FEMA pays on delivery. If you fail to fulfil a contract, the FEMA keeps its money. In this case, that leaves the contractor holding the bag, as they subcontract

FEMA pays on delivery. If you fail to fulfil a contract, the FEMA keeps its money. In this case, that leaves the contractor holding the bag, as they subcontracted out for all of the work. Unfortunately, the contractor can dispute the contract termination in a lawsuit. Lawsuits are expensive, so this may force FEMA into a settlement. This happens all the time with government contracts. People that know the system can exploit it. The FEMA contracting officer bears much of the blame for this outcome. The company had no prior experience in disaster relief, had a track record of failing to fulfil contracts, and did not have sufficient funds to fulfil the contract. These are all things that should have been considered before awarding the contract.