FEMA's workforce; 
the consistency and complexity of FEMA's business processes; 
and the ability to use information and data for rapid 
situational awareness and effective decisionmaking. I would 
like to take a moment to talk about each of these in greater 
detail.
    FEMA is focused on its workforce and better managing, 
training, and equipping each member. Much of what the IG and 
the GAO indicate as improper cost or contracting procedures are 
symptomatic of a disaster workforce that has not received the 
training and tools it needs to perform to its full potential 
and provide grantees critical information at the time of 
decision.
    As a case in point, in the last 3 years of IG Capping 
Reports, the IG identified a systemic problem in sub-grantee 
contracting procedures. We identified the root cause of these 
discrepancies and implemented improved training and workforce 
oversight to correct the issues. To address the immediate needs 
of local communities, FEMA implemented a Temporary Response 
Team of contract attorneys to deploy within the first 48 hours 
of a disaster to support grantees and sub-grantees to ensure 
their actions are consistent with the Federal Acquisition 
Regulations (FAR). This will eliminate the problem of 
deobligating funds well after the event.
    Through the new FEMA Qualifications Standards and Cadre 
Management System, we will institute a more permanent fix, 
ensuring that each employee is provided the training and 
experience necessary to perform their job while holding them 
accountable to provide disaster survivors accurate information 
to rebuild their future.
    Workforce development takes time, but good management and 
accountability cannot wait. We are committed to making clear 
policy-driven decisions that are correct the first time.
    To better allocate resources, FEMA is strengthening the 
connection between strategy, budget, and execution through a 
comprehensive resource management system. FEMA is increasing 
its focus on performance metrics and linking performance 
allocations to outcomes to ensure the most effective use of the 
funds provided.
    The recently released FEMA Strategic Plan for 2014 to 2018 
provides aggressive performance goals for each of the 16 key 
priority outcomes the plan requires. The Strategic Plan 
reaffirms FEMA's commitment to its guiding principles and sets 
new priorities designed to strengthen its organizational 
foundation. The plan focuses on getting back to basics, 
streamlining policies, improving our information technology 
(IT) systems and security, and strengthening the workforce. 
Building on a solid foundation will enable FEMA to identify 
additional efficiencies and ensure issues identified today do 
not become tomorrow's challenges.
    FEMA is committed to addressing the need for effective data 
management analytic capability by making our IT systems more 
capable, secure, and resilient. The better use of data 
analytics will provide early reliable basis for decisions. 
Better business systems will provide consistency and 
transparency.
    We continue to make extensive efforts to address and 
improve our programs and ensure they are efficient, effective, 
and meeting the critical needs of survivors.
    Mr. Chairman, on behalf of Administrator Fugate and the 
entire FEMA leadership team, I want to thank the Committee for 
your focus on these important issues and the opportunity to 
testify before you today, and I look forward to any questions 
you or the Committee may have.
    Senator Begich. Thank you very much.
    The next person we have on the list is Mr. Christopher 
Currie. He is the Director of Homeland Security and Justice 
Issues at the U.S. Government Accountability Office.

 TESTIMONY OF CHRISTOPHER CURRIE,\1\ ACTING DIRECTOR, HOMELAND 
  SECURITY AND JUSTICE ISSUES, U.S. GOVERNMENT ACCOUNTABILITY 
                             OFFICE

    Mr. Currie. Chairman Begich, thank you very much for the 
opportunity to be here today to discuss ways to strengthen FEMA 
disaster operations.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Currie appears in the Appendix on 
page 76.
---------------------------------------------------------------------------
    Mr. Chairman, today, FEMA's preparedness, response, and 
recovery missions are larger, more expensive, and more complex 
than ever before, and the future is not looking any easier. 
Extreme and rare weather events are now expected to be the norm 
and it is very difficult for FEMA to budget and manage in such 
an uncertain and reactive environment.
    While FEMA cannot control disasters or always predict them, 
it can work to make sure programs are more effective and 
efficient. In the years since Hurricane Katrina, FEMA has made 
much progress in responding to disasters. However, we have also 
reported on areas where it could continue to improve. This 
afternoon, I would like to drill down into two of those areas.
    The first area is FEMA's administrative costs, or what it 
costs FEMA to deliver disaster assistance to State and local 
communities. Examples of this include salaries, travel, and 
other support costs for FEMA employees deployed to disaster 
locations, and rent and other costs for operating its joint 
field offices in these locations.
    As disaster costs have risen, so have these costs. In 
September 2012, we found that average administrative cost 
percentages had doubled in the last 20 years for disasters of 
all sizes. To put this in terms of real dollars, our analysis 
shows that of the $95 billion spent on major disasters from 
2004 to 2013, $12.7 billion, and that is about 13 percent, were 
FEMA's administrative costs.
    Recognizing these rising costs, FEMA issued guidance and 
targets for managing administrative costs in 2010. However, we 
found that FEMA did not require these targets to be met and 37 
percent of disasters exceeded those targets. As an example, for 
large disasters costing between $500 million and $5 billion, 
FEMA's target for administrative costs is between 8 and 12 
percent of disaster spending. However, 4 out of every 10 
disasters we looked at had costs above 12 percent.
    Now, we recommended that FEMA implement required goals for 
administrative costs and monitor how well they achieve these 
goals. As of this month, FEMA was still considering options for 
addressing this recommendation, but has taken it very 
seriously. While it is difficult to control the overall costs 
of disasters, it will be important for FEMA to monitor its own 
costs to ensure that it is as efficient as possible.
    The second area I would like to discuss is opportunities to 
strengthen FEMA's workforce. The increasing number, size, and 
complexity of disasters requires a larger Federal disaster 
workforce. During Hurricane Sandy, more than 17,000 Federal 
personnel, including more than 7,000 FEMA staff, were sent to 
the affected area in one of the largest deployments ever. 
FEMA's after-action report self-identified that workforce 
readiness for an event like Hurricane Sandy was a challenge.
