FEMA: Action Needed to Improve Administration of the National Flood Insurance Program
Highlights
The National Flood Insurance Program (NFIP) has been on GAO's high-risk list since March 2006 because of concerns about its long-term financial solvency and related operational issues. Significant management challenges also affect the Federal Emergency Management Agency's (FEMA) ability to administer NFIP. This report examines (1) the extent to which FEMA's management practices affect the administration of NFIP; (2) lessons learned from the cancellation of FEMA's attempt to modernize NFIP's insurance management system; and (3) limitations on FEMA's authority that could affect NFIP's financial stability. To do this work, GAO reviewed internal control standards and best practices, analyzed agency documentation, reviewed previous work, and interviewed relevant agency officials.
FEMA faces significant management challenges in areas that affect NFIP, including strategic and human capital planning; collaboration among offices; and records, financial, and acquisition management. For example, because FEMA has not developed goals, objectives, or performance measures for NFIP, it needs a strategic focus for ensuring program effectiveness. FEMA also faces human capital challenges, including high turnover and weaknesses in overseeing its many contractors. Further, FEMA needs a plan that would ensure consistent day-to-day operations when it deploys staff to federal disasters. FEMA has also faced challenges in collaboration between program and support offices. Finally, FEMA lacks a comprehensive set of processes and systems to guide its operations, in particular a records management policy and an electronic document management system. FEMA has begun to address some of these challenges, including acquisition management, but the results of its efforts remain to be seen. Unless it takes further steps to address these management challenges, FEMA will be limited in its ability to manage NFIP's operations or better ensure program effectiveness. FEMA also faces challenges modernizing NFIP's insurance policy and claims management system. After 7 years and $40 million, FEMA ultimately canceled its latest effort (NextGen) in November 2009 because the system did not meet user expectations. As a result, the agency continues to rely on an ineffective and inefficient 30-year old system. A number of acquisition management weaknesses led to NextGen's failure and cancellation, and as FEMA begins a new effort to modernize the existing legacy system, it plans to apply lessons learned from its NextGen experience. While FEMA has begun implementing some changes to its acquisition management practices, it remains to be seen if they will help FEMA avoid some of the problems that led to NextGen's failure. Developing appropriate acquisitions processes and applying lessons learned from the NextGen failure are essential if FEMA is to develop an effective policies and claims processing system for NFIP. Finally, NFIP's operating environment limits FEMA's ability to keep the program financially sound. NFIP assumes all risks for its policies, must accept virtually all applicants for insurance, and cannot deny coverage for high-risk properties. Moreover, additional external factors--including lapses in NFIP's authorization, the role of state and local governments, fluctuations in premium income, and structural and organizational changes--complicate FEMA's administration of NFIP. As GAO has previously reported, NFIP also faces external challenges that threaten the program's long-term health. These include statutorily required subsidized premium rates, a lack of authority to include long-term erosion in flood maps, and limitations on FEMA's authority to encourage owners of repetitive loss properties to mitigate. Until these issues are addressed, NFIP's long-term financial solvency will remain in doubt. GAO makes 10 recommendations to improve the effectiveness of FEMA's planning and oversight efforts for NFIP; improve FEMA's policies and procedures for achieving NFIP's goals; and increase the usefulness and reliability of NFIP's flood insurance policy and claims processing system. GAO also presents three matters for congressional consideration to improve NFIP's financial stability. DHS concurred with all of GAO's recommendations.
