Disaster Housing: Implementation of FEMA's Alternative Housing	 
Pilot Program Provides Lessons for Improving Future Competitions 
(31-AUG-07, GAO-07-1143R).					 
                                                                 
The Department of Homeland Security's (DHS) Federal Emergency	 
Management Agency (FEMA) provides direct temporary housing	 
assistance in response to disasters primarily through a 	 
combination of travel trailers and manufactured homes and for a  
period of up to 18 months. In 2005, Hurricanes Katrina and Rita  
devastated much of the housing stock across the Gulf Coast	 
region, leaving thousands of persons in need of temporary housing
for lengthy periods. Uncertainty with respect to neighborhood and
community recovery and individual and community resistance to the
use of travel trailers for extended temporary housing challenged 
the effectiveness of FEMA's traditional temporary housing	 
options. Recognizing these challenges, Congress, in the Fiscal	 
Year 2006 Emergency Supplemental Appropriations Act for Defense, 
the Global War on Terror, and Hurricane Recovery, provided for	 
alternative housing pilot programs in the areas hardest hit by	 
Hurricane Katrina and the other hurricanes of the 2005 season,	 
and appropriated $400 million to DHS for this purpose. To	 
implement this provision of law, FEMA announced a competitive	 
grant program--the Alternative Housing Pilot Program		 
(AHPP)--inviting the five Gulf Coast states (Alabama, Florida,	 
Louisiana, Mississippi, and Texas) to submit proposals for	 
projects that would demonstrate alternatives for housing disaster
victims. FEMA convened a panel of officials to evaluate and score
the projects. In December 2006, FEMA announced that it was	 
awarding Mississippi up to $281.3 million for two projects,	 
Louisiana up to $74.5 million for one project, Texas up to $16.5 
million for one project, and Alabama up to $15.7 million for one 
project. This report examines (1) the processes FEMA followed for
soliciting and evaluating AHPP project proposals, and for	 
selecting projects for funding and determining the funding	 
amounts; (2) how FEMA's processes compare with those of other	 
agencies that carry out similar types of competitive grant	 
programs; and (3) how the group of projects FEMA selected for	 
AHPP funding, as well as other funding options, addresses the	 
goal of identifying alternative forms of disaster housing.	 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-07-1143R					        
    ACCNO:   A75571						        
  TITLE:     Disaster Housing: Implementation of FEMA's Alternative   
Housing Pilot Program Provides Lessons for Improving Future	 
Competitions							 
     DATE:   08/31/2007 
  SUBJECT:   Allocation (Government accounting) 		 
	     Disaster relief aid				 
	     Evaluation criteria				 
	     Federal aid for housing				 
	     Grants to states					 
	     Housing programs					 
	     Hurricane Katrina					 
	     Hurricanes 					 
	     Program evaluation 				 
	     Policies and procedures				 
	     Program implementation				 
	     FEMA Alternative Housing Pilot Program		 

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GAO-07-1143R

   

     * [1]FEMA Convened a National Evaluation Panel to Review AHPP Pro
     * [2]PDF6-Ordering Information.pdf

          * [3]Order by Mail or Phone

August 31, 2007

Congressional Requesters

Subject: Disaster Housing: Implementation of FEMA's Alternative Housing
Pilot Program Provides Lessons for Improving Future Competitions

The Department of Homeland Security's (DHS) Federal Emergency Management
Agency (FEMA) provides direct temporary housing assistance in response to
disasters primarily through a combination of travel trailers and
manufactured homes and for a period of up to 18 months.1 In 2005,
Hurricanes Katrina and Rita devastated much of the housing stock across
the Gulf Coast region, leaving thousands of persons in need of temporary
housing for lengthy periods. Uncertainty with respect to neighborhood and
community recovery and individual and community resistance to the use of
travel trailers for extended temporary housing challenged the
effectiveness of FEMA's traditional temporary housing options.

Recognizing these challenges, Congress, in the Fiscal Year 2006 Emergency
Supplemental Appropriations Act for Defense, the Global War on Terror, and
Hurricane Recovery,2 provided for alternative housing pilot programs in
the areas hardest hit by Hurricane Katrina and the other hurricanes of the
2005 season, and appropriated $400 million to DHS for this purpose. To
implement this provision of law, FEMA announced a competitive grant
program--the Alternative Housing Pilot Program (AHPP)--inviting the five
Gulf Coast states (Alabama, Florida, Louisiana, Mississippi, and Texas) to
submit proposals for projects that would demonstrate alternatives for
housing disaster victims. FEMA convened a panel of officials to evaluate
and score the projects. In December 2006, FEMA announced that it was
awarding Mississippi up to $281.3 million for two projects, Louisiana up
to $74.5 million for one project, Texas up to $16.5 million for one
project, and Alabama up to $15.7 million for one project.

You asked us to review FEMA's implementation of the AHPP. This report
examines (1) the processes FEMA followed for soliciting and evaluating
AHPP project proposals, and for selecting projects for funding and
determining the funding amounts; (2) how FEMA's processes compare with
those of other agencies that carry out similar types of competitive grant
programs; and (3) how the group of projects FEMA selected for AHPP
funding, as well as other funding options, addresses the goal of
identifying alternative forms of disaster housing.

1FEMA has used travel trailers primarily for short-term housing needs and
placed the units on private sites while the homeowner's permanent
residence is under repair or in group configurations to support displaced
renters. FEMA has used manufactured homes for both short- and long-term
disaster housing needs and placed the units on commercial pads or in group
sites.

2P.L. 109-234, 120 STAT. 418.

To assess the processes FEMA followed for soliciting and evaluating AHPP
project proposals, and for selecting projects for funding and determining
the funding amounts, we reviewed the AHPP guidance and application
materials prepared by FEMA, and interviewed agency officials knowledgeable
about the development of these documents. In addition, we reviewed the
applications and the 29 project proposals submitted by the five states,
and interviewed state officials knowledgeable about the preparation of
these documents. We also analyzed documentation of FEMA's evaluation of
the project proposals, including the written comments of the evaluation
panel members. We interviewed FEMA officials and three members of the
evaluation panel to ascertain how the evaluation and scoring process
worked in practice and obtain their views on the program guidance and
related issues. We did not independently verify FEMA's calculations of
aggregate scores for the 29 projects based on the panelists' individual
scores. To assess how FEMA's processes compare with those of other
agencies that carry out similar types of competitive grant programs, we
compared FEMA's processes to those of three other federal agencies: the
Environmental Protection Agency (EPA), the Department of Education
(Education), and the Department of Housing and Urban Development (HUD). We
selected these agencies on the basis of our familiarity with their
competitive grant processes and their implementation of recommendations we
previously made to improve these processes. We reviewed the competitive
grants procedures for FEMA and the other three federal agencies, and
interviewed officials at each agency knowledgeable about the procedures.
To assess how the group of projects FEMA selected for AHPP funding, as
well as other funding options, addresses the goal of identifying
alternative forms of disaster housing, we analyzed documents describing
the rationale for FEMA's selection and funding of project proposals and
interviewed cognizant officials. In addition, we reviewed the DHS
Inspector General's March 2007 evaluation report on the AHPP.3 The DHS
Inspector General's evaluation was conducted in accordance with the
Quality Standards for Inspections prescribed by the President's Council on
Integrity and Efficiency. We also interviewed staff who prepared that
report about the work they conducted as well as their findings and
conclusions. We determined that the information presented in the DHS
Office of the Inspector General (OIG) report was sufficiently reliable for
the purposes of our work. Last, we reviewed statements and testimony from
a hearing on the AHPP conducted by the Senate Homeland Security and
Government Affairs Committee, Subcommittee on Disaster Recovery, on April
24, 2007. We conducted our work in Washington, D.C., from February 2007
through August 2007, in accordance with generally accepted government
auditing standards.

Results in Brief

FEMA solicited applications for the AHPP based on guidance developed by
staff with disaster housing expertise, convened a national evaluation
panel to review and score project proposals from the states, and selected
projects for funding based on the evaluation panel results and other
considerations. Overall, FEMA elected to implement the AHPP as a
competitive grants program, and in September 2006 released written
guidance to solicit applications and project proposals. According to FEMA
officials, the agency restriction of eligible applicants to the five Gulf
Coast states was consistent with its understanding of the legislation
authorizing the pilot program. In addition to providing information on how
states should apply and the deadlines for submitting applications, the
guidance went on to explain the five criteria against which FEMA would
rate the applications, and how FEMA would ultimately make project
selections. To evaluate the 29 distinct project proposals that the states
subsequently submitted, FEMA convened a national panel of 11 federal and
private sector individuals, whose backgrounds represented a variety of
disciplines such as architecture, community recovery, disaster housing
operations, and engineering. The panelists scored each project based on
the established rating criteria. According to FEMA, 19 of the 29 projects
scored competitively, and four of the five states (the exception was
Florida) submitted at least one competitive project. To select projects
for funding, FEMA designated a selecting official and provided the
official with the results of the national evaluation panel, written
comments and recommendations from individual panelists, and the written
project proposals, including the requested funding amounts for each. To
assist the selecting official, FEMA's Deputy Director for Gulf Coast
Recovery distilled the panel's results into three options for allocating
the available funds; these options called for selecting from as few as 2
to a maximum of 10 competitive projects. According to FEMA, the chosen
funding option--partially funding the single highest-scoring project from
Alabama, Louisiana, Mississippi, and Texas at 85 percent of the requested
funding amounts, and allocating the remaining funding to the
next-highest-scoring project, which was submitted by
Mississippi--maximized the number of competitive states receiving AHPP
awards.

3Department of Homeland Security, Office of the Inspector General,
Evaluation of the Federal Emergency Management Agency's Alternative
Housing Pilot Program, OIG-07-39 (Washington, D.C.: April 20, 2007).

FEMA's competitive grant processes for the AHPP were generally similar to
those of Education, EPA, and HUD, but we identified differences--including
a generally shorter time period for submitting applications, the absence
of established maximum (or minimum) award amounts, and the absence of
explicit weights or indicators of the relative importance of the rating
criteria--that could have affected the program's results. The three
agencies' processes include a number of similar requirements. For example,
each agency generally requires that its program offices establish a review
panel to evaluate applications and that the panelists independently review
applications based on criteria outlined in the program guidance. Each
agency also requires that the selecting official recommend applications
for funding based on the review panel's ranking and recommendations and
document the basis for any deviation from the rankings. However, we found
several differences between the processes used by Education, EPA, and HUD
and the processes FEMA followed for the AHPP:

           o The three agencies generally provide applicants longer time
           frames (ranging from 45 to as much as 180 days) to submit
           applications for new or complex competitive grant programs; in
           comparison, FEMA provided its applicants 35 days for the AHPP.
           According to FEMA officials, the agency desired to assist victims
           affected by the 2005 hurricanes in the fastest amount of time.
           However, officials in each of the five states told us that it was
           difficult to prepare their applications within the 35-day time
           frame, and they would have benefited by having additional time.
           Similarly, the DHS Inspector General reported that FEMA might have
           been able to solicit and fund more innovative and creative
           disaster housing solutions had the agency allowed applicants more
           time.
           o Education, EPA, and HUD officials told us that they generally
           include minimum and/or maximum award amounts for their competitive
           grant programs, which helps to ensure that the program offices
           will fund multiple proposals--as in the case of a pilot
           program--without having to partially fund any project. According
           to FEMA officials, the agency did not specify minimum or maximum
           AHPP grant amounts because they believed that any limitations
           would constrain the market-driven nature of the program. However,
           a HUD grants official told us that it can be more difficult to
           judge competitive grant applications without award limits, because
           the requested funding amounts may vary widely (the requested
           funding amounts for the 29 AHPP project proposals ranged from
           $600,000 to $400 million). Similarly, the DHS Inspector General
           reported that it would have been easier to compare the costs of
           each project had FEMA requested that each project include a budget
           showing the minimum amounts required to implement each concept,
           rather than allowing the applicants to submit a "wish-list" budget
           for each project.
           o Education, EPA, and HUD disclose the relative importance of
           rating criteria used to evaluate applications in the program
           guidance for their competitive grant programs. In contrast, FEMA's
           AHPP guidance provided no indication regarding the relative
           importance of the five rating criteria. According to FEMA
           officials, the AHPP guidance could have more clearly stated that
           the rating criteria would be weighted equally.

Because agencies have some discretion in designing competitive grants
processes, these differences do not represent a lack of compliance with
applicable law or regulations. However, they may have affected the quality
and thoroughness of the proposals FEMA received, reduced the amount of
time it had to answer questions from potential applicants, and potentially
reduced the number of disaster housing alternatives explored through the
program. In this regard, FEMA's implementation of the AHPP provides
lessons that can inform similar competitions in the future.

According to FEMA, its selection of five projects for AHPP funding helped
to identify alternative forms of disaster housing by maximizing the number
of competitive states that received grant awards. However, by choosing a
different funding option, FEMA could have similarly maximized the number
of states receiving grant funding and, at the same time, doubled the
number of projects it funded. According to FEMA, the five projects
selected for funding offer a number of housing options that will improve
upon FEMA's traditional disaster housing in areas such as innovative
design, energy efficiency, ease of construction, and community support. To
meet the AHPP's goal of identifying disaster housing alternatives, FEMA
elected to maximize the number of competitive states that received grant
awards (four) and, within those states, to fund the top-rated projects.
According to FEMA officials, this funding option best reflected the
competitive nature of the program--what the market brought to them in
response to the solicitation for proposals--and allowed them to fund the
strongest proposal in each state. However, given the number of projects
determined to be competitive, based on the aggregate scores of the
national evaluation panel members, FEMA could have funded more projects
under a variety of possible options. For example, FEMA could have doubled
the number of projects funded--and more thoroughly addressed the program
goal of evaluating alternatives--by awarding smaller amounts to the top
projects and using the remaining funding for five additional competitive
projects (an option that would have allowed the agency to award grants to
the same four states as in the case of its chosen option). According to
FEMA, doing so would have penalized the "most competitive" proposals by
significantly reducing their funding. However, the DHS Inspector General
reported that by choosing to fund only five projects, FEMA did not fund an
optimum number of "innovate and creative" disaster housing solutions,
citing specifically the example of FEMA's choice to award one project $275
million of the $388 million available.4 We found that evaluation panel
members' comments showed similar concerns, as 10 out of 11 panelists
recommended partially funding this large project--some at significantly
lower levels. While the funding option FEMA chose is consistent with the
authorizing legislation, it resulted in fewer housing alternatives to
evaluate under the AHPP.

4FEMA awarded grants totaling $388 million, as 3 percent, or $12 million,
of the $400 million appropriated for the AHPP was allocated for
administrative costs, management costs, pilot project evaluations, and
amendments as needed.

This report includes a recommendation that, in the event that FEMA
conducts future competitive grant processes for the purpose of identifying
alternative, new, or innovative forms of disaster housing, the Secretary
of DHS direct FEMA to consider (1) longer time frames for applicants to
prepare and submit applications, (2) minimum and/or maximum funding
amounts for grant awards, and (3) stating explicitly the relative
importance of the rating criteria that the agency will use to evaluate
applications. In reviewing a draft of this report, DHS concurred with the
recommendations and offered no other comments. HUD also reviewed the draft
report but had no comments.

Background

FEMA was established in 1979 in an effort to consolidate many federal
policies related to the management of emergencies, including preparedness,
mitigation, and disaster response and recovery. Since its inception,
FEMA's responsibilities have been wide-ranging, including, among other
things, coordination of civil defense and civil emergency planning,
federal disaster relief and disaster preparedness, and coordination of
preparedness and planning to reduce the consequences of major disasters or
terrorist incidents. FEMA became part of the new DHS in March 2003.

The Robert T. Stafford Disaster Relief and Emergency Assistance Act5 (the
Stafford Act) grants the principal authority for the President to provide
assistance in mitigating, responding to, and preparing for disasters and
emergencies such as earthquakes, hurricanes, floods, tornadoes, and
terrorist acts. FEMA administers the Stafford Act and provides direct
temporary housing assistance (e.g., travel trailers and manufactured
homes) under its Individual and Households Program (IHP).6 FEMA provides
these units, acquired by purchase or lease, directly to disaster victims,
who, because of a lack of available housing resources, would be unable to
make use of financial assistance to rent alternate housing accommodations
(fig. 1).

5The Stafford Act is codified as amended at 42 U.S.C. S 5121 et seq.

6Direct assistance is one of the five types of housing assistance
authorized under section 408 of the Stafford Act. The other four types
include financial assistance to (1) rent alternate housing accommodations;
(2) repair owner-occupied private residences, utilities, and residential
infrastructure; (3) replace owner-occupied private residences; and (4)
construct permanent or semipermanent housing in insular and other areas
where no alternative housing resources are available and other forms of
authorized temporary housing assistance are unavailable, infeasible, or
not cost-effective.

Figure 1: Example of FEMA Travel Trailer

Hurricane Katrina made landfall in late August 2005 and devastated much of
the Gulf Coast; the storm surge caused major or catastrophic damage along
the coastlines of Alabama, Mississippi, and Louisiana. Hurricane Rita
caused further devastation, making landfall on the Gulf Coast in September
2005. According to FEMA, several factors related to these storms have
challenged the efficacy of the agency's traditional temporary housing
options, which are limited to an 18-month period by the Stafford Act.7
These factors include the following:

           o A significant number of homes on private lots were completely
           destroyed.
           o Complete neighborhoods were destroyed.
           o Many communities face protracted recovery timelines, with the
           likelihood that temporary housing may be required in some cases
           for extended periods.
           o A shortage of resources for reconstruction of homes, uncertainty
           with respect to community and neighborhood recovery, and labor
           shortages (among other things) have limited the pace of recovery.
           o Communities and individuals are resistant to the extended use of
           FEMA's travel trailers for temporary housing.

Section 2403 of the Fiscal Year 2006 Emergency Supplemental Appropriations
Act for Defense, the Global War on Terror, and Hurricane Recovery
authorizes "alternative housing pilot programs in the areas hardest hit by
Hurricane Katrina and the other hurricanes of the 2005 season" under the
IHP. According to FEMA, the AHPP represents a onetime exception to the
limitations on its authority under the Stafford Act to provide
nontemporary housing solutions and enables FEMA to explore, implement, and
evaluate innovative approaches to both short- and intermediate-term
housing solutions that may be worthy of future consideration.

7After the 18-month period, FEMA may charge fair market rent for each
temporary housing unit provided unless the President extends the 18-month
free-of-charge period due to extraordinary circumstances. According to
FEMA, the temporary housing assistance programs for Gulf Coast hurricane
victims have been extended until March 1, 2009. As of May 25, 2007, FEMA
data showed that the agency was providing direct temporary housing
assistance to 76,187 households as a result of Hurricanes Katrina and
Rita.

FEMA established four objectives for the AHPP:

           o evaluate the efficacy of nontraditional short- and
           intermediate-term housing alternatives for potential future use in
           a catastrophic disaster environment;
           o identify, develop, and evaluate alternatives to and alternative
           forms of FEMA disaster housing to assist victims of the 2005
           hurricanes in the Gulf Coast;
           o consider the feasibility of these options as part of the
           standard package of housing assistance that could be made
           available by federal government agencies or state agencies for
           other disasters of various sizes, locations, and impacts; and
           o ensure that pilot projects address the needs of a variety of
           populations, such as persons with disabilities and the elderly,
           historically underserved populations as well as renters,
           homeowners, single-family dwelling occupants, and multifamily
           dwelling occupants.

FEMA designated its Gulf Coast Recovery Office, located in New Orleans, to
be responsible for carrying out the AHPP.

FEMA Developed Processes for Soliciting and Evaluating Proposed Projects,
while Selecting Official Made Final Selections and Determined Funding
Amounts

Overall, FEMA elected to award grants through a competitive process, which
it outlined in the AHPP Guidance and Application Kit published on
September 15, 2006, inviting the five Gulf Coast states--Alabama, Florida,
Louisiana, Mississippi, and Texas--to submit applications for the funding
available under the pilot program.8 According to FEMA officials, the
agency's Gulf Coast Recovery Office developed the AHPP guidance in
consultation with agency staff that had disaster housing expertise. FEMA
also received assistance from HUD staff in developing the AHPP guidance.
HUD officials told us that their agency's staff assisted FEMA in
developing various aspects of the AHPP guidance, such as the appropriate
building code requirements for projects and the rating criteria for
evaluating proposals. In addition, HUD provided FEMA with copies of
funding announcements for certain HUD competitive grant programs that the
department had previously implemented. HUD staff also worked with FEMA to
develop the evaluation component of the AHPP, under which the projects
selected for funding will be evaluated after the housing has been in place
for 24 months or more.9

8Specifically, "agencies designated by the Governors" of these five
states.

9According to the guidance, HUD is to conduct two interrelated evaluations
of the AHPP--a short-term evaluation to address factors associated with
the type, codes, cost, time frames, and acceptability of the projects
selected, and a concurrent evaluation to address the longer-term energy
and maintenance costs, durability, consumer perceptions, and effect of the
housing on individual and long-term community recovery and well-being.

FEMA officials told us that the agency designed the AHPP guidance to be
consistent with its understanding of the legislation authorizing the pilot
program, restricting the eligible applicants to the five Gulf Coast states
to comply with the requirement that the pilot program be implemented in
the areas hardest hit by Hurricane Katrina and the other hurricanes of the
2005 season. (Each state designated a state agency as the applicant under
the program.) FEMA also stipulated that individuals placed in the housing
should be those displaced by the 2005 hurricanes with continuous
posthurricane housing needs not adequately met by traditional forms of
temporary housing. According to FEMA, the authorizing legislation did not
define any other requirements for the pilot program, giving the agency
substantial discretion in deciding the terms and conditions under which it
would make AHPP grant awards. As such, after consultation with HUD, FEMA
published the guidance. In addition to providing information on, among
other things, how states should apply and the deadlines for submitting
applications, the guidance went on to explain the criteria against which
FEMA would judge the applications, and how FEMA would ultimately make
project selections. More specifically, the guidance provided the
following:

           o Award information--FEMA instructed state agencies to submit
           applications for an allocation of the $400 million appropriated
           for the pilot program, and encouraged state agencies to propose
           multiple projects as part of their applications. The guidance
           stipulated that specific funding levels would not be predetermined
           or allocated to specific states, and that one or multiple awards
           might be made based on the quality of the proposals. While the
           guidance required information on each project's life cycle cost,
           it did not specify any minimum or maximum amount that state
           agencies could request for each project.

           o Rating criteria--FEMA established five rating criteria to
           evaluate proposed projects: (1) the manner and extent to which the
           project improved upon the conditions characteristic of existing
           temporary housing and improved long-term recovery; (2) the extent
           to which the project could provide ready-for-occupancy housing
           within time frames and in quantities sufficient to meet
           disaster-related needs under a range of scenarios, including
           sudden onset catastrophic disasters; (3) estimated life cycle
           cost, including the cost to acquire, transport,
           install/construct/repair, and maintain the housing during the
           period of occupancy by disaster victims; (4) the capacity of the
           proposed project to be utilized in and adapt to a variety of site
           conditions and locations; and, (5) the extent to which local
           officials, local neighborhood associations, and other community
           organizations were part of or support the project in the community
           in which it was to be placed. The guidance provided no indication
           of the relative importance of any of the rating criteria.

According to FEMA, the AHPP guidance also adhered closely to the agency's
draft standard operating procedures for competitive grants.10 For example,
these procedures state that FEMA's basic policy is to seek maximum open
and free competition for competitive grants. To meet this basic policy for
the AHPP grants, FEMA officials chose not to predetermine or allocate
specific funding levels to the eligible states. In addition, these
procedures stated that FEMA would conduct a preliminary technical review
of applications; an independent panel would review applications against
established criteria; and the approving official would consider the
ranking, any comments and recommendations from the independent reviewers,
and any other available advice or information before deciding which
applications to approve--and document any deviation from the ranking. As
discussed later in this report, FEMA followed these procedures in
implementing the AHPP.

As with any new grant program, FEMA's Grants Management Office reviewed
the AHPP guidance prior to its release. The purpose of the Grants
Management Office's review is to ensure compliance with overall agency
policies as well as those of the Office of Management and Budget (OMB),
and advise the program office (in this case, the Gulf Coast Recovery
Office) of any suggestions or concerns that may affect the conduct of the
proposed competitive grant program. According to the Grants Management
Office official who reviewed the draft AHPP guidance, the office raised
two issues, one of which resulted in a change in the final guidance and
one that did not. The first issue was the biweekly reporting proposed to
be required of grantees, a reporting frequency greater than OMB's
prescribed quarterly or semiannual reporting for federal agencies. To
require more frequent reporting, FEMA would have had to obtain an
exception from OMB, which, the FEMA Grants Management Office official
believed, would likely have delayed the issuance of the AHPP guidance. The
Gulf Coast Recovery Office subsequently revised the draft guidance and
specified a quarterly reporting requirement in the final AHPP guidance.

10According to a FEMA Grants Management Office official, the agency refers
to the procedures as "draft" because it has not yet incorporated them into
its Grants Handbook, which spells out policies and procedures for all of
its grants management activities (that is, including those that take place
after grants are awarded). According to this official, FEMA has followed
the procedures outlined in the draft since 2004, and the officials who
designed the AHPP were required to adhere to them.

The second issue was the proposed time frame for states to submit
applications. FEMA proposed to require the state-designated agencies to
submit applications within 35 days following the release of the AHPP
guidance. The Grants Management Office, noting that this represented a
very tight deadline, recommended that the Gulf Coast Recovery Office
provide the states with 90 days to submit applications. The Grants
Management Office official told us that a longer time frame would have
been beneficial because, for example, it would have enabled the agency to
conduct "town hall" meetings with the states to answer any questions they
might have had regarding the application process. The Deputy Director for
Gulf Coast Recovery told us that he did not recall receiving this advice.
Further, he reiterated his belief that, at the time during which the
guidance was being developed, the states were sufficiently aware of the
program and of alternative housing concepts and that this, coupled with
the agency's interpretation of congressional intent to award the grants
quickly, justified the 35-day application deadline.

FEMA Convened a National Evaluation Panel to Review AHPP Project Proposals

The AHPP guidance stated that FEMA would chair a national evaluation panel
composed of representatives from DHS, HUD, the private sector, and
not-for-profit organizations, and that the selection panel would evaluate
and rate all proposals and make recommendations to the FEMA senior manager
about which proposals, or portions of a proposal, to fund. While
developing the AHPP program guidance, FEMA's Gulf Coast Recovery Office
also identified candidates to serve on the national evaluation panel.
According to FEMA officials, the agency sought individuals within DHS, and
specifically within FEMA, with various types of experience that,
collectively, could allow them to assess project proposals relative to the
purposes of the AHPP--including individuals with expertise in mitigation,
flood plain management, building science, engineering, environmental
requirements, and historical preservation requirements. In addition, FEMA
sought expertise from officials with pertinent private and nonfederal
public sector expertise, including those with architectural, construction,
and emergency management backgrounds. Ultimately, FEMA's Deputy
Administrator and Chief Operating Officer selected 11 individuals to
participate on the national evaluation panel, including representatives
from the American Institute of Architects, National Emergency Management
Association, and a private sector construction/engineering firm, and staff
from the Office of Federal Coordinator for Gulf Coast Rebuilding, HUD,
FEMA, and DHS Preparedness.11

11The American Institute of Architects represents the professional
interests of architects and promotes excellence in design and livability
in buildings and communities; the National Emergency Management
Association is the professional association for state emergency management
directors.

FEMA convened the national evaluation panel in November 2006. According to
FEMA, each panelist reviewed all 29 project proposals submitted by the
five states. In addition, FEMA assigned each panelist two to four projects
as the primary reviewer and an additional two to four projects as the
secondary reviewer. The primary reviewer presented the details of the
project to the other members of the review panel, with the secondary
reviewer providing any additional observations regarding the project.
After the review panel members discussed any questions regarding the
project, each of the panelists individually recorded a score of one
(unsatisfactory) to five (excellent) for each of the five rating criteria
described in the AHPP guidance. Panelists shared their initial scores for
the project with the review panel as a whole, and were provided time for
further discussion. Finally, each panel member recorded a final score for
the project independent of the other panelists. FEMA computed an aggregate
score for each of the 29 projects, based on the panelists' individual
scores. According to FEMA, the average score was about 120, and FEMA
considered the 19 projects with a score over 120 as competitive. Table 1
shows the 19 projects in national evaluation panel rank order that FEMA
considered as competitive.

Table 1: Competitive AHPP Projects in National Evaluation Panel Rank Order
        Rank State           Project name                               Score 
           1 Mississippi     Green Mobilea                                184 
           2 Mississippi     Park Model and Mississippi Cottage           182 
           3 Louisiana       Cypress Cottage Partners                     176 
           4 Texas           Heston                                       159 
           5 Mississippi     Modular Town Home                            157 
           6 Alabama         City of Bayou La Batre                       155 
           7 Alabama         Mobile County Proposal B                     146 
           8 Texas           Palm Harbor Homes                            145 
           9 Alabama         Baldwin County                               141 
          10 Louisiana       Home at Last                                 135 
          11 Louisiana       Phoenix Systems Built Home                   135 
          12 Texas           Centera                                      133 
          13 Alabama         Mobile County Proposal A                     129 
          14 Louisiana       Palm Harbor                                  129 
          15 Texas           Octogon                                      128 
          16 Alabama         City of Greensboro                           126 
          17 Alabama         City of Thomasville                          125 
          18 Alabama         City of Andalusia                            121 
          19 Louisiana       Homes Now                                    121 

Source: FEMA.

aAccording to a Mississippi state agency official, the Green Mobile
project is currently referred to as the Mississippi Eco Cottage.

The AHPP guidance stated that the national evaluation panel would make
recommendations to the FEMA senior manager about which proposals or
portions of a proposal to fund. However, FEMA officials told us that they
did not intend for the panel to reach a consensus on projects to fund;
rather, they considered the panelists to be making individual
recommendations about the merits of each project. As discussed
subsequently in this report, several panelists individually recommended
that certain of the projects they reviewed receive funding, but commented
that the funding should be less than that requested by the applicant.

FEMA Selected Projects and Determined Related Funding Amounts Based on the
National Evaluation Panel Results and Other Considerations

The AHPP guidance stated that the approving federal official (the
selecting official) at FEMA would consider the national evaluation score,
the comments and recommendations from independent panelists, and any other
pertinent information in determining which projects to select, up to the
amount of funds available for the program. FEMA's Deputy Director for Gulf
Coast Recovery chose to summarize the results of the national evaluation
panel in a December 2006 memorandum to the AHPP selecting official.
Specifically, this memo included an overview of the AHPP, a list of the 29
project proposals in national evaluation panel rank order, a summary of
the panelists' comments for each project proposal, and three possible
funding options. Specifically:

           o Option 1: Fully fund the highest scoring projects until money is
           exhausted. FEMA would fund the top scoring project from
           Mississippi at 100 percent of the requested funding and the second
           highest scoring project (also from Mississippi) at 95 percent of
           the requested funding.

           o Option 2: Optimize the number of housing alternatives funded
           within the competitive range. FEMA would fund 10 of the top
           scoring projects in a manner allowing for a variety of housing
           solutions to be tested. However, some of the larger and most
           competitive projects would be substantially reduced.

           o Option 3: Maximize the number of competitive states that receive
           awards. FEMA would fund the top project from each state (excluding
           Florida because the panel scored none of its projects as
           competitive--i.e., with a score of 120 or greater) at 85 percent
           of requested funding. FEMA would allocate the remaining funding to
           the Park Model and Mississippi Cottage project, the next highest
           scoring project proposal.

According to the Deputy Director for Gulf Coast Recovery, the intent of
this memorandum was to summarize the results of the national evaluation
panel for the selecting official and distill options for dealing with the
results of the panel's deliberations. The Deputy Director told us that no
one requested that he develop the three options, and that his intent was
to best reflect the competitive process and to secure funding for the most
competitive projects. The Deputy Director also told us that, in developing
the three funding options, he considered the rank order of projects--that
is, the aggregate score for each project as determined by the panelists'
individual scores--and the amounts requested for each project, but did not
factor the individual comments made by the panelists into the options. He
acknowledged that any number of options could have been developed, and
also commented that the three funding options were not binding--that is,
the AHPP selecting official did not have to select or fund projects in
accordance with any of the options.

The AHPP selecting official chose option 3 proposed by the Deputy Director
for Gulf Coast Recovery, which was characterized as maximizing the number
of competitive states that receive awards and resulted in five projects
receiving funding (see table 2). Specifically, FEMA (1) selected for AHPP
grant awards 5 of the 29 project proposals submitted by the states based
on the selecting official's review of the project proposals and
consideration of the recommendations from the national evaluation panel
and (2) funded them at reduced amounts (i.e., less than the amounts
requested in their applications), based on these factors, further analysis
of the amounts requested, and the funding FEMA had available for the
program. This resulted in FEMA funding the top scoring project proposal
from Alabama, Louisiana, Mississippi, and Texas at 85 percent of requested
funding and allocating the remaining available funding to the next highest
scoring project (the Park Model and Mississippi Cottage), which had been
proposed by Mississippi.

Table 2: Summary of AHPP Selecting Official's Recommended Project
Selections and Funding Allocations
                                                        Percentage   National 
                                            Recommended         of evaluation 
                                 Requested      funding  requested      panel 
Project name   State            funding       amount    funding    ranking 
Green Mobile   Mississippi   $6,930,450   $5,890,882       85.0          1 
Park Model and Mississippi $400,000,000 $275,427,730       68.9          2 
Mississippi                                                                
Cottage                                                                    
Cypress        Louisiana    $87,696,906  $74,542,370       85.0          3 
Cottage                                                                    
Partners                                                                   
Heston Group   Texas        $19,378,500  $16,471,725       85.0          4 
City of Bayou                                                              
La Bartre      Alabama      $18,432,110  $15,667,293       85.0          6 
Total                                   $388,000,000                       

Source: FEMA.

In commenting on the recommendations, the AHPP selecting official stated
that the selections reflected choosing the strongest project from each of
the competitive states and a second project from Mississippi that met the
AHPP rating criteria exceedingly well and received the second highest
score from the national evaluation panel. How this option, as well as
possible others, compares with the program's goal of exploring alternative
forms of disaster housing is discussed later in this report.

While Generally Similar to Competitive Grants Processes of Education, EPA,
and HUD, FEMA's Processes Differed in Time Frames, Maximum Award Amounts,
and Application Rating Criteria

FEMA's AHPP grant processes were generally similar to the competitive
grant processes of Education, EPA, and HUD. For example, program officials
at each agency identify individuals with relevant skills, knowledge, or
expertise as candidates for their panels that review applications. In
addition, these agencies generally select at least three individuals to
participate on their review panels, although the level of the official
making the final selections varied among the agencies. FEMA's Gulf Coast
Recovery Office followed a similar process in identifying candidates for
the AHPP national evaluation panel, and the agency ultimately selected 11
individuals to participate on the panel. Each agency also requires that
the panelists independently review applications in accordance with the
criteria stated in its respective program guidance. Further, each agency
requires the selecting official to base project selections and funding
decisions on the review panel's ranking and recommendations, and to
document any deviation from the ranking. Table 3 summarizes these and
other similarities between FEMA's AHPP grant processes and the competitive
grant processes of Education, EPA, and HUD.

Table 3: Similar Features among Selected Agencies Competitive Grants       
Processes                                                                  
      o Applications are subject to initial eligibility determination.        
                                                                              
      o Program officials identify individuals with specific relevant skills, 
      knowledge, or expertise as candidates for review panels.                
                                                                              
      o Three or more individuals are selected to participate on review       
      panels.                                                                 
                                                                              
      o Panelists must independently review applications based on established 
      criteria.                                                               
                                                                              
      o A rank-order list of applications is developed based on panel         
      evaluation.                                                             
                                                                              
      o Selecting official is obligated to consider the results of panel      
      evaluation when determining which applications will be awarded grants.  

Source: GAO analysis.

FEMA's AHPP processes also complied with relevant OMB grant guidance that
applies governmentwide. For example, FEMA had grant applicants submit
standardized applicant forms, in accordance with OMB Circular A-102,
Grants and Cooperative Agreements with State and Local Governments.
Furthermore, FEMA directed state grantees to require that sub-grantees
comply with the audit requirements of OMB Circular A-133, Audits of
States, Local Governments, and Non-Profit Organizations.

Differences in FEMA's Processes May Have Affected the AHPP Results

We identified differences between the processes FEMA followed for awarding
AHPP grants and the competitive grant processes of Education, EPA, and
HUD. While the differences do not represent a lack of compliance with
applicable law or regulations, they may have affected the quality and
thoroughness of the proposals FEMA received, reduced the amount of time it
had to answer questions from potential applicants, and potentially reduced
the number of alternative proposals the evaluation panel ultimately had to
consider in its deliberations. More specifically:

           o Application deadline--FEMA provided the five eligible states 35
           days to submit their applications under the AHPP. Education, EPA,
           and HUD program offices generally provide applicants with longer
           time frames to submit applications for new or complex grant
           programs. For example, Education's competitive grant procedures
           require program officials to provide applicants a minimum of 60
           days to submit applications for funding under new programs,
           compared with 45 days for existing programs. In addition, EPA's
           competitive grants procedures, for open competitions, generally
           require program officials to provide applicants at least 45 days
           to submit applications. The director of HUD's Office of
           Departmental Grants Management and Oversight told us that,
           depending on the complexity of the program, the time frame for
           submitting applications for HUD grants can be as little as 45 days
           and as much as 180 days. According to FEMA officials, the agency
           determined that time frames for implementing the AHPP needed to be
           short in order to assist victims affected by the 2005 hurricanes
           in the fastest amount of time. FEMA officials also told us that
           the agency established a shorter time frame for submitting
           applications because the concept of alternative housing options
           was not new when the agency released the AHPP guidance, as FEMA
           and state officials had discussed various alternatives to the FEMA
           travel trailer and manufactured home and some concepts had been
           presented. For example, Mississippi sponsored a forum in October
           2005 where architects, engineers, and community planners discussed
           rebuilding options, including one concept presented as an
           alternative to the FEMA travel trailer. For this reason, FEMA
           officials contended that the 35-day time frame did not have an
           effect on the quality of the AHPP project proposals that the
           agency received.

           However, officials from each of the five state agencies told us
           that it was difficult to prepare the application and project
           proposals within the 35-day time frame and they would have
           benefited by having additional time. For example, some state
           agency officials told us that they did not have enough time to
           secure title to the sites for proposed projects; one state
           official noted that this process can take up to 6 months. In other
           cases, state agency officials told us that they did not have
           enough time to follow their normal procurement practices for
           soliciting ideas for alternative housing solutions. Furthermore,
           some state agency officials also told us that a longer time frame
           would have provided additional time to ask FEMA questions
           regarding the AHPP guidance and application process. Similarly, in
           its April 2007 report on the AHPP, the DHS OIG reported that FEMA
           might have been able to solicit and fund more innovative and
           creative disaster housing solutions had the agency allowed
           applicants more time.12 Finally, the three AHPP review panelists
           we interviewed also told us that they did not believe 35 days was
           a sufficient amount of time for states to develop proposals.

           o Minimum/maximum award amounts--The AHPP guidance did not specify
           a minimum or maximum amount that the states could request for each
           project, and the funding requests for the 29 projects submitted
           ranged from $600,000 to $400 million. Officials of Education, EPA,
           and HUD told us that, when they have discretion in designing
           competitive grant programs because the authorizing statutes for
           the programs have not prescribed certain provisions, such as
           minimum or maximum amounts that applicants may request, they
           typically choose to establish them. According to FEMA officials,
           the agency placed no limitations on the amounts that the states
           could request for each project because it sought to obtain the
           best ideas from the marketplace and felt that any limitations
           would constrain this process. In addition, FEMA was not certain
           how many eligible states might submit AHPP applications or how
           many project proposals the agency might receive, and did not want
           to place constraints on the amount it might award to any one
           proposal.

           A senior official in EPA's Office of Grants and Debarment told us
           that award limitations help to ensure that program offices will
           fund multiple projects--as in the case of a pilot program--without
           having to partially fund a project. In addition, the director of
           HUD's Office of Departmental Grants Management and Oversight told
           us that it can be more difficult to judge applications under a
           competitive grant program without award limitations, because the
           budget amounts may vary widely. The DHS OIG also noted in its
           April 2007 report that it would have been easier to compare the
           costs of each project had the AHPP guidance requested that each
           project include a budget that showed the minimum amounts required
           to implement each concept (with some
           adequate-for-testing-and-evaluation number of units, such as 25 or
           50), rather than allowing the applicants to submit a "wish-list"
           budget for each project.13 Furthermore, one AHPP review panelist
           we interviewed told us that it was more difficult to evaluate and
           make comparisons among the project proposals because the funding
           requests varied greatly.

12OIG-07-39.

13OIG-07-39.

           o Rating criteria--The AHPP guidance provided no indication of the
           relative importance of any of the five rating criteria, and in
           fact FEMA did not assign weights but rather treated each criterion
           equally. In contrast, Education, EPA, and HUD program offices
           disclose in the program guidance information regarding the
           relative importance of rating criteria that will be used to
           evaluate applications. According to FEMA officials, the AHPP
           guidance could have more clearly stated that the rating criteria
           would be weighted equally. These officials also told us that, in
           retrospect, the agency could have given more consideration to
           which of the five rating criteria were more important than others.
           Similarly, the DHS OIG's April 2007 report noted that it was
           unusual when some evaluation factors are not considered to be more
           important than other factors, and concluded that the project
           assessments were possibly unbalanced in that every factor was
           given the same weight as all of the other factors.14

Selected Projects Will Provide Housing Alternatives, but FEMA Could Have
Funded More Projects

According to FEMA, the five projects selected for AHPP funding to help
identify alternative forms of disaster housing for evaluation were chosen
to maximize the number of competitive states that receive grant awards.
FEMA officials indicated to us that this option, among all of those the
selecting official considered, best balances the competitive nature of the
AHPP, which was intended to solicit ideas from the marketplace and secure
funding for only the most competitively rated projects. As a result, FEMA
elected to fund the top rated projects from the four states that submitted
competitive proposals (excluding Florida) at 85 percent of requested
funding and allocate the remaining funding to the next highest rated
project, which was from Mississippi. (The latter, while a single "project"
for purposes of the competition, consists of proposals to construct two
types of units.)

The five projects FEMA chose for funding offer a number of housing
options, including single family modular homes that can be deconstructed,
one-story multifamily units that offer varying layouts, modular units
placed on an undercarriage and frame, and prefabricated panelized housing.
In addition, the group of projects is intended to improve upon FEMA's
traditional housing options in areas such as innovative design, energy
efficiency, ease of construction, and community support. For example,
Mississippi's Green Mobile project is intended to provide an improved
emergency housing alternative by emphasizing innovative design features
that are durable and energy efficient and can be adapted to varied family
needs. In addition, Louisiana's Cypress Cottage Partners project is
intended to provide semipermanent and permanent housing solutions that can
be built relatively quickly. Figure 2 describes the five projects selected
for AHPP funding.

14OIG-07-39.

Figure 2: Projects Funded under the AHPP

FEMA Could Have Funded More Alternative Housing Projects Using a Different
Funding Allocation

FEMA could also have increased the number of projects to evaluate under
other funding options. As previously noted, the Gulf Coast Recovery Office
developed three possible options for allocating the funding available
under the AHPP. Under one of these options, FEMA would have funded 10
competitively ranked projects (worthy of consideration) in four states
(Alabama, Louisiana, Mississippi, and Texas, the same states that
ultimately received AHPP grant awards) by scaling down some of the funding
allocations of the top five projects and using the remaining funding for
five additional competitive projects. Specifically, FEMA would have
partially or fully funded three projects in Louisiana, three projects in
Mississippi, two projects in Alabama, and two projects in Texas. Table 4
provides details on the projects and the recommended funding amounts they
would have received had the FEMA selecting official chosen this option.

Table 4: Option FEMA Considered to Fund More Projects under the AHPP
                                                                Rank based on 
                                                                    scores of 
                                   Recommended   Percentage          national 
Project name        Requested funding under of requested        evaluation 
(state)               funding   this option      funding         panelists 
Green Mobile                                                               
(Mississippi)      $6,930,450    $6,930,450          100                 1 
Park Model and                                                             
Mississippi                                                                
Cottage                                                                    
(Mississippi)     400,000,000    99,283,657         24.8                 2 
Cypres Cottage                                                             
Partners                                                                   
(Louisiana)        87,696,906    87,696,906          100                 3 
Heston Group                                                               
(Texas)            19,378,500    16,972,906         87.6                 4 
Modular Town Home                                                          
(Mississippi)      88,800,000    46,336,731         52.2                 5 
City of Bayou La                                                           
Batre (Alabama)    18,432,110    18,432,110          100                 6 
Mobile Country                                                             
Proposal B                                                                 
(Alabama)          32,500,650    32,500,650          100                 7 
Palm Harbor Homes                                                          
(Texas)            25,212,300    25,212,300          100                 8 
Home at Last                                                               
(Louisiana)        13,540,513    13,540,513          100         10 (tied) 
Phoenix                                                                    
Systems-Built                                                              
Home (Louisiana)   91,455,038    41,093,770         44.9         10 (tied) 
Total                          $387,999,993                                

Source: FEMA.

Note: According to FEMA, the ninth ranked project (Alabama Baldwin County)
was not recommended for funding under this option because it proposed the
same housing solution as the eighth ranked project (Texas Palm Harbor
Homes).

