In FY 1998, under the authorization of the Violent Crime Control and Law Enforcement Act of 1994, Congress established the Methamphetamine (Meth) Initiative in the Department of Justice (DOJ) and assigned responsibility for administering the program to the Office of Community Oriented Policing Services (the COPS Office). The primary purposes of the Meth Initiative are to combat the production, distribution, and use of this illegal drug by issuing grant funding to state and local law enforcement agencies for uses such as training and equipment, and to reimburse the Drug Enforcement Administration (DEA) for the proper removal and disposal of hazardous materials from clandestine meth laboratories. From the inception of the program through the end of fiscal year (FY) 2005, Congress appropriated $385.6 million for the Meth Initiative, $214.1 million of which was appropriated for grants to state and local entities.
The Office of the Inspector General (OIG) has completed this audit of the COPS Meth Initiative. The objectives of the audit were to evaluate: (1) the adequacy of the COPS Office’s administration of meth grant programs and its monitoring of grantee activities; and (2) the extent to which grantees have administered the grants in accordance with applicable laws, regulations, guidelines, and terms and conditions of the grant awards. See Appendix I for additional details of our audit regarding objectives, scope, and methodology.
Background
Meth is currently the most prevalent manufactured drug illegally produced in the United States. It is powerfully addictive, and the drug is made easily in clandestine laboratories with relatively inexpensive over-the-counter ingredients such as cold tablets, fertilizer, acids, acetone, alcohol, lithium from batteries, and phosphorous from road flares, and its use and production is increasing. The meth problem became widespread in the early 1990s in the Southwest and Western states, and since then has spread across the country. Typical meth users are in their 20s and 30s, have young children, and represent all social and economic backgrounds. Long-term meth use can lead to paranoia, convulsions, stroke, heart attack, and death.
In FY 1997, the DEA’s El Paso Intelligence Center (EPIC) began tracking statistics about the number of meth labs seized by law enforcement.1 According to data provided to the OIG by EPIC, the number of clandestine laboratory seizures reported nationwide has increased from 3,441 in FY 1998 to 17,956 in FY 2004, an increase of 422 percent. In FY 2002, EPIC started to track the number of children affected by their proximity to the meth labs. The 50 states and the District of Columbia have reported about 3,500 children per year as being affected. According to the DEA, children have died or suffered injuries due to fire and explosions at meth lab sites and have been injured by swallowing or touching toxic chemicals.
Every year since 1998, Congress has funded the Meth Initiative under a variety of names such as the Meth Program or the “Meth/Drug Hot Spots” Program. Between FYs 1998 and 2005, Congress appropriated $385.6 million for these programs. Of this total, the COPS Office transferred almost $125 million to the DEA (mostly for laboratory cleanup), reimbursed the Office of Justice Programs (OJP) a total of $46.6 million for several Meth Initiative grants it administered on behalf of the COPS Office, and distributed the balance of $214.1 million to state and local entities through the grant process. The grants support a variety of prevention, enforcement, intervention, training, and laboratory/environmental cleanup activities by state and local law enforcement agencies. The grants provide funding for the payment of approved salaries, overtime, and benefits for support personnel; approved overtime for law enforcement officers; equipment and technology; training; and travel.
The following chart illustrates the proportion of funding provided to the three components.
| DISTRIBUTION OF METH FUNDING FY 1998 THROUGH FY 2005 |
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| Source: The COPS Office |
Most of the money that the COPS Office receives comes in the form of congressional earmarks. An earmark refers to funds designated by Congress for a specified purpose, project, activity, institution, or location. Congress has designated approximately 84 percent of appropriated Meth Initiative funds to specific entities or locales for the past 8 years. Earmarked funds do not require projects to be vetted for duplication, necessity, fiscal accountability, or any other factor normally reviewed by a granting agency through the solicitation and selection process.
Implementation of the Meth Initiative
Our audit revealed weaknesses in the COPS Office’s administration of the Meth Initiative. COPS officials told us that the FY 1998 appropriation for the Meth Initiative was unexpected, and at that time they did not anticipate any future funding for the program. The COPS Office formed a Meth Team under the Grant Administration Division to monitor the majority of meth awards to grantees that were not covered by its existing structure. The Training and Technical Assistance Division and the Program, Policy Support, and Evaluation Division administered the remaining awards. Assignment of grants among these units was dependent upon the type or purpose of the award. As a result, three separate and distinct organizational units within the COPS Office processed the first Meth Initiative awards. We interviewed representatives from each of the COPS Office’s organizational units who told us that each oversight group acted independently. There has been no regular communication among the various units to foster uniform administration of the meth awards or to share information on matters such as policies, procedures, concerns, and best practices. In addition, there has been no regular communication between OJP and the COPS Office regarding the administration, monitoring, or oversight of the Meth Initiative grants that the COPS Office transferred to OJP.
