[SENSITIVE INFORMATION REDACTED]
Report No. GR-90-95-002, April 1995

For the audit period of January 1992 through December 1994, [SENSITIVE INFORMATION REDACTED] billed the USMS for 125,575 jail days at $61.80 per day for a total of about $7.8 million. Our audit determined that [SENSITIVE INFORMATION REDACTED] included unallowable costs totaling $929,147 in its cost sheet for calculating a daily jail rate as follows:

• The rate included 100 percent of the utility expenses ($243,898) for the sheriff’s training academy located adjacent to the [SENSITIVE INFORMATION REDACTED]. If the training academy utility costs were allocated based on departmental payroll costs, as are all other training academy costs, the [SENSITIVE INFORMATION REDACTED] would have been charged only $87,515. Thus, the proposal contained $156,383 in unallowable costs (other operating costs).

• Jail staff uniform costs ($175,670) were double-counted on the cost sheet as other operating costs and employee benefits.

• The building use allowance stated in the cost sheet included $597,094 charged for idle capacity and is therefore not an allowable cost (Indirect Costs).⁶⁸

As a result of these unallowable costs being included on the cost sheet, the daily jail rate should have been $60.74 instead of the $61.80 charged by [SENSITIVE INFORMATION REDACTED]. Therefore, the USMS was overcharged $133,109.

[SENSITIVE INFORMATION REDACTED]⁶⁹
Report No. GR-40-95-005, May 1995

Our audit disclosed the following unallowable costs were included in the jail-day rate: interest, management fee, donations, contingency accruals, and bad debt write-offs. In addition, the following unallowable indirect costs totaling $443,806 were also included in the jail-day rate:

• accruals for contingencies and consulting for New Mexico related activity;

• consultant charges for work with the Texas State legislature, consulting firm charges for work with the Louisiana State Department of Education, and consulting charges associated with activities in New Mexico;

• law firm charges for developing marketing opportunities in Texas;

• general entertainment charges and sponsorship of a golf tournament; and

• entertainment expenses, a going away gift for one individual, and cookies in gift packages for at least 100 individuals or organizations.

Our audit determined that for the periods October 1990 through July 1991 and October 1993 through September 1994, the USMS overpaid [SENSITIVE INFORMATION REDACTED] $259,241. We further determined that the allowable costs only supported a jail-day rate of $45.23, instead of the $51.30 rate that the USMS paid.

[SENSITIVE INFORMATION REDACTED]
Report No. GR-30-96-007, April 1996

The USMS established an $83.64 jail-day rate with the [SENSITIVE INFORMATION REDACTED]. Our audit noted that this rate was based on estimates. On several occasions the USMS requested the [SENSITIVE INFORMATION REDACTED] to provide an operational budget for establishing a new jail-day rate, although the [SENSITIVE INFORMATION REDACTED] had not complied with the request. The [SENSITIVE INFORMATION REDACTED] continued to use the original preliminary jail-day rate.

Our audit found that the actual allowable costs only supported a jail-day rate of about $60. We took exception to the following costs:

• accrued salary and fringe benefit expenses in excess of actual (salaries and fringe benefits);

• salary expenses for transportation guards, when the USMS had a separate transportation guard rate in effect (salaries);

• contribution to five guards for their participation in the [SENSITIVE INFORMATION REDACTED] Centennial parade (salaries);

• costs incurred for a change order with North Carolina to house its prisoners (other direct costs);

• costs incurred for corporate meals and entertainment, holiday parties, donations, and contributions (general and administrative); and

• transportation guard rate in excess of actual costs.

As a result of these cost exceptions, we found that USMS overpayments to the [SENSITIVE INFORMATION REDACTED] totaled over $1.8 million during 1994 and 1995.