According to FEMA's Deputy Director for Gulf Coast Recovery, this option
of funding 10 projects represented one of many options that the AHPP
selecting official could have recommended to allocate funding under the
pilot program. In developing this option, the Deputy Director indicated
that it would enable FEMA to fund the top projects in a manner that
allowed for a variety of housing solutions to be tested. However, the
Deputy Director remarked that this option would not have been the best
choice because it "penalized" some of the most competitive proposals by
significantly reducing the requested funding amount. Similarly, FEMA
indicated that another funding option it considered but did not choose had
drawbacks as well. That option, under which FEMA would have funded only
the highest scoring projects until it exhausted its available funding,
would have resulted in the agency awarding all of the AHPP funds to two
projects (both in Mississippi)--assuming that the projects were funded up
to the amount requested for each, rather than at some lesser amount as
recommended by some individual panel members. According to the Deputy
Director and the selecting official, choosing this option would have
quickly exhausted the available funding and precluded it from funding
excellent, competitive projects from the other states and increasing the
alternative housing options it would develop under the AHPP. As a result,
the Deputy Director believed that the selection of five projects for AHPP
funding represented the best funding solution consistent with the
competitive process.

In its review of FEMA's implementation of the AHPP, the DHS Inspector
General raised a concern about the effect of FEMA's choice to award AHPP
funds in the manner it did. Specifically, the OIG reported that, had the
selecting official chosen the option under which FEMA would have maximized
the number of competitive projects receiving awards (the option funding 10
projects), the AHPP grant funds would be much more effective in exploring
and testing "innovative and creative" alternative solutions to disaster
housing.15 Furthermore, the OIG stated that FEMA did not fund an optimum
number of "innovate and creative" disaster housing solutions because, by
selecting and funding the 5 projects it did rather than the 10 under this
option, FEMA awarded the vast majority of the available funds (about 71
percent) to one project in one state (Park Model and Mississippi Cottage).

Our analysis of the evaluation panel member's comments on the project
proposals showed similar concerns with awarding to 1 project such a
substantial portion of available AHPP funding and the effect this might
have on the goal of developing housing alternatives to evaluate. We found
that 10 out of 11 panelists recommended partially funding the $400 million
requested for this large project--some at significantly lower levels. For
example, 1 panelist strongly recommended that the project be funded at a
maximum of 10 percent of the proposed level, noting that the intention of
the program is to test different forms of housing as a pilot; another
panelist suggested the funding level be at 20 percent.

Although the AHPP selecting official ultimately recommended funding this
project (the Park Model and Mississippi Cottage) at 69 percent of
requested funding (or $275.4 million), in doing so he stated that there
were issues requiring resolution, one of which may have reflected the
concerns the panelists raised. Specifically, the official noted that this
project should "address the proposed balance between the Park Model and
Mississippi Cottage to provide for a better evaluation of the efficiency
of one option versus the other." As a result, FEMA officials stated that,
in subsequent postaward negotiations with Mississippi, they were working
to adjust the mix of these two types of housing for which the state would
ultimately receive grant funds in order to reduce the number of Park Model
units to be built. The selecting official also noted a concern with the
similarity between the Park Model units and some of the existing
manufactured homes through which FEMA currently provides disaster housing
(also named Park Model), writing in his recommendation to fund the project
that consideration should be given to "expanding the available square
footage of the Park Model to demonstrate more contrast to the existing
Park Model options."

Conclusions

The legislation creating the AHPP did not specify in detail how FEMA was
to design and implement the program and award the grant funds. FEMA's
choice of a competitive grant program, to be implemented expeditiously,
was intended to be consistent with the authorizing legislation. In
designing the program, FEMA planned for the AHPP to not only address
continuing housing needs, but also to generate ideas for how to do so in
better ways in future disasters. FEMA's choices will likely meet these
goals. However, the experience of implementing the AHPP, as well as
insights from other agencies' competitive grants' processes, provide
useful lessons that may be worth exploring as part of any future attempt
on FEMA's part to identify alternative, new, or innovative forms of
disaster housing. Specifically:

           o Allowing applicants more time could increase the quantity and
           quality of proposals. Perceiving some urgency to quickly implement
           the program, FEMA gave applicants 35 days to prepare and submit
           their applications for AHPP grants, even though the program was
           new and intended to elicit innovation. The other federal agencies
           whose competitive grants processes we examined--Education, EPA,
           and HUD--advised that giving applicants more time to apply,
           particularly for a new program, makes it more likely the agency
           will receive more proposals to evaluate.
           o Establishing minimum and/or maximum grant award amounts could
           help ensure comparability among proposals and ultimately lead to
           funding a greater number of innovative proposals. In the absence
           of such limits, FEMA received applications for individual projects
           ranging from $600,000 to $400 million. When they can, officials at
           Education, EPA, and HUD typically establish minimum or maximum
           amounts, which help to ensure that they will fund multiple
           projects.
           o Determining the relative weight of each rating criterion, and
           explicitly stating these weights in program guidance, would also
           help promote comparability among proposals. The other agencies we
           consulted disclose this information. FEMA's failure to do so,
           according to the DHS Inspector General, created the possibility
           that panel members' reviews of grant applications could have been
           unbalanced. FEMA officials acknowledged that they could have more
           clearly stated that they weighted all of the criteria equally.

15OIG-07-39.

Recommendations for Executive Action

In the event that FEMA conducts future competitive grant processes for the
purpose of identifying alternative, new, or innovative forms of disaster
housing, the Secretary of DHS should direct FEMA to consider:

           o longer time frames for applicants to prepare and submit
           applications,
           o minimum and/or maximum funding amounts for grant awards, and
           o stating explicitly the relative importance of the rating
           criteria that the agency will use to evaluate applications.

Agency Comments and Our Evaluation

We provided DHS and HUD with a draft of this report for review and
comment. In an e-mail from its Audit Liaison Office, DHS concurred with
the recommendations in the draft report and offered no other comments. HUD
officials indicated that they had no comments on the draft report.

                                     _____

As we agreed with your office, unless you publicly announce the contents
of this report earlier, we plan no further distribution of it until 30
days from the date of this letter. We will then send copies to the
Secretary of Homeland Security, the Secretary of Housing and Urban
Development, and interested congressional committees. We will also make
copies available to others upon request. In addition, the report will be
available at no charge on the GAO Website at http://www.gao.gov.

If you have any questions concerning this report, please contact me at
(202) 512-8678 or [email protected]. Contact points for our Office of
Congressional Relations and Public Affairs may be found on the last page
of this report. Key contributors for this assignment were Bill MacBlane,
Assistant Director; Marshall Hamlett; Simin Ho; and John McGrail.

David G. Wood
Director, Financial Markets and Community Investment

List of Congressional Requesters

The Honorable Mary L. Landrieu
Chair
Subcommittee on Disaster Recovery
Committee on Homeland Security and Governmental Affairs
United States Senate

The Honorable David Vitter
United States Senate
The Honorable Rodney Alexander
House of Representatives

The Honorable Richard Baker
House of Representatives

The Honorable Charles W. Boustany, Jr.
House of Representatives

The Honorable William J. Jefferson
House of Representatives

The Honorable Bobby Jindal
House of Representatives

The Honorable Jim McCrery
House of Representatives

The Honorable Charlie Melancon
House of Representatives

(250334)

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