Discretionary Funding
Although Congress earmarked the majority of Meth Initiative funding, the COPS Office also administers some discretionary funds for meth programs. Discretionary funds provide the COPS Office the authority to designate both the recipient and the amount of the awards within the amount of discretionary funding available. The amount of discretionary funding available to the COPS Office from year-to-year has been limited and has not been certain or predictable. Between FYs 1998 and 2005, total discretionary funding amounted to almost $35.1 million and ranged from zero to $20 million per year. The only year Congress specifically appropriated discretionary funding to COPS was in FY 2002. Otherwise, discretionary funding became available when earmarked entities refused grant funds or their grant applications amounted to less than the amounts stipulated by Congress.
Because the COPS Office does not know if discretionary funding will be available from year-to-year, officials wait until the conclusion of the appropriation and the earmark award process to decide how discretionary money will be used. In FYs 1998 and 1999, the COPS Office used the discretionary monies to fund projects similar to the earmarked awards, but the awards were not focused on any particular aspect of the meth drug problem.
Since FY 2002, the COPS Meth Team has implemented a more disciplined approach and has attempted to focus discretionary funding on a particular aspect of the meth problem every year. For example, in FYs 2002 and 2003, the COPS Office implemented the Drug Endangered Children Project to focus funding on children affected by meth. This project had multiple strategies, including the development of multi-disciplinary teams from various social service areas, the development of protocols for children found at meth sites, and the purchase of equipment. In FY 2003, the COPS Office introduced the Pilot Container Storage Project to fund the acquisition and use of approved hazardous waste containers (for seized meth and precursor chemicals) to be strategically located throughout a state.
The COPS Office’s recent actions to award discretionary funds are more strategic and proactive than the passive approach taken for earmarked awards. However, due to the uncertainty of discretionary funding there is no ongoing, coordinated use of discretionary monies, and the bulk of available funds have gone into different programs in the last several years. We believe the COPS Office should consider a strategy for discretionary funds that looks to the long-term and is more comprehensive than the short-term approach used currently for discretionary funding.
Management and Administrative Controls
The COPS Office’s management and administrative controls over Meth Initiative grants are not adequate to ensure consistent and adequate oversight of entities receiving funding. Our audit revealed deficiencies related to the reliability of data available to COPS Office management, computer security, monitoring and oversight, grant program progress reporting, and grant closeout practices.
Data Reliability
The COPS Management System (CMS) is the database that the COPS Office uses to manage and track grants through their life cycle. Early in our audit, we asked the COPS Office to provide a listing for all Meth Initiative grants awarded from the inception of the program in FY 1998 through FY 2004. The COPS Office provided a listing generated from the CMS. Our review of this initial universe revealed that it contained numerous material errors and omissions. For example, the COPS Office had omitted at least six grants from the list, many grant descriptions were missing, award amounts were incorrect, and one open grant was identified as closed. We brought these discrepancies to the attention of officials in the COPS Office, and they subsequently provided a new listing. However, we continued to identify errors and omissions, and thus repeated this process several times during the course of the audit.
In consultation with COPS Office officials, we attempted to identify the extent of the discrepancies and determine why the errors persisted. We found that, in general, the controls over the CMS were inadequate or non‑existent. Specifically, we found: (1) lack of standardization in data entry, (2) a CMS user’s manual that was relatively unknown and out-of-date, and (3) lack of a policy requiring periodic review of grant data for accuracy and completeness.
CMS Security Issues
We also found that the CMS lacked controls related to system security. Because the CMS is the primary system for the maintenance of information on COPS Office grants, this system should be protected to ensure system integrity and reduce the risk of unauthorized access, modification, disclosure, or loss. However, the COPS Office had not sufficiently restricted users’ ability to overwrite data, and we found that 32 of 61 users with write-access did not have a legitimate need for the level of access provided. Additionally, the system does not leave a complete audit trail that tracks record changes and the user that made them. We also found that the COPS Office had not properly regulated the log-out practices of it employees. We noted two instances where employees had remained continuously logged on to the system for up to 8 months.
Monitoring and Oversight
The COPS Office Grant Monitoring Division was created in 1998 to perform site visits and review the activities of COPS grantees. However, since FY 1998 only 9 of the 179 Meth Initiative grantees have received an on-site visit by the COPS Monitoring Division. In addition, members of the Meth Team had conducted on-site program reviews of 6 additional grantees during FYs 2000 and 2002.
Interviews with members of the COPS Meth Team revealed that their methods of overseeing the grants on a day-to-day basis consisted of actions such as telephone discussions with grantee officials; desk reviews of submitted reports; and responding to e-mails, letters, and other correspondence. Our review also found significant differences in the guidance and oversight provided by the various grant specialists responsible for the grants. In addition, formal guidance issued by the COPS Office has been inconsistent and contradictory. For example, several grantees used grant funds to purchase items such as furniture and vehicles, which are generally prohibited by the guidelines the COPS Office issued for the program. However, the COPS Office allowed these purchases because of the grantees’ earmarked status. According to COPS officials, they did not believe that they were in the position to disallow the expenditures.
