GAO Finds Tracking Gaps in Nearly $6 Billion of Disaster Contracts

FEMA and the Army Corps of Engineers lacked reliable systems to track how often disaster contracts went to local businesses, according to a Government Accountability Office report released September 3, 2026.

The audit examined contracting tied to Hurricane Helene, Hurricane Ian and the 2023 Maui wildfires. FEMA and the Corps collectively obligated nearly $6 billion for response and recovery work connected to those disasters during fiscal years 2022 through 2024.

GAO said the weaknesses make it difficult to determine whether federal contracting is supporting businesses in disaster areas and whether agencies are following requirements intended to help local economic recovery.

FEMA data identified about 3 percent as local

Data entered by FEMA contracting officials identified about $85 million, or roughly 3 percent, of the $2.9 billion in FEMA obligations reviewed by GAO as awards to local vendors.

That figure is not a definitive audited share. FEMA required officials to mark whether an award went to a local vendor, but GAO found that the agency did not have a process to monitor local-vendor use or verify the accuracy of the underlying data as of January 2026.

In a nongeneralizable review of 25 FEMA contracts, GAO found that 22 were coded correctly. The review was not designed to estimate the accuracy of FEMA’s data across all disaster contracts.

The Army Corps did not have a consistent enterprise-wide process for collecting or analyzing comparable information. GAO’s Corps analysis covered the Maui wildfires and Hurricane Helene; Hurricane Ian contracts were excluded because the Corps had not coded all of its contracts for that disaster in the federal procurement system, and the advance contracts that were coded were outside the review.

Contracting officers sometimes expanded the disaster area

Federal rules generally define a local vendor as a business residing or primarily doing business in the area covered by an official major-disaster declaration. Agencies are expected to give local firms a preference when feasible and practicable.

Among 40 contracts reviewed, GAO found that four of the 13 selected contracting officers who awarded contracts to local vendors incorrectly identified the eligible disaster area. Some treated the entire state as the local area rather than limiting it to counties named in the disaster declaration.

Examples included a FEMA contracting officer who treated the entire state of Tennessee as the local area even though only designated counties were covered, and another who included counties on additional Hawaiian islands beyond those in the relevant declaration. GAO said all three FEMA contracting officers in its review who incorrectly identified the local area had received some training on local-vendor use.

The sample was nongeneralizable, meaning the findings should not be treated as a statistical estimate of all FEMA or Corps disaster contracting.

Corps files lacked required nonlocal justifications

Federal acquisition rules require a written justification in the contract file when a post-disaster contract is awarded to a nonlocal vendor. The justification must explain why a local vendor was not selected and be approved by the contracting officer.

GAO found that none of the five Corps contracting officers responsible for the selected nonlocal contracts had prepared the required written justifications when GAO requested them. Those officers were responsible for eight selected Corps contracts; six justifications were created after GAO asked for them.

Across the 15 selected Corps contracts, GAO found missing documentation related to local-vendor use. The findings do not establish that the contracts were illegal or that every award should have gone to a local company. They make it harder to determine whether officials considered local vendors and properly justified nonlocal awards.

Four recommendations remain open

GAO made four recommendations: FEMA and the Corps should establish processes to monitor local-vendor use and assess the reliability of the data; FEMA should take additional steps to ensure contracting officers correctly identify the local area; and the Corps should ensure that staff follow documentation requirements for nonlocal disaster awards.

Both agencies concurred with the recommendations, but GAO listed all four as open. FEMA said it plans to update its disaster-contracting training materials and hold a workshop for contracting officers in early 2027. The Corps said it has begun collecting local-vendor data in recovery field offices and district contracting offices, but GAO described that effort as being in its early stages.

GAO will monitor the agencies’ responses. The next practical test will be whether FEMA can validate its local-vendor data and whether the Corps creates a consistent system for tracking awards and documenting decisions during future disasters.

Sources

Look for updates to this story

Discover more from Interactive News

Subscribe to get the latest posts sent to your email.