    Just as examples, just prior to Hurricane Sandy, FEMA found 
that 28 percent of its disaster positions were vacant. Also, 
deploying so many staff nearly exhausted the number of 
available personnel. According to FEMA, a month into the 
response, by November 2012, it had only 355 of its almost 7,000 
total reservists--that is 5 percent--available to deploy, 
because the others were either already deployed or not 
available for deployment.
    We have also reported on broader human capital issues at 
FEMA and have made a number of recommendations. For example, we 
found that FEMA could better collect and analyze agency-wide 
workforce and training data and recommended they develop 
mechanisms to do that.
    Regarding its Disaster Reserve workforce, we have also 
recommended that FEMA better define its criteria for hiring and 
compensating these employees and ensure that they are 
qualified. Also, we have recommended they better monitor how 
these employees implement disaster assistance policies across 
the country to ensure consistency.
    FEMA has made progress in addressing our recommendations 
and has efforts underway to strengthen how it manages its 
personnel. As part of our ongoing work for you, we will 
continue to evaluate these efforts.
    This completes my prepared remarks. I would be pleased to 
answer any questions you have.
    Senator Begich. Thank you very much.
    Next, we have Daniel Sutter, a Professor of Economics at 
Troy University. Please.

TESTIMONY OF DANIEL SUTTER,\1\ PROFESSOR OF ECONOMICS, JOHNSON 
         CENTER FOR POLITICAL ECONOMY, TROY UNIVERSITY

    Mr. Sutter. Chairman Begich, thank you for the invitation 
to discuss the need to make FEMA more efficient for effective 
disaster response. I appreciate the opportunity to testify 
today.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Sutter appears in the Appendix on 
page 90.
---------------------------------------------------------------------------
    The enormous generosity of Americans is never more evident 
than in the aftermath of natural disasters, and naturally, some 
of this assistance will be channeled through the Federal 
Government. Today, I would like to make three points about 
increasing efficiency in disaster response.
    First, FEMA currently assists with many smaller events, 
which threatens the availability of assistance when most 
needed.
    Second, the damage threshold for Federal assistance should 
be raised and tied to per capita personal income to avoid FEMA 
having to respond to so many smaller disasters.
    Third, a more thorough assessment of the potential for 
State and local governments to respond should inform the 
establishment of a new threshold for Federal assistance.
    I would like to expand on each of these points. First, the 
point about minor disasters dissipating resources. Too many 
events are being declared major disasters. Presidents have 
declared an average of 60 major disasters per year since 1996, 
an average of more than one per week. The GAO has found that 36 
percent of these declarations between 2004 and 2011 involve 
less than $10 million in Federal assistance, demonstrating that 
these weekly disasters do include some relatively small events. 
These events dissipate FEMA's resources and energy.
    Disasters with total assistance under $50 million have 
distressingly high administrative costs, as the GAO has shown, 
at an average of 20 percent, compared with 12 to 13 percent for 
larger disaster declarations. And, administrative costs 
exceeded total Federal assistance for 12 recent smaller 
disasters. We pay a high price for having FEMA assist with 
these relatively small events.
    Second, the public assistance damage threshold should be 
raised. FEMA public assistance to State and local governments 
introduces third-party payment to disaster response. Third-
party payment is well known to increase costs due to the 
problem of moral hazard. Rising administrative costs, improper 
payments, identified by the Office of Inspector General, and 
the professionalization of State and local emergency management 
in pursuit of Federal disaster assistance, as noted by the GAO, 
all reflect, I think, this third-party cost inflation. Third-
party payment should be avoided whenever possible, and by 
limiting FEMA assistance to truly major or unanticipated 
disasters would allow this.
    The low damage threshold FEMA uses to evaluate Governors' 
requests enables the declaration of small events as major 
disasters. FEMA set a threshold of $1 per capita for statewide 
damages in 1986 and has adjusted this for inflation since 1999. 
The threshold for public assistance should have been tied to 
per capita income since 1986, consistent with the normalization 
of disaster losses by natural hazards researchers. The GAO 
found that 44 percent of all declared disasters between 2004 
and 2011 would not have met an income-adjusted threshold.
    Third, I think the Federal assistance should be based on a 
better assessment of State and local capability. FEMA set the 
$1 per capita threshold somewhat arbitrarily in 1986, so a 
significant revision need not be tied to this baseline.
    A more thorough assessment of the potential for State and 
local governments to respond to disasters should be undertaken. 
Financial instruments allow State and local governments to tap 
into private sector capital and to cover disaster losses. For 
instance, public assistance covers several categories of costs, 
including property and equipment, debris removal, and emergency 
protective measures. Adequate insurance can cover the property 
and equipment losses, increasing government's ability to meet 
any disaster.
    Furthermore, new financial instruments, like weather 
derivatives and catastrophe bonds, have emerged since 1986. 
Although primarily to date used by businesses or insurers to 
help manage weather and catastrophe risk, these financial 
instruments could help state and local governments pay for 
personnel expenses, debris removal, and other costs. 
Establishing a damage threshold in consideration of the 
financial instruments now available to State and local 
governments would help ensure that Federal assistance is 
available and there when truly needed after major disasters or 
unexpected disasters.
    By avoiding third-party cost inflation and providing better 
incentives for State and local governments to prepare, a 
reduced Federal role will also help stem rising disaster costs 
for the Nation.
    Thank you, Senator Begich, and I want to thank again the 
Committee for the opportunity to testify today.
    Senator Begich. Thank you very much. I made some notes. I 
want to come back to you with some questions, but you bring up 
some intriguing ideas.
    Let me first start, with you, Chris, and that is it was 
interesting, your data points in regards to administrative 
costs and what you are seeing, or the growth in it. I guess one 
of the questions, first, is in 2010, you had mentioned the 
targets that were set or agreed to, and they were not 
mandatory, but they were targets or goals. And, you had 
indicated about 37 percent of them exceeded those targets in 
some form or another.