[SENSITIVE INFORMATION REDACTED]
Report No. GR-30-96-008, April 1996

Our audit determined that USMS overpaid [SENSITIVE INFORMATION REDACTED] a total of $1,996,600 during FY 1995. This resulted from [SENSITIVE INFORMATION REDACTED] including in the jail-day rate unallowable salaries, fringe benefits, and costs related to criminal investigators that do not benefit the needs of the USMS. We also took exception to other costs including:

• Outside medical services provided to inmates because these costs were paid directly by the USMS ($358,035) (contracts);

• The detention facility entered into a Memorandum of Understanding (MOU) in which it agreed to pay the Town of [SENSITIVE INFORMATION REDACTED] $400,000 annually for a period of 30 years. The MOU mentioned no service or product for this annual payment. Further, neither the detention facility nor the Town employees were able to identify any service that was provided for this payment (administrative);

• Equipment purchased that should have been depreciated instead of expensed (equipment); and

• Incurred cost totaling over $9 million to recover the cost of financing the new jail. The USMS did not take issue with the debt service during its review of the cost sheet. However, we reported that the substance of the $9 million transaction was the recovery of financing, and was unallowable under OMB Circular A-87 (debt service).

[SENSITIVE INFORMATION REDACTED]
Report No. GR-40-96-002, April 1996

Our audit of [SENSITIVE INFORMATION REDACTED] County’s actual costs revealed that the jail-day rate included the following unallowable costs:

• Medical costs totaling over $1 million that did not benefit federal prisoners (consultants and contracts);

• Legal fees pertaining to settlements of claims filed by inmates against the [SENSITIVE INFORMATION REDACTED] County Sheriff’s Office (consultants and contracts); and

• Capital costs for an above ground fuel tank improperly classified as an expense. The cost should have been capitalized and depreciated (other direct operating).

As a result, the USMS overpaid [SENSITIVE INFORMATION REDACTED] County $6.97 a day for its 61,086 jail days, for an overpayment of $425,769 from May 1, 1995 to February 29, 1996.

[SENSITIVE INFORMATION REDACTED]
Report No. GR-50-96-004, April 1996

Our audit revealed that the cost sheet submitted by the [SENSITIVE INFORMATION REDACTED] County Jail sought an increase in the jail-day rate from $60.81 to $68.66. The USMS established a rate of $67.74. However, our audit revealed that the jail-day rate included the following unallowable costs:

• medical costs totaling over $4,000 that did not benefit federal prisoners (consultants and contracts),

• routine maintenance of Sheriff’s Department motor vehicles totaling over $11,000 that were not used for USMS prisoners (other direct operating), and

• over $8,000 for the repair of accident damage to a Sheriff’s Department vehicle that was not used for USMS prisoners (other direct operating).

In addition, our audit noted that the jail was given CAP funding for the construction of the jail and this amount was not subtracted from the total construction cost before figuring depreciation (building depreciation costs). Our audit determined that from October 1, 1994 to January 31, 1996, the USMS overpaid the [SENSITIVE INFORMATION REDACTED] County Jail $98,331. In addition, our audit determined that the [SENSITIVE INFORMATION REDACTED] County Jail only had costs to support a jail-day rate of $62.93.

[SENSITIVE INFORMATION REDACTED]
Report No. GR-80-96-004, April 1996

In May 1990, the USMS established a temporary rate of $55 per day with the City of [SENSITIVE INFORMATION REDACTED]. The agreement also included separate off-site guard services at $18 per hour. In 1994, the City of [SENSITIVE INFORMATION REDACTED] submitted a cost sheet that only supported a rate of $52.76. However, the City of [SENSITIVE INFORMATION REDACTED] and the USMS negotiated a final jail-day rate of $55 per day in December 1994.

We determined that the City of [SENSITIVE INFORMATION REDACTED] included unallowable and unsupported costs in calculating the jail-day rate as follows:

• annual bond debt payments of $589,398 per year instead of allowable depreciation costs (equipment and building depreciation costs), and

• unsupported indirect costs totaling over $55,000.

The City of [SENSITIVE INFORMATION REDACTED] also failed to consider telephone revenue in the cost sheet. The jail receives revenue payments from telephone long-distance carriers for collect calls made by inmates using the jail-owned telephone system. OMB Circular A-87 requires that credits that reduce expense items be used to reduce related expenditures in determining the rates or amounts applicable to a given contract.

As a result of our audit, we determined that the City of [SENSITIVE INFORMATION REDACTED] overbilled the USMS $1,186,800 in FY 1995. In addition, our audit determined that the City of [SENSITIVE INFORMATION REDACTED] Law Enforcement Center Jail only had costs to support a jail-day rate of $34.26.

