AECOM: Katrina Damage Estimates and FEMA Replacement Claims

AECOM agreed to pay $11.8 million to resolve allegations that its Katrina damage estimates and FEMA replacement claims secured more disaster assistance from the Federal Emergency Management Agency than educational facilities were entitled to receive. The alleged discrepancies reached the physical facts of the buildings, including damage attributed to an air-conditioning unit the government said did not exist. If you evaluated facilities, reviewed estimates or worked on funding applications, you may recognize the distance between the building you knew and the one described to FEMA.

The architecture and engineering firm’s settlement, announced October 24, 2023, followed separate settlements with Xavier University of Louisiana and the Roman Catholic Archdiocese of New Orleans. An AECOM project specialist brought the whistleblower case. The government joined part of it, pursuing both the contractor that prepared the requests and applicants that certified their accuracy.

The Repair Estimate Could Unlock Full Replacement Funding

The Federal Emergency Management Agency’s Katrina Public Assistance rules limited funding to the cost of repairing a damaged facility unless that cost exceeded 50% of the facility’s replacement cost. Crossing that threshold made full replacement funding available. The damage description affected more than the price of a particular repair: it helped determine whether taxpayers funded an entire replacement.

The government’s account of the program explains that the starting point was restoring a facility to its pre-disaster condition. That put the building’s original design, the storm damage, the cost of repairing it and the cost of replacing the structure at the center of the funding decision.

These claims for federal assistance depended on technical work performed by a government contractor. AECOM supplied assessments used to decide what funding the facility qualified for. That arrangement put the engineering description between the storm damage and the government’s payment.

The government alleged that false descriptions and estimates caused some applicants to receive replacement funding when they were entitled only to repair costs.

What AECOM Prepared and What Its Supervisors Reviewed

According to the Justice Department, AECOM conducted site evaluations and prepared and reviewed damage and repair estimates used to determine eligibility for disaster assistance. The department reported more than $300 million in technical-assistance payments to AECOM between 2005 and 2019, against the company’s later $11.8 million settlement. Those service payments went to AECOM; the allegedly excessive disaster assistance went to the facility applicants.

We expect a damage-assessment contractor to know whether the damaged equipment exists.

The final AECOM settlement announcement describes the company’s technical-assistance role between 2006 and 2010. It says AECOM prepared requests containing damage descriptions, repair-cost estimates and replacement-cost estimates. The government alleged that an AECOM project officer deployed to Louisiana submitted fraudulent requests for educational facilities in New Orleans.

The named facilities included Xavier’s gymnasium, student center and electrical grid, along with the cafeteria building at the Archdiocese’s St. Raphael the Archangel School. The allegations reached a campus’s electrical infrastructure as well as individual buildings.

An Air Conditioner That Wasn’t There

The Archdiocese settlement announcement gives the most concrete examples. The government alleged that damage descriptions prepared by AECOM included purported damage to a nonexistent central air-conditioning unit and misstated a facility’s square footage. It alleged that the Archdiocese knowingly signed certifications containing false damage descriptions and repair estimates from 2007 through 2013.

The unit’s existence and the building’s size are facts someone responsible for a facility could know directly. Those facts sit underneath the cost estimate.

A facilities employee’s knowledge of the building can test an assumption that otherwise disappears inside an engineering estimate.

Review Without Correction

The government also alleged that AECOM supervisors reviewed applications and failed to correct materially false descriptions of design, damage and replacement eligibility. The alleged problem survived review inside the company.

The earlier government announcement went further in describing its lawsuit: it alleged that AECOM management knew by 2011 of systemic problems with false and inaccurate information going to FEMA and failed to notify the government. That allegation puts management’s knowledge and response alongside the project officer’s preparation of individual requests.

For an insider, those are different views of the same claim. One person may know how an estimate was prepared. Another may know what a reviewer saw and what the company did afterward. We connect those accounts to the application that actually reached FEMA.

AECOM and the Applicants Reached Separate Settlements

AECOM’s preparation and review work and the applicants’ certifications of accuracy produced separate resolutions.

On June 3, 2020, the Justice Department announced that Xavier had agreed to pay $12 million over its alleged role in false and misleading repair estimates prepared by AECOM. The applicant agreed to pay more than AECOM later would. The government alleged that Xavier obtained substantially more assistance than the rules allowed for its gymnasium, student center and electrical grid.

On November 15, 2021, the department announced that the Archdiocese had agreed to pay more than $1 million over allegedly false requests for repair or replacement funding.

AECOM’s later agreement resolved allegations about its own role in preparing and reviewing the requests. In that announcement, the Justice Department described nearly $25 million recovered in connection with the applications AECOM had prepared. That figure covered the connected resolutions, including those with the applicants.

The Department of Homeland Security Office of Inspector General provided investigative support.

What Proof Do You Need as a Whistleblower?

For a case about allegedly inflated FEMA damage estimates, the useful evidence connects the facility’s actual condition to the damage description, repair estimate, replacement estimate and funding request. In this matter, the government’s allegations also make the contractor’s review and the applicant’s certification part of that connection.

Tying the building to the claim is the work we do with you. You may know the building without having prepared the application, or know the review process without having visited the site. Our work starts with the part you can explain firsthand and follows its significance for the funding claim.

Lighthouse Disaster Relief and Premature Payment

The Lighthouse Disaster Relief case shows another way representations could affect Katrina spending. The government alleged that the contractor obtained a $5.3 million Department of Homeland Security payment prematurely through false statements to FEMA and failed to build and staff a sufficient basecamp for responders. The company and the individual defendants agreed to a $4 million judgment to settle the case.

In that case, the comparison was between promised basecamp performance and the payment obtained. In AECOM’s case, it was between the facility and the descriptions used to justify assistance. Both matters put a contractor’s account of physical conditions at the center of the payment question.

The AECOM Whistleblower Reward

The AECOM project specialist who brought the qui tam case was to receive more than $2.4 million from the AECOM settlement, according to the department’s announcement. The earlier Xavier resolution carried a separate reward of approximately $2.3 million for the same whistleblower. Both came from a case begun by someone inside the technical-assistance work.

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

You Know the Facility Behind the Estimate

If a FEMA application described damage you know was exaggerated or equipment you know was never there, tell our whistleblower experts what you saw. We build the case around your knowledge of the facility, the estimates and the decisions inside the contractor, and bring in disaster-relief whistleblower lawyers who understand federal funding claims. We stay beside you as your partners throughout the case.