Background Hurricanes Irma and Maria In September 2017, Hurricane Irma struck the islands of St. Thomas and St. John, and two weeks later, Hurricane Maria struck the island of St. Croix in the USVI, causing catastrophic damage across the entire territory and neighboring Caribbean islands (see fig. 2). The storms severely damaged the USVI’s critical infrastructure, leaving many of the territory’s 107,000 residents without electricity, phone service, food, or running water. According to a September 2018 report from the USVI Hurricane Recovery and Resilience Task Force (USVI Task Force Report), the hurricanes devastated the territory’s electricity grid and telecommunications systems, shutting down both for months. Further, the storms damaged more than half of the territory’s housing units, as well as its hospitals, government buildings, schools, water and wastewater facilities, and more (see figs. 3 and 4). Overall, the report estimated that the hurricanes caused approximately $10.7 billion in total damages across the USVI. In response to the request of the Governor of the USVI, the President declared a major disaster the day after each hurricane struck the territory. Major disaster declarations can trigger a variety of federal response and recovery programs for government and nongovernmental entities and households and individuals, including assistance through the Public Assistance program and Hazard Mitigation Grant Program. Under the National Response Framework and National Disaster Recovery Framework, DHS is the federal department with primary responsibility for coordinating disaster response and recovery, and within DHS, FEMA has lead responsibility. The Administrator of FEMA serves as the principal adviser to the President and the Secretary of Homeland Security regarding emergency management. FEMA’s, States’, and Territories’ Roles and Responsibilities for Disaster Recovery Once the President has declared a major disaster, FEMA, the state or territorial government (the recipient), and local or territorial entities (the subrecipient) work together to, among other things, identify and develop projects through the Public Assistance program and Hazard Mitigation Grant Program. After a project has completed FEMA’s review process and is approved, FEMA obligates funding for the project by placing money into an account where the recipient has the authority to draw down—or expend—funding to pay for eligible work upon completion. Further, when a project has been completed, FEMA conducts a close-out process to certify that all eligible work has been completed and reconciles the actual cost incurred. If the actual cost of the completed work is less than the amount of money FEMA obligated for the project, FEMA will deobligate funding. However, if the actual cost of the completed work is greater than the amount of money FEMA obligated for the project, FEMA may reimburse the subrecipient for these additional costs. A state or territorial governor may designate a governor’s authorized representative to oversee all aspects of disaster assistance—including Public Assistance program and Hazard Mitigation Grant Program funding—to ensure the USVI’s compliance with federal regulations and FEMA requirements. Among other responsibilities, the governor’s authorized representative is to confirm that subrecipients submit complete documentation demonstrating that all eligible work completed is in accordance with program requirements. FEMA’s Public Assistance Program and Hazard Mitigation Grant Program FEMA’s Public Assistance program provides grant funding to state, territorial, local, and tribal governments, as well as certain types of private nonprofit organizations, to assist with the repair or replacement of disaster-damaged public infrastructure. To develop projects under the Public Assistance program, FEMA and USVI officials collaborate to identify and document the damage caused by a disaster to a particular system or facility. These officials then use this damage assessment to formulate the scope of work—or activities required to fix the identified damage—as well as the estimated cost of these activities. As shown in figure 5, Public Assistance grant funds are organized broadly as “emergency work” or “permanent work.” Within these areas are separate categories of work. In addition to emergency work and permanent work, the program includes category Z, which represents indirect costs, direct administrative costs, and any other administrative expenses associated with a specific project. Under the Public Assistance program’s permanent work categories, FEMA also provides grant funding for cost-effective hazard mitigation measures to reduce or eliminate the long-term risk to people and property from future natural and man-made disasters and their effects. FEMA provides this funding in conjunction with the repair of disaster-damaged facilities to enhance their resilience during future disasters. For example, this funding could be used to replace damaged wooden utility poles with composite fiberglass ones to increase the resilience of an electricity distribution system and mitigate the potential for future damage from hurricane-force winds. FEMA’s Hazard Mitigation Grant Program provides grant funding for long- term mitigation solutions to reduce the risk of loss of life and property from future disasters. Unlike mitigation measures funded through the Public Assistance program to further protect disaster-damaged infrastructure, the Hazard Mitigation Grant Program may fund measures for systems, facilities, or properties that were not damaged in the disaster. For example, program funding can be used to construct floodwater control measures—such as berms and rock linings—that did not exist prior to the disaster, or to update existing hazard mitigation plans to accurately reflect current mitigation goals. The Public Assistance Alternative Procedures Pilot Program in the USVI In July 2018, FEMA approved the use of the Public Assistance alternative procedures pilot program for permanent work projects in the territory. Unlike the standard Public Assistance program wherein FEMA will fund the actual cost of a project, the alternative procedures require awards for permanent work projects to be made on the basis of fixed-cost estimates. As a result, the recipient or subrecipient is ultimately responsible for any project costs that exceed the agreed-upon fixed-cost estimate at the time of the close-out process. However, the alternative procedures program also provides the USVI with financial incentives for the timely and cost-effective completion of work and additional flexibilities that are not available through the standard Public Assistance program. For example, the USVI may use excess grant funding for cost-effective hazard mitigation measures and, in certain circumstances, consolidate permanent work projects approved under the alternative procedures and share obligated funding across these projects. Further, section 20601 of the Bipartisan Budget Act of 2018 authorizes FEMA, when using the alternative procedures, to provide assistance to fund the replacement or restoration of disaster-damaged infrastructure that provide critical services without regard to pre-disaster condition (see fig. 6). For example, through the Act, FEMA may fund the restoration of a disaster-damaged school building—which provides a critical service—to accepted industry standards applicable to the construction of education facilities. Therefore, according to FEMA policy, if components of the school building were not up to industry standards or in poor condition prior to the 2017 hurricanes, the Act allows FEMA to fund the restoration of this building to a better condition than it was in prior to the storms. The Sheltering and Temporary Essential Power Pilot Program The Sheltering and Temporary Essential Power (STEP) pilot program is an emergency sheltering program implemented under FEMA’s emergency work authority and funded through the Public Assistance program’s category B emergency work. The program—which was created following Hurricane Sandy in 2012—allows FEMA to fund emergency, temporary repairs to make damaged homes habitable by, for example, restoring electricity to a private home and applying temporary patches to roofs and windows to protect the interior. In funding these types of repairs, FEMA’s goal is to quickly make damaged homes habitable in the short term until the homeowner could complete more permanent repairs independently through other FEMA programs or private insurance payments. Since 2012, FEMA has implemented the program as a tool in addressing the unique circumstances and challenges associated with providing safe sheltering options for disaster survivors. FEMA Obligated More Than $1.9 Billion through Two USVI Recovery Programs as of June 30, 2019, but Faced Some Challenges in Implementing Recovery Projects Status of FEMA Public Assistance Program and Hazard Mitigation Grant Program Funding in the USVI As of June 30, 2019, FEMA obligated more than $1.9 billion in grant funding for 640 projects through the (1) Public Assistance program and (2) Hazard Mitigation Grant Program in the USVI. First, FEMA obligated more than $1.8 billion in Public Assistance grant funding for 618 projects across the USVI (see fig. 7). Specifically, FEMA obligated more than $1.1 billion for emergency work projects (categories A and B), about $588.5 million for permanent work projects (categories C through G), and about $141.2 million for management costs (category Z). Of the approximately $1.8 billion FEMA obligated in Public Assistance grant funding as of June 30, 2019, the USVI had expended nearly $1.1 billion (59 percent) to reimburse subrecipients for completed work. Appendix I provides more detailed information on the status of Public Assistance grant funding in the USVI. Second, FEMA obligated about $60.6 million for 22 Hazard Mitigation Grant Program projects in the territory as of June 30, 2019. These projects are designed to fund mitigation measures to increase the longer- term resilience of the USVI’s infrastructure during future disasters. Of the $60.6 million FEMA obligated as of June 30, 2019, the USVI expended about $1.7 million (3 percent) across 5 projects. Appendix II provides more detailed information on the status of Hazard Mitigation Grant Program funding in the USVI. While these data represent the status of grant funding as of June 30, 2019, the amount of FEMA obligations and USVI expenditures for both programs will likely increase over time as additional projects are finalized and approved. Limited Availability of Local USVI Personnel and Territory’s Difficult Fiscal Situation Presented Challenges to Program Implementation FEMA, USVI officials, and contractor personnel identified challenges across three areas that affected the implementation of the Public Assistance program and the Hazard Mitigation Grant Program in the USVI. Specifically, they cited: (1) the limited availability of local staff in the USVI to implement and oversee recovery programs, (2) the inability of local construction crews to undertake the large number of recovery projects, and (3) the impact of the USVI’s difficult fiscal situation on recovery efforts. Limited availability of local staff. USVI and FEMA officials cited the limited number of local USVI personnel with the knowledge and expertise necessary to staff recovery-related positions in key USVI agencies as a significant challenge following the 2017 hurricanes. For example, USVI officials told us that the Virgin Islands Territorial Emergency Management Agency—the agency initially responsible for overseeing all aspects of both the Public Assistance program and Hazard Mitigation Grant Program in the territory—did not have enough employees on staff to effectively implement and manage these programs. Further, a senior FEMA official noted that after the storms, the USVI had only one individual responsible for managing all aspects of the Hazard Mitigation Grant Program across