FEMA May Ask for Return of Funds

Inspector General: Duluth Didn't Meet Federal Requirements

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A federal report issued August 24, 2015 is recommending the Federal Emergency Management Association recover more than $1.7 million from the City of Duluth.

The recommendation stems from the auditors finding that the city did not meet federal requirements in contracting repair work after the 2012 flood.

The report acknowledges that the city was following direction given to it by the State of Minnesota, but says the state’s requirements don’t meet requirements for federally funded projects. 

City Administrator Dave Montgomery said Tuesday, the Inspector General randomly audits after any disaster to make sure federal funds aren’t misused or misappropriated.

In the case of the 2012 flood, Montgomery said Duluth is the only entity to be audited. 

The major finding in the audit is that more than $1.55 million in contracts was awarded without actively soliciting small businesses or minority and women owned business enterprises.

The report states the city was required to consult with the “Small Business Administration and the Minority Business Development Agency of the Department of Commerce.”

The city maintains that the intention of the regulations cited by the Inspector General is to prevent improper contract awarding and maintain the integrity of the award process.

The city believes it met those criteria with its open bidding process and notification process, which included a seven day newspaper ad, an e-mail blast and other public notifications.

FEMA has 90 days from August 24, to make an official decision on whether to ask Duluth to return any portion of the $1.78 million in question. 

Duluth has already stated it would repay around $235,000. 

Around $227,000 of that money was covered by the city’s insurance policies.

The full audit report can be found here.

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