In addition, not all COPS grant managers provided grantees with the manuals developed specifically for the Meth Initiative awards, and COPS officials informed at least one earmarked grantee that it did not have to comply with the guidance in the Meth Grant Manuals. Additionally, the requirements regarding submission of program progress reports varied between different types of grants, as well as among the COPS grant managers responsible for administering the awards.
Program Progress Reporting
Program progress reports are intended to describe information relevant to the performance of grant objectives in a narrative fashion. Program progress reports provide information on the status of funded activities and the purchase and installation of equipment and technology. The grant manuals for the Meth Initiative awards state, “Program progress reports will be distributed on a periodic basis throughout the grant period.” However, as noted previously, the COPS Office issued inconsistent instructions on program progress reporting to various grantees. Moreover, the COPS Office failed to gather adequate grant implementation information because it did not require all grantees to report on their progress.
We examined the COPS Office’s practices related to grantee reporting of project implementation in a sample of 13 grantees and determined that the COPS Office failed to obtain written program progress information from 5 grantees. For example, one grantee received 4 grants with award periods lasting from 21 to 42 months between May 2001 and June 2005. However, at the time we conducted our audit of this grantee in the spring of 2005, the COPS Office had obtained only one program progress report. Similarly, for another grantee the COPS Office received only one program progress report even though the entity received 2 grants with award periods lasting from 23 to 29 months between May 2001 and June 2004. Without sufficient documentation of grantee activities, the COPS Office cannot effectively monitor the implementation of grant activities or grantee compliance with grant conditions.
Grant Closeout Practices
We reviewed the files of 267 Meth Initiative grants awarded between FYs 1998 and 2004 and found that the COPS Office had only closed 36 of the 72 grants eligible for closure. The remaining 36 expired grants were between 1 and 5 years past the award end date. In March 2005 we examined the files for these 36 expired grants and determined that 16 had $824,517 in funding that grantees had not utilized and the COPS Office should have deobligated. The remaining 20 open, expired grants had no unspent funds. According to COPS officials, this situation occurred because closing grants had not been an agency priority until FY 2002. In addition, the COPS Office does not have a written policy mandating prompt closure of grants past their end dates.
In November 2005, COPS officials informed us that they had taken action to deobligate $324,149 from five of the expired grants with funds available. In addition, they informed us that they had subsequently paid out funds totaling $158,323 to three grantees.
OIG Audits of Meth Initiative Grant Awards
In addition to our review of the COPS Office’s management of the Meth Initiative, we also audited 44 individual grants totaling approximately $56 million that the COPS Office awarded to 13 entities between FYs 1998 and 2004.2 Our audits encompassed 16 percent of the total number of Meth Initiative awards and 26 percent of the total funds awarded under the program.
We reviewed these grants to assess whether the grantees complied with requirements regarding grantee financial reporting, grant drawdowns, and budget management and control. Further, we determined if costs charged to the grants were allowable, supported, and in accordance with applicable regulations, guidelines, and terms and conditions of the grants. Based on our reviews, we identified a total of $9,806,053 in dollar‑related findings (amounting to 17.5 percent of the $56.1 million in grant funds reviewed), which included $9,523,622 in questioned costs and $282,431 in funds put to better use, as illustrated by the following examples.3
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Three of 13 grantees did not properly monitor expenditures by budget category and exceeded the 10‑percent transfer allowance limitation without prior approval from the COPS Office.4 Their failure to obtain prior approval for budget deviations in excess of 10 percent of the grant resulted in $1,240,042 in questioned costs.
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In 10 of the 13 audits, we found $8,283,580 in grant expenditures that were either unsupported or unallowable. The bulk of these exceptions were due to grant expenditures for which the grantee did not have adequate support, unallowable charges for salaries and equipment, and excess drawdowns.
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There were five instances amounting to $282,431 in which the grantee had excess funds in the budget that should be deobligated and put to better use.5
Our audits of individual Meth Initiative grants also revealed that some grantees had not complied with essential grant requirements, as explained below.
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Seven of 13 grantees either did not submit, or did not submit in a timely manner, reports of financial activity.
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Five of 13 grantees either submitted program progress reports late or did not submit these reports as requested.
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Three of 13 grantees did not maintain adequate controls over their accounting system and financial records.
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Two of 13 grantees did not maintain adequate inventory controls over several equipment items.
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Three of 13 grantees could not provide support that the awards had met their objectives, or were not adequately measuring project outputs, outcomes, and milestones.
