Meanwhile, contractors have been complaining since not long after the hurricanes of long delays in getting paid. V.I. government agencies have attributed those delays to the rigorous accounting processes needed to get after-the-fact federal reimbursement for expenses and the need to verify the work was properly completed.
Long chains of subcontractors with labyrinthine contractual relations complicated the process.
The audit reviewed projects from Oct. 1, 2017, to Sept. 30, 2018.
The initial result of the audit, dated October 1, 2019, indicated $516 million of potential improper payments and a decision to implement manual drawdown restrictions, according to Government House. This means the V.I. government must funding drawdown requests prior to receiving FEMA grant funding. And the drawdown request must be accompanied with supporting documentation to certify the amount being requested for drawdown is eligible, allowable, reasonable and in alignment with federal procurement regulations. Since then, a series of meetings and correspondences between the territory and FEMA have reportedly taken place to provide the requested information in an effort to lift manual draw requirements.
The Office of Disaster Recovery submitted documentation outlining updated policies and staffing plans that Government House says have been accepted by FEMA.
“Since its establishment in February of 2019, ODR immediately went to work on implementing measures to monitor the flow of funding from all federal recovery sources,” Adrienne Williams-Octalien, director of the Office of Disaster Recovery, said in the release from Government House.
“The expenditures in question occurred early in the disaster and did not go through the rigorous process established since the office took the recovery helm. I will continue to work with FEMA’s financial team to ensure the most accurate accounting of the territory’s projects,” she said.
FEMA’s findings suggest an overall lack of supporting documentation for transactions executed by the departments of Public Works, Human Services, Education, Territorial Emergency Management Agency, Waste Management Authority, Water and Power Authority and Port Authority. According to Government House, FEMA will issue a notice of “potential” debt to the territory for $134,746,028, which V.I. officials say is standard practice. Once issued, the territory has 60 days to appeal.
The Government House release emphasized that the initial findings of potential improper payments were in excess of $500 million, but were reduced to $269 million, then again to the current $134 million.
*Update*: According to information from Public Finance Authority representative Laurissa Ellis, this was all emergency work like debris management and power restoration. The vast majority relates to Water and Power Authority work. It breaks down by agency as follows:
– Department of Public Works $25,209,446.84
– Department of Human Services $513,236.34
– Virgin Islands Water and Power Authority $97,106,331.51
– VITEMA $2,477,692.99
– Department of Education $9,343,896.80
– Port Authority $95,424.00
Ellis said the territory has not received the notification of debt with the details from each project to make any additional determinations at this point.
In the statement from Government House, Gov. Albert Bryan said, “Our administration continues to work closely with FEMA and our federal partners in the recovery and intends to appeal this decision within the allowed 60-day period,” Gov. Albert Bryan Jr. said in the release “While this decision is the result of a 2018 audit, I think it serves to underscore the complexity of the disaster recovery process and the efforts of our administration to meet the federal guidelines while making good on commitments made to contractors,” the governor added.
At the time of this notice, the territory has not received the notification of debt with the details necessary to initiate the appeals process, the Government House statement said. FEMA will meet with the territory to discuss actions to monitor the effectiveness of the USVI’s internal controls, expectations for future drawdown documentation requirements and address any questions related to the notice of debt and rights to appeal.
This is not the only audit to find issues with how federal disaster recovery funds were being used. A May 2020 audit by the Department of Homeland Security found massive cost overruns and insufficient accounting practices involving hundreds of millions of dollars in U.S. Housing and Urban Development disaster grants issued through the V.I. Housing Finance Authority. The Housing Finance Authority disputes some of those findings.