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Auditor Says Southern Miss Misused $5.3M in Katrina Aid

Southern MissSouthern Miss

JACKSON, Miss.  — A federal auditor says FEMA should demand the return of $5.3 million of Hurricane Katrina reconstruction money from the University of Southern Mississippi.

The Department of Homeland Security’s Inspector General reviewed $12.2 million of the $41.1 million that USM received to rebuild its Gulf Park campus in Long Beach following the 2005 hurricane.

Federal Emergency Management Agency officials must decide whether to demand the money’s return or discard the finding.

“Ultimately, FEMA does not have to accept it,” said Frances Lucas, USM’s vice president for Gulf Park.

Lucas said the university agreed that it should relinquish claim to $1.44 million it never spent. That money was replaced by a grant. But she said $3.85 million was mostly spent properly. She noted that all the spending was approved by both the Mississippi Emergency Management Agency and FEMA. MEMA is also supposed to respond to the audit.

The auditor said $358,000 was due back because the university received insurance payments to cover the same damage. It says another $2 million was duplicated by a grant from the U.S. Department of Education that paid for rent and renovations to temporary quarters at the former Garden Park Hospital in Gulfport. That includes the amount USM is not disputing.

Findings also say that the university improperly awarded a $2.4 million contract for permanent and temporary repairs and a $453,000 contract for architectural and engineering services. Under the construction contract, the university paid for the contractor’s time and materials, instead of taking bids.

Lucas said that, immediately after Katrina, there was “absolutely no way under the sun to run a bid process.”

“You had to hire whoever you could find that you thought was good to come in and do time and materials,” she said. “In a situation like this, exceptions have to be made. Money had to be spent to secure the buildings enough to find out what we had to do to them.”

The audit says the questioned contracts weren’t completed until 11 months after the storm and that federal rules generally call for limiting time-and-materials to three days of work after the storm, until the nature of needed work becomes clearer.

“The university should have used a more appropriate type of contracting method to accomplish the work,” auditors wrote.

They also found that USM didn’t have adequate records for almost $1 million of the time-and-materials spending. The university said its architect reviewed the documents and should have records, but the auditor said USM had been given a chance to produce the records.

Auditors also questioned USM’s decision to use an engineering firm it had employed before the storm instead of taking new proposals.

“Full and open competition increases the probability of reasonable pricing from the most qualified contractors and helps discourage and prevent favoritism, collusion, fraud, waste and abuse,” the inspector general wrote.


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