Council Tasked to Evaluate FEMA’s Effectiveness May Address Inspector General Findings

President Trump's executive order (EO) Council to Assess the Federal Emergency Management Agency established a federal task force on January 24 to conduct a “full-scale” review of the Department of Homeland Security’s (DHS) Federal Emergency Management Agency (FEMA).

Questioning the agency’s ability to meet the nation’s needs during natural disasters, the EO specifically mentioned the nearly $90B in disaster aid spent over the past three years while failing to adequately provide the necessary assistance. The EO states, FEMA “has lost mission focus, diverting limited staff and resources to support missions beyond its scope and authority, spending well over a billion dollars to welcome illegal aliens.”

Some of the concerns mentioned in the EO were also discussed in the January 23, 2025 DHS Office of Inspector General’s audit of FEMA’s Disaster Relief Fund management. While the IG concluded that “FEMA Followed Applicable Laws and Reporting Requirements for Transferring Disaster Relief Funds, “it also reported use of disaster funds for non-disaster related activities.

Funded by the Department of Homeland Security (DHS) Appropriations Act, FEMA’s annual and supplemental disaster funds do not expire and remain available until spent. This means funds appropriated for disasters in any given year, remain available for that event until spent and often carry over from year to year. Additionally, the agency may legally transfer or reprogram restricted percentages of DRF funds each year based on that fiscal year’s appropriation.

 

 

 

 

 

 

 

 

 

 

 

This week, the DHS Office of Inspector General issued its final audit report on FEMA’s management of Disaster Relief Fund (DRF) funds between FY 2017 and 2023. The audit was prompted due to the agency’s use of DRF for non-disaster-related events not applicable under the Stafford Act. The watchdog found that FEMA received $281B for disaster relief including recovery and recission of prior year funds and obligated $267.7B (95.3%). Of those obligations, the $8.1B (2.9%) was set aside or transferred to other programs with $194M transferred to other agencies and internally to FEMA programs for non-disaster related activities.

Those non-disaster related transfers likely contributed to the mandated review and claims that the agency diverted limited staff and resources on “illegal aliens.” The audit revealed the following transfers:

• $118.7M emergency funding to Immigration and Customs Enforcement (ICE) for Southwest Border Custody Operations. The funds were allocated for detention beds, payroll, training, transportation, rent, utilities, communications, supplies, equipment, legal fees, leasehold improvements, and indemnities
• $55.2M to FEMA non-disaster activities including operation of co-located facilities, modernization and expansion of the National Response Coordination Center, Operating and Support services and its Procurement, Construction, and Improvement account.
• $31.9M to the U.S. Agency for International Development for disaster relief in the Federated States of Micronesia and the Republic of the Marshall Islands under their Compacts of Free Association with the United States
• $15.3M to the Transportation Security Administration for its computed tomography systems at airport checkpoints
• $7.8M to the Secret Service for upgrade a backup data center, deploy a resource management system, enhance explosive detection systems and increase the White House security infrastructure.

Other sources of contention surrounded DRF improper and overpayments. According to PaymentAccuracy, from 2020 and 2024, FEMA DRF total outlays, improper payments and over payments increased significantly. Total Outlays more than tripled while improper payments and over payments increased by 111% and 110% respectively with more than 70% of each were made through the Validate as You Go (VAYGo) program. The VAYGo streamlines FEMA’s grant validation process by allowing grant recipients who achieve and maintain low error rates to submit fewer documents during the closeout process. While this provides regular expense validations and expedites the process, it also increases the risks for reporting errors and falsification. 

 

 

 

 

 

 

 

 

 

 

 

Conclusions:

Should the White House opt to reform and reorganize the agency, the obvious outcome would likely include budget reductions and funding reallocations, stricter reporting and compliance requirements and tighter payment validation and tracking processes. Another possibility was mentioned in the President's recent visit to North Carolina-elimination of FEMA altogether and relegating disaster relief to the states. This would likely result in termination of existing contracts and cancellation of re-competitions and planned new contracts. But, this would subsequently create state and local opportunities. All will depend upon the Council’s final recommendations, and as with other EOs, the final impact won’t be evident until the Council submits its report six months from now. 

 

 

 

 

 

 

 

 

 

 

 

The SLED and Canadian teams are providing updates and analysis on key Trump Administration actions impacting state and local and Canadian contractors. Learn more about their insights through the following links:

Impacts on the Canadian public sector

• Impact of Trump Administration 2.0 on Canada-U.S. Supply Chains

Impacts on the State and Local markets

• The Impact of Trump's 2025 Executive Actions on State, Local and Education (SLED) Government Funding
• Headwinds Facing the SLED Market in 2025