Impact of Congressional Earmarks
The COPS Office has taken limited actions towards executing the Meth Initiative due to the restrictive nature of earmarked funds. As a result of the significant use of congressional earmarks in the Meth Initiative, available funding is not always directed to the areas of the country with the greatest need, and because of the earmarks the COPS Office has been unable to fully control the program. COPS also has not established overall goals and measurements for the meth grant program to support the DOJ Strategic Plan. Moreover, the COPS Office has not complied with the congressional instruction to consult with the DEA to review earmarked grant proposals to determine if the grants were warranted.
COPS officials told us they do not possess the same latitude over the earmarked funds as they do with discretionary grant programs. However, since FY 2002 the congressional earmarks have included an instruction to the COPS Office to scrutinize the proposed projects, consult with the DEA, and award the funds if warranted. Nonetheless, the COPS Office has not consulted with the DEA, and instead has awarded all of the earmarked funds as directed by Congress.
Further, the COPS Office has not strategically analyzed or assessed the necessity or benefit of awarding funds to the earmarked entities. We reviewed the distribution of funds from the inception of the program in FY 1998 through FY 2004 and compared the level of funding to the number of meth-related incidents reported to EPIC over the same period. We found that although certain states with high numbers of reported meth incidents have received significant funding through the Meth Initiative, other states with similar levels of reported meth incidents have not received similar funding. For example, California ranked first in the nation with 13,377 laboratory seizures between FYs 1998 and 2004, and it received a total of $76.9 million in Meth Initiative funding, placing it first in a ranking of states awarded funds. In comparison, Texas ranked 10th in the number of seizures with 2,924 and was awarded over $1.3 million, ranking it 23 rd in the nation in funds received from the Meth Initiative.
Conversely, states with little or no reported meth seizures or arrests have received considerable resources through the program. For example, Hawaii reported only 90 seizures between FY 1998 and FY 2004, but received $8.8 million, ranking fourth in dollars received. A comparison of the funds awarded and the reported seizures appears in the following chart.6
| METH INITIATIVE FUNDS AWARDED
AND REPORTED LABORATORY SEIZURES FY 1998 THROUGH FY 2004 |
|---|
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| Source: OIG analysis of data from the COPS Office and the DEA’s El Paso Intelligence Center |
The COPS Office did not develop a strategic approach for administering the meth program nor plan for the strategic disbursement of funds because of the significant use of congressional earmarks and because it did not anticipate that the program would continue after its initial year. Nevertheless, we believe that establishing measurable goals and objectives could help in ensuring that Meth Initiative funds are used in the most effective and efficient manner to address the meth problem in America.
OIG Conclusions and Recommendations
Our audit revealed significant weaknesses in the COPS Office’s management and administrative controls related to the Meth Initiative. Specifically, we identified a lack of coordination within the COPS Office, weaknesses in the COPS Management System (the database that COPS uses to manage and track grants), and insufficient and inconsistent monitoring of grantees. In addition, our audits of individual Meth Initiative grantees revealed over $9.8 million in dollar-related findings due to: (1) unapproved budget deviations exceeding 10 percent of the award amount, (2) unallowable and unsupported grant expenditures, and (3) excess funds on hand that should be deobligated and put to better use.
These weaknesses developed because the COPS Office lacked strong administrative oversight of the Meth Initiative and lacked policies and procedures to address these issues. According to the COPS Office, it has taken limited actions towards overseeing the Meth Initiative due to the restrictive nature of earmarked funds, which make up approximately 84 percent of the Meth Initiative funds administered by COPS. As a result of the significant use of congressional earmarks in this program, funding is not always directed to the areas of the country with the most significant meth problem.
Our report contains 17 recommendations that focus on specific steps that the COPS Office should take to improve the management and administration of the Meth Initiative, including implementing policies and procedures for the standard administration and oversight of Meth Initiative grants as well as evaluating the effectiveness of the program as a whole.
EPIC, created by the DEA in 1974, relies on state and local law enforcement agencies to report voluntarily their statistics for inclusion in its National Clandestine Laboratory Seizure database. However, only three states – California, Missouri, and Oklahoma – have mandatory reporting requirements of their statistics.
The OIG issued 13 separate grant audit reports to detail the results of our reviews. See Appendix III for a breakdown of findings by audited grantee.
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 can be remedied through offset, waiver, recovery of funds, or the provision of supporting documentation. Funds put to better use are future funds that could be utilized more efficiently if management took actions to implement and complete audit recommendations.
Grantees are required to obtain prior approval from the COPS Office to make budgetary changes that cumulatively exceed 10 percent of the award. These changes may be within a budget category, such as personnel, as well as between budget categories, such as personnel and equipment.
A portion of these funds amounting to $134,729 is included in the previous discussion of the COPS Office’s failure to close out grants in a timely manner.
The states not shown on the chart had received no meth funds through FY 2004 and had few reported meth incidents.