the territory. In addition, the limited availability of local staff in the USVI was exacerbated by the departure of qualified individuals following the hurricanes as well as competition among recovery agencies to hire qualified staff that remained in the territory, according to USVI officials. To address these challenges, the USVI hired two contractors to augment the territory’s capacity in the shorter term and established a new Office of Disaster Recovery to oversee recovery efforts in the longer term. First, in December 2017, the USVI hired two contractors to assist the territory in planning, developing, implementing, and overseeing recovery projects, among other responsibilities. Second, in February 2019, the USVI established the Office of Disaster Recovery as the primary territorial agency responsible for coordinating and overseeing all disaster recovery efforts in the USVI, including the Public Assistance program and Hazard Mitigation Grant Program. The office’s Director told us that while contractor personnel had been valuable in augmenting the USVI’s capacity, the territory was prioritizing the hiring and training of qualified local hires to replace these contractors for the longer term. Shortage of local construction crews. Due to the territory’s relatively small population, FEMA and USVI officials stated there were not enough local construction crews to address the large amount of construction work required to repair and rebuild damaged infrastructure following the 2017 hurricanes. These officials told us this construction crew shortage affected the USVI’s ability to keep Public Assistance program and Hazard Mitigation Grant Program projects proceeding on time. FEMA and contractor personnel stated that unlike in the contiguous United States, the USVI does not have neighboring states that can easily send construction crews to affected areas to augment local crews. In addition, historically, the USVI relied on Puerto Rico to supplement the territory’s capacity, but this was not an option as Puerto Rico was undergoing its own massive recovery effort as a result of Hurricane Maria. The USVI’s fiscal situation. USVI officials and contractor personnel stated that the challenging fiscal situation in the territory directly affected its ability to effectively implement recovery programs. Specifically, USVI officials told us that the territory’s financial condition made it difficult to provide initial funding to reimburse subrecipients for completed work prior to drawing down funding from the account holding FEMA-obligated money. These officials stated this process was problematic because instead of funding all eligible projects as quickly as possible to move the recovery forward, the USVI had to prioritize certain recovery projects over others based on the availability of funding. Further, USVI contractor personnel told us that the territory often does not have the cash on hand necessary to provide these reimbursements to subrecipients, which can result in delays in paying subrecipients and contractors. According to USVI officials, pursuing projects under the Public Assistance alternative procedures program may help to address these issues by providing more flexibility regarding when and how projects are funded. Challenges Implementing the Public Assistance Alternative Procedures Program Have Delayed Recovery Projects in the USVI The Public Assistance alternative procedures program provides the USVI with financial incentives and new flexibilities in implementing recovery projects that are not available through the standard Public Assistance program. However, FEMA and USVI officials stated that implementing the alternative procedures program in the USVI presented challenges that affected recovery efforts and delayed the obligation of funding for permanent work projects. Specifically, they cited challenges in (1) developing accurate fixed-cost estimates for program projects and (2) implementing the new flexibilities authorized by section 20601 of the Bipartisan Budget Act of 2018. Senior USVI officials told us that due to these challenges and the financial risk associated with the use of fixed- cost estimates, the USVI is planning to take a cautious approach in pursuing alternative procedures projects. As established in FEMA guidance, USVI officials have a deadline of March 2020 to finalize the fixed-cost estimates for such projects for inclusion in the alternative procedures program. Fixed-cost estimates. As the USVI is financially responsible for any actual costs that exceed the fixed-cost estimate for any given alternative procedures project, ensuring the accuracy of these estimates is critical due to the USVI’s already difficult fiscal situation. However, USVI officials told us that developing fixed-cost estimates that accurately forecast the future costs of completing large, complex permanent work projects in the remote island territory is difficult given the unique circumstances that influence construction costs in the USVI, such as the limited availability of local resources and the need to import construction materials and labor. To address this challenge, in October 2018, FEMA asked an independent contractor to analyze whether a USVI-specific “cost factor” should be incorporated into FEMA’s process for developing fixed-cost estimates to ensure the actual costs of implementing permanent work projects in the territory were captured. According to FEMA officials, the independent contractor determined that a cost factor was appropriate for use in the USVI and the contractor proposed several options. However, territorial officials contended that these proposals did not sufficiently or accurately capture the unique circumstances that influence construction costs in the territory. Further, USVI officials stated that ensuring the accuracy of the cost factor was critical given the significant financial risk using fixed-cost estimates posed to the USVI. Since incorporating a cost factor into the process for developing fixed- cost estimates increases the base cost for any given permanent work project—and therefore the amount of funding FEMA obligates—FEMA officials explained the USVI had an incentive to delay the obligation of projects until FEMA finalized this factor. As a result, FEMA officials told us in May 2019 that obligations for permanent work projects had been mostly on hold since October 2018 while the contractor worked to develop the USVI-specific cost factor. As the USVI is reliant on federal recovery funding to reimburse subrecipients for completed work, this delay in obligations directly affected the USVI’s ability to move recovery projects forward. In May 2019, the contractor proposed a new cost factor, which FEMA approved on an interim basis pending further analysis. In July 2019, FEMA officials told us that while additional analyses are required to ensure its final process for developing fixed-cost estimates in the USVI accurately captures construction costs, using this interim cost factor in the meantime allows FEMA and USVI officials to move forward with the development and final approval of alternative procedures projects. In August 2019, a senior USVI official told us the territory plans to begin using the interim cost factor, where appropriate, to keep projects progressing forward. However, she stated that the USVI questioned whether the interim cost factor did, in fact, sufficiently capture the actual costs of construction in the USVI. Given the uncertainty around these fixed-cost estimates, USVI officials told us the territory will need to balance the potential flexibilities provided by the alternative procedures program with the financial risk posed by cost overruns when deciding whether to use the alternative procedures or the standard Public Assistance program for any given permanent work project. We are currently assessing FEMA’s process for developing cost estimates for projects under both the standard and alternative procedures programs, and plan to report our results in early 2020. The Bipartisan Budget Act of 2018. While FEMA and USVI officials told us that section 20601 of the Bipartisan Budget Act presented a valuable opportunity to advance the USVI’s recovery, they also reported challenges with implementing the new flexibilities authorized by the Act, which made developing eligible permanent work projects difficult. For example, USVI officials stated that, at times, they were unclear about the implementation process for key components of the Act and thus ensuring subrecipients understood the process was difficult. Further, FEMA officials in the USVI told us that initially, they had difficulty obtaining clarification from FEMA headquarters regarding how to implement key provisions of the Act, such as the process for identifying and incorporating relevant industry standards for specific alternative procedures projects. As a result, permanent work projects that were eligible to use the flexibilities provided by the Act remained on hold until FEMA could clarify the process for implementing the Act and pertinent industry standards could be approved. In addition, the Bipartisan Budget Act was signed into law in February 2018 and applies exclusively to federal disaster assistance to the USVI and Puerto Rico. As a result, FEMA officials faced the challenge of interpreting the Act’s language and appropriately implementing its provisions for the first time. For example, the Act allows for a new process for determining whether a disaster-damaged facility is eligible to receive funding to (1) repair the existing facility or (2) replace the facility with a new structure. Under the standard Public Assistance program, this determination is calculated using the “50 percent rule”—if the cost of repairing the disaster-related damage sustained by the facility exceeds 50 percent of the cost of replacing it, FEMA may fund the replacement of the facility. In contrast, the Act does not provide a similar cost estimating process for use in developing fixed-cost estimates through the alternative procedures program. In September 2018, FEMA issued guidance for implementing section 20601 of the Bipartisan Budget Act through the Public Assistance alternative procedures program, which provides that critical services infrastructure—such as medical and educational facilities—is eligible for replacement “if repair is feasible, but replacement is more prudent.” FEMA officials in the USVI told us that since the agency did not have further guidance or criteria on the appropriate process for evaluating repair or replacement under this new standard, they were responsible for developing the agency’s first justification to support the replacement of a hospital in St. Croix based on their interpretation of the new standard. These officials also stated that since their rationale justifying the facility’s eligibility for replacement was the first of its kind and would set a precedent for future projects, they submitted it to FEMA headquarters for review. In May 2019, FEMA officially approved the replacement of this hospital through the alternative procedures program. For more information on how the Public Assistance program and the Bipartisan Budget Act are affecting recovery efforts at this facility, see appendix III. The Additional Supplemental Appropriations for Disaster Relief Act of 2019, which was signed into law in June 2019, provides additional direction to FEMA regarding the implementation of section 20601 of the Act. Among other things, this legislation includes a provision directing FEMA to change its process for determining whether a disaster-damaged facility is eligible for repair or replacement. FEMA evaluated this and other provisions of the Act and, in September 2019, issued an updated policy to provide clear guidance moving forward, according to agency officials. The USVI Governor and senior territorial officials stated that due to the challenges outlined above and the financial risk posed by exceeding fixed-cost estimates, the USVI plans to take a cautious approach in implementing the Public Assistance alternative procedures program. Specifically, the Governor told us the territory will most likely pursue alternative procedures projects that are simple, have clear scopes of work, and do not include high levels of uncertainty to reduce the financial risk of potential cost overruns. USVI officials added that if they are not comfortable with the fixed-cost estimate for any given alternative procedures project, the territory has the option to pursue the project under the standard Public Assistance program. Under the standard program, the USVI cannot take advantage of the flexibilities and financial incentives provided by the alternative procedures and the Bipartisan Budget Act, but FEMA would reimburse the USVI for the actual cost—including any cost overruns—of all work completed in accordance with a project’s approved scope of work, thereby mitigating the territory’s financial risk. The USVI is ultimately responsible for deciding whether the benefits provided through the alternative procedures program and the Bipartisan Budget Act outweigh the financial risk associated with agreeing to fixed-cost estimates for permanent work projects. Since the territory has until March 2020 to finalize these fixed-cost estimates, it remains too early to determine the extent to which the alternative procedures program will play a role in the USVI’s long-term recovery strategy. FEMA Discontinued the STEP Pilot Program After Expanding It in the USVI, but Has Not Evaluated Options for Providing Future Emergency Sheltering Assistance FEMA Expanded the STEP Pilot Program in the USVI In October 2017, FEMA authorized the STEP pilot program in the USVI in response to the widespread damage to homes that displaced residents and overwhelmed sheltering and temporary housing resources in the territory. Through the program, FEMA funded minimal, temporary protective repairs (or “Phase I” repairs) to private homes to allow residents a safe place to shelter. For example, Phase I emergency repairs included applying temporary patches to roofs and windows to protect the interior from outside weather conditions and ensuring a functional kitchen and bathroom and safe sleeping area. According to FEMA documentation, the intent of these minimal temporary repairs was to quickly make damaged homes habitable in the short term until homeowners could complete more permanent repairs independently through other FEMA programs or using private insurance payments. In August 2018, FEMA expanded the STEP pilot program to include the “permanent” repair or replacement of damaged roofs (or “Phase II” work)—the first time in its history that FEMA authorized such work through this pilot program. Phase II work funded more permanent work on USVI residents’ damaged roofs—either by repairing damages to the existing roof or replacing it with a new one. In addition, Phase II work included incorporating roof hardening measures, such as installing hurricane clips to the roof berms, to increase the resiliency of the roofs against hurricane-force winds. Figure 8 provides two examples of USVI homes that participated in Phase II of the STEP pilot program. FEMA expanded the STEP pilot program to address the USVI’s unique, longer-term sheltering needs. Specifically, as the 2018 hurricane season arrived, FEMA was faced with the challenge of ensuring adequate sheltering options were available to USVI residents in the event that another hurricane struck the territory. The following factors contributed to FEMA’s decision to expand the STEP pilot program: Infeasibility of other sheltering programs. Alternate sheltering options were not viable in the USVI due to the unique circumstances in the territory. For example, the Transitional Sheltering Assistance program—where FEMA funds non-congregate sheltering (typically in hotels or motels) for displaced residents who cannot safely return to their homes—was not a feasible option as there was only one operating hotel in the USVI capable of sheltering disaster survivors. Further, FEMA officials told us that temporary housing units—such as manufactured housing units or recreational vehicles—could not be deployed to supplement the territory’s available housing stock due to logistical challenges, including the prohibitive costs of shipping these units to the remote territory and the limited availability of space to install them. Operation Blue Roof caused additional damage to homes. According to FEMA officials, FEMA’s decision to allow homes that had received temporary blue tarps as an emergency roofing measure through Operation Blue Roof to be eligible for the STEP pilot program led to expanding the scope of allowable work funded by the program. FEMA and USVI officials told us this change was implemented to address several issues with the blue tarps installed on homes, including the temporary nature of the tarps—which had a post-installation lifespan of only 30 days—and the need to fix the damage caused by installing the blue tarps on undamaged sections of roofs. FEMA officials stated that expanding the STEP pilot program to conduct more permanent roof repairs on these homes helped to ensure homeowners were able to safely shelter in the event of another hurricane. Shortage of construction crews. As previously discussed, FEMA and USVI officials cited the limited number of construction crews available to implement recovery work as a challenge, including for the STEP pilot program. Specifically, this challenge made it difficult for private homeowners to independently hire qualified contractors to conduct permanent repairs to their homes, according to FEMA officials. Therefore, these officials explained that using Phase II of the STEP pilot program to manage contractors in an official capacity made it more likely that necessary permanent repairs would be completed in a timely manner. Evacuation was not an option. When requested, FEMA is responsible for providing safe sheltering options following a disaster and, in the absence of feasible local sheltering options, FEMA is responsible for evacuating residents to a safe location outside the potentially affected area. However, according to FEMA documentation, developing and executing a plan to evacuate the USVI’s more than 100,000 residents in the event of another hurricane was impractical. Given these factors and the risk of another hurricane, FEMA officials determined that authorizing Phase II roof repairs or replacements of a permanent nature represented an appropriate solution to ensure eligible program participants could safely shelter in their homes. The STEP pilot program in the USVI officially ended on April 15, 2019. FEMA reported that 7,381 homes ultimately received repairs through the program. Specifically, 6,372 homes received Phase I temporary repairs and 1,631 homes received Phase II roof repairs or replacements of a permanent nature. In addition, 622 homes received both Phase I and Phase II repairs. According to FEMA officials, the agency is now conducting the close-out process for the STEP pilot program in the USVI, which includes reviewing the paperwork for each participating home to ensure all work was completed in accordance with both the home’s approved scope of work and overall programmatic requirements. FEMA Has Decided Not to Use the STEP Pilot Program During Future Recovery Efforts, but Has Not Evaluated Its Options for Providing Similar Emergency Sheltering Assistance In May 2019, FEMA’s Chief Counsel stated that FEMA had decided to discontinue the STEP pilot program due to significant challenges and lessons learned from prior experiences implementing the program. Specifically, FEMA stated that while FEMA had implemented the STEP pilot program within its authority pursuant to Section 403 of the Stafford Act, the agency was no longer “comfortable from a legal, policy, or pragmatic perspective” with implementing the STEP pilot program following future disasters. FEMA cited two main challenges in implementing the program in the USVI and elsewhere: (1) limiting the program’s scope to provide only minimal, emergency repairs, as intended, and (2) completing these emergency repairs in a timely manner. First, FEMA stated that in multiple iterations of the STEP pilot program—including in the USVI—FEMA officials had “succumbed to the pressure” from state and territorial leaders to expand the scope of allowable repairs under the program to conduct more extensive repairs. For example, in the USVI specifically, although expanding the program to authorize permanent roof repairs was legally supportable and represented an earnest effort to meet the territory’s needs, the expansion did “push the boundaries of appropriateness” and increased FEMA’s risk of interfering with the agency’s authority to provide assistance through other FEMA programs. Second, FEMA stated that the lengthy process for delivering the STEP pilot program—including in the USVI—undercut the program’s stated intent of providing emergency sheltering within 3 to 4 months following a disaster. For example, while FEMA authorized the program in the USVI in October 2017, initial repairs did not begin until March 2018 and eligible work was not completed until April 2019—18 months after the program’s authorization. According to FEMA, completing STEP pilot program repairs took longer than intended across most instances of the program’s implementation due to the amount of time required to develop disaster- specific program guidance, hire a large number of construction crews to undertake the repair work, obtain the necessary permissions from homeowners, and ultimately complete the repairs. Given the STEP pilot program’s protracted period of implementation, FEMA stated the agency had not been successful in ensuring that program repairs provided disaster survivors with emergency shelter in a timely manner. FEMA’s decision to discontinue the STEP pilot program following future disasters raises questions about how the agency plans to address the emergency sheltering needs of disaster survivors in the future—especially in communities that face challenges and circumstances similar to those the program was specifically designed to address. Since implementing it in 2012, FEMA used the STEP pilot program to supplement other FEMA sheltering programs and provide necessary additional capacity to help address the emergency sheltering needs of disaster-affected communities, as described below. In certain cases, the program provided assistance to more disaster survivors than other relevant FEMA programs, including the Transitional Sheltering Assistance program and the provision of temporary housing units. FEMA implemented the STEP pilot program in the following locations: Louisiana: FEMA authorized the STEP pilot program to supplement other federal programs implemented in Louisiana following severe storms and flooding in 2016. Specifically, the Transitional Sheltering Assistance program was not a viable option for most survivors, partially due to the limited availability of hotels and motels in the affected area, and FEMA ultimately used this program for approximately 4,300 households. In addition, FEMA deployed temporary housing units for approximately 4,600 households. FEMA also funded repairs through the STEP pilot program for nearly 11,000 homes. Texas: FEMA authorized the STEP pilot program to supplement other federal programs in Texas following Hurricane Harvey in 2017. Specifically, FEMA determined that implementing the STEP pilot program provided a useful option since the number of displaced survivors significantly exceeded the available capacity for sheltering survivors in local hotels and motels. FEMA used the Transitional Sheltering Assistance program for approximately 55,000 households and deployed temporary housing units for more than 3,500 households. FEMA supplemented these programs by funding repairs through the STEP pilot program for approximately 15,700 homes. Puerto Rico: FEMA authorized the STEP pilot program to address the unique emergency sheltering needs in Puerto Rico following Hurricanes Irma and Maria in 2017. Specifically, FEMA determined that approximately 80 percent of the island did not have power and would not have it restored for an extended period of time. As a result, FEMA implemented the STEP pilot program to, among other repairs, reconnect homes to a functioning electricity grid or, as necessary, fund the installation of generators if the grid could not be restored in a timely manner. Further, similar to what occurred in the USVI, FEMA authorized the STEP pilot program to repair homes that participated in Operation Blue Roof to address the roof damage caused by the installation of the blue tarps. FEMA funded repairs through the STEP pilot program for nearly 108,500 homes in Puerto Rico. In addition, due to the lack of available hotels and motels in Puerto Rico, participation in FEMA’s Transitional Sheltering Assistance program was limited to approximately 7,000 households, most of which were relocated to hotels and motels in the contiguous United States. Further, as detailed below, FEMA implemented its new Voluntary Agencies Leading and Organizing Repair program for the first time in Puerto Rico to conduct repairs to approximately 4,600 homes. North Carolina: FEMA authorized the STEP pilot program to address the particular emergency sheltering needs in North Carolina following Hurricane Florence in 2018. FEMA amended the STEP pilot program to allow both contracted construction crews and voluntary organizations to conduct the repairs, and ultimately funded repairs through the program for approximately 2,200 homes. In addition, FEMA used the Transitional Sheltering Assistance program for more than 870 households and deployed temporary housing units for approximately 650 households. Overall, FEMA authorized the STEP pilot program following 8 declared disasters since 2012 and obligated approximately $2.6 billion to fund repairs to more than 167,000 disaster survivors’ homes, according to FEMA documentation. While the program may not have provided repairs as rapidly as FEMA intended, these repairs nonetheless played a significant role in ensuring these disaster survivors could safely shelter in their homes. Since discontinuing the program, FEMA has not evaluated its options for addressing the emergency sheltering needs of disaster survivors. FEMA stated that it continues to support the use of congregate sheltering and will consider authorizing the Transitional Sheltering Assistance program, among other options, to address disaster survivors’ needs following future disasters. However, as detailed above, FEMA used the STEP pilot program for the specific purpose of providing necessary additional capacity to supplement these and other federal programs. Further, in certain cases, the STEP pilot program was used when implementing these other programs was unfeasible, such as in the USVI and New York where the particular circumstances on the ground made using the Transitional Sheltering Assistance program or deploying temporary housing units impractical. FEMA officials also told us the agency could utilize voluntary organizations to a greater extent than in the past to conduct the same types of repairs provided through the STEP pilot program. Specifically, FEMA officials stated that the Voluntary Agencies Leading and Organizing Repair program—which was implemented in Puerto Rico in response to the 2017 hurricanes and used to repair about 4,600 homes— could be used for this purpose following future disasters. However, given the program’s limited implementation, it is too early to determine the extent to which it represents a feasible solution for addressing emergency sheltering needs, or is capable of providing assistance on as large a scale as other federal programs, such as the STEP pilot program that funded repairs on more than 100,000 homes in Puerto Rico alone. Further, in North Carolina—where FEMA amended the STEP pilot program to allow both hired construction crews and voluntary organizations to conduct the repairs—the number of homes repaired by the construction crews—about 2,000—far exceeded the number of homes repaired by voluntary organizations—about 150—which raises questions about the ability of voluntary organizations to undertake the large volume of repairs necessary following disasters. Standards for Internal Control in the Federal Government states that management should identify, on a timely basis, significant changes to internal conditions that have already occurred, including changes to the entity’s programs or activities. Further, management should identify, analyze, and respond to risks related to achieving the entity’s defined objectives. FEMA has not assessed how its decision to discontinue the STEP pilot program will affect its ability to provide emergency sheltering assistance following future disasters. While FEMA officials told us they plan to use other sheltering programs when the next disaster strikes, these programs may not be sufficient in addressing the emergency sheltering needs of disaster survivors, especially in communities where implementing such programs is not feasible. FEMA officials also stated that given the agency’s decision to discontinue the STEP pilot program, conducting a broad evaluation of FEMA’s emergency sheltering programs and the agency’s options for addressing emergency sheltering needs would be useful to ensure that FEMA is prepared to respond effectively to future disasters. Conducting such an evaluation would help FEMA understand its ability to provide sheltering options and to properly plan for the provision of effective emergency sheltering assistance to disaster- affected communities. The USVI and FEMA Established Structures for Overseeing Recovery Efforts, but FEMA Has Not Consolidated Hazard Mitigation Grant Program Monitoring Guidance The USVI and FEMA Have Structures in Place for Overseeing Recovery Activities USVI. As the recipient of federal disaster funding, the USVI is responsible for providing oversight over the Public Assistance program and Hazard Mitigation Grant Program to ensure they are implemented in compliance with applicable laws and regulations, as well as FEMA policies and guidance. Following the 2017 hurricanes, the USVI took steps to address its responsibilities for receiving grant funding through these programs, including by: (1) developing administrative plans, (2) designating two territorial entities to manage the administration of disaster recovery funding, and (3) establishing the new Office of Disaster Recovery. First, as required by FEMA, the USVI developed administrative plans for the Public Assistance program and Hazard Mitigation Grant Program to ensure that subrecipients are in compliance with the conditions of these grant programs. These plans outline programmatic and project monitoring activities as well as the financial and administrative procedures for both programs. The plans require, among other things, the USVI to submit quarterly progress and financial reports on the status of projects to FEMA and describe the USVI’s specific roles and responsibilities for implementing and overseeing these two programs. Second, the Governor of the USVI designated two territorial entities to manage and oversee the implementation of recovery programs—the Virgin Islands Territorial Emergency Management Agency as the programmatic manager and the governor’s authorized representative as the grant administrator for all federal recovery funding in the USVI. Among other responsibilities, these entities are responsible for ensuring that Public Assistance program and Hazard Mitigation Grant Program participants are in compliance with all programmatic and administrative requirements. For example, the Virgin Islands Territorial Emergency Management Agency is responsible for, among other things, preparing and submitting quarterly progress and financial reports to FEMA for certain Public Assistance program projects and for all Hazard Mitigation Grant Program projects. In addition, the governor’s authorized representative is responsible for ensuring the territory’s compliance with all requirements outlined in the FEMA-approved administrative plans. Third, in February 2019, the USVI’s new Office of Disaster Recovery assumed responsibility for overseeing the Public Assistance program and Hazard Mitigation Grant Program, including tracking and reporting on the progress of individual projects and overseeing the submission of reimbursement requests for completed work. The office is also responsible for monitoring and publicly reporting the status of federal recovery funding at http://www.usviodr.com/. In addition, according to the office’s Director, her team also meets with FEMA officials on a bi- weekly basis to discuss recovery activities more generally and raise any potential issues for discussion, such as challenges with submitting quarterly progress and financial reports to FEMA in a timely manner. FEMA. FEMA officials at the USVI, regional, and headquarters level are responsible for overseeing the USVI’s implementation of federal recovery programs. Specifically, once FEMA obligates grant funding for a project, FEMA officials on the ground in the USVI are responsible for the day-to- day monitoring of individual projects using a variety of tools. For example, FEMA officials stated they use the information included in quarterly progress and financial reports to help ensure that subrecipients are in compliance with applicable federal requirements and that potential problems are identified and addressed in a timely manner. Further, FEMA officials are to conduct quarterly meetings with USVI officials to ensure regular communication and coordination and to discuss program implementation, raise potential challenges, and identify solutions. In addition to monitoring ongoing projects, FEMA officials in the USVI are responsible for managing the process for closing out Public Assistance program and Hazard Mitigation Grant Program projects that have been completed. To facilitate this close-out process, the USVI is to compile all required documentation for an individual project and submit this paperwork to FEMA. FEMA is to review the documentation to ensure that all work has been completed in accordance with the project’s scope of work as well as relevant laws, federal regulations, and program requirements. FEMA Region II officials and FEMA officials in the Grant Programs Directorate in headquarters also provide higher-level oversight of Public Assistance program and Hazard Mitigation Grant Program implementation. For example, FEMA Region II officials stated they analyze the USVI’s quarterly financial reports to identify patterns that may indicate financial challenges, such as irregularities in the amount of funding the USVI has drawn down for projects or an excess or lack of reimbursements to subrecipients for completed work. At FEMA headquarters, officials in the Grant Programs Directorate stated they assess the financial condition of projects annually to identify potential challenges in administering grant funding and may enhance monitoring efforts as needed. These officials stated they also review the timeliness, completeness, and accuracy of information submitted in quarterly reports to help monitor project milestones and identify potential challenges that require FEMA’s attention. FEMA Has a Consolidated Standard Operating Procedures Document for Monitoring Public Assistance Projects, but Not for Hazard Mitigation Grant Program Projects FEMA has issued numerous documents that provide useful information and guidance for implementing and monitoring the Public Assistance program and the Hazard Mitigation Grant Program, such as program and policy documents, fact sheets, job aids, and operational manuals. For example, one document for monitoring the Public Assistance program is the Public Assistance Program Management and Grant Closeout Standard Operating Procedure. This standard operating procedures document provides FEMA officials across all disasters nationwide with a common understanding of the expectations and requirements for managing projects. It also clearly and concisely outlines the roles and responsibilities, requirements, key tasks and milestones, and performance measures associated with monitoring and closing out Public Assistance program projects. However, FEMA has not developed a similar consolidated standard operating procedures document to provide a clear and concise roadmap for monitoring and closing out projects under the Hazard Mitigation Grant Program. In July 2019, FEMA officials in headquarters and FEMA Region II told us that guidance on key policies and procedures for managing FEMA’s varied hazard mitigation efforts can be found across multiple sources. However, these officials stated that FEMA has not consolidated this guidance into a single document for FEMA-wide use that focuses on the oversight of Hazard Mitigation Grant Program projects specifically. Further, FEMA’s existing guidance documents do not provide a concise roadmap that outlines roles and responsibilities, key tasks and milestones, and performance measures for FEMA officials to use when monitoring and closing out individual program projects for any given disaster. For instance, the Hazard Mitigation Assistance Guidance includes information on many topics, such as program eligibility requirements; roles and responsibilities for recipient and subrecipient personnel; and oversight requirements spanning three separate FEMA mitigation programs. Likewise, FEMA’s 250-page Hazard Mitigation Field Operations Guide includes operating procedures, descriptions of major tasks for mitigation positions, and job aids, including samples and templates of tools to help hazard mitigation staff implement defined tasks. While these and other FEMA documentation collectively provide important information regarding the agency’s broader hazard mitigation efforts, they are not focused specifically on the Hazard Mitigation Grant Program, or the detailed processes FEMA officials on the ground should use to conduct the day-to-day monitoring of individual projects. Further, these documents do not detail the use of performance measures in effectively monitoring Hazard Mitigation Grant Program projects— information that is included in FEMA’s standard operating procedures document for the Public Assistance program. When we asked FEMA officials responsible for implementing the program in the USVI why the agency had not developed a consolidated standard operating procedures document specific to the Hazard Mitigation Grant Program, they stated that developing this document had not been a priority for the agency—which could be due to the relatively small size of this program compared to larger and more complex recovery programs, such as the Public Assistance program. Although FEMA obligates more funding through the Public Assistance program, the Hazard Mitigation Grant Program nonetheless plays a critical role in ensuring that disaster- affected communities can undertake mitigation measures specifically designed to enhance the resilience of their infrastructure during future disasters. Standards for Internal Control in the Federal Government states that management should document in policies and procedures each unit’s responsibility for an operational process’s objectives in the appropriate level of detail to allow management to effectively monitor the control activity. In addition, these standards state that management should define objectives in specific and measurable terms so they are understood at all levels of the organization. This includes clearly defining what is to be achieved, who is to achieve it, how it will be achieved, and the timeframes for achievement. Further, leading practices identified in the Program Management Institute’s Standard for Program Management call for agencies to develop a program roadmap outlining information on the program’s intended direction and providing a set of documented success criteria for each key milestone and decision point. This roadmap can be a valuable tool for managing the execution of the program and for assessing the program’s progress toward achieving its goals. FEMA’s consolidated standard operating procedures document for the Public Assistance program provides such a roadmap, stating that FEMA’s main goal is to provide effective assistance and excellent customer service necessary to assist disaster-affected communities to recover while also ensuring the responsible stewardship of public funds. FEMA does have guidance on key policies and procedures for managing its hazard mitigation efforts, including through the Hazard Mitigation Grant Program. However, FEMA could further strengthen its existing guidance by consolidating this information into a single document for FEMA-wide use, similar to the one FEMA uses for the Public Assistance program. FEMA officials told us that having a detailed standard operating procedures document for the Hazard Mitigation Grant Program that clearly and concisely outlined roles and responsibilities, key objectives and tasks, and milestones for conducting monitoring and close-out activities would be helpful in effectively overseeing program projects. In addition to FEMA officials, the governor’s authorized representative in the USVI also told us that such a document would help to ensure that both FEMA and USVI officials are following the necessary procedures and guidance when conducting program management and close-out activities. Assessing the need for such a consolidated standard operating procedures document for the Hazard Mitigation Grant Program would help FEMA determine whether existing guidance should be strengthened to ensure that agency officials across all disasters are using a consistent approach in carrying out their responsibilities under the program. Conclusions As of June 30, 2019, FEMA had obligated more than $1.9 billion in grant funding through the Public Assistance program and Hazard Mitigation Grant Program to help the USVI recover from the catastrophic 2017 hurricane season. As part of the Public Assistance program, FEMA authorized the STEP pilot program in the USVI—and in other locations— to supplement other FEMA programs and provide necessary additional capacity to help address the emergency sheltering needs of disaster survivors. While FEMA decided to discontinue the STEP pilot program, the agency has not evaluated how this decision will affect its ability to provide emergency sheltering assistance in the future. FEMA has a responsibility to provide assistance, when requested, to address the emergency sheltering needs of disaster survivors. Given that FEMA will no longer use the STEP pilot program, taking steps to evaluate its options for addressing these needs will help FEMA to assess its capacity for providing effective emergency sheltering assistance in the future and to properly plan for when the next disaster inevitably strikes. In addition, FEMA has issued numerous policy documents, guides, and other useful documents to assist FEMA officials to effectively monitor and oversee Hazard Mitigation Grant Program projects. However, FEMA has not developed a consolidated standard operating procedures document specific to the Hazard Mitigation Grant Program that provides a clear and concise roadmap for FEMA officials’ use in monitoring individual projects. Assessing the need for a consolidated roadmap for agency-wide use would help FEMA determine whether existing guidance for effectively monitoring Hazard Mitigation Grant Program projects should be strengthened. Recommendations for Executive Action We are making the following two recommendations to FEMA: The FEMA Administrator should evaluate the agency’s options for providing future emergency sheltering assistance. (Recommendation 1) The FEMA Administrator should assess the need for an agency-wide consolidated standard operating procedures document for the Hazard Mitigation Grant Program that provides detailed information on the roles and responsibilities, requirements, and key tasks and milestones for monitoring and closing out program projects. (Recommendation 2) Agency Comments and Our Evaluation We provided a draft of this product to DHS and the USVI government for review and comment. DHS provided written comments, which are reprinted in appendix IV and summarized below. DHS and the USVI government provided technical comments, which we incorporated as appropriate. DHS concurred with both our recommendations and described the actions it plans to take in response. With regard to our first recommendation, DHS stated that it will evaluate FEMA’s options for providing emergency sheltering assistance through its Individual Assistance Division and provide any recommendations for action, as appropriate, to FEMA’s Assistant Administrator for Recovery. DHS anticipates completing this evaluation by February 2020. This action, if fully implemented, should address the intent of the recommendation. With regard to our second recommendation, DHS stated that FEMA will assess the need for an agency-wide consolidated standard operating procedures document for the Hazard Mitigation Grant Program and, if deemed necessary, FEMA will develop this document. DHS anticipates this effort will be completed by August 2020. This action, if fully implemented, should address the intent of the recommendation. In the meantime, DHS noted that FEMA will consider updating its website to include a single portal providing access to all existing guidance documents relevant to monitoring and overseeing Hazard Mitigation Grant Program projects. We will monitor DHS’s and FEMA’s efforts to address these two recommendations. We are sending copies of this report to the appropriate congressional committees, the Secretary of Homeland Security, the FEMA Administrator, the USVI government, and other interested parties. In addition, the report is available at no charge on the GAO website at http://www.gao.gov. If you and your staff have any questions, please contact me at (202) 512- 8777 or curriec@gao.gov. GAO staff who made key contributions to this report are listed in appendix V. Appendix I: Status of Public Assistance Program Funding in the U.S. Virgin Islands The Federal Emergency Management Agency (FEMA) obligated more than $1.8 billion in Public Assistance grant funding for 618 projects across the U.S. Virgin Islands (USVI) as of June 30, 2019. Specifically, FEMA obligated more than $1.1 billion for emergency work projects (categories A and B), about $588.5 million for permanent work projects (categories C through G), and about $141.2 million for management costs (category Z). As of that date, the USVI expended nearly $1.1 billion—about 59 percent of total Public Assistance obligations to the USVI—to reimburse subrecipients for completed work. Of this nearly $1.1 billion, the USVI expended about $857.5 million (78 percent) for emergency work projects, $211.3 million (19 percent) for permanent work projects, and $29.9 million (3 percent) for management costs. The majority of FEMA’s obligations and the funding the USVI expended as of June 30, 2019, are for emergency work because these projects began soon after the disasters struck and focused on debris removal and providing assistance to address immediate threats to life and property. In contrast, permanent work projects take time to identify, develop, and ultimately complete as they represent the longer-term repair and restoration of public infrastructure. While the data below represent the status of Public Assistance funding as of June 30, 2019, the amount of grant funding FEMA obligates and the USVI expends will likely increase over time as additional projects are finalized and approved. Emergency work. Of the more than $1.8 billion FEMA obligated as of June 30, 2019, more than 1.1 billion (61 percent) was obligated for 410 emergency work projects in Public Assistance program categories A and B. Category A: Debris removal. FEMA obligated about $139.9 