    What was the main cause, if you can recall, what forced 
them to exceed that, I guess? What was the driver? For example, 
if I can pause you for a second, I know in Alaska, in a rural 
area, you will have some unusual shipping costs, air costs, 
barge costs. But, was there a common denominator in that, or--
--
    Mr. Currie. Chairman Begich, we have not actually looked at 
the common denominators, but you are absolutely right. I mean, 
each disaster in and of itself is very different. So, each 
disaster has its own story as to why it costs what it costs.
    I did want to say that these costs are not requirements. 
FEMA does not require them because they want to allow 
flexibility for the Federal Coordinating Officers----
    Senator Begich. Right.
    Mr. Currie [continuing]. To make the decisions they need to 
make in that case of a disaster. But, I think one of the 
causes, obviously, is the rising number of personnel that are 
required to respond to these disasters----
    Senator Begich. Because the disasters are bigger, or that 
is what we are doing?
    Mr. Currie. I think it is both, sir. I think, obviously, in 
the case of, Hurricane Sandy, FEMA deployed more than 7,000 
people. That is travel. That is lodging costs. That is very 
expensive.
    Senator Begich. Yes.
    Mr. Currie. But, also, the assistance that is being 
provided is much greater, even in smaller disasters. And, I 
would also argue, in smaller disasters, you do not have the 
economies to scale that you have in larger disasters. So, it is 
common to see administrative costs be much higher as a 
percentage in those smaller disasters, as well.
    Senator Begich. You heard the commentary just at the end 
here regarding maybe raising those thresholds. Did you look at 
any of that kind of information, of what impact that would 
have, or----
    Mr. Currie. Oh, on administrative costs, sir?
    Senator Begich. No. Raising the thresholds on what kind of 
disaster----
    Mr. Currie. Oh, right. Absolutely. We have an extensive 
body of work on that, and our position is that FEMA has not 
adjusted the per capita indicator to account for inflation and 
personal income, and had they done that, it would be much 
higher than it is today. And, if that had been the case, then 
many of the smaller disasters may have not been declared.
    However, I think what is very important is--and what we 
have advocated for--is that FEMA take into account other 
factors besides the per capita indicator. Every State is very 
different and has a different way of responding to disasters 
and different capabilities.
    So, in Alaska, for example, the costs of getting the 
assistance to where it needs to get may be much higher----
    Senator Begich. Right.
    Mr. Currie [continuing]. And that could be something that 
needs to be factored into the decision of when a disaster is 
declared.
    Senator Begich. Again, I do not mean to monopolize your 
time, but I want other people to be thinking about these 
answers as I am walking through them with you. You are the 
front-end person. For example, would it be logical to say, here 
is some baseline--maybe it is income, maybe it is per capita--
but then look at more regional and the impacts.
    For example, in Alaska, going to Galena is not like going 
from here to Baltimore.
    Mr. Currie. Right.
    Senator Begich. So, you have a different kind of impact. If 
you are going to move people there, it could take you three 
plane trips, if the weather is good, to get you there. Or, you 
might end up moving equipment by a barge rather than a truck.
    Mr. Currie. Right.
    Senator Begich. Do you think there is a formula that should 
be looked at instead of a one-size-fits-all? Even though in a 
lot of cases FEMA has flexibility, is it to say, here is our 
baseline that we really need to be focused on to raise this 
threshold of what we consider a disaster, but keeping in mind 
that even though it may be a--like, Galena, to a lot of others, 
might have been a small disaster, but for the community, it 
wiped it out. So, in their view, it was big. So, do you think 
there is a way to have some sort of formula in there? And, 
then, I am going to jump down the row here. But, do you----
    Mr. Currie. I think that has been the goal, sir, with the 
per capita indicator, is to have a baseline. And, what we have 
argued is that, not that the per capita indicator is bad, but--
--
    Senator Begich. By itself, it is bad.
    Mr. Currie. Well, by itself, exactly----
    Senator Begich. Right.
    Mr. Currie [continuing]. It is bad. And, the fact that, by 
itself, it has not been adjusted to take into account other 
factors. But, certainly, FEMA could take into account many 
other factors if it chose to do so. I know it is considering 
options, because we actually recommended that they do this and 
we have an open recommendation. I know they are----
    Senator Begich. When did you recommend that?
    Mr. Currie. This was in 2012.
    Senator Begich. OK. Let me ask John, and then I am going to 
go to you, Joe, in a second. Do you want to respond? You heard 
the conversation here to those questions, and I have some other 
more specific for you, but do you have any thought about that 
as you looked at doing an IG report and what that means and the 
impacts of small versus larger disasters?
    Mr. Roth. Right. I mean, certainly, as far as the threshold 
for a Presidential declaration, we have done some work on that, 
also, in 2012. Very similar results to GAO----
    Senator Begich. OK.
    Mr. Roth [continuing]. That it has not been indexed for 
inflation, that it has resulted, of course, in a creep up of 
the number of Presidentially declared disasters, which, of 
course, then increases the size of the Disaster Relief Fund.
    Senator Begich. Right.
    Mr. Roth. I think we ought to recognize that the statute 
does not require a specific formula. It simply requires FEMA to 
analyze whether or not the States have the capacity to 
respond----
    Senator Begich. To deal with it.
    Mr. Roth [continuing]. To a specific disaster. The rule of 
thumb has been the amount of damage that has occurred as a 
result of the disaster, but certainly factoring in things like 
the cost of recovery for a disaster could be one of the factors 
that they look at.
    Senator Begich. OK. Joseph, do you want to----
    Mr. Nimmich. Yes, sir. Well, first----
    Senator Begich. I wanted to give them an opportunity to lay 
it down for you, and then maybe you could respond to it.
    Mr. Nimmich. Thank you, Senator, and first----
    Senator Begich. Daniel set it up, so I think----
    Mr. Nimmich [continuing]. We need to be very specific here 
that the threshold is not the only element that is considered. 
The 44 CFR requires several elements, and some of which you 
have described, Senator, in terms of the effect on the 
community. Some of the issues with raising the threshold 
indicators involves the dynamic between rural States and larger 
States that have larger capacity.
    We are, in fact, as a result of the GAO audit and the IG 
audits, looking at and working with States at the moment to be 
able to identify what is the right set of criteria, but it is a 
multiple set of criteria. The Stafford Act prohibits a formula. 
The threshold is just one indicator. There are disasters that 
have been denied even though a State may have made the 
threshold because other factors indicated that it was well 
within the State's capabilities.
    Senator, one of the things that we really need to 
understand, there has been a drive for States to be able to get 
more disasters, that States have had difficulty during the last 
several years with the economy to be able to get that.
    Senator Begich. Got you.
    Mr. Nimmich. What we are----
    Senator Begich. Do you think that is one of the drivers, 
that they saw----
    Mr. Nimmich. Sir, a lot has to do with population shift, 
the infrastructure that is being developed. There are multiple 
factors that go into it. Some of it, you heard, the severity of 
storms.
    FEMA is working very closely with the States to have non-
Stafford Act capabilities. There is an awful lot that the 
National Voluntary Organizations Active in Disasters (VOADs), 
the voluntary organizations, that other agencies provide short 
of a Stafford Act. The goal has always been to try to get to a 
Stafford Act declaration because that opens up the DRF. But, we 
are really working with States now to be able to identify where 
they have capability that they can use, both from the Federal 
Government, voluntary organizations, and their own, to be able 
to reuse grants and other capabilities that we take the drive 
away.
    We are also looking at what are those initial indicators 
for the threshold, and then the obligations that actually come 
in long afterwards to see if, in fact, the thresholds, while 
may appear low, are really, because of the way we assess 
damage, really are a right level, or are we finding that States 
are trying to get to that threshold in order to get there----
    Senator Begich. Got you.
    Mr. Nimmich [continuing]. But when we see the obligations 
later, they are much lower. All of these are being taken into 
consideration as we move toward a proposal that GAO has asked 
for. We owe GAO an answer by the spring of 2015----
    Senator Begich. OK.
    Mr. Nimmich [continuing]. And we are moving in that 
direction, but we are consulting with the National Emergency 
Management Association (NEMA). We need to consult with the 
Tribes and other people that have implications now that they 
may not have had before.
    Senator Begich. Let me, if I can, I am going to jump back 
to you, John, if that is OK? I am going to move around a little 
bit here. But, one of the things in our analysis, we found 40 
open disasters, some 10 years old, or 12 of the disasters 
declared before 1999. I am assuming--and this actually kind of 
goes back to one of the things Christopher said on 
administrative costs--the longer these are open, there is an 
accumulation of administrative costs, operational costs just to 
maintain these open accounts.
    Is there something that FEMA could do better to--I know 
when I was mayor and we had things that were--I mean, if we had 
grants, and sometimes they were obligated but unobligated, we 
would look at these projects and determine if they are reality 
or not, or if what is happening is a department--in my case as 
mayor--a department is stretching the money in order to take 
off their two points or three points for administrative 
overhead and then say, ``Oh, we are working on it still,'' and, 
really, they will never have enough money to do it, or they 
have done it and they are just waiting for other claims that 
might come forward.
    What is your thought here? Is there something more we could 
be doing, or FEMA could be doing, and, it is always hard when 
you have a community who has this money sitting there to say, 
you have not used it in 15 years. And, they will always--I know 
this as a mayor--you are always going to have a reason why it 
still should stay there.
    Mr. Roth. You raise very good points. We are doing an audit 
on this very specific issue, a systemic audit to understand the 
root causes of this. I will say that when we do an audit and we 
see unobligated funds that we do not think there is a 
likelihood of expenditure on, we will advise or recommend to 
FEMA that they deobligate the money, put it back into the DRF 
so it can be used----
    Senator Begich. And, that is in process now, that review 
you just described----
    Mr. Roth. Correct.
    Senator Begich [continuing]. Or is it something you do on a 
regular basis, or is it just something that you have added in?
    Mr. Roth. Both.
    Senator Begich. OK.
    Mr. Roth. So, in any audit that we do of any project, if we 
see money that is unlikely to be spent, we recommend that it be 
deobligated, first thing. Second----
    Senator Begich. Can I pause you there on that----
    Mr. Roth. Of course.
    Senator Begich. Do you go back and see what FEMA's 
compliance to that is on that kind of recommendation, what 
their percentage of compliance is?
    Mr. Roth. Yes. We track every recommendation that we do. We 
do followups with FEMA over time----
    Senator Begich. What would you say on that one, for 
example, is it 20 percent of the time they take that 
recommendation, 100 percent of the time, or----
    Mr. Roth. Off the top of my head, I would not be able to 
give you an answer.
    Senator Begich. Could you provide that for us?
    Mr. Roth. Absolutely.
    Senator Begich. I would just be curious, because that is an 
interesting recommendation. If you say, here is this money, you 
view it as not usable, I am assuming, then, FEMA always has the 
opportunity to put their reason why they still need to keep it, 
but, I would be curious on those recommendations.
    But, then you had a second piece. I did not mean to 
interrupt you.
    Mr. Roth. Certainly. And, then, we are doing a systemic 
audit to look at the root causes of this.
    Senator Begich. Good.
    Mr. Roth. That is currently in process. And, I guess my 
third point here would be that, The way the system works is 
that you have grantees, who are the States, and then you have 
sub-grantees, who are these localities. Neither the State nor 
the sub-grantee have any inherent interest in turning that 
money back.
    Senator Begich. No, I know this. [Laughter.]
    Mr. Roth. And, the States, as the entities that are 
supposed to be administering these, I think we ought to be a 
little more----
    Senator Begich. Aggressive.
    Mr. Roth [continuing]. Aggressive in ensuring that they are 
looking at these projects, actively managing the projects, and 
they get FEMA money to do that management, and recommending 
when there are projects that need to be closed out, that we 
close them out.
    Senator Begich. I am going to one more, and again, I want 
to keep a little flexibility here for folks to respond and so 
forth, but I want to get a couple more questions in and watch 
our time at the same time.
    In doing our research, one thing that we noted was the DHS 
OIG website does not have a data system that provides either 
Congress or the general public kind of what comprehensive 
records, status and recommendations. Can you tell me, is there 
something that you could do--and when I say ``you,'' your 
agency--do to make that more transparent, at least to Congress 
so we have better access, and obviously a broader perspective, 
to the public. What would you recommend, or are there thoughts 
that are in process now, that you are looking at this issue? 
And, you know what I am referring to is the transparency of 
this.
    Mr. Roth. I do, and, in fact, I saw that in the staff 
report----
    Senator Begich. Right.
    Mr. Roth [continuing]. That was issued. I think that is a 
very good point----
    Senator Begich. Good.
    Mr. Roth [continuing]. And, candidly, it is one I had not 
thought of.
    Senator Begich. OK. So, it is one that seems reasonable?
    Mr. Roth. Absolutely, and so I have directed my staff to 
start to take a look at these issues----
    Senator Begich. OK.
    Mr. Roth [continuing]. And to ensure that we do a little 
better on metrics, making those metrics public----
    Senator Begich. Good.
    Mr. Roth [continuing]. As far as the number of 
recommendations, the age of the recommendations, and what 
specific----
    Senator Begich. And what is the status?
    Mr. Roth [continuing]. Whether they have been closed out, 
whether FEMA agrees----
    Senator Begich. Right.
    Mr. Roth [continuing]. Disagrees with the recommendations.
    Senator Begich. Will you let the Committee know if you have 
some challenges in trying to--if there is something that is 
coming up that you think we could be helpful in helping make 
that happen. I think that is a great the more people know that, 
obviously, Committee, but the public understand, because I 
think as we continue to have--and I think it was very clear by 
almost everyone here, the testimony of the amount and the size 
of these disasters are increasing, and some of the calls we 
start to get now are, well, what happened to such and such 
grant, and I understand there was an audit, and then they say, 
well, what happened to that, and more access is better. So, if 
there is anything we can assist in that, but I think it is 
great you are looking at this.
    Mr. Roth. I could not agree more. Thank you, Senator.
    Senator Begich. You bet.
    Let me, if I can, Joe, you heard the conversation in 
regards to the disasters that have open-ended, pre-1999, so 
forth, long-term ones. Give me your thought on that response. 
Do you agree with the IG in regards to how you can handle 
these, or what we can do better? The other audit they are 
doing, which will, hopefully--it will be very interesting to 
see is there, again, a common denominator? What is the root 
problem of these? Are they independently very different or is 
there something across the board? Can you give me some comment.
    Mr. Nimmich. So, sir, some of the disasters that are open 
for 10 years have reasons that they are open for 10 years, and 
sometimes it is litigation and other issues that are going on. 
Of those that are open over 10 years, there are three 
significant ones. The vast majority, I would say, the highest 
percentage of the costs or obligated money--unobligated money--
exist around the 9/11 disaster, exist around the 1994 
earthquake, and exist around Hurricane Irene, the first one 
back in the 1990s. So, these three disasters----
    Senator Begich. Can I pause you on that?
    Mr. Nimmich. Yes, sir.
    Senator Begich. I recognize those are major ones, but at 
some point, you have to close them out. I mean, that, to me----
    Mr. Nimmich. So, that comes to the issue, Senator, which is 
it is a joint issue on closing it out. Now, you mentioned the 
fact that management costs continue.
    Senator Begich. Right.
    Mr. Nimmich. There is a ceiling on the management costs, a 
certain threshold that they stop at a certain point unless they 
ask for an extension or an increase in those management costs.
    Senator Begich. Have you ever granted them on those three 
big ones?
    Mr. Nimmich. I cannot answer that, sir. We can answer it 
for the record.
    Senator Begich. I would like that.
    Mr. Nimmich. So, once the management costs reach a 
threshold--but, this is a joint effort. The States need to 
provide the information so we can close out each of those, and 
there may be only specific project work items that are inside 
there, that we are looking for that information to be able to 
close it out.
    Senator Begich. How do you incentivize the States to do 
that, because I am going to be very blunt with you. As a former 
mayor, a city of 300,000 people, a billion-dollar budget, we 
covered 1,900 square miles of city, if there is no incentive, I 
am going to keep that on the books, because--there are a lot of 
reasons why I will keep it on the books. One, it helps my 
balance sheet, to be frank with you, when I am doing bonding 
and other things. I have all this money sitting there. That is 
one little piece. But, the second is, I do not want to give it 
back to you. If I give it back, I will never see it again.
    So, what is the incentive to tell the States--or the 
locales, but in most cases States--to get off the dime and 
close it out and do their work?
    Mr. Nimmich. So, Senator, you used the right word, 
``incentive,'' because most everything that has been proposed 
for close-outs--and, I need to make the point that since 2011, 
Administrator Fugate has had us focus on this and we have 
returned tens of millions of dollars each year and have closed 
out over 50 percent of the open----
    Senator Begich. Open disasters.
    Mr. Nimmich [continuing]. Disasters. But, there are still 
quite a few, as you know.
    Senator Begich. Right.
    Mr. Nimmich. So, incentives are tough. Most of what 
everybody proposes are disincentives, either termination at a 
certain period in time, which may not be the correct answer if, 
in fact, you have valid project works that are open. And, prior 
to the Sandy Recovery Improvement Act (SRIA), sir, the repairs 
had to be done, and we are working on repairs over time. Some 
of the road repairs, some of the repairs that we are looking at 
can take 10 years or 12 years to actually make, until we have 
adjusted the final costs.
    So, incentives are the right way to go. It is a real 
challenge when you are offering a State or a sub-grantee some 
additional money that they do not need to have for the repair 
of that issue. Again, with the pre-SRIA requirements that are 
in the legislation, we really do not have a way of doing that. 
So, we are open to suggestions on incentives.
    Senator Begich. Good.
    Mr. Nimmich. The reality is, there are some disincentives 
we could put into the program. As you well know, States do not 
want to see disincentives in terms of losing money that they 
may actually be able to use, even though it has taken a long 
time.