Recommendations
Matter for Congressional Consideration
| Matter | Status | Comments |
|---|---|---|
| As Congress considers NFIP reforms and reauthorization, it may wish to consider ways to better ensure the long-term financial stability of the program, such as 1) allowing NFIP to charge full-risk premium rates to all property owners and providing assistance to some categories of owners to pay those premiums; 2) authorizing NFIP to account for long-term flood erosion in its flood maps; and 3) clarifying and expanding FEMA's ability to increase premiums or discontinue coverage for owners of repetitive loss properties who do not mitigate their properties or refuse FEMA's mitigation offers. | In 2012 Congress passed the Biggert-Waters Flood Insurance Reform and Reauthorization Act that among other things, took steps to betterd ensure the long-term financial stability of the program. These steps included requiring that FEMA use accepted actuarial principles in determining premium rates, eliminating subsidized premium rates for most property owners, allowing FEMA to account for long-term flood erosion, and creating a catastrophic loss reserve fund. While the ultimate effect of these changes is not yet known, they should improve NFIP's financial stability. |
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of Homeland Security | To improve strategic planning, performance management, and program oversight within and related to NFIP, the Secretary of DHS should direct the FEMA Administrator to provide strategic direction and guidance to the process for developing a comprehensive strategy for FIMA operations; establish a firm timeframe for and complete the development of this strategy; and take steps to ensure that this strategy has appropriate performance goals and measures to track NFIP's progress. |
In November 2012 FEMA completed a multi-year planning document for the Flood Insurance and Mitigation Administration (FIMA), which administers NFIP. This document lays out FEMA's strategic direction and how FIMA's strategic goals will be incorporated within FEMA's goals. It also sets specific expectations for the completion and regular updating of FIMA's strategic planning documents, including peformance goals.
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| Department of Homeland Security | To improve strategic planning, performance management, and program oversight within and related to NFIP, the Secretary of DHS should direct the FEMA Administrator to develop a comprehensive workforce plan according to PKEMRA that identifies agency staffing and skills requirements, addresses turnover and staff vacancies, and analyzes FEMA's use of contractors. |
FEMA had previously completed a Human Capital Strategic Plan covering the years 2016-2020, which while helpful for the agency, did not contain specifics that would address this recommendation. In February 2020, FEMA officials advised us that they had begun several internal efforts that would cover the detailed actions in our recommendation. In June 2020, they provided us with high level agendas of meetings that they indicated had discussed these efforts. However, in August 2020, FEMA officials let us know that these internal efforts were being ended and that any FEMA workforce management improvement efforts would be subsumed by a DHS-wide effort, for which they did not yet have a projected completion date. Officials said that any FEMA efforts to date would provide helpful input to the DHS-wide effort. In GAO-11-297 we made this recommendation as a FEMA-specific effort to address FEMA-specific issues related to their oversight of the National Flood Insurance Program. Given the length of time since the recommendation was made and that a FEMA-specific effort is no longer being contemplated by the agency, having been replaced by a DHS-wide effort, we are closing this recommendation as unimplemented.
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| Department of Homeland Security | To improve strategic planning, performance management, and program oversight within and related to NFIP, the Secretary of DHS should direct the FEMA Administrator to direct the FEMA Administrator to develop guidance for continuing operations when staff are deployed to respond to federal disasters and direct FIMA Acting Assistant Administrator to develop such a plan. |
As part of the development of FIMA's 2012 Continuity of Operations (COOP) Implementation Plan, FIMA has identifed critical staff as well as the key operations that need to continue when staff are deployed in response to a federal disaster and how operations will continue during such periods.
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| Department of Homeland Security | To improve strategic planning, performance management, and program oversight within and related to NFIP, the Secretary of DHS should direct the FEMA Administrator to direct the FIMA Acting Assistant Administrator and the FEMA Mission Support Associate Administrator to develop protocols to encourage and monitor collaboration between FIMA and relevant support offices, including those for information technology, acquisition management, and financial management. |
FEMA has developed guidance for the oversight and review of oversight of its acquisitions, which has resulted in greater collaboration between FIMA and Mission Support, including support offices for information technology, acquisition management, and financial management. For example, these offices have collaborated in the development of a system to improve strategic planning, performance management, and program oversight. In addition, FEMA has fostered collaboration through its business process improvement effort, which reviews and analyzes business processes and procedures across FEMA to identify opportunities for improvement. FEMA officials provided us documentation including updated acquisition procedures, briefing slides, and meeting records summarizing these collaborative efforts.
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| Department of Homeland Security | To improve FEMA's policies, procedures, and systems for achieving NFIP's program goals, the Secretary of DHS should direct the FEMA Administrator to consider the costs and benefits of implementing an interim system for FEMA and updating its document management policies and procedures while waiting for DHS to implement an agencywide electronic document management system. |
As of February 2018, FEMA had assessed the costs and benefits of implementing an interim electronic records system while waiting for the development of an agency-wide solution. It has determined that implementing such a system would require a roll-out in five phases, and would take about two and a half years to complete at a cost of approximately $4.4 million. FEMA has not yet identified a funding source for this effort, but is looking to do so. Until then, however, FEMA has updated its legacy document management system to be able to store more documents and provide easier access to users. Further, NFIP has established policies and procedures for the upgraded system.