[SENSITIVE INFORMATION REDACTED]
Report No. GR-30-96-013, September 1996

During the audit period of January 1, 1993, through December 31, 1995, (fiscal years 1993, 1994 and 1995), [SENSITIVE INFORMATION REDACTED] County billed the USMS $6.4 million per year, which comprised 83,950 jail days at $76.60 per day. The IGA was signed in March 1990, and was in effect during the entire audit period.

We determined that [SENSITIVE INFORMATION REDACTED] County included unallowable and unsupported costs in calculating the jail-day rate as follows:

• medical, dental, radiology, and ambulance services billed separately to the USMS (contracts); and

• indirect costs that were unallocable and unallowable per OMB Circular A-87 (indirect costs).

As a result of these unallowable costs being included in the daily jail rate, the USMS overpaid [SENSITIVE INFORMATION REDACTED] County by $1,598,408 in FY 1993, $1,475,002 in FY 1994, and $1,150,955 in FY 1995.

Our audit also determined that [SENSITIVE INFORMATION REDACTED] County only maintained records of the number of prisoners detained, not the number of jail days per prisoner. As a result of a contract administration oversight, the USMS issued Modification 3 in the form of payment for guaranteed daily bed space. Therefore, [SENSITIVE INFORMATION REDACTED] County billed the USMS for 230 prisoners per day (83,950 prisoners annually) at the daily rate of $76.60 for each fiscal year. However, [SENSITIVE INFORMATION REDACTED] County housed less than the annual total in FYs 1993 and 1994. This resulted in the USMS expending $819,160 that could have been better used had the Modification included provisions for [SENSITIVE INFORMATION REDACTED] County being reimbursed for actual prisoner days.

[SENSITIVE INFORMATION REDACTED]
Report No. GR-30-97-002, February 1997

[SENSITIVE INFORMATION REDACTED] County submitted a cost sheet that estimated annual costs based on incurred costs from January 1, 1995, through September 30, 1995, but offered no specific period of performance at that time. The proposed costs resulted in a jail-day rate per inmate of $185.98. This rate was based on the care and feeding of 1,520 inmates. Although the county based its cost estimate on incurred costs from January 1, 1995, through September 30, 1995, it based its estimate of the average daily prisoner population on the average prisoner population during January and February 1996.

Our audit determined that [SENSITIVE INFORMATION REDACTED] County’s expenses used to calculate the jail-day rate were overstated by $7.7 million, resulting in a supported jail-day rate of $142.32. In addition, the estimated average daily population increased from 1,520 to 1,838. Therefore, the USMS overpaid [SENSITIVE INFORMATION REDACTED] County by almost $1.6 million in FY 1996.

[SENSITIVE INFORMATION REDACTED]
Report No. GR-40-97-004, April 1997

On November 7, 1996, the City of [SENSITIVE INFORMATION REDACTED] submitted a proposal to increase the jail-day rate from $40 to $49.54. This rate was based on [SENSITIVE INFORMATION REDACTED] computation of operating costs for January 1, 1995, through December 31, 1995.

Our audit determined that the proposed jail-day rate included the following unallowable costs:

• Employee health insurance costs were double-counted as jail employee benefits and indirect costs (benefits);

• Medicare expenses that were not incurred (benefits);

• Unsupported use allowance for the Annex because the Department of Correction could not provide documentation to support the construction costs (equipment and building depreciation costs); and

• Unallowable indirect costs including a business strip to South Africa, golf and tennis tournaments, and the cost to settle a sexual harassment lawsuit (indirect costs).

The costs claimed that were unallowable or unsupported totaled $875,944. Also, [SENSITIVE INFORMATION REDACTED] under-reported the average daily population for 1995 by 57 inmates. As a result, [SENSITIVE INFORMATION REDACTED] costs only supported a jail-day rate of $44.93, which could save the USMS up to $504,795 annually.

Our audit also determined that [SENSITIVE INFORMATION REDACTED] proposed to recover costs of building the new [SENSITIVE INFORMATION REDACTED] City Detention Center through a capital cost recovery surcharge of $23.05 per jail day. The City of [SENSITIVE INFORMATION REDACTED] calculated a pro-rata share of the total cost to design, build, and finance 300 bed spaces to replace those provided to the USMS at the Annex under a CAP award. The USMS made no formal agreement to pay for the replacement bed spaces at the new Detention Center. Since the federal prisