The United States Marshals Services' Management of the Justice Prisoner
and Alien Transportation System
Audit Report 07-01
October 2006
Office of the Inspector General
Since the late 1990s, JPATS has undergone significant changes, including: adopting a new budget model, switching to an entirely leased fleet of large aircraft, and automating the scheduling process. These changes fundamentally transformed how JPATS does business. While JPATS successfully implemented its automated system of scheduling prisoners, we found problems in JPATS’s transition to a new budget model, the lack of capacity planning for future needs, and the use of short-term rather than less expensive long-term aircraft leases. We reviewed the management of these significant challenges and have identified areas for continued improvement. As previously stated, JPATS began operating on a revolving fund instead of appropriated monies in FY 1999. According to one JMD official, a revolving fund is the ideal choice to operate a program when the level of required service cannot be predicted accurately. JPATS meets this criterion because the requirements of the federal judiciary are subject to frequent changes, and the number of prisoner and alien movements is difficult to predict. When JPATS operated with appropriated funds, the program encountered difficulties in that it ran out of money each year toward the end of the fiscal year and had to rely on an infusion of funds from the USMS to continue operations. Switching to a revolving fund was intended to eliminate the perennial end-of-year shortages and allow the operation to continue as long as the customers are able to pay the expenses. The original MOU for the JPATS revolving fund outlined the responsibilities of the participating agencies. The three major customer agencies agreed to provide Reimbursable Agreements as their guarantee to pay for services received from JPATS. The customers also agreed to provide JPATS with annual estimates of anticipated movements as a part of the planning process for each fiscal year. Further, the customers agreed to keep all parties informed when the original estimates had to be modified. As the provider of services, JPATS agreed to develop cost estimates and pricing strategies based on the requirements of the customer agencies. We reviewed the budgetary process and found that JPATS has adhered to the stipulations of the MOU. Generally, customers also adhered to the stipulations of the MOU, with one exception relating to the USMS, which we discuss in the USMS: Budget Shortfalls sub-section below and more fully in Chapter 4. JPATS follows the accounting method published in OMB Circular A‑126, Improving the Management and Use of Government Aircraft to recover both the fixed and variable costs of its operations.47 Initially, JPATS charged its customers on a cost-per-seat basis. Beginning in FY 2003, JPATS changed its pricing strategy by charging its customers for the number of flight hours. This change resulted from an external study that recommended adopting an activity-based costing method to charge customers a more accurate amount for the actual use of services. Under this costing method, JPATS calculates the hourly rate based on the estimated flight hours required by customers for the forthcoming fiscal year. According to the JPATS budget analyst, prices were not affected by the change in allocation methodology from cost-per-seat to an hourly rate. However, the hourly rate prices represented a better allocation of costs than the cost-per-seat prices. Besides computing the hourly rates for its customers prior to each fiscal year, JPATS also holds a mid-year pricing conference where JPATS and customer officials review the amount of services already rendered for that fiscal year and the remaining requirements. If the requirements for the remainder of the fiscal year change, JPATS recalculates rates to ensure accurate billing and full recovery of its costs. Although the revolving fund was intended to address JPATS’s financial shortfall, our review identified problems associated with this budget method that are different for each customer. USMS: Budget Shortfalls For three consecutive fiscal years beginning in FY 2003, the USMS had to cope with budget shortfalls that affected its usage of JPATS. The amounts of the shortfalls were $3.0 million in FY 2003, $7.0 million in FY 2004, and $9.9 million in FY 2005. A budget official at USMS headquarters stated that the USMS account used to reimburse JPATS for its services is vulnerable because of the size of the account, which generally ranks among the top three programs in terms of expense in the USMS’s budget.48 When an agency-wide budget shortfall occurs, this budget official said the amount allocated for JPATS inevitably decreases. In FY 2003, the USMS had an overall budget shortfall of $3 million, as well as an additional $3 million reduction specifically targeted at the usage of JPATS. According to the USMS headquarters budget official, the FY 2003 budget was approved late in spring 2003 and did not have a noticeable impact on the usage of JPATS services by the USMS District offices. In FY 2004, the USMS resolved