FEMA's Public Assistance Grant to PREPA and PREPA's Contracts with Whitefish and Cobra Did Not Fully Comply with Federal Laws and Program Guidelines

The Puerto Rico Electric Power Authority (PREPA) complied with Federal procurement requirements for its noncompetitive procurement of the Whitefish contract. However, the contract costs may not have complied with Federal cost principles that costs must be reasonable to be eligible for Federal awards. PREPA’s oversight of the Cobra contract did not comply with PA program guidelines. Finally, FEMA’s Public Assistance grant to PREPA for the Cobra contract did not fully comply with PA program guidelines. We made two recommendations for FEMA to provide technical assistance to Puerto Rico to ensure compliance with Federal regulations and PA program guidelines. We made two other recommendations for FEMA to develop guidance to verify its subrecipients’ oversight of time and material contracts and determine the reasonableness and eligibility of time and material contract costs. FEMA concurred with three of the recommendations and did not concur with one recommendation.