Improving Oversight and Management of Homeland Security Grant Programs

The Department of Homeland Security (DHS) has faced significant challenges in efficiently and effectively managing its array of grant programs, and GAO and others have raised concerns regarding DHS's policies and processes for allocating, managing, and monitoring homeland security grants. DHS manages more than 80 disaster and nondisaster grant programs and has distributed approximately $20 billion to states and urban areas over the past 6 years for emergency preparedness and response and approximately $1.6 billion in fiscal year 2008 through the Homeland Security Grant Program. DHS has taken actions to strengthen its management of grants by, for example, using a risk analysis model to help allocate homeland security grant funds. However, GAO and the DHS Office of Inspector General (IG) have identified weaknesses in DHS's grant programs, including questioned costs such as excessive charges and duplicate payments, poor oversight of state grantees, and lack of guidance for grantees in preparing applications and understanding purposes for which funds can be used. Specific challenges include the following:

• In general, DHS has constructed a reasonable methodology to assess risk and allocate funds within a given fiscal year for State Homeland Security Program and Urban Areas Security Initiative funds under the Homeland Security Grant Program. The risk analysis model DHS has used as part of its methodology includes empirical risk analysis and policy judgments to select the urban areas eligible for grants and to allocate State Homeland Security Program and Urban Areas Security Initiative funds. However, GAO reported that the vulnerability element of the risk analysis model has limitations that reduce its value. Measuring vulnerability is considered a generally accepted practice in assessing risk; however, DHS's current risk analysis model does not measure vulnerability for each state and urban area. Vulnerability is a crucial component of risk assessment, and GAO's work has shown that DHS needs to measure vulnerability as part of its risk analysis model to capture variations in vulnerability across states and urban areas. DHS should formulate a method to measure variations in vulnerability across states and urban areas, and apply this measure in future iterations of its risk analysis model for the Homeland Security Grant Program. (GAO-08-852)
• The DHS IG has identified numerous concerns with DHS's grants management activities. According to the IG, DHS must do more to coordinate and manage grants that are stovepiped for specific, but often related, purposes, to ensure that they are contributing to the highest national preparedness and disaster recovery goals, rather than duplicating one another and being wasted on low-priority capabilities. The IG has reported on the need for DHS to monitor the preparedness of state and local governments, grant expenditures, and grantee adherence to the financial terms and conditions of the awards. The IG has also reported that given the billions of dollars appropriated annually for disaster and nondisaster grant programs, DHS needs to ensure that internal controls are in place and adhered to, and grants are sufficiently monitored to achieve successful outcomes. DHS must ensure that, to the maximum extent possible, disaster and homeland security assistance go to those states, local governments, private organizations, or individuals eligible to receive such assistance and that grantees adhere to the terms and conditions of the grant awards. (Department of Homeland Security, Office of Inspector General, Major Management Challenges Facing the Department of Homeland Security, OIG-08-11 (Washington, D.C.: January 2008).
• GAO's work has shown that improper payments continue to be a substantial problem for federal agencies. Agencies, including DHS, must perform several steps to address the specific improper payment reporting requirements found in the Improper Payments Information Act (IPIA) of 2002 and related Office of Management and Budget (OMB) guidance, including performing a risk assessment of all programs and activities. DHS did not perform risk assessments for programs having $13 billion in payments during fiscal year 2006. Of this amount, over $6 billion related to payments for grant programs. The DHS IG found questioned costs such as excessive charges, duplicate payments, ineligible contractor costs, unsupported contractor and labor costs, and other expenditures. Given these identified weaknesses and the high-dollar amount of homeland security grants, as well as the inherent risk associated with grant programs, it is important for DHS to assess grant programs for susceptibility to significant improper payments in accordance with IPIA. Assessing and, if necessary, testing these grant programs would allow DHS to gain an understanding of its risk related to improper payments and potentially reduce future improper payments.
  
  Highlights of GAO-07-913 (PDF)
• DHS grants have funded improvements for a variety of communications interoperability projects. However, in selected states, strategic planning had generally not been used to guide investments or provide assistance to improve communications interoperability across all levels of government. Specifically, not all states had plans in place to guide their investments toward long-term interoperability gains, and no national plan was in place to coordinate investments across states. Further, although DHS has required states to implement statewide plans by the end of 2007, no process has been established for ensuring that states' grant requests are consistent with their statewide plans. Until DHS takes a more strategic approach to improving interoperable communications, such as including in its decision making an assessment of how grant requests align with statewide communications plans, and conducts a thorough assessment to identify strategies to mitigate obstacles between federal agencies and state and local agencies, states and localities are likely to make limited progress in improving interoperability. DHS should assess how states' grant requests support their statewide communications plans and include the assessment as a factor in making DHS grant allocation decisions.
  
  Highlights of GAO-07-301 (PDF)
• GAO has identified concerns with DHS's transportation security grant programs. For example, funds awarded through the Transit Security Grant Program could be used to supplement funds received from other grant programs. However, allowable uses were not clearly defined. Transit Security Grant Program funds could be used, for instance, to create canine teams but could not be used to maintain these teams. Grant recipients expressed a need for clear guidance on the allowable use of grants and how they could combine funds from more than one grant to fund and implement specific projects. As DHS works to refine its risk assessment methodologies, develop better means of assessing proposed investments using grant funds, and align grant guidance with the implementation of broader emergency preparedness goals, it has annually made modifications to the guidance for the various grants it administers. As a result of these annual modifications, awardees and potential grant recipients must annually review and understand new information on the requirements for grant applications, including justification of their proposed use of grant funds.
  
  Highlights of GAO-07-583T (PDF)
• A key provision of the Cash Management Improvement Act (CMIA) of 1990 requires the federal government and the states to minimize the time between transfer of federal funds and payments made by states for federal grant program purposes. Congress exempted certain first responder grants from this CMIA provision in DHS's fiscal years 2005 and 2006 appropriations acts, so that grantees could receive cash-advance funding and hold such funds for extended periods of time prior to payment. However, GAO identified concerns about oversight difficulties associated with potential extensive use of the CMIA exemption and DHS's 120-day cash-advance funding provision. For example, DHS did not have policies and procedures to track and report on specific cases of cash-advance funding to state grantees, including associated interest liabilities. Such oversight was critical to ensure that interest due to the federal government associated with cash-advance funding was accurately recorded and promptly paid. In addition, DHS was not be able to readily determine the extent to which state grantees advanced funds to local government and other subgrantees and the interest liabilities that should have accrued to the subgrantees as a result of such advances. Moreover, specific cases of cash-advance funding for first responder grants were not subject to oversight by the Department of the Treasury as part of its overall management of the CMIA. Although states' single audits could be a tool for oversight, such audits were not designed to replace program management's oversight responsibilities, and GAO found that they may not have covered all first responder grants because of the relatively small size of the grants. DHS should develop policies and procedures to handle requests for cash-advance funding, including the ability for DHS to track specific cases of cash-advance funding to state grantees and the related interest liabilities.
  
  Highlights of GAO-07-68 (PDF)

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Homeland Security: DHS Risk-Based Grant Methodology Is Reasonable, But Current Version's Measure of Vulnerability is Limited

GAO-08-852, June 27, 2008

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Department of Homeland Security: Challenges in Implementing the Improper Payments Information Act and Recovering Improper Payments

GAO-07-913, September 19, 2007

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First Responders: Much Work Remains to Improve Communications Interoperability

GAO-07-301, April 2, 2007

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GAO-07-583T, March 7, 2007

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Homeland Security First Responder Grants: Cash Management Improvement Act Exemption and Cash Advance Funding Require Additional DHS Oversight

GAO-07-68, December 22, 2006

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