the shortfall by allowing its district offices to continue using JPATS funds with no restrictions until funds designated for JPATS usage were depleted. When the funding ran out in September, the final month of the fiscal year, the USMS prioritized the use of JPATS for court-mandated movements and paid for these movements using USMS discretionary funds. In FY 2005, the USMS modified its approach to address another budget shortfall. Instead of allowing unrestricted use of JPATS throughout the year, the USMS in January 2005 reduced its estimated flight hours and cut its funding to the district offices for air transportation by about 10 percent. This strategy was intended to allow for the transportation to continue for the remainder of the fiscal year, albeit at a reduced level. In May 2005, however, the USMS reverted to the original number of flight hours after it reallocated funding from human resources to JPATS services.49 BOP: Selective Use of JPATS The BOP selectively transports prisoners under its jurisdiction through JPATS in order to manage transportation costs. In addition, the BOP operates the Federal Transfer Center, a facility in Oklahoma City, Oklahoma, near the JPATS hub, that provides layover lodging for both BOP and USMS prisoners that are in the process of being transported by JPATS. During our audit field work, we noted the following practices adopted by the BOP to determine the most economical mode of movements to accomplish its goals. Bus Fleet. As noted earlier, the BOP has determined that inmate movements of less than [SENSITIVE INFORMATION REDACTED] miles are best achieved through its bus system. Movements above [SENSITIVE INFORMATION REDACTED] miles are occasionally conducted by bus when the departing and arrival points fall within the BOP’s normal bus routes. Medical Charters. Most of the time, the BOP charters its own medical airlifts instead of using the small planes owned by JPATS that operate out of the hub in Oklahoma City, Oklahoma.50 These airlifts transport prisoners from BOP institutions to the agency’s medical facilities.51 55"> According to BOP officials, it can arrange charter services at half the rate charged by JPATS. Besides the expense, BOP officials also stated that chartering a non-JPATS airplane has proven more convenient for scheduling purposes. The following table shows the amount spent by the BOP in medical airlifts outside of JPATS from FYs 2003 to 2005. COST OF BOP MEDICAL AIRLIFTS
ICE: Attempting to Fill Empty Seats Since the inception of JPATS in 1995, ICE has experienced tremendous growth in air movements and has become JPATS’s largest customer and contributor to the revolving fund. The number of air movements to transport ICE’s aliens increased 826 percent since 1995. Because JPATS is funded entirely by its revolving fund, it must recover the entire hourly rate, even when seats are empty, as is the case when ICE’s deportation flights return to the JPATS hubs empty. During our audit, the ICE’s liaison to JPATS and ICE’s chief of air transport expressed their frustration at how much their agency is being charged by JPATS. Flight missions on behalf of ICE often have empty seats, especially on the return flight from overseas deportation missions and, to a lesser degree, on certain CONUS flights that depart with an empty cabin and pick up passengers at various points en route. The empty flight segments are costly to ICE, which must pay the full cost of the entire flight. In the past, JPATS explored selling unused seats on ICE missions to other federal agencies. However, this option has not yet proved practical, mostly because those other agencies would have to pay for the entire plane, regardless of the number of passengers. Under an alternative approach approved in late 2005 by the JEC, JPATS now charges other agencies only for seats actually used and bills the cost of the empty seats to ICE. Alternative to the Revolving Fund One possible funding alternative for JPATS that emerged during our audit is the “hybrid” budget model that would combine appropriated and revolving funds. The FAA employs a hybrid budget for its Hangar Six Program, which serves the aviation needs of both the FAA and other federal agencies.52 The program’s funding comes from an annual congressional appropriation for fixed costs and payments from user agencies that receive aviation services. According to JPATS officials, if JPATS received appropriated funding to adopt the hybrid model, it would budget for fixed costs – expenses that support its infrastructure – through an annual appropriation and would bill customers only for variable costs. Such a model would significantly reduce the hourly rate that JPATS charges its customers. To illustrate such reductions, the following table shows the FY 2005 rates by flight hour charged by JPATS by customer and type of aircraft. FY 2005 JPATS RATES53
