The Office of the Inspector General (OIG), Audit Division, has completed an audit of the cost proposal for the Intergovernmental Service Agreement (IGA) between the United States Marshals Service (USMS) and the City of Atlanta, Georgia’s Department of Corrections (Department of Corrections). In November 1996, the Department of Corrections submitted a proposal for a jail day rate of $49.54. This rate was based on the Department of Corrections’ computation of operating costs for January 1, 1995, through December 31, 1995.

We also reviewed the Department of Corrections’ proposal to recover costs of building the new Atlanta City Detention Center (Detention Center) through a capital cost recovery surcharge of $23.05 per jail day. The City of Atlanta calculated a pro rata share of the total cost to design, build, and finance 300 bed spaces to replace those provided to the USMS at the Annex under a Cooperative Agreement Program (CAP) award. The City of Atlanta used this pro rata share as the basis for the proposed $23.05 surcharge. However, the USMS made no formal agreement to pay for the replacement bed spaces at the new Detention Center.

We: (a) tested the Department of Corrections’ proposal to provide detention space for federal prisoners, (b) examined jail day count sheets to determine if the days reported were accurate and whether the actual jail day rate agreed with the proposal, and (c) reviewed records documenting inmate visitor logs and the receipt of inmate mail and packages. Additional background information, scope, and audit methodology appear in Appendix II.

Based on our review, we determined that:

• Costs claimed totaling $875,944 were unallowable or unsupported. Also, the Department of Corrections underreported the average daily population for Calendar Year (CY) 1995 by 57 inmates. As a result, the proposed jail day rate should be reduced to $44.93, which could save the USMS up to $504,795 annually.
  
  
• The USMS and the Department of Corrections had no formal agreement to allow a surcharge to recover capital costs of building the new Detention Center. Since the federal prisoners are housed in the Annex rather than the new Detention Center, the $23.05 surcharge for the cost of the new Detention Center should be disallowed. Up to $2.5 million in annual savings to the USMS could be realized by disallowing the surcharge. Even if federal prisoners were housed in the new Detention Center, recovery of costs through a surcharge would not be appropriate.
  
  
• Other than noted in the Findings and Recommendations, we found no material deficiencies in: internal management, administrative, and financial controls; accuracy of reports; and records relating to visitors, mail and packages received by inmates. However, we identified other matters that, although not material, should be addressed by management. These matters are discussed in the OTHER REPORTABLE MATTERS section of this audit report.