    Senator Begich. Right, but we have disincentives in a lot 
of programs. The Highway Trust Fund money, if they do not use 
it, at a certain point, they can be deobligated very quickly, 
even if it is obligated. There are disincentives with the CDBG 
money. I mean, as a former mayor, I remember we had a goal. If 
we received these monies, we have to move them. And, disasters, 
in the moment, they are complicated, but once you get past the 
crisis moment, it is a project. There are timelines.
    Mr. Nimmich. It is a project, sir, but to put it in 
reference, FEMA is an insurance company, and every time you and 
the client deal with an insurance issue, there is always debate 
over what was covered, what should be covered, and some of 
those debates go on for a very long period of time.
    Senator Begich. Let me just say, I had a small disaster in 
my house in Anchorage and the insurance company made sure I 
closed it out. So, the incentive was, we are closing it out. 
That was the incentive, so get my work done. Actually, we 
closed it out so fast that they had not done their final 
inspection and we got paid. So, that was good. But, this is an 
area we are interested in, because----
    Mr. Nimmich. Yes, sir. We look forward to working with the 
Committee on identifying ways to more rapidly close out 
disasters.
    Senator Begich. OK, because it is an obvious thing what 
happens, is we hear from people and they go, 15 years, that 
money has been sitting there. What the heck is going on?
    Daniel, I want to ask you a question. I thought it was 
interesting, and you called them weather derivatives and 
catastrophic bonds. Are most of those applied for by private 
corporations, not local governments or State governments?
    Mr. Sutter. Yes. Those financial instruments have been 
usually used either by companies or insurance companies.
    Senator Begich. I kind of ask you this and maybe, Joseph, 
you can answer this, too--is there an opportunity to have a 
hybrid partnership, maybe that between local governments or 
State governments to utilize these kind of bonds in conjunction 
with disaster preparedness? I do not know the answer to this. I 
am just asking this question, because it would seem--I know 
when we did catastrophic liability issues within the city, we 
had a threshold covered out of our self-insurance fund, then we 
had another threshold that was insured, and then above that, 
another level.
    Is that a model or an opportunity, I guess, to do some 
demonstration capacity projects in regards to these types of 
bonds with local governments or State governments? Who would 
like to--Daniel, maybe, and then Joseph.
    Mr. Sutter. I think that, certainly, there could be some 
hybrid or new types of instruments that might be derived. There 
could be some kind of cost sharing or self-insurance amongst 
different States that could seek to share some of these costs. 
I think, certainly, weather derivatives have a good possibility 
to use here, because they are used in some ways to substitute 
for insurance----
    Senator Begich. Right.
    Mr. Sutter [continuing]. On things that would otherwise be 
hard to insure because they would be related to a business's 
cost.
    Senator Begich. Got you.
    Mr. Sutter. So, by tying the payment to some measurable 
weather statistic, like heating degree days or inches of 
snowfall----
    Senator Begich. Right.
    Mr. Sutter [continuing]. Or something like that----
    Senator Begich. Rainfall, things like that.
    Mr. Sutter. Right. You can make a payment that is not so 
directly tied to a business's cost. So, I think they create 
quite a bit of potential for both States and local governments 
to be able to access money to help them rebuild or deal with a 
disaster response, costs, that were not available at the time 
of the passage of the Stafford Act.
    Senator Begich. Very good. Joseph, any thought on that?
    Mr. Nimmich. Yes, sir. Well, both of those, you are 
identifying ways to reapply the risk back to the State as 
opposed to the Federal Government absorbing the risk.
    Senator Begich. Right.
    Mr. Nimmich. So, these are significant changes that we 
would need to look at. There are other opportunities that 
people talk about in terms of being able to do this--a State 
deductible level, where the States, based on their GDP or so--
--
    Senator Begich. Capacity----
    Mr. Nimmich [continuing]. Have a certain deductible that 
they do not get any resources until they have exceeded that 
deductible. There are multiple different ways of looking at 
this problem, but what we are really talking about is putting 
the risk back to the States that have the highest risk----
    Senator Begich. Got you.
    Mr. Nimmich [continuing]. With the potential, I presume, of 
not including those very catastrophic events. So, the 9.0 
earthquake in Alaska is not something that you are going to be 
able to insure against----
    Senator Begich. Right.
    Mr. Nimmich [continuing]. But, certain other things, you 
are, some of the lower ones that we are looking at.
    Senator Begich. Right.
    Mr. Nimmich. That is not how the program is currently 
configured.
    Senator Begich. Understood.
    Mr. Nimmich. And, there are multiple discussions, and we 
can continue to look at alternatives, all of which would need 
to go through the regulatory process.
    Senator Begich. I want to go back to one other part you 
brought up and that is the workforce. You talked about 
administrative costs, but also workforce and some of the issues 
I brought up, especially in rural communities. What are some of 
the things that you see that we could do to improve the 
workforce capacity? And, you mentioned an interesting comment 
here. I think it was you said, I forget which incident it was, 
but 5 percent of the reservists were available. I forget which 
incident that was, but that is not a ready workforce. So, is 
there something that we can do better, FEMA can do better? What 
is the piece here? And, you had mentioned they are working on 
this, but give me some thought there.
    Mr. Currie. Yes, absolutely. The example----
    Senator Begich. You understand the issue I am referring to.
    Mr. Currie. Yes, sir. The example was in Hurricane Sandy--
--
    Senator Begich. OK.
    Mr. Currie [continuing]. Which, obviously, is a very 
extreme example----
    Senator Begich. Right.
    Mr. Currie [continuing]. But something that is well within 
what FEMA plans for. In fact, I think they even plan for having 
multiple events like that going on at a time and factor that 
into how ready they need to be.
    I think FEMA--we have made recommendations in the past that 
they develop a comprehensive workforce plan and analysis. They 
have acted on those. I know they have contracted to actually 
complete those, and some of those are underway.