As shown in the table above, fixed costs account for 64 percent of the hourly rate in FY 2005 for ICE. Under a hybrid model, JPATS would rely on appropriations for that 64 percent of the total rate while charging ICE for the remaining 36 percent. Similarly, the hybrid model would reduce the rate charged for the use of small planes at the hub in Oklahoma City, Oklahoma by 58 percent, which represents the fixed costs portion. This reduction may provide a possible incentive for the BOP to consider using JPATS instead of chartering medical airlifts from private vendors. Overall, the total costs for the program would not change by switching to a hybrid model, but it would lessen the financial burden currently borne by JPATS’s customers by appropriating fixed costs directly to the JPATS account. The resulting lower rates would encourage customers to increase their use of JPATS, thereby reducing the number of empty seats and providing a more efficient use of federal aircraft. According to JPATS officials, the demand for prisoner and alien transportation has grown since 2000, as shown in the following table. JPATS AIR MOVEMENTS FROM 2000 THROUGH 2005
Because JPATS is focused on providing transportation services to its customers, it is important for JPATS to be a demand or need-driven organization. This means that JPATS and its operations should be directly linked to the level of service that customers need in order to safely and economically transport prisoners and aliens. To assess JPATS’s ability to plan for capacity in order to fulfill customers’ needs for prisoner and alien transport, we interviewed JPATS officials and evaluated relevant documents in two categories. First, we examined whether JPATS has conducted long-range plans to address anticipated changes in passenger movements based on historical trends. Second, we reviewed flight manifest records to determine whether the capacity of JPATS’s air fleet is being optimally used to maintain an efficient operation. Long-Term Capacity PlanningBased on the pattern of past growth and expected future demands, it is critical that JPATS adequately plan for its future capacity needs. By not planning for future capacity needs, JPATS may be caught off guard by changes in demand and customer needs and find itself in a position where it cannot transport prisoners and aliens in an efficient and effective manner. An important element in any capacity planning effort is the ability to forecast future needs. According to JPATS management, JPATS does not forecast or project prisoner and alien movements more than one year into the future.54 The closest that JPATS came to having multi-year forecasting capability was contained in its 1997 five-year strategic plan. The plan described the proposed development of a model to forecast and predict JPATS’s future transportation demands based on the number of prisoners and aliens in the federal prison system and those awaiting trial or adjudication. The purpose of the model was to link historical trends that affect demand with projections for future needs. However, JPATS did not develop the forecasting model upon the issuance of the strategic plan.55 According to the Assistant Director of JPATS, information in the 1997 strategic plan was believed to be obsolete by the time the plan was completed. However, regarding the specific forecasting project, we disagree that its concept was obsolete, because the proposed model would have provided a mechanism for JPATS to assess its future needs in air transport and develop necessary strategies and plans to fulfill those needs. We asked JPATS management whether it is actively planning for future capacity needs. According to JPATS’s Assistant Director, JPATS does not plan for future capacity needs because aviation programs change frequently and are subject to many variables which would render such planning obsolete by the time it is completed. We disagree and believe that the difficulty in performing capacity planning is outweighed by the benefits that can be realized from such an effort. The benefits include JPATS having the ability to plan for future increases in demand and thereby incorporate changes to its operations, if needed, in areas such as infrastructure, air fleet, or personnel rather than reacting at the last minute. Further, we asked the Assistant Director of JPATS what is being planned for JPATS to cope with the anticipated rise in prisoner and alien movements. He told the OIG that JPATS is capable of meeting the increase in customers’ demand for transportation services. Specifically, he said that JPATS would lease additional planes on an emergency basis and hire more contract guards to serve customers. In our opinion, this illustrates the need for longer-term capacity planning because leasing additional planes on an emergency basis is not only reactive, but is also more expensive compared to longer-term aircraft leases. Overall Use of Air Fleet In reviewing capacity planning, we also examined the efficiency of passenger loads on JPATS’s flights. One consequence resulting from the lack of capacity planning has been the under-utilization of available seats on JPATS aircraft. The table below shows the use of available seats on the six large leased planes at the three major JPATS hubs. OVERALL USE OF AVAILABLE SEATS ON JPATS FLIGHT MISSIONS56
The noticeably higher occupancy of flights originating from Oklahoma City, Oklahoma indicates a more efficient use of available seats by the USMS and the BOP. Even after removing the empty segments from the deportation flights, our audit disclosed a lower usage of available seats on ICE missions originating at Alexandria, Louisiana and Mesa, Arizona than on USMS and BOP missions. In our analysis, we noted another issue in the current flight schedule of ICE missions. One of the two large planes from the Mesa, Arizona hub currently flies each weeknight to regularly scheduled west coast locations to transfer detainees among the ICE facilities and to deport illegal aliens of Mexican origin.57 Although JPATS officials stated that the west coast is generally considered as a region with a high number of illegal aliens, our analysis shows a generally low usage of available seats on these flights. OVERALL USE OF SEATS ON
OMB Circular A-126 requires federal agencies to “use their aircraft in the most cost-effective way to meet their requirements.” The low usage of the available seats on the Mesa, Arizona evening flights – less than 45 percent full, on average, during any of the months reviewed – points to a possible inefficiency in JPATS’s operations. While the program’s objective is to transport the prisoners and aliens according to the requirements of the customer agencies, we believe JPATS should review the use of its aircraft and amend flight schedules to maintain a more optimal use of its resources. Investing in Aviation Resources JPATS provides air transport for prisoners and aliens through its fleet of large and small aircraft. As mentioned in the previous chapter, JPATS transitioned from service-owned and leased large aircraft in the late 1990s to an entirely leased fleet of large aircraft today. Currently, JPATS leases its large aircraft on a one-year short-term basis. However, recent studies performed by the GAO and the OFDT indicate that on a long-term basis, purchasing the aircraft yields the most savings for an aviation program. If funding for purchase is not available, the GAO study suggests that long-term leases provide more savings than short-term leases.59 JPATS operates its air transport on a short-term lease awarded in late 2004; the fleet from this lease includes two Boeing 737-400s for the Oklahoma City, Oklahoma hub; two Boeing 737-300s for the Alexandria, Louisiana hub, and two McDonnell Douglas MD-83s for the Mesa, Arizona hub. The lease has a one-year base with the option to renew for two additional terms, each renewal lasting one year. In late 2005, JPATS renewed this term contract for another year. According to our interviews with 23 JPATS pilots, 20 believed that these leased aircraft have operated well and have been maintained adequately by the contractor.60 Of the remaining three pilots, two provided a negative response, while one pilot did not answer our question.61 Despite the generally positive feedback from JPATS’s pilots on the quality of airplanes leased under short-term arrangements, recent studies have shown that purchasing aircraft is the best option for aviation programs. In its 2004 report, the GAO explored the following methods of acquiring aircrafts: (1) purchase, (2) operating leases on short- or long-term, and (3) lease-to-purchase, where the programs remit lease payments and eventually own the planes at the end of the lease. According to the GAO’s analysis, purchasing is the most economical option over the course of the assets’ useful life. The GAO cited a 2003 study by a GSA’s consultant that based its analysis on an aircraft purchased at $10 million. Such a purchased aircraft would have a net cost of $3.5 million at the end of ten years after deducting the residual value of the asset. The same aircraft would have cost $5.5 million at the end of the same period for a five-year lease-to-purchase option; $9.6 million for a ten-year operating lease; and $18 million for ten terms of one-year operating lease. Based on these figures, a short-term lease in one-year increments would be the most expensive option. Despite the savings that may be realized through purchasing assets such as aircraft, most federal air transportation programs have chosen operating leases, in part, because of how these expenses are reported in an agency’s budget. According to the GAO’s analysis, operating leases seem “cheaper” because programs are required to record only the annual lease payment for the budget authority. By contrast, for lease-to-purchase options, programs must record the net present value over the entire life of the contract, a significantly higher figure than operating leases. The OFDT reached a similar conclusion in its 2003 study, Aircraft Replacement Procurement Strategy for the Justice Prisoner and Alien Transportation System (JPATS). In comparing the option to lease and purchase, the OFDT states that although short-term leases appear attractive because of the low cost on a short-term basis, they provide no ownership of the assets at the end of the terms. The OFDT also identified the Boeing 737-700 as a possible candidate for purchase. This aircraft would cost $49 million per aircraft, with a useful life of 30 years. The study by the OFDT compared the cost of purchasing six such aircraft with leasing similar type of planes, as follows. COMPARISON BETWEEN PURCHASING AND LEASING SIX AIRCRAFT
Based on the above analysis, the OFDT concluded that purchasing the aircraft would cost more in the short-term, but operating leases do not offer ownership of the assets and cost more in the long-term. Nevertheless, the OFDT conceded that because “funding is not available for the purchase of aircraft; therefore, leasing remains the only option to modernize the JPATS fleet.” JPATS officials told the OIG that they recognized the benefits of purchasing the aircraft instead of leasing. However, they said that JPATS must rely on operating leases because of the exorbitant initial outlay of capital required to purchase planes. Of the various lease options, JPATS had attempted to procure its air fleet through a long-term lease in 2002 that would be cheaper than the current short-term lease, but that attempt was unsuccessful and had to be aborted in 2003.62 As of the time of this audit, JPATS officials stated that they are renewing their efforts to procure leased planes on a long-term basis with assistance from JMD. Additionally, JPATS has announced a new contracting officer position to increase the total number of contracting officers from two to three, which would ensure more adequate staffing for such a major procurement project. Even before the creation of JPATS in 1995, the USMS recognized the need to automate the scheduling process for prisoner transportation. Prior to implementation of APSS in April 2000, the BOP and the USMS transmitted requests for prisoner movements to JPATS and a teletype machine transferred the incoming data to index cards. JPATS schedulers then typed the data onto itineraries and manifests. Modifying original requests was a cumbersome process, requiring schedulers to annotate changes in longhand and manually search for requests through long stacks of index cards. The switch to APSS in April 2000 enhanced the scheduling process by storing the transportation request information in a database, which eliminated extraneous word processing and enabled the BOP and the USMS to access the application directly through the Justice Detainee Information System. APSS allowed schedulers to arrange movements, modify and update requests, generate a variety of reports, and query information stored inside the database. Originally designed solely to schedule air transportation, APSS was also adapted to schedule ground movements soon after its initial deployment. Since its inception, APSS has been continually upgraded to reflect changes in JPATS operations. Scheduling Practices for the USMS and the BOP APSS is employed in two fundamentally different ways by the customer agencies. For USMS and BOP prisoners, the scheduling process begins when a USMS district office or a BOP institution electronically submits a request to JPATS headquarters and ends when a scheduler lists the individual on a flight manifest. Although the name of the application includes the word “automated,” APSS does not generate trip itinerary automatically. Instead, the schedulers must consider each request and apply their knowledge of the federal judicial processes to schedule an individual in the best and most efficient way. The supervisors of the Scheduling Section told us it takes approximately three years for a new scheduler to master the complexity of the criteria used in arranging prisoner transportation. Nevertheless, the 13 schedulers who arrange movements for the USMS and the BOP unanimously endorsed the conversion to APSS because the application greatly streamlined the scheduling process. APSS has helped JPATS by reducing the amount of time needed to process transportation requests and ensure that flights are as full as possible. In addition, the scheduling process may be enhanced by providing security officers with electronic manifest during flight missions. Currently, APSS generates an initial flight manifest and allows for as many revisions (called “supplements”) as needed until the day before a trip. On the day of a trip, the security crew prints out the most updated supplement from APSS before the flight mission to verify the number of passengers on each leg. Our review of the manifests and supplements at the Oklahoma City, Oklahoma hub found that these reports were frequently updated in longhand by the security crew because of last-minute changes. The following table shows the frequency of such on-the-spot revisions in our sample. FREQUENCY OF LAST-MINUTE CHANGES TO