million for 88 projects focused on debris removal activities across the territory. For example, FEMA obligated $81.8 million to the USVI Water and Power Authority for territory-wide debris removal efforts (see fig. 9). Of the $139.9 million FEMA obligated for debris removal, the USVI expended about $76.9 million (55 percent) as of June 30, 2019. Category B: Emergency protective measures. FEMA obligated about $985.6 million for 322 projects focused on emergency measures. For example, FEMA obligated about $278.2 million for the Sheltering and Temporary Essential Power (STEP) pilot program as of June 30, 2019, to fund certain types of temporary repairs to private homes. In addition, FEMA obligated approximately $111.9 million for the purchase and installation of modular units to be used as temporary classrooms and other facilities while permanent school buildings are repaired or replaced (see fig. 10). Of the $985.6 million FEMA obligated for emergency protective measures, the USVI expended about $780.7 million (79 percent) as of June 30, 2019. Permanent work. Of the more than $1.8 billion in Public Assistance grant funding FEMA obligated as of June 30, 2019, about $588.5 million (32 percent) was obligated for 200 permanent work projects across categories C through G. These permanent work projects included more than $383.1 million for cost-effective hazard mitigation measures to reduce the future risk of disaster damage to infrastructure. Category C: Roads and bridges. FEMA obligated about $5.9 million for 40 projects focused on repairing roads and bridges in the territory, 9 of which included hazard mitigation measures totaling about $1.6 million. For example, FEMA obligated about $233,000 for one project to repair a road on St. Croix damaged by floodwaters. This project included approximately $61,000 for hazard mitigation measures to reduce the likelihood of erosion during future flooding events. Of the $5.9 million FEMA obligated for category C, the USVI expended about $86,000 (1.5 percent) as of June 30, 2019. Category D: Water control facilities. As of June 30, 2019, FEMA did not have any projects in this category. According to FEMA officials, the USVI does not have water control infrastructure—such as berms or levees—that would fall under category D. Category E: Buildings and equipment. FEMA obligated about $68.3 million for 101 projects focused on repairing damaged structures in the territory, 49 of which included hazard mitigation measures totaling about $3.1 million. For example, FEMA obligated about $59.7 million for one project to replace 5 heavily damaged buildings in a public housing facility in St. Thomas (see fig. 11). While FEMA obligated this project through the standard Public Assistance program, FEMA and the USVI plan to work to develop a fixed-cost estimate with the intention of transitioning this project to the alternative procedures program, according to FEMA documentation. Further, this documentation states that hazard mitigation measures will be incorporated into the new structures by implementing internationally adopted building codes and standards for wall and window replacements. Of the $68.3 million FEMA obligated for Category E, the USVI expended about $533,000 (0.8 percent) as of June 30, 2019. Category F: Utilities. Of the $588.5 million FEMA obligated for permanent work projects, $505.6 million (86 percent) was obligated for 23 projects focused on repairing utilities, 13 of which included hazard mitigation measures totaling about $378.2 million. Specifically, FEMA obligated $481.8 million—or 95 percent of the $505.6 million—through the standard Public Assistance program for projects focused on territory-wide permanent electrical distribution system repairs. This includes replacing damaged wooden utility poles with more resilient composite fiberglass poles that can withstand 200 mile per hour winds as well as power transmission lines and transformers (see fig. 12). Of the $505.6 million FEMA obligated for category F, the USVI expended about $210.4 million (42 percent) as of June 30, 2019. Category G: Parks, recreational, and other facilities. As of June 30, 2019, FEMA obligated about $8.8 million for 36 projects focused on repairing parks, playgrounds, and other facilities, 5 of which included hazard mitigation measures totaling about $214,000. For example, FEMA obligated about $1.5 million in March 2019 for two projects to repair the USVI’s Tsunami Early Warning System, which comprises a network of warning stations that alert residents of a potential tsunami event (see fig. 13). As of September 2019, these were the only projects FEMA had obligated under the Public Assistance alternative procedures program in the territory, according to FEMA officials. These projects included about $185,000 for hazard mitigation measures to replace wooden poles with higher-rated steel poles that are able to withstand high winds and impacts from flying debris during a storm. Of the $8.8 million FEMA obligated for category G, the USVI expended about $246,000 (3 percent) as of June 30, 2019. Appendix II: Status of Hazard Mitigation Grant Program Funding in the U.S. Virgin Islands As of June 30, 2019, the Federal Emergency Management Agency (FEMA) obligated about $60.6 million for 22 Hazard Mitigation Grant Program projects in the U.S. Virgin Islands (USVI) and the USVI expended about $1.7 million (3 percent) across 5 projects. Unlike Public Assistance program projects that, in many cases, are focused on rapidly providing emergency services or repairing critical disaster-damaged infrastructure and systems, Hazard Mitigation Grant Program projects are designed to fund a variety of measures to increase the longer-term resilience of the USVI’s infrastructure during future disasters. Information on selected Hazard Mitigation Grant Program projects in the USVI that received obligations as of June 30, 2019, is detailed below. Virgin Islands Territorial Emergency Management Agency and Bureau of Information Technology Emergency Operations Center and Safe Room Retrofit. FEMA obligated about $22.5 million to fund the retrofit of the USVI Territorial Emergency Management Agency’s Emergency Operations Center. The new facility will serve as the headquarters for both the USVI Territorial Emergency Management Agency and the USVI Bureau of Information Technology and house a 911 Emergency Call Center. According to FEMA documentation, the facility will include a safe room to allow emergency personnel to shelter in place during disasters and will contain sufficient space to house FEMA and other federal personnel, as necessary. Further, the facility will include a hardened communications system to ensure emergency responders are able to effectively communicate during emergency events, among other improvements. The Comprehensive Territorial Hazard Mitigation and Resilience Plan Project. FEMA obligated nearly $5.0 million to fund the development of an in-depth, comprehensive hazard mitigation and resilience plan for territory-wide use. FEMA officials stated that unlike in the contiguous United States, the USVI does not have any entities responsible for formally developing similar plans to guide operations and mitigation activities across various sectors, such as protecting the potable water supply and assessing economically feasible options for development. As a result, FEMA officials told us that this project represents an important effort to develop a holistic, territory-wide hazard mitigation plan that would cover all relevant sectors. The Spring Gut Watershed Green Space Acquisition and Stormwater Management Project. FEMA obligated nearly $1.0 million to fund the first phase of a $2.0 million project to purchase 50 acres of undeveloped land and develop storm water retention measures—such as berms and rock linings—to reduce downstream flooding and the associated damages to roads, homes, and infrastructure (see fig. 14). FEMA officials told us that the first phase of the project included an environmental and historical preservation review of the target locations to confirm program eligibility before actual construction activities can begin. Fortuna/Bordeaux Fire Station Retrofit. FEMA obligated more than $470,000 to fund the first phase of a nearly $5.0 million project to retrofit a fire station in St. Thomas. Specifically, the project will upgrade the facility’s structure to applicable codes and standards to mitigate the risks posed by hurricane-force winds, including the dangers posed by flying debris. Further, the retrofit will include the installation of a steel-reinforced concrete safe room and a back-up emergency power generator to ensure the safety and protection of emergency personnel and the continuity of emergency response activities during a disaster, according to FEMA documentation. Appendix III: The Governor Juan F. Luis Hospital and Medical Center in St. Croix, U.S. Virgin Islands The Governor Juan F. Luis Hospital and Medical Center (JFL hospital) in St. Croix provides an illustrative example of the processes and challenges associated with developing and implementing Public Assistance program projects in the U.S. Virgin Islands (USVI). In September 2017, Hurricane Maria’s strong winds and torrential rains caused severe damage to the facility’s roof; heating, ventilation, and air conditioning system; and electrical, water, and sewage systems, according to Federal Emergency Management Agency (FEMA) documentation. Further, the infusion of water—both during and after the storm—saturated the interior of the hospital, destroyed medical equipment and hospital furnishings, and facilitated the growth of hazardous mold. Figure 15 details selected hurricane damage to the facility. Due to the extensive damage, the JFL hospital has been operating at reduced capacity since the hurricane and certain functions have been relocated to undamaged areas, according to FEMA documentation. This documentation states that while the hospital continues to provide limited medical services to St. Croix residents, it is no longer capable of providing critical care services. Since alternate options were either limited or unavailable on the island following the storms, St. Croix residents in need of life sustaining medical treatments such as chemotherapy infusions or who are experiencing life-threatening health events such as cardiac failure or trauma must be transported out of the territory to receive life- saving care, according to FEMA documentation. Public Assistance Program Emergency Work Projects at the JFL Hospital Following Hurricane Maria, FEMA obligated grant funding for several Public Assistance emergency work projects to help keep the JFL hospital functioning and capable of providing limited medical services to St. Croix residents. For example, in August 2018, FEMA obligated $119,000 in grant funding to reimburse the JFL hospital for the use of an emergency backup generator through Public Assistance program category B, which provides funding for emergency protective measures. According to JFL personnel, this funding covered the cost of using the backup generator until the facility’s primary electrical system could be restored. In another example, FEMA obligated about $2.4 million in August 2018—also through Public Assistance program category B—to fund the rental of mobile dialysis trailers (see fig. 16). According to JFL personnel, these trailers were acquired to replace all 14 of the facility’s dialysis units that were destroyed during the storm. In addition to Public Assistance projects focused on maintaining the existing facility, FEMA obligated $43.2 million in January 2018 to fund the purchase and installation of modular units to serve as a temporary medical facility through category B emergency work. According to FEMA documentation, this temporary facility is intended to provide critical medical services to St. Croix residents—including an emergency room, pediatric care, a labor and delivery ward, and an intensive care unit, among other services—until a permanent