Hurricane relief oversight leads to indictments, convictions

The number of indictments and convictions related to federal aid distributed in the aftermath of hurricanes Katrina and Rita has grown significantly in the last two months, with 65 indictments and 11 convictions since the end of October, according to data released by the Homeland Security Department Tuesday.

A total of 330 cases have been opened by federal inspector general offices, stemming from 8,392 hotline complaints made through Dec. 30, the sixth biweekly report on hurricane oversight from the President's Council on Integrity and Efficiency stated.

The report includes information from all federal agencies involved in hurricane relief, but all 11 convictions and 69 of the 77 total indictments since the oversight effort began were from DHS. The 330 investigations represent an increase of 238 over the 92 reported up to November.

DHS Inspector General Richard Skinner is coordinating IG oversight activities through his position as chair of the PCIE's Homeland Security Round Table. Agency inspectors general also have established a Hurricane Katrina Contract Audit Task Force to coordinate their work. It includes auditors from the Government Accountability Office, the General Services Administration, the Pentagon and other agencies.

Misconduct could involve anything from fraudulent claims for government benefits to improper contracting actions. False disaster claims carry a maximum penalty of 10 years in prison and a $250,000 fine.

Nearly 5,000 federal contracts worth about $8.3 billion are under scrutiny from the inspector generals. They have assigned 586 auditors, investigators, managers and administrative staff to oversee the effort, up from the 408 assigned at the end of October.

A majority of the reported contracts -- worth nearly $4 billion -- were awarded by DHS. The General Services Administration doled out $525 million in contracts and the Transportation Department distributed $415 million worth.

DHS has issued 378 no-bid or sole-source contracts, according to the report. Other government agencies have issued 164 no-bid or sole-source contracts. Another 24 -- mostly from GSA -- have been issued with "limited" competition, the PCIE report said.

The biweekly PCIE reports will begin to be released monthly starting Feb. 3, said Tamara Faulkner, a DHS spokeswoman.

Some numbers in the most recent report -- which are supposed to be cumulative -- are lower than previous reports. Faulkner said this is because the DHS IG office is still trying to standardize the statistics agencies are supposed to report.

GAO and Skinner's office are conducting a joint audit and investigation of the $22.7 million the Homeland Security Department spent on relief efforts using purchase cards, said Gregory Kutz, managing director of the GAO's Financial Management and Assurance division.

Governmentwide, $50.9 million has been spent though purchase-card transactions, according to the PCIE report.

Kutz said that a study published in March 2004 (GAO-04-430) showed that if agencies pursued better prices when using purchase cards, up to $300 million could be saved annually.