The frequent last-minute changes to the manifests demonstrate the fluid nature of JPATS service, with the USMS and the BOP routinely transporting a different number of prisoners than originally planned. At present, the security officers aboard the aircraft annotate in ink all such revisions to the manifests. We also noted that security officers performed mathematical computations on manifest reports in order to account for the number of passengers and available seats. We believe that having an electronic manifest would facilitate the process of updating passenger information during the flight. The electronic manifest would assist security officers in planning for available seats and coping with unexpected new passengers during the flight. At the conclusion of each flight, the annotated manifest is forwarded to JPATS headquarters where the schedulers record changes from the annotated manifests into APSS. After a flight mission is updated in APSS, the information is downloaded to JPATS Cost Accounting System (JCAS) in order to initiate the billing process. To ensure that JPATS bills its customers accurately, JCAS generates reports showing actual passengers transported and flight hours used that are reviewed for accuracy by customer liaisons to JPATS. We believe that it may be advantageous to provide an electronic flight manifest to the security crew on the day of the flight and to permit them editing functions. The frequent changes to the original manifests point to a potential scenario that could hamper JPATS flight missions. For example, if all legs on a flight encountered last-minute additions, the passenger cabin could become full early in the planned itinerary. Such a situation could conceivably require JPATS to reject new passengers at later segments of the same flights. Our interviews with JPATS’ Chief Inspector of Operations as well as the BOP liaison to JPATS revealed that JPATS has not denied prisoners from boarding in this scenario; nevertheless, the potential for such occurrences exist. An electronic manifest would provide security officers with better knowledge of the seating requirements at subsequent stops and would enable them to better coordinate with the USMS and the BOP. Also, having security officers electronically update the flight manifests would result in a more up-to-date APSS, save time for the schedulers that review flight missions in APSS, and help ensure that the billings are accurate. ICE: Limited Use of APSS Although use of APSS has proven beneficial for the BOP and the USMS, the application is used only on a limited basis by ICE, which still relies mainly on a manual method of scheduling. According to ICE officials, they have no plans to migrate to APSS. On the day of the flight missions, ICE offices forward a passenger list by facsimile to JPATS hubs in either Alexandria, Louisiana, or Mesa, Arizona and the hubs forward these lists to JPATS headquarters in Kansas City. Two JPATS schedulers at the headquarters enter the passenger information into a module within APSS after the flight has been completed. This module only tracks the passengers transported because it is not designed to schedule an individual on a trip. At the conclusion of each ICE flight mission, the schedulers reconcile the passenger information they receive from the security officers on the flight with the data initially entered into APSS. Upon completion, the flight missions are closed out and passenger data are downloaded to the JPATS Cost Accounting System for billing purposes. As discussed earlier, flights for BOP and USMS prisoners are more fully scheduled than those for ICE aliens. When we asked ICE officials why they do not fully utilize APSS, they stated that the agency generally has too short of a lead time to electronically schedule aliens in APSS. Specifically, an ICE official told us that ICE does not use APSS more extensively because it often does not know which aliens will be ready for domestic transport until the date of the mission. However, for international deportation flights ICE must give the foreign government one week’s notice of the names of its citizens who will be returned. Although we understand that the short lead time for domestic flights may not always allow for advanced electronic scheduling, we believe that the one-week lead time on foreign flights provides enough time to electronically schedule those passengers into APSS, which will save data entry and result in flights that are more full. Our review concluded that JPATS needs to improve its management controls in budget, capacity planning, leasing arrangements, and scheduling. The transition from an appropriated budget to a revolving fund has generated new concerns on finances for the customers: the high hourly rate forces BOP to look elsewhere for its medical flights, while the pricing strategy requires ICE to pay for empty seats. In examining these budget issues, we identified an alternative “hybrid” budget model that, if implemented, would noticeably reduce customer costs. In addition, based on historical trends it is anticipated that customers’ future capacity needs will increase, but we found that JPATS has not been actively planning in this area. Furthermore, we identified several areas for improvement in how JPATS utilizes its fleet of airplanes. Specifically, ICE flights tend to have a lower rate of usage than flights containing USMS and BOP prisoners, suggesting a pattern of inefficient use of aviation resources. In reviewing the current leasing arrangements, we concluded that JPATS could save money by switching to long-term rather than short-term leases for its aircraft. Finally, the transition to an automated scheduling method has benefited the USMS and the BOP, but limited participation by ICE reduces optimal use of the JPATS fleet. We recommend the USMS:
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