Glenn A. Fine Inspector General U.S. Department of Justice
House Judiciary Committee Subcommittee on Crime
"Oversight of Department of Justice Grant Programs"
March 15, 2002 * * * * *
Mr. Chairman, Congressman Scott, and Members of the Subcommittee on Crime:
Thank you for inviting me to testify about the work of the Office of the Inspector General (OIG) in auditing and investigating grant programs in the Department of Justice (Department). The number and amount of grants the Department awards have grown rapidly, increasing from $849 million in 1994 to nearly $5 billion in each of the past five years. Grants now account for almost 20 percent of the Department's total budget. They are primarily awarded by the Department's Office of Community Oriented Policing Services (COPS) and the Office of Justice Programs (OJP).
Over the years, the OIG has conducted numerous audits and inspections relating to the grants issued by these two Department components. In addition, we have investigated a variety of fraud allegations involving Department grant funds.
In my remarks this morning, I will first discuss the work of the OIG in reviewing COPS and OJP grant programs by briefly describing several of our recent audits and inspections. In addition, I will highlight several ongoing OIG reviews in COPS and OJP. Next, I will provide examples of OIG investigations of fraud in these programs. Finally, I will offer several general observations about the COPS and OJP grant programs based on our audits, inspections, and investigations.
I. OIG AUDITS OF COPS GRANTS
The COPS grant program was created by the Violent Crime Control and Enforcement Law Act of 1994, which authorized the Attorney General to implement over six years an $8.8 billion grant program for state and local law enforcement agencies to hire or redeploy 100,000 additional officers to perform community policing. The Department established the COPS Office in 1994 to administer the grant program and advance community policing throughout the country.
The OIG has been involved with the COPS program in various advisory and oversight capacities since its inception. Before grants were awarded, we reviewed program announcements and grant application kits. Since COPS began dispersing grants, we have completed more than 330 audits of grant recipients.
A. OIG's 1999 Summary Report and Audit of the COPS Office
In April 1999, the OIG issued a report summarizing the audits it conducted during its first two years of auditing COPS grant recipients.1 During fiscal years (FY) 1997 and 1998, the OIG performed 149 grant audits of COPS and OJP hiring and redeployment grants totaling $511 million, or about 10 percent of the $5 billion in grants COPS had obligated up to that time.
Our individual audits focused on: (1) the allowability of grant expenditures; (2) whether local matching funds were previously budgeted for law enforcement; (3) the implementation or enhancement of community policing activities; (4) hiring efforts to fill vacant officer positions; (5) plans to retain officer positions at grant completion; (6) grantee reporting; and (7) analyses of supplanting issues.
Our audits identified weaknesses in each of these areas. For the 149 grant audits, we identified approximately $52 million in questioned costs and approximately $71 million in funds that could be better used.2 Our dollar-related findings amounted to 24 percent of the total funds awarded to the 149 grantees.
Among the findings of our April 1999 report:
- Approximately half of the grantees we audited included unallowable costs in their claims for reimbursement.
- Most auditees either could not demonstrate that they redeployed officers or could not demonstrate that they had a system in place to track the redeployment of officers into community policing.
- A large percentage of auditees showed indicators of using federal funds to supplant local funding instead of using grant funds to supplement local funding. When grantees use grant funds to replace local funds rather than to hire new officers, additional officers are not added to the nation's streets to perform community policing. Instead, federal funds are used to pay for existing police officers. We found that grantees budgeted for decreases in local positions after receiving COPS grants, used COPS funds to pay for local officers already on board, did not fill vacancies promptly, or did not meet the requirements of providing matching funds.
- A majority of auditees either did not develop a good-faith plan to retain officer positions or said they would not retain the officer positions at the conclusion of the grant.
- More than three-quarters either failed to submit COPS initial reports, annual reports, officer progress reports, or submitted them late.
- Over 90 percent did not submit all required Financial Status Reports or submitted them late.
In July 1999, we issued another audit report describing our review of the COPS Office's overall administration of the grant program.3 We evaluated: (1) COPS' ability to meet the stated goal of putting 100,000 additional police officers on the street, (2) COPS' monitoring of grantees, and (3) the quality of the guidance COPS provided to grantees to assist them in implementing essential grant requirements.
We found that COPS grants would not result in 100,000 additional officers on the streets by the end of FY 2000. We attributed this shortfall to various factors, including law enforcement agencies not accepting grant funds, grantees terminating many grants, grantees not being able to demonstrate they had or would redeploy officers from administrative duties to the streets, and indications that COPS grant funds were used to supplant local funds, which could result in fewer additional officers on the street.
We also determined that many grantees did not submit the required program monitoring and financial reports and that COPS' on-site monitoring reviews did not consistently cover all grant conditions. Moreover, we concluded that COPS and OJP did not adequately follow up on deficiencies found in on-site reviews to ensure that the deficiencies were corrected.
In response to our July 1999 audit, the COPS Office and OJP agreed with many of our recommendations and reported that they had created specific monitoring divisions dedicated to grant-monitoring efforts. The COPS Office, however, disagreed with many of the findings in our individual grant reports and appealed them to the Deputy Attorney General. In August 1999, the Department hired a mediator to resolve the dispute, using a sample of 40 OIG findings. In the vast majority of the sampled issues, either the mediator found or COPS concluded that the grantees were in violation of grant conditions.
B. Recent OIG Audits of COPS Grants
Since our 1999 reports, the OIG has issued an additional 185 audit reports of COPS hiring and redeployment grants. These audits identified more than $63.9 million in questioned costs and $32.2 million in funds to better use. Our audits contained some findings similar to those discussed in our April 1999 summary report, such as grant recipients:
- Not hiring and retaining additional officers, and using federal funds to supplant local funds
For example, our audit of the El Paso, Texas, Police Department found that it violated COPS' non-supplanting requirement. We found that the El Paso Police Department did not increase its police force by the 231 officers funded by the COPS grants and did not retain the required number of officer positions. We questioned more than $7 million paid to the grantee.
- Including unallowable or unsupported costs in reimbursement requests
Our audit of COPS grants made to the City of Camden, New Jersey, found excess police officer salary and fringe benefit costs in Camden's reimbursement requests. We questioned more than $1 million for these grant violations.
- Not demonstrating redeployment of officers to community policing.
The District of Columbia's Metropolitan Police Department (MPD) received a redeployment grant to hire 56 civilians and purchase equipment that was to result in the total redeployment of 364 officer positions. Despite our repeated requests, the MPD was unable to provide the OIG with its redeployment plan or with a complete and accurate list of all grant-funded civilians who were reported to have been hired with COPS grant funds. We questioned more than $6 million based on these grant violations.
In our judgment, based on our recent audit work, the Making Officer Redeployment Effective (MORE) grant program continues to be the COPS Office's highest risk program. The MORE grants fund technology or the hiring of civilians to allow existing officers to be redeployed from administrative activities to community policing. Although grants under the MORE program are intended to last for one year, we found numerous instances where COPS extended grant periods several additional years. For example, when police departments buy computers or mobile data terminals and fail to install them in a timely manner, they may become obsolete by the time they are operational. Importantly, we rarely found that MORE grant recipients could demonstrate that they had redeployed the required number of officers to community policing as a result of the MORE grants.
We continue to believe that the COPS Office's on-site monitoring efforts can be improved. Depending on the size of the grantee, COPS site visits are usually one to two days in length and concentrate mainly on the grantee's community policing activities, rather than on ensuring that grant requirements are met, including hiring, budgeting, and tracking redeployment.
Another continuing issue is the COPS Office's monitoring of corrective actions to our audit findings. In the past, we have been concerned by the length of time it has taken the COPS Office to respond to our findings and recommendations.
For example, in September 1998 we issued a report on the Oxford Emergency Safety Authority (OESA) in Oxford, Michigan. We found that Oxford violated the COPS grant non-supplanting requirement and failed to maintain the locally required staffing level. As a result, we questioned $177,920 that the grantee had been reimbursed at the time of the audit and recommended deobligation of $370,108 in remaining grant funds. In addition, we recommended that the COPS Office deobligate redeployment grant funds of $46,875 if the OESA failed to develop the grant-required redeployment plan within 60 days of the report date.
In February 2000, we received correspondence from the COPS Office stating that the grantee's police department had been disbanded and that the COPS Office agreed that the OESA violated the grant's non-supplanting requirement. Accordingly, the COPS Office suspended funding of the COPS grants associated with the OESA. However, despite repeated requests and the passage of three years since we made the recommendations, we have not received any documents demonstrating that any of the funds in question have been returned or that the remaining grant funds have been deobligated.
We also have seen that the COPS Office has sometimes not taken aggressive action against grantees for grant violations. Leniency in the administration of the grant program, and failure to take timely action when the grantee does not comply with the grant conditions, can encourage other grantees to ignore or circumvent program requirements. As the responsible program office, COPS is the OIG's primary point of contact on tracking corrective action by grant recipients. While we recognize that there may be instances where prompt corrective action cannot always be achieved, many of our audit reports contain findings and recommendations that could have been addressed quite some time ago.
In September 2001, we informed Carl Peed, the new Director of COPS, that approximately 170 COPS grant audit reports were still open and that the COPS Office had not responded to many of these reports for more than a year. In October 2001, Director Peed advised us that he would dedicate additional staff to audit resolution activities. In addition, Director Peed has contacted OIG staff and expressed interest in addressing the untimely audit follow-up and resolution process. However, our auditors report that many recent responses from COPS provided information that could not be used to close the audit reports. While we are encouraged by the increased awareness and actions on COPS' part related to our open audit findings, we remain concerned about the length of time involved for corrective action to take place. Of the 155 audit reports currently open, 94 of the reports were issued more than two years ago.
II. OIG AUDITS OF OJP GRANTS
OJP, established in 1988, administers approximately $4 billion in grant programs each year. OJP consists of five bureaus and six program offices that administer a myriad of grant programs designed to reduce crime, improve the criminal justice system, and assist crime victims.
Over the years, the OIG has audited a variety of OJP grant programs. We describe below several of our more recent reviews.
- State Criminal Alien Assistance Grant Program (SCAAP)
Under the SCAAP program, OJP provides grants to state and local governments to help defray the cost of incarcerating undocumented criminal aliens convicted of state or local felonies. In an audit report issued in May 2000, we found that OJP had overcompensated state applicants approximately $19.3 million for unallowable inmate costs and ineligible inmates who were included in grant applications. We found that OJP's methodology for compensating states was over-inclusive and needed improvement, because OJP overpaid states for many inmates whose immigration status was unknown. OJP relied on the Immigration and Naturalization Service (INS) to determine the immigration status of inmates, but INS files were not complete, current, or accurate. We recommended that OJP should improve its methodology for compensating applicants for inmates whose immigration status is unknown by the INS.
- Combined DNA Index System
The Combined DNA Index System (CODIS) is a national DNA information repository maintained by the Federal Bureau of Investigation (FBI) that allows state and local crime laboratories to store and compare DNA profiles from crime-scene evidence and convicted offenders. The goal of the system is to match case evidence to other previously unrelated cases or to persons already convicted of other crimes. Our audit report on the CODIS system, issued in September 2001, reviewed the FBI's implementation and management of CODIS. It also examined awards dispensed by the National Institute of Justice - a component of OJP - of Laboratory Improvement Program grants totaling $30.7 million to improve the capacity and capability of forensic laboratories in performing forensic DNA testing. We found that the grantees generally complied with the matching fund and indirect cost requirements; however, we noted some areas that OJP could improve to ensure that grantees met the requirements of the grant awards. For example, we saw that OJP did not require one grantee to provide matching funds, as required by law.
- Safefutures: Partnerships to Reduce Youth Violence and Delinquency
Partnerships to Reduce Youth Violence and Delinquency (Safefutures) is a five-year demonstration grant program administered by OJP to help six competitively selected communities reduce juvenile delinquency. OJP's Office of Juvenile Justice and Delinquency Prevention (OJJDP) administers the grants. The grants help communities implement a continuum of care consisting of prevention, intervention, treatment, and graduated sanctions programs for at-risk and delinquent youth. Each grantee can receive up to $1.4 million per year, for a total of about $7 million, to implement nine specific programs and help reform its existing service delivery system. Total program costs are expected to be about $42 million. Our audit report, issued in April 1999, found that OJJDP program managers were not adhering to the grant-monitoring plans, and their monitoring efforts were neither consistent nor consistently documented. As a result, we found it difficult to determine the level of monitoring that actually occurred. We found that a lack of current policies and procedures, unclear expectations, and insufficient accountability contributed to the monitoring problems.
In addition, we found weak controls over fiscal monitoring of the program. Quarterly financial reports, which often were untimely and inaccurate, were not reviewed or corrected routinely. Based on our review of a grantee in Boston, for example, we found that the OJP's Office of the Comptroller lacked a systematic approach to follow up on identified deficiencies. Additionally, grantees did not submit financial reports by fund source, even though they were required to account for each source separately. We found that incomplete official grant files were a continuing problem. All of the files reviewed by the OIG in this audit were missing some of the required documents that were needed to record the activity of each grant.
- Management of the OJP Regional Information Sharing System (RISS) Program
The RISS project was established to help state and local law enforcement agencies identify and target criminal activity that extends across jurisdictions. At the time of our audit in 1998, six RISS projects serve member agencies in all 50 states, the District of Columbia, Puerto Rico, and the Canadian provinces. These projects are funded through grants provided by OJP.
Our audit found that the RISS program could save $3.2 million annually by consolidating overhead and management positions from six locations into one. Each of the six RISS projects generally offered the same services to member agencies. Further, the structure and operations of the projects were virtually identical, including the methods by which services were provided to member agencies. In FY 1997, the individual databases maintained by each project were consolidated into a single database, known as RISSNET II, to allow sharing of information. We concluded that staffing levels could be reduced with implementation of RISSNET II because the new system allowed each member agency to directly input and access information without going through their local RISS project.
This audit also found that OJP did not ensure that the RISS projects operated according to grant requirements. For example, RISS projects inappropriately spent more than $300,000 on computer hardware upgrades, lunches at conferences, over-reimbursing a local law enforcement agency, and unnecessary travel expenses.
- Residential Substance Abuse Treatment for State Prisoners Formula Grant (RSAT) Program
The OIG Inspections Division reviewed RSAT grants in six states from March 1999 through June 1999 and issued a summary report in September 2000. The purpose of the RSAT grant program is to develop or enhance residential drug and alcohol abuse treatment programs for adult and juvenile offenders in state and local correctional facilities. Funding for RSAT grants from FY 1996 through FY 2002 has ranged from $27 million to $63 million. OIG site visits assessed the states' adherence to grant guidance and progress toward implementing residential substance abuse treatment programs.
The OJP Corrections Program Office (CPO) is responsible for this program. In the September 2000 summary report, we concluded that the CPO's monitoring and oversight of the grant program needed strengthening. States received grant funds through a formula grant. The states had responsibility for monitoring any sub-awards and providing the required monitoring reports to the CPO. We found that the CPO was not diligent in ensuring that states provided the required reports (such as financial status reports, semiannual progress reports, and individual project reports) on the use of grant funds and the progress of projects. We found that all six RSAT grantees did not submit accurate or timely reports. These reports are an important tool to help managers and grant monitors determine if grantees are meeting program objectives and financial commitments. We found that even when states provided the reports, the quality of the CPO review was not consistent. Further, the CPO failed to ensure that conflicting or missing information in a state's reports are clarified or obtained.
We found that the CPO conducted limited site visits, citing insufficient staff resources. When visits were conducted, subgrantees - the organizations that actually implement the projects or programs - were not targeted and visits were generally limited to the state office designated to receive grant awards. Therefore, the CPO did not assess the actual programs for compliance with grant requirements. We also found that on-site monitoring reports were not completed or included in the official grant file.
Finally, we found that the CPO's overall record keeping needed improvement. Official grant files were missing applications, award documents, state reports, and CPO site visit reports so that the life cycle of a state's grant compliance could not be tracked readily.
III. ONGOING OIG REVIEWS OF COPS AND OJP GRANT PROGRAMS
The OIG has several ongoing reviews that are relevant to the administration of COPS and OJP grants. In January 2002 we began an audit examining whether administrative activities and grant functions could be streamlined in OJP and COPS. While OJP historically has administered the Department's grant programs, the COPS Office was created in 1994 as a separate, single function grant-making agency. Because of possible duplication of efforts in COPS and OJP - particularly in developing grant criteria, awarding grants, monitoring grants, and following up on audits - we plan to assess whether activities and functions can be improved or combined to increase operational efficiency.
In addition, the OIG will soon issue an audit of OJP's State and Local Domestic Preparedness Support Grant Program. This review is especially timely given the emphasis on homeland security since the September 11 terrorist attacks and the critical role state and local agencies play as "first responders" in such crises. Under this 1998 program, OJP awards grants to help state and local police and fire departments obtain training and equipment to respond to acts of terrorism. The OJP's Office of Domestic Preparedness (ODP) is responsible for implementing the program.
In this audit, we reviewed ODP operations and performed on-site reviews at 13 grantees and 3 training organizations. We found that since inception of the program, grant funds were not awarded quickly and grantees were very slow to spend available monies. We found that as of January 15, 2002, more than half of the total funds ($250 million) appropriated for the grant program from FY 1998 through FY 2001 still had not been awarded. In addition, more than $60 million in grant funds that were awarded was still unspent by the grantees. Further, we found that nearly $1 million in equipment purchased with Department grants was unavailable for use because grantees did not properly distribute the equipment, could not locate it, or had been inadequately trained on how to operate it.
Finally, we are in the final stages of an audit of OJP's Convicted Offender DNA Sample Backlog Reduction Grant Program. In early 2001, state and local DNA laboratories estimated that, at the end of 2000, they held over 745,000 convicted offender DNA samples that had been collected and were awaiting analysis. To aid in reducing the backlog of convicted offender DNA samples, OJP's National Institute of Justice (NIJ) administers a grant program that dispensed approximately $14.5 million to 21 states in FY 2000. States used the funds to hire contractor laboratories to analyze their convicted offender DNA samples so that backlogged DNA profiles could be entered into the National DNA Index System, part of the network of state and local DNA profile databases maintained by the FBI. Our audit examined NIJ's oversight of the grant program and whether the program was helping states reduce and eliminate their backlogs of convicted offender DNA samples.
IV. OIG INVESTIGATIONS OF DEPARTMENT GRANT PROGRAMS
In addition to OIG audits and inspections of grant programs, the OIG's Investigations Division investigates allegations of misconduct, fraud, waste, or abuse in Department programs, including grant programs. Within the Investigations Division, the OIG has established a Fraud Detection Office to investigate fraud in Department operations. Although the number of allegations of fraud in Department grant programs that we have substantiated is not large in comparison to the number of grants awarded by the Department, we have found some fraud in the use of grant funds. Examples of cases that we have substantiated include:
- An OIG investigation led to the arrest and conviction of a former Missouri chief of police for false statements and theft. The OIG established that the former police chief in Novinger, Missouri, falsified COPS Universal Hiring Grant paperwork to claim he hired and paid one additional officer when, in fact, he used the grant to pay his own salary, including a $6,000 annual raise. When confronted by OIG special agents, the former police chief admitted falsifying grant applications. He was sentenced on January 3, 2002, to two years' probation and ordered to pay $53,190 in restitution.
- A former acting chief of the Town of Navajo Department of Law Enforcement was convicted at trial in the District of New Mexico on charges of wire fraud. He was sentenced to 30 months' incarceration and ordered to pay $102,877 in restitution. A joint investigation by the OIG's Fraud Detection Office and the FBI determined that the acting chief fraudulently applied for and received a COPS Problem-Solving Partnership Grant to establish a "Crime Busters" program targeting burglaries. The acting chief diverted more than $100,000 in grant funds to personal use by making illegal sub-awards to members of his immediate family, who used some of the money to purchase a used pickup truck and other vehicles.
- As a result of an OIG investigation, the Clerk of a North Carolina town pleaded guilty to submitting a fraudulent COPS grant application and receiving COPS funds - which he transferred to his own use - even though the town did not have a police department. The Clerk was sentenced to 12 months' incarceration and ordered to pay $24,692 in restitution as a result of the OIG's investigation.
- Based on an investigation by the OIG's Fraud Detection Office and the North Carolina Governor's Crime Commission, Hoke County repaid the state of North Carolina $93,467 in Byrne Formula grant funds awarded by the Department. The county manager was alleged to have purposefully submitted false documentation relating to police vehicle purchases under the grant and then diverted the funds to other uses. Although no proof of intent to defraud was sustained, the supplanted funds were recovered and returned to the state.
It is important to point out that the COPS Office has cooperated fully with our investigative efforts and in several cases has referred suspicious activities by grantees to the OIG. In addition, we have conducted joint training programs with COPS officials to ensure that OIG agents are familiar with COPS program requirements.
V. CONCLUDING OBSERVATIONS
Based on our oversight work, we have several continuing concerns and recommendations regarding COPS and OJP grant programs:
- Monitoring. Grant monitoring is an essential management tool to ensure that grantees are properly expending funds and that the objectives of the grant program are being implemented. Generally, each grant manager is required to prepare a monitoring plan that includes on-site visits, review of financial and progress reports, telephonic contacts, and review of audit reports. In some cases, however, we found that monitoring activities were not being documented in grant files, reports for on-site visits were not prepared, on-site inspections did not include visits to project sites, financial and progress reports were not submitted or not submitted timely, and grant managers were not reviewing carefully the information they received. As a result, grant managers failed to catch inconsistent or incorrect information on project activities. We believe that COPS and OJP need to better monitor their grantees by performing more site visits and by reviewing more aggressively grantee financial and programmatic status reports.
- Failure to Adequately Review Grant Applications. In one significant OIG investigation in the SCAAP grant program, we saw an undue emphasis by some program managers on dispensing grant funds without sufficient regard to ensuring that grantees met eligibility standards. Our investigation of fraud allegations in SCAAP found that OJP employees failed to apply eligibility rules in making the FY 1999 award of more than $500 million. OJP managers told us they felt pressured to award SCAAP funds before the close of the fiscal year, so rather than examine the FY 1999 data they used FY 1998 submissions as the basis for re-awards. Our investigation also found that OJP did not ensure that key program eligibility requirements had been checked. Specifically, OJP did not check to ensure that an alien's minimum period of incarceration had been met, which is a key trigger to award or denial of SCAAP funds. We have encountered a few similar problems in some of our audits of COPS grants, where grant finds were dispersed by the COPS Office without adequate review of grantee applications.
- More Aggressive and Timely Corrective Action. As discussed earlier, COPS and OJP should require prompt corrective action on OIG audit findings. Although we have seen improvement in the responsiveness of the COPS Office to resolving our audit findings, many of the reports remain open for far too long. We believe that COPS and OJP should take more aggressive and more timely corrective action against grantees who do not comply with grant terms. The sense among some grantees is that COPS and OJP rarely require repayment of funds, even when the grantees do not comply with the grant terms. Stricter enforcement of grant terms would send a strong deterrent message that failure to comply with program guidelines will result in the Department seeking repayment of the funds.
- In sum, the COPS Office and OJP administer many important and valuable grant programs. But the rapid growth of grant funds in the Department brings with it the increased risk that these funds could be wastefully or fraudulently used. We believe that COPS and OJP need to focus more attention on thorough monitoring of grant awards, ensuring that grant requirements are met, and pursuing timely and aggressive corrective action when the grant requirements are not met. While we have seen some improvement in these areas, we believe that these programs need continued scrutiny and oversight.
This concludes my written statement. I would be pleased to answer any questions.
- Police Hiring and Redeployment Grants, Summary of Audit Findings and Recommendations October 1996 - September 1998 (Audit Report No. 99-14, issued April 1999).
- "Questioned costs" are expenditures that do not comply with legal, regulatory, or contractual requirements, are not supported by adequate documentation at the time of the audit, or are unnecessary or unreasonable. Questioned costs may be remedied by offset, waiver, recovery of funds, or the provision of supporting documentation. "Funds to better use" are expenditures that would be better used if management acts on and implements our audit recommendations.
- Management and Administration of the Community Oriented Policing Services Grant Program (Audit Report No. 99-21, issued July 1999).