The Executive Office (EO) for the Organized Crime Drug Enforcement Task Forces (OCDETF) was created in 1982 to take advantage of multi-agency cooperation and coordination to identify, investigate, and prosecute criminal enterprises engaged in high-level drug trafficking and related enterprises. Federal agencies participating in the OCDETF Program submit an annual operating plan that outlines how OCDETF funding will be used. Upon acceptance of this plan, the EO issues reimbursable agreements to the participating agencies that document: (a) the maximum level of reimbursement, (b) references to the law that provides the appropriated funds to the program, and (c) any additional requirements that agencies must adhere to in accepting OCDETF funding.

In November of 1997, the EO developed Program Guidelines that established requirements, fundamental goals, and objectives for the OCDETF Program and enabled the utilization of OCDETF resources to be measured and assessed.³ A key element of the Program Guidelines was the requirement that all funds appropriated for the OCDETF Program be spent in their entirety on OCDETF investigations and prosecutions. Agency reimbursement of the OCDETF Program costs cannot offset revenue of participating agencies' base level funding. On a quarterly basis, participating agencies must submit an invoice to the EO that includes documentation supporting accrued expenditures during the billing period and lists the costs by Federal object classification.

The Attorney General designated the INS as an OCDETF Program participant in December 1986. As a result of this designation, the INS established OCDETF Program Offices in its Washington, D.C. headquarters and nine OCDETF regional locations throughout the continental United States. Since OCDETF investigations require agents experienced in investigating complex drug trafficking cases or cases of a similar nature, INS management assigned approximately 100 INS agents to solely work on the OCDETF investigations. In recognition of the additional experience requirement, the INS established these OCDETF positions at a GS-13 level, which was one pay grade higher than other INS investigators. However, the INS was the only Department of Justice agency participating in the OCDETF Program that specifically chose to designate agents to work solely on OCDETF investigations.

For fiscal years 1997 through 2001, the INS tracked OCDETF Program obligations and expenditures through its core financial management system, the Financial Accounting and Control System (FACS). In fiscal year 2002, the INS began tracking obligations and expenditures in its new core financial management system, the Federal Financial Management System (FFMS). The INS established an OCDETF program code to track obligations and expenditures related to OCDETF investigations. All obligations and expenditures were recorded in the financial management system at the transaction level, except for salary and related benefit costs. These costs were maintained in a separate payroll system which produced summary level entries that were then recorded in FACS/FFMS. Exhibit No. 1 displays the amount of reimbursable agreements the EO has entered into with the INS and the amount of obligations/expenditures invoiced by the INS to the EO for the six years under review. The INS submitted invoices based on obligations incurred, not on obligations expended; however, this practice was changed in fiscal year 2002.

In each quarter during fiscal years 1997 through 2001,⁴ the INS provided the EO with quarterly billings that, in general, included the following:

• A FACS report that listed, by sub-object classification, the obligations incurred during the quarter. These amounts were extracted from the financial management system's database using the program code the INS established for tracking OCDETF incurred obligations.

• A memorandum from a senior official within INS's Office of Financial Management certifying that the obligations had been legally and properly incurred for the OCDETF Program.

• Other miscellaneous system reports or schedules that supported the obligations incurred by the INS.

Exhibit No. 2 displays the financial management system reports provided to the EO as compared to the amounts invoiced to the EO for fiscal years 1997 through 2002.

In general, the INS billed the EO for the amounts reported on the FACS Reports. In the fourth quarter of each fiscal year, the INS would determine the total obligations reported in FACS and deduct the amount of reimbursement already received to date.⁵ This amount was compared to the reimbursable agreement amount and the difference was billed to the EO. However, according to the criteria established in the EO's Program Guidelines, any amounts exceeding reimbursable funding levels had to be paid by the agency's direct appropriations.

In April of 2000, the General Accounting Office (GAO) began an audit into the INS's participation in antigang task forces in the Los Angeles area, including a review of whether OCDETF funds were used to support gang-related investigations. In October of 2000, the GAO reported that for much of 1997 and 1998, seven INS agents dedicated to OCDETF were re-assigned to non-OCDETF investigations. GAO also found that 67 percent of the other direct costs tested were used for law enforcement purposes not directly related to OCDETF investigations. GAO reported that INS managers had agreed that OCDETF dedicated agents had been reassigned to had been reassigned to non-OCDETF cases and that the INS costs related to these agents were billed to the EO. GAO also reported that interviews with other INS OCDETF regional coordinators outside of the Los Angeles area indicated that INS OCDETF dedicated agents in their regions were sometimes used for non-OCDETF purposes and that nonpayroll OCDETF funds should be, but were not always, used only for OCDETF cases.

The Department's Assistant Attorney General for Administration concurred with GAO's findings and pledged to work with the EO and the INS to recover funds billed for non-OCDETF investigations, and to improve the internal controls over the billings by the INS. Therefore, the objective of this audit was to determine whether the expenditures reported by the INS and reimbursed by the EO were in accordance with criteria established by the EO (i.e., reimbursements were for expenditures incurred for OCDETF investigations).

Another consequence of GAO's audit was reflected in INS's fiscal year 2002 reimbursable agreement with the EO which contained the following provision: Pursuant to the provisions of the H. Rept. 107-278, the Conference Report on the FY 2002 Department of Justice Appropriations Act, INS is directed to match at least 25 percent of each reimbursable dollar from their direct appropriation on Organized Crime Drug Enforcement Task Force cases before being reimbursed under this agreement. Accordingly, INS shall submit quarterly billings directly to the Executive Office for OCDETF, together with documentation on accrued expenditures, including overburn.⁶ Billings may not be processed electronically. As a result of this requirement, the INS provided the EO with manually prepared schedules that calculated the costs incurred, including the allocation of indirect or administrative costs that was applied to the matching requirement but not billed to the EO. Although the schedules provided the names, salary, and benefit costs of the INS staff that were being billed to the EO, system-generated reports and other detailed documentation were not provided to support INS's calculations.

3. The Program Guidelines were subsequently revised in July of 2002.
4. For fiscal year 2002, INS was required to provide 25% of every dollar of OCDETF costs incurred. See the last paragraph of this Background section for a discussion of the INS's fiscal year 2002 billing methodology and the supporting documentation provided to the EO.
5. Since INS was basing its billings on obligations incurred rather than actual expenditures this methodology accounted for any timely (i.e., within the same fiscal year) upward or downward adjustments of previously billed obligations. However, as discussed later in our report, delayed deobligations of prior year funds required the INS to refund the EO the funds that were not fully expended. For example, in fiscal year 2002 the INS had to refund the EO $626,917 for previously billed fiscal year 2000 and 2001 obligations that were not fully expended.
6. Overburn represents any hours over and above the estimated FTE hours associated with the reimbursable agreement.