Office of Justice Programs National Law Enforcement and Corrections Technology Centers

Audit Report 07-22
March 2007
Office of the Inspector General

Findings and Recommendations


Award Expenditures

We analyzed expenditures charged against the NIJ awards at six of the eight sites visited to determine whether expenses charged were allowable and in compliance with award conditions.8 From October 1, 2003, through June 30, 2005, expenditures for the six sites reviewed totaled approximately $43 million, of which we tested 156 transactions totaling $2.6 million. At each center, we obtained accounting records for the expenditures charged to the awards during the review period. From the accounting records we judgmentally selected a minimum sample of 25 transactions at each site. We then reviewed supporting documentation to verify that the expenditures were authorized, properly classified, accurately recorded, and properly charged to the award. Our sample included expenditures for personnel, travel, consultants, contractors, other direct costs, and indirect costs.

As a result of our transaction testing, we questioned a total of $697,005 in award-related expenditures, of which $472,069 was not adequately supported and $224,936 was unallowable, as shown in the table below.




$ 138,553

$ 0

$ 0

$ 0








Rocky Mountain





Travel/ Consultant


















Travel, Gifts, Personnel, Indirect Costs






Source: OIG analysis of NLECTC financial data

NLECTC Northeast – We tested 25 transactions totaling $138,553 out of total expenditures of $5.5 million for the review period. Expense categories tested included travel, consultants’ fees, subcontractors’ expenses, and facilities and maintenance. There were no exceptions noted.

NLECTC Northwest – We tested 25 transactions totaling $377,031 out of total expenditures of $4.3 million for the review period. Expense categories tested included travel, subcontractor labor costs, consultants’ fees, and office equipment. We initially identified $86,493 in unsupported costs at the time of fieldwork. This included $37,720 in subcontractor costs for which either no documents were found or there was no evidence that the invoice was reviewed and approved for payment. In addition, we identified $12,523 in travel reimbursements for a trip to St. Petersburg, Russia, by the center director and a consultant, in which we could not verify that the travelers actually paid for the costs claimed and reimbursed. Finally, we identified $36,250 in monthly retainer fees paid to a contractor in which the contract did not stipulate that a monthly retainer fee was authorized. However, subsequent to completion of fieldwork, Chenega Technology Services Corporation, the host organization for NLECTC-Northwest, was able to provide documentation to support the above-mentioned costs. Therefore, no exceptions were noted.

NLECTC Rocky Mountain – We tested 31 transactions totaling $225,564 out of total expenditures of $6.4 million for the review period. Expense categories tested included domestic travel, foreign travel, contractor payments, and consultants’ fees. We questioned $18,480, of which $5,494 was unsupported and $12,986 was unallowable. The unsupported costs included a $5,394 payment for hotel accommodations for an official function, for which University of Denver officials could not produce an invoice to support the payment. The unallowable costs of $12,986 included $11,786 in consultants’ fees in excess of the allowable rate, $630 in per diem in excess of allowable rates for foreign travel, and $445 for a bus rental used for a non-official function. We solicited comments from the director at the time of fieldwork, and again prior to issuance of the draft report. On both occasions, the director explained that providing adequate support for payments was the responsibility of the University of Denver’s Office of Sponsored Programs. We discussed this issue with NIJ managers at our exit conference in October 2006, and they expressed their concern with NLECTC-Rocky Mountain’s response to our findings. They added that they would follow up with the University of Denver to ensure that the issues raised are properly addressed.

NLECTC Southeast – We tested 25 transactions totaling $927,613 out of total expenditures of $19.8 million for the review period. Expense categories tested included training, equipment, and payments to subcontractors. All transactions were adequately supported. However, we identified $163 in unallowable travel costs. One traveler was reimbursed for the cost of replacing a car battery. A second traveler claimed expenses for the use of a privately owned vehicle although the traveler used a rental car for transportation. This same traveler also claimed hotel expenses for a 5‑night stay while the hotel statement showed charges for only 4 nights. Subsequent to completion of fieldwork, NLECTC-Southeast provided justification for the use of a privately owned vehicle and documentation to support the per diem claimed for the 5th night at the hotel. In addition, NLECTC-Southeast agreed that the reimbursement to replace a car battery was not allowable and would be credited to the grant. Therefore, no exceptions were noted.

NLECTC West – We tested 25 transactions totaling $69,280 out of total expenditures of $4.1 million for the review period. Expense categories tested included travel, training, consultants’ fees, and office equipment. We initially identified $506 in unallowable consultant’s fees charged against the cooperative agreement because we could not verify that NLECTC-West had obtained prior approval to exceed the allowable rate authorized in the award. In accordance with the OJP Financial Guide, award conditions prohibit awardees from paying more than $450 for an 8-hour day, or $56.25 per hour, for consultant fees without obtaining prior approval from OJP. The consultant billed and was paid $2,025 for 27 hours of work, or $75 per hour, which resulted in $506 in excess of the allowable rate. However, subsequent to completion of fieldwork, NLECTC West was able to provide evidence that it had obtained prior approval from OJP for the exception. Therefore, no exceptions were noted.

RULETC – We tested 25 transactions totaling $97,822 and an additional $770,317 in salaries and indirect costs for a total of $868,139 out of total expenditures of $3.2 million for the review period. Expense categories included travel, equipment rental, and payments to contractors. We identified $5,281 in unsupported costs, all of which were travel related. In five individual travel reimbursements reviewed totaling $4,364, no travel vouchers were available to support the reimbursements to the travelers. In addition, we found no authorization to support a reimbursement of $917 for travel expenses claimed by another traveler. We also identified $4,003 in unallowable expenditures incurred by Eastern Kentucky University (EKU) staff identified in the grant application as performing grant-related work on a part-time basis. This included a $77 claim on a travel voucher for a gift and $3,926 in consultants’ fees charged in excess of the allowable rate of $450 per day. EKU officials commented that the university was undergoing a major transition in administrative processes and personnel at the time of our fieldwork, which could explain why some documents were not readily available. However, they agreed to take the necessary steps to address the lack of supporting evidence.

In our review of transactions for the RULETC operation, we performed work at the host organization, EKU.9 During the course of our testing at the university, we noted that six members of the university staff charged time against the cooperative agreement. We expanded our testing to include costs charged to the cooperative agreement for these individuals. In total we identified $461,294 in charges, including salary, fringe benefits, and related indirect costs. However, we found no supporting documentation for these charges, such as time cards, timesheets, or work schedules that would indicate that they spent time on RULETC activities. Therefore, we questioned the personnel costs as unsupported.

In addition to personnel costs, we also included in our expanded testing a review of the $309,023 in indirect costs charged against the RULETC operation in Hazard, Kentucky. According to the cooperative agreement, a two-tiered indirect cost schedule was approved by OJP wherein an indirect rate of 48 percent was established for administrative overhead costs at Eastern Kentucky and an indirect rate of 15.7 percent was established for the RULETC operation in Hazard, Kentucky. However, we noted that the 48 percent rate was used to determine administrative costs for the RULETC site. Therefore, we questioned as unallowable a total of $207,947 in indirect costs charged against the cooperative agreement for the RULETC operation in excess of the allowable indirect rate. Both RULETC and EKU officials indicated that this was an oversight and that the error has been corrected. EKU officials added that the excess funds previously drawn down had subsequently been applied to other allowable expenses.

Potential Conflict of Interest

The OJP Financial Guide, Part I, Chapter 3, states “In the use of agency project funds, officials or employees of State or local units of government. . . shall avoid any action which might result in, or create the appearance of using his or her official position for private gain. . . [or] affecting adversely the confidence of the public in the integrity of the government or the program.” In the course of fieldwork conducted at the NLECTC-Rocky Mountain operation at the University of Denver in Colorado, we were informed that several staff members were owners and operators of private, for-profit businesses that offered consulting services in the area of crime analysis. In addition to consulting services, one of the staff members also designed and marketed crime-mapping software to law enforcement agencies. Crime analysis is one of the focuses of the NLECTC-Rocky Mountain operation. The type of assistance provided by center staff in the crime analysis area includes technical assistance, training on techniques and methods used in crime analysis, and training in the use of crime-mapping software. In addition, the center is also responsible for providing law enforcement agencies with unbiased evaluations of crime analysis tools, including crime-mapping software.

We learned from one of the center’s clients, a member of the Douglas County Sheriff’s Office, that the staff member who designs and markets crime-mapping software was scheduled to lead several sessions on the use of his company’s software at an International Association of Crime Analysts (IACA) training conference in Arlington, Virginia. While the IACA conference was not a NIJ‑sponsored event, the fact that the staff member has a financial stake in a particular product being evaluated by the NLECTC program raises concerns about a potential conflict of interest. Moreover, the NLECTC program claims as one of its core principles its role as an “honest broker” in advising local law enforcement on the use or acquisition of available technologies. Therefore, even the appearance of bias on the part of center staff towards products that the NLECTC program is responsible for evaluating may damage the credibility of the NLECTC program, and in so doing compromise its effectiveness as a trusted liaison between the law enforcement community and private industry.

Moreover, two of the NLECTC-Rocky Mountain staff members previously were the subjects of conflict-of-interest allegations concerning their respective businesses that were made by a former employee in a letter to the Denver University Counsel dated February 25, 2001. In response to the allegations, the University hired an independent Certified Fraud Examiner (CFE) to conduct an investigation. In his report, dated September 17, 2001, the CFE concluded that the allegations were without merit. However, the report raised concerns with NIJ management, who then requested that the OIG conduct an investigation into whether NLECTC staff assigned to the crime-mapping program were using their grant-funded positions to conduct private business.

The OIG’s Report of Investigation, which was completed in February 2003, concluded that one of the staff members had inappropriately used grant funds to subsidize outside activities related to his private business. The report, which focused mainly on the reimbursement for travel-related expenses, recommended that the NIJ implement stricter controls over the authorization and reimbursement of travel expenses for that particular staff member. Although NIJ management implemented additional controls over the authorization and reimbursement of travel expenses, we found that these controls were rescinded as of February 13, 2004. According to NIJ officials, the additional controls were rescinded because they believed that the problem had been addressed, and that the controls were no longer necessary. Our transaction testing disclosed only minor weaknesses in the reimbursement of travel funds, which lends support to their assertion. The report made no recommendations regarding the potential conflict of interest.

We discussed the conflict-of-interest issue with the NIJ program manager responsible for overseeing the NLECTC-Rocky Mountain operation during a meeting in December 2005. The program manager was aware of the allegations and stated that the appearance of a conflict-of-interest could be a cause for concern. He added that potential for conflicts of interest was particularly problematic at NLECTC-Rocky Mountain because the University of Denver allows and even encourages employees who perform research to be involved in private ventures, including the kind in which the two staff members at the Rocky Mountain NLECTC were engaged.

We again discussed this issue with NIJ managers at our exit conference in October 2006. They reiterated their concern with the conflict-of-interest issue, and stated that they would discuss the matter with NLECTC-Rocky Mountain and the University of Denver to ensure that center staff adhere to NLECTC policy and OJP financial guidelines with respect to conflicts of interest.


We recommend that OJP:

  1. Remedy $472,069 in unsupported costs.

  2. Remedy the $224,936 in unallowable costs.

  3. Our draft report contained a recommendation concerning the delegation of executive authority over one of the centers. After additional research, we decided to remove recommendation number 3 from the final audit report.

  4. Require NIJ program management to review NLECTC-Rocky Mountain practices to determine whether a conflict of interest or an inappropriate appearance of a conflict of interest exists, and if so, to ensure that proper controls are established to address such a conflict.

  1. We did not select sample transactions at the NLECTC-National and the OLES locations because these two locations do not provide direct technical assistance to the law enforcement community, as do the regional technology centers and the RULETC specialty center.

  2. The RULETC specialty office is not co-located with its host organization, EKU. According to grant documents, approximately one-half of the grant funds went to the RULETC operation in Hazard, Kentucky, to provide technical assistance and training to rural law enforcement agencies. The remainder of the grant funds went to EKU’s Justice and Safety Center to fund law enforcement-related research projects.

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