FEMA Did Not Properly Review the Port Authority of New York and New Jersey's Request for $306 Million in Public Assistance Funds

The Federal Emergency Management Agency (FEMA) did not properly review the requests for Public Assistance grant funds for damages to the Holland Tunnel. FEMA did not follow Federal regulations nor its own guidelines for reviewing cost estimates and documenting its determinations. FEMA Region II personnel could not provide documentation to justify changes made to the cost estimates or prove they reviewed the cost estimates for reasonableness, resulting in a lack of assurance the costs obligated are accurate and reasonable. We recommend FEMA deobligate $123 million in ineligible costs, in addition to two other recommendations that, when implemented, will improve FEMA’s review and obligation of Public Assistance grant funds. FEMA concurred with one recommendation, which we consider resolved and open. FEMA did not concur with two recommendations that remain unresolved and open.