facility is completed (see fig. 17). JFL personnel told us that completing this project is a key priority as it will enable them to transition all medical services from the main facility, which continues to deteriorate over time. However, they stated that implementing this project has been challenging. For example, JFL personnel told us that when former JFL administrators were developing the project, they incorporated the cost of procuring and installing the modular units, but omitted the costs associated with acquiring, installing, and certifying new medical equipment for use in the interim facility. These personnel stated that these costs should have been incorporated into the original project paperwork and clarified that the acquisition and certification of new equipment was critical in ensuring the hospital’s provision of medical services would not be disrupted. Specifically, they explained that relocating the facility’s existing medical equipment was not a feasible option as it would result in an unacceptable lapse in medical services during the time-consuming process of deconstructing, transferring, reinstalling, and recertifying this equipment in the modular facility. JFL personnel stated they worked closely with FEMA officials and contractor personnel to update the project’s paperwork and request additional program funding for this new medical equipment. In August 2019, FEMA approved the updated paperwork and obligated additional funding for this project, according to FEMA documentation. JFL personnel also stated they have limited capacity to effectively manage and oversee the construction of the temporary facility due to competing responsibilities. In addition to managing this project, they stated they were occupied with the continuous maintenance challenges associated with keeping the deteriorating main facility functioning while also working to develop options for a permanent facility through the Public Assistance alternative procedures program, as discussed below. They told us FEMA officials and contractor personnel had been helpful in providing assistance, but stated they would benefit from a larger hospital management team that could focus specifically on planning and implementing the facility’s numerous recovery efforts. As of July 2019, JFL personnel stated their aim is to officially open the temporary facility in the spring of 2020. Public Assistance Alternative Procedures Permanent Work at the JFL Hospital In conjunction with the temporary facility’s construction, FEMA officials and JFL personnel are working to develop a permanent work project under the Public Assistance alternative procedures program to replace the damaged hospital. Further, in providing a critical service, the JFL hospital is eligible to use the new flexibilities provided by the Bipartisan Budget Act of 2018. This Act allows FEMA—when using the alternative procedures—to fund the repair or full replacement of the hospital to accepted industry standards regardless of any pre-disaster damage or wear and tear the facility may have sustained prior to the 2017 hurricanes. FEMA officials and JFL personnel stated the Act therefore provides a valuable opportunity to restore the facility to a better condition than it was in prior to the storms. However, JFL personnel told us that pursuing this permanent work project included challenges. For example, JFL personnel told us that maintaining the damaged facility while FEMA determined whether the hospital was eligible for repairs to the existing structure or a complete replacement under the Bipartisan Budget Act was challenging. Specifically, they explained that while FEMA worked to finalize this determination, management was in the difficult position of deciding where and how to invest its finite resources to keep the constantly deteriorating facility functioning. For example, these personnel explained that if FEMA determined that the facility is ineligible for replacement under the Act, they would immediately invest money into the existing facility to address critical components that require urgent attention, such as the water and wastewater systems. In contrast, if FEMA determined that the facility is indeed eligible for replacement, management would strategically invest the minimum amount of resources required to keep the facility functioning with the full knowledge that it would eventually be demolished. Figure 18 details selected examples of temporary fixes JFL personnel implemented to keep the facility functioning. In May 2019, FEMA officially determined that the JFL hospital was eligible under the Bipartisan Budget Act of 2018 for a complete replacement through the Public Assistance alternative procedures program. JFL personnel told us they are working with FEMA officials and medical industry experts to ensure that they take advantage of the flexibilities provided by the Bipartisan Budget Act when developing the project. As of July 2019, these personnel explained they are in the early stages of working with FEMA officials and territorial stakeholders to assess options for the replacement facility and are designing a strategy to ensure the future hospital is able to sufficiently address the healthcare needs of USVI residents. Appendix IV: Comments from the Department of Homeland Security Appendix V: GAO Contact and Staff Acknowledgments GAO Contact Chris Currie, (202) 512-8777 or curriec@gao.gov. Staff Acknowledgments In addition to the contact named above, Joel Aldape (Assistant Director), Bryan Bourgault (Analyst in Charge), Aaron Gluck, Eric Hauswirth, Brian Lipman, Amanda Miller, Heidi Nielson, and Kevin Reeves made key contributions to this report.


Background Hurricanes Irma and Maria In September 2017, two Category 5 hurricanes struck the USVI, causing catastrophic damage across the entire territory and neighboring Caribbean islands. On September 6, 2017, Hurricane Irma struck St. Thomas and St. John and on September 19, 2017, Hurricane Maria struck St. Croix (see fig. 1). The storms severely damaged the territory’s critical infrastructure, devastating more than 90 percent of aboveground power lines and shutting down electricity and telecommunications for months. Further, 52 percent of the territory’s housing units were damaged, ports and airports were closed for weeks, and hundreds of thousands of tons of debris were generated, often blocking roads and making transportation hazardous. In addition, according to a September 2018 report from the USVI Hurricane Recovery and Resilience Task Force, the territory’s economic activity— especially tourism—was severely reduced in the months following the storms, leading to job losses and a total estimated economic impact of $1.54 billion. In response to the request of the Governor of the USVI, the President declared a major disaster the day after each hurricane struck the territory. Major disaster declarations can trigger a variety of federal response and recovery programs for government and nongovernmental entities and households and individuals, including assistance through the Public Assistance program. Under the National Response Framework and National Disaster Recovery Framework, DHS is the federal department with primary responsibility for coordinating disaster response and recovery, and within DHS, FEMA has lead responsibility. The Administrator of FEMA serves as the principal adviser to the President and the Secretary of Homeland Security regarding emergency management. FEMA’s Public Assistance Program FEMA’s Public Assistance program provides funding to state, territorial, local, and tribal governments as well as certain types of private nonprofit organizations to assist with responding to and recovering from major disasters or emergencies. As shown in figure 2, Public Assistance program funds are categorized broadly as “emergency work” or “permanent work.” Within these broad categories are separate subcategories. In addition to the emergency work and permanent work categories, the program includes category Z, which represents indirect costs, administrative expenses, and other expenses a recipient or subrecipient incurs in administering and managing the Public Assistance program that are not directly chargeable to a specific project. FEMA’s Public Assistance program also provides funding for cost- effective hazard mitigation measures to reduce or eliminate the long-term risk to people and property from future natural and man-made disasters and their effects. Specifically, FEMA provides funding for hazard mitigation measures in conjunction with the repair of disaster-damaged facilities to enhance their resilience during future disasters. For example, a community that had a fire station damaged by a disaster could use Public Assistance funding to repair the facility and incorporate additional measures such as installing hurricane shutters over the windows to mitigate the potential for future damage. Once the President has declared a disaster, FEMA, the state or territorial government (the recipient), and local or territorial entities (the subrecipient) work together to develop damage assessments and formulate project worksheets for eligible projects. Project worksheets detail the scope of work and estimated cost for repairing or replacing disaster-damaged infrastructure as well as any hazard mitigation measures that may help to increase the resilience of this infrastructure during future disasters. After a project has completed FEMA’s review process and is approved, FEMA obligates funding for the project by placing money into an account where the recipient has the authority to draw down—or withdraw—funding to pay the subrecipient for eligible work upon completion (see fig. 3). In addition, a state or territorial governor may designate a governor’s authorized representative (GAR) to oversee all aspects of disaster assistance, including Public Assistance funding. Specifically, the GAR is responsible for ensuring compliance with program requirements by providing oversight into how goods and services are procured for projects, such as construction materials or modular school units. The GAR also confirms that subrecipients submit complete documentation demonstrating that all work completed is in accordance with a project’s approved scope of work and Public Assistance program requirements. The GAR then approves the paperwork and the recipient can draw down funding from the account holding the obligations to reimburse subrecipients for completed work. When a project has been completed, FEMA conducts a close-out process to certify that all work has been completed and reconciles the actual cost incurred. If the actual cost of the completed work is greater than the amount of money FEMA obligated for the project, FEMA will reimburse the subrecipient for these additional costs. FEMA’s Public Assistance Alternative Procedures Program The Sandy Recovery Improvement Act of 2013 authorized the use of alternative procedures in administering the Public Assistance program, thereby providing new flexibilities to FEMA, states, territories, and local governments for debris removal, infrastructure repair, and rebuilding projects using funds from this program. Unlike in the standard Public Assistance program where FEMA will fund the actual cost of a project, the Public Assistance alternative procedures allow awards for permanent work projects to be made on the basis of fixed-cost estimates to provide financial incentives for the timely and cost-effective completion of work. Under these procedures, if the actual cost of the project exceeds the fixed-cost estimate agreed upon by FEMA and the recipient, the recipient or subrecipient is responsible for the additional costs at the time of the close-out process. However, if the actual cost of completing eligible work for a project is below the estimate, the recipient may use the remaining funds for additional cost-effective hazard mitigation measures to increase the resilience of public infrastructure. In addition, these funds may also be used for activities that improve the recipient’s or subrecipient’s future Public Assistance operations or planning. FEMA Had Obligated More Than $1.4 Billion and the USVI Had Expended About $587 Million in Public Assistance Funding as of October 1, 2018 As of October 1, 2018, FEMA had obligated more than $1.4 billion through the standard Public Assistance program for 475 projects across the USVI. As shown in figure 4, FEMA obligated funding for both emergency work and permanent work projects. As of October 1, 2018, of the more than $1.4 billion FEMA obligated, the USVI had expended approximately $586.9 million—about 41 percent of total Public Assistance program obligations to the USVI—to reimburse subrecipients for completed work. Of this $586.9 million, the USVI had expended about $532.8 million (91 percent) for emergency work projects in categories A and B and $49.1 million (8 percent) for permanent work projects in categories C through G. The majority of FEMA’s obligations and the funding the USVI expended as of October 1, 2018, are for emergency work because these projects began soon after the disasters struck and focused on debris removal and providing assistance to address immediate threats to life and property. In contrast, permanent work projects take time to identify, develop, and ultimately complete as they represent the longer-term repair and restoration of public infrastructure. Emergency work. Of the more than $1.4 billion FEMA had obligated as of October 1, 2018, about $873.8 million (60 percent) was obligated for 322 emergency work projects in Public Assistance categories A and B. Category A: Debris Removal. FEMA obligated about $94.0 million for 71 projects focused on debris removal activities across the territory. For example, FEMA obligated $45.0 million to the USVI Department of Public Works for territorywide debris removal efforts and $39.1 million to the USVI Water and Power Authority for these activities in St. Croix (see fig. 5). Of the $94.0 million FEMA obligated for debris removal, the USVI had expended about $54.6 million (58 percent) as of October 1, 2018. Category B: Emergency Protective Measures. FEMA obligated about $780 million for 251 projects focused on emergency measures. For example, FEMA obligated about $187 million for the Sheltering and Temporary Essential Power program, which is intended to provide essential repairs or restore power to private residences to allow affected individuals to return or remain in their homes, thereby reducing the demand for other shelter options. In addition, FEMA obligated approximately $101 million for the purchase and installation of modular units to be used as temporary classrooms and other facilities while permanent school buildings are repaired or replaced (see fig. 6). Of the $780 million FEMA obligated for emergency protective measures, the USVI had expended about $478 million (61 percent) as of October 1, 2018. Permanent work. Of the more than $1.4 billion in Public Assistance funding FEMA had obligated as of October 1, 2018, about $516.3 million (36 percent) was obligated for 153 permanent work projects across categories C through G. These permanent work projects include about $349.4 million for cost-effective hazard mitigation measures aimed at reducing the future risk of disaster-damaged facilities in conjunction with their repair. Further, of the $516.3 million FEMA obligated for permanent work in the USVI, approximately $500.4 million—or 97 percent of all permanent work obligations—was obligated to the USVI Water and Power Authority for the permanent repair of electrical distribution systems and other utilities across the territory. Category C: Roads and Bridges. FEMA obligated about $5.2 million for 35 projects focused on repairing roads and bridges in the territory, 18 of which included hazard mitigation measures totaling about $1.5 million. For example, FEMA obligated about $410,000 for one project to repair a road on St. Thomas damaged by floodwaters. This project included approximately $227,000 for hazard mitigation measures, such as replacing the damaged road surface with reinforced concrete and building a retaining wall. As of October 1, 2018, the USVI had not expended funding in this category. Category D: Water Control Facilities. As of October 1, 2018, FEMA did not have any projects in this category. According to FEMA officials, the USVI does not have water control infrastructure that would fall under category D, such as dams, levees, or berms. Category E: Buildings and Equipment. FEMA obligated $6.0 million for 77 projects focused on repairing and rebuilding damaged buildings and equipment, 16 of which included hazard mitigation measures totaling about $1.8 million. For example, FEMA obligated about $1.5 million to repair damage to the airport terminal building in St. Thomas—a project where hazard mitigation measures comprised 87 percent of the project’s total cost (see fig. 7). These measures include replacing the terminal’s roof with materials designed to withstand higher wind speeds to increase the building’s resilience during future storms. Of the $6.0 million FEMA obligated for category E, the USVI had expended about $148,000 (2.5 percent) as of October 1, 2018. Category F: Utilities. Of the $516.3 million FEMA obligated for permanent work projects, $502.2 million (97 percent) was obligated for 15 projects focused on repairing utilities, 7 of which included hazard mitigation measures totaling about $346.0 million. For example, FEMA obligated $286.1 million and $50.2 million for permanent electrical distribution system repairs in St. Croix and St. John, respectively. This includes replacing damaged wooden utility poles with more resilient composite fiberglass poles that can withstand 200 mile per hour winds as well as power transmission lines and transformers (see fig. 8). Of the $502.2 million FEMA obligated for category F, the USVI had expended about $49.0 million (10 percent) as of October 1, 2018. Category G: Parks, Recreational, and Other Facilities. FEMA obligated about $2.9 million for 26 projects focused on repairing parks, playgrounds, and other recreational facilities, 1 of which included hazard mitigation measures. Specifically, FEMA obligated about $453,000 to repair the Lindbergh Park and Water Playground in St. Thomas—a project that included about $18,000 for hazard mitigation measures. As of October 1, 2018, the USVI had not expended funding in this category. Future projects. In addition to the more than $1.4 billion in Public Assistance funding FEMA had obligated as of October 1, 2018, FEMA expected to review an additional 900 future projects for eligibility representing an estimated $779.4 million in potential funding. Of this estimated total amount, FEMA anticipates $128.5 million (16 percent) in costs for future emergency work projects and $650.9 million (84 percent) in costs for future permanent work projects. FEMA and the USVI Are Transitioning From the Standard Public Assistance Program to the Public Assistance Alternative Procedures Program In July 2018, FEMA approved a June 2018 request from the Governor of the USVI to transition to using the Public Assistance alternative procedures program for permanent work in the territory. The alternative procedures provide new flexibilities to FEMA and the USVI that are not available through the standard Public Assistance program. In September 2018, FEMA issued the Public Assistance Alternative Procedures Permanent Work Guide for the USVI to provide guidance on the implementation of the program in the territory. FEMA and USVI officials stated that a section of the Bipartisan Budget Act of 2018 and the flexibilities provided by the program itself influenced the USVI’s decision to transition to using the alternative procedures. First, Section 20601 of the Bipartisan Budget Act of 2018 authorized FEMA, when using the Public Assistance alternative procedures, to provide assistance to fund the replacement or restoration of disaster- damaged infrastructure that provide critical services to industry standards without regard to pre-disaster condition. FEMA and USVI officials told us that the territory therefore has a valuable opportunity to use the alternative procedures to repair and rebuild its critical services infrastructure—including the USVI’s education system, electrical grid, and emergency medical care system, among others—so it is in a better condition than it was prior to the 2017 hurricanes. Second, USVI officials stated that under the standard Public Assistance program currently being used in the USVI, the territorial government is responsible for providing the initial funding to reimburse subrecipients for completed work prior to drawing down funds from the account holding the FEMA- obligated amounts of money for each project. They explained that because of the financial liquidity challenges facing the territory, this process was problematic and required USVI officials to prioritize projects based on the availability of the territory’s funding. USVI officials stated that the Public Assistance alternative procedures will help to address this challenge by providing the territory with more flexibility regarding when and how to fund projects. For example, in certain cases, the USVI is able to consolidate permanent work projects approved under the alternative procedures and share obligated funding across these projects. In addition, the USVI is able to use any excess funds for cost-effective hazard mitigation measures or for activities that improve the recipient’s or subrecipient’s future Public Assistance operations or planning. As of November 2018, FEMA and USVI officials stated they were working to identify and develop permanent work projects using the Public Assistance alternative procedures and discussing the process for developing the fixed-cost estimate for each project. Specifically, unlike in the standard Public Assistance program where FEMA will fund the actual cost of a project, the Public Assistance alternative procedures use a fixed-cost estimate which is agreed to prior to obligation and the USVI will be financially responsible for any actual costs that exceed this amount. Given the USVI’s difficult fiscal situation, FEMA and USVI officials stated that ensuring these fixed-cost estimates are as accurate as possible will be critical. However, FEMA officials also noted that if FEMA and the territory cannot come to an agreement on a fixed-cost estimate for any given project, the USVI does have the option to move forward through the standard Public Assistance program. According to FEMA’s Public Assistance Alternative Procedures Permanent Work Guide for the USVI, all cost estimates for projects using these procedures must be finalized by March 2020. We will continue to monitor the USVI’s plans for using the alternative procedures as part of our broader work assessing disaster recovery efforts in the USVI and will issue a follow-on report later this year. Agency Comments We provided a draft of this report to DHS and the USVI government. We requested comments from DHS and the USVI government, but none were provided. DHS did provide technical comments, which we incorporated as appropriate. We are sending copies of this report to the appropriate congressional committees, the Secretary of Homeland Security, the Administrator of FEMA, the USVI government, and other interested parties. In addition, the report is available at no charge on the GAO website at http://www.gao.gov. If you and your staff have any questions, please contact me at (202) 512- 8777 or curriec@gao.gov. GAO staff who made key contributions to this report are listed in appendix II. Appendix I: GAO Contact and Staff Acknowledgments GAO Contact: Chris Currie, 202-512-8777 or curriec@gao.gov. Staff Acknowledgments: In addition to the contact named above, Joel Aldape (Assistant Director), Bryan Bourgault, Leanna Diggs, Aaron Gluck, Eric Hauswirth, Brian Lipman, Amanda Miller, Heidi Nielson, and Kevin Reeves made key contributions to this report.