    I think a big part is workforce training. FEMA has a very 
diverse and different workforce. They have permanent full-time 
people. They have FEMA Corps now. They have the Corps employees 
and they have reservists, all very different employees. For 
example, the reservists are not full-time FEMA employees.
    Senator Begich. Right.
    Mr. Currie. They are called up when they are needed. So, 
one challenge has been how do you train reservists when they 
are not actually deployed to a disaster, when they are off 
doing the other things that they do----
    Senator Begich. Come to Alaska. We have one every week, it 
seems. [Laughter.]
    Mr. Currie. So, FEMA recognizes these challenges, 
obviously, and they have taken steps. They have tried to better 
communicate with reservists when they are not actually 
deployed. They have sent them to the Emergency Management 
Institute, all those things to try to get them ready.
    I think the other thing with the human capital area is 
qualification. This has been a perennial challenge in 
disasters. It was a huge problem in Hurricane Katrina. We 
reported on it. FEMA has made a lot of progress, but it was a 
challenge in Hurricane Sandy, making sure that the people you 
deploy, those thousands all at one time, they are in the right 
job and they have the training and they need to do the job 
right away.
    Senator Begich. Joseph, any thought there?
    Mr. Nimmich. Sir, that is----
    Senator Begich. I mean, you probably agree with what he is 
talking about.
    Mr. Nimmich. Well, it has been a challenge, but we are 
accepting the challenge----
    Senator Begich. Good.
    Mr. Nimmich [continuing]. And working diligently on it. In 
terms of qualifications, it was just a month before Hurricane 
Sandy that FEMA implemented its FEMA Qualifications Standards, 
so that was a real challenge in being able to--none of that had 
taken effect.
    Senator Begich. Right.
    Mr. Nimmich. And, quite frankly, those things do not change 
overnight. It takes a significant amount of time. But, I think 
the biggest step forward we are taking is realizing we have to 
put the infrastructure in place to manage the workforce. So, 
this past June, we created internally to FEMA the Cadre 
Management Program, which puts people in place to be able to 
engage each and every employee in that disaster workforce, 
whether they are a reservist or a Corps or a permanent 
workforce.
    Senator Begich. So, it does not matter where they fall, 
just----
    Mr. Nimmich. If they are part of the disaster workforce and 
have identified that they have a skill set that needs to be 
used in that disaster----
    Senator Begich. Right.
    Mr. Nimmich [continuing]. They have been contacted, and 
they have been contacted to look at what our systems say is 
their qualifications, their experience, the equipment they 
have, their availability, and in the future, we are going to 
add performance in from the last disaster. This is an 
opportunity----
    Senator Begich. Can I ask you a question on that last 
piece?
    Mr. Nimmich. Yes, sir.
    Senator Begich. So, that is basically saying you can then 
analyze did they perform to what we believed was their 
qualification----
    Mr. Nimmich. And, what do I need to provide them if they 
are not able to perform----
    Senator Begich. Got you.
    Mr. Nimmich [continuing]. To what the skill set was, what 
did I lack in providing them so that I can get their skill sets 
up so the advice and the service that they provide to survivors 
in the State is right at the first time, so I am not making 
improper costs--thank you---- [Laughter.]
    Mr. Nimmich. Improper costs----
    Senator Begich. The IG got right in there to make sure you 
had the right language. [Laughter.]
    Mr. Nimmich. Improper costs or contractual vehicles that 
were not in compliance with the Federal Acquisition 
Regulations. So, we are not only looking at it. We are doing 
something about that right now.
    And, Senator, you hit the nail on the head. This is going 
to start allowing us to identify where our training gaps are 
and how we go about creating the infrastructure of training 
that we need so that reservists do not wait 2 years to be 
contacted, and when they are called up, their experience and 
their knowledge is 2 years old----
    Senator Begich. Got you.
    Mr. Nimmich [continuing]. That we are working with them on 
a regular basis.
    Senator Begich. You had mentioned some ideas of how you are 
going to try to get some additional data and some other 
information. Do you believe the information systems that you 
have are adequate to meet the needs of what you want to do in 
trying to analyze--for example, this was a great example, 
workforce, the analytics that you want to do. From our 
information, it just seems that it is not as effective as it 
could be. Is there data that you think, or information systems 
that should be better designed for what you need, or what you 
have is adequate and you can work with what you have got?
    Mr. Nimmich. We have a wealth of data. We do not have the 
tools and the analytics to be able to make the knowledge we 
need out of some of that data.
    Senator Begich. Got you.
    Mr. Nimmich. We have a lot of data. It is not always the 
right data, either, though. So, as a case in point, we should 
be able to use our own data and those of the Weather Service 
and other providers to us to be able to estimate damage far 
earlier in the process than we do so that we can respond 
faster, particularly if it is in individual systems.
    Senator Begich. Why can you not do that right now?
    Mr. Nimmich. Sir, we do not have the skill sets that we are 
developing right now. We have taken on----
    Senator Begich. Within personnel?
    Mr. Nimmich. Yes, sir.
    Senator Begich. OK.
    Mr. Nimmich. Yes, sir. So, we are looking at the better 
skill sets and bringing in those people that have the skill 
sets to understand the data that goes behind the geospatial 
imagery----
    Senator Begich. Yes.
    Mr. Nimmich [continuing]. That we need to be able to say 
what is going on. So, this morning, for the fires in Washington 
State, I can now see where every house has been destroyed, what 
houses are threatened if the fire changes course. So, I can 
anticipate, are they likely to be eligible for some assistance 
and be prepared to do that in a more rapid manner.
    Senator Begich. Got you. So, with that kind of data, the 
question is, your personnel capacity is one of the areas in 
order to look at that and say, OK, we know, based on all the 
weather patterns and everything else, this area could get hit 
by this--I will use the fire as an example--fire disaster, and 
there are 72 homes. This is what we think the average 
valuations are. Here is the cost. Here is what we need to 
prepare for potential damage.
    Mr. Nimmich. So, in the tornadoes that hit Arkansas earlier 
this year, within 24 hours, we were able to estimate that they 
would exceed the thresholds and the other requirements for an 
individual assistance disaster, including the trauma, the 
number of lives lost, the significant damage to a specific 
small town, all of those thresholds they were meeting. So, we 
were able to work with them to get a very rapid individual 
assistance declaration in place that the President approved, 
and within 48 hours after that, we were able to put money in 
people's accounts that they needed to buy food, to be able to 
pay for hotels, to be able to sustain their lives.
    Senator Begich. And, your goal is to make that systemwide.
    Mr. Nimmich. My goal is that every survivor in this country 
gets the same service, whether they are in remote Alaska or 
whether they are in downtown Los Angeles.
    Senator Begich. Very good. I just want to make sure I have 
covered what I want to cover. Let me back up. I am sorry, John, 
you are the center point for a moment here. I think you used 
the words--I may get this wrong, but back to basic plan, or 
getting to the basics. Do you think, as you work through that, 
within FEMA, you are going to identify--obviously, IG and GAO 
have identified areas--will you be able to identify the kind of 
resources or reallocation of resources that may be necessary to 
get to that core issue, or like we just talked about, the data 
inputs that you need to have so it is consistent nationwide, 
and do you think--I think I know the answer to this, so it is 
kind of a, I do not want to make it a softball--but, do you 
think you are going to have the resources within what you have, 
or do you think, at the end of the day, you are going to have 
to figure this out and know that there are some resources 
needed?
    Mr. Nimmich. So, as far as we----
    Senator Begich. Does that make sense, what I am asking?
    Mr. Nimmich. Yes, sir. Absolutely. And, as we work through 
the process that we have put in place now to be able to look 
from our strategy and those goals that the strategy has down 
into the activities that we actually do and be able to equate 
those, too, we are looking for twofold. One is to be able to 
identify, whether we can meet those goals, and if not, do we 
need additional resources. But, also, the Administrator has 
made it very clear. We need to do less but better. Where are 
the areas that we do not have an impact from those resources on 
the outcomes we are trying to achieve, and where do I need to 
put those resources?
    Senator Begich. Reassign.
    Mr. Nimmich. Yes, sir.
    Senator Begich. And reallocate.
    To the folks from the IG and the GAO, thank you for what 
you have done in helping us get some good information to the 
staff who, I am a big believer--in this Committee as well as my 
other Committee I chair over in Commerce, we spend a lot of 
time on oversight. I think the Senate, to be very frank with 
you, does not do enough. We do it when there is a disaster, all 
right. When there is a crisis, pick the Committee, whatever 
Committee you want, when there is something bad happening, 
like, it is only now we have realized there is something wrong 
with the Department of Veterans Affairs (VA), which actually 
the IG and others have done reports on the VA for the last 
decade and a half, but that is another story, but it is only 
now that people realize.
    So, I thank you for participating in this. To the staff, I 
want to thank you for the report, because it really helps us go 
after these issues and look at $1.1-plus billion dollars of 
some that may be wasteful, some may not be. Some may be issues 
that we need to work on. But, also to drill down, I think as 
you said it, John, to what are the systemic issues here. What 
is the root problem of some of these, because it is great to 
get a report, but if we do not go one more step down, then we 
are on to the next report or the next issue.
    And, as you are doing this, the recommendations to me are 
always important, because if you are making these 
recommendations and then 5 years go by, something bad happens, 
FEMA is in here, we are railing on them, and then we go, well, 
wait a second, and you will politely say--and I know that you 
will politely say, well, actually, in 2009, we recommended A, 
B, C, and because we did not do oversight.
    So, what I am hopeful of, that this is the beginning of a 
continual effort, as we have done already on FEMA, following 
it, trying to push the envelope, trying to figure out how to 
make your business more efficient, how to make sure the reports 
that are being issued are being used in a way that really gets 
to the meat of this.
    And, then, Daniel, your comments, try and be innovative in 
how to think beyond. I know in the city of Anchorage, we did 
several things around disaster relief that was different. We 
have private sector folks that work in our disaster relief 
program. They are actually from Sam's and Costco and others. 
Why? Because they are our storehouses. Why would we store all 
that stuff? It does not make any sense. They have the 
warehouses. They have logistics.
    Or, another thing we did, we went on a program to make sure 
every city employee was trained in cardiopulmonary 
resuscitation (CPR). So, at a bare minimum--because, in a 
natural disaster, the odds are you are in your neighborhood. 
You cannot get police and fire fighters to it. First responders 
may not get there because the roads are out. So, if you have 
someone--and we had a 3,000-person workforce, the odds we would 
have someone in those communities if it was an off-hour work 
time that understood basic first aid and CPR. That was part of 
our emergency management plan in a broader sense and trying to 
think ahead rather than when the disaster occurs, clean it all 
up, and then move on to another thing.
    So, I want to really say to the folks at FEMA, I think, as 
identified in the report, we have great assets over there, 
which are our personnel. We have some work to do to create some 
more training opportunities, create some more consistency, not 
only with the full-time, but part-times and the ones that are 
called up.
    I think, on the money issue, we have to drill down and 
figure out what are systematic issues here. With the States, we 
have to create some incentives for them to get their work done, 
because I can tell you, you are right. Some of these projects 
get done, take a long time. But, I can also tell you, as a 
former mayor, you can get things done. We built a bridge in 
Minneapolis in a year and it was done. We can get things done 
if we put our minds to it, especially if there is a little 
incentive to, if you do not do it, you might end up not having 
that money.
    And then, again, trying to figure out on the workforce, 
what more can we do here to make it the best quality workforce 
out there.
    So, this is helpful. It helps us identify opportunities of 
savings, but also opportunities to improve the quality of 
delivery of service here. So, thank you very much for being 
here.
    I may have some other questions. We will keep the record 
open for 15 days for other members who may have some 
information or questions they may have for you.
    But, again, I want to thank you all for being here today 
and testifying in front of the Committee.
    At this time, the Committee is adjourned.
    
    [Whereupon, at 3:31 p.m., the Subcommittee was adjourned.]
    
                            A P P E N D I X

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