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| Department of Homeland Security | To improve FEMA's policies, procedures, and systems for achieving NFIP's program goals, the Secretary of DHS should direct the FEMA Administrator to ensure that FEMA regularly reviews unliquidated obligations within NFIP-related funds. |
FEMA officials provided docmentation of revised guidance for managing open obligations and evidence that the new guidance is being followed.
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| Department of Homeland Security | To improve FEMA's policies, procedures, and systems for achieving NFIP's program goals, the Secretary of DHS should direct the FEMA Administrator to establish timelines for and complete the development and implementation of FEMA's revised acquisition process, in line with the DHS Acquisition Directive 102-01, including a rollout process with staff training and a mechanism to better ensure that all acquisitions undergo the necessary reviews. |
According to FEMA officials, in August 2017 FEMA ceased the development of its revised acquisition process before it was completed. According to the officials, FEMA determined that this revised process was duplicative of the DHS directive it was meant to replace, and therefore no longer needed. However, FEMA was unable to provide documentation justifying this determination or demonstrating that the other elements of the recommendation (providing training and ensuring that all acquisitions undergo the necessary reviews) had been addressed some other way.
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| Department of Homeland Security | To improve FEMA's policies, procedures, and systems for achieving NFIP's program goals, the Secretary of DHS should direct the FEMA Administrator to ensure that FEMA Mission Support's business process improvement efforts are expeditiously completed. |
FEMA acknowledged the need to continually evaluate and verify the effectiveness of its policies, procedures, and systems. In response, FEMA created a Business Process Improvement Office to review, analyze, and improve FEMA's business processes and procedures. While the office has completed a number of projects to date, FEMA views it as a continuous effort that will continue to identify areas for improvement and strategies for implementing these improvements. FEMA officials provides us with numerous supporting documents, including policies, meeting records, and reports documenting several of its business process improvement initiatives over the last several years.
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| Department of Homeland Security | To improve the usefulness and reliability of NFIP's flood insurance policy and claims processing system, the Secretary of DHS should direct the DHS Deputy Secretary, as the Chair of DHS's Acquisition Review Board (ARB), to provide regular oversight of FEMA's next attempt to modernize this system. |
FEMA has established an NFIP steering committee that has the responsibility of overseeing FEMA's next attempt to modernize it's policy and claims processing system. Members of this committee include the DHS Chief Information Officer, the FEMA Deputy Administrator, teh FIMA Acting Associate Administrator, the FEMA Chief Procurement Officer, the FEMA Chief Financial Officer, and the FEMA Chief Information Officer. The steering committee meets regulaly to discuss the current status of the legacy system as well as modernization efforts.
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| Department of Homeland Security | To improve the usefulness and reliability of NFIP's flood insurance policy and claims processing system, the Secretary of DHS should direct the FEMA Administrator to ensure that FEMA's Chief Information Officer (CIO) applies lessons learned from the NextGen experience to the next modernization attempt. At a minimum, this effort should ensure that (1) all levels of system requirements are complete and clear and that key stakeholders are adequately involved in requirements development and management, (2) key test events are effectively planned and executed and problems identified during testing effectively managed, (3) project risks are proactively identified and mitigated, and (4) project office staffing needs are properly assessed and met. |
According to FEMA officials, FEMA has taken multiple steps to ensure that lessons learned from the failed implementation of the NextGen system are applied to future modernization efforts. These steps include: 1) Creating clear system requirements and involving key stakeholders in the evaluation of systems on an ongoing basis. There will be a formal signoff process for FEMA management team members. 2) Documenting requirements for key test events and creating a template for documenting test results. Business process owners will be involved in the creation and execution of the tests. 3) Creating a process for identification and mitigation of project risks. This includes regular briefings of the executive steering committee. 4) Creating an NFIP IT project management office, which was staffed with two deputy program executives hired form the private sector, each with significant IT experience. Additional staff have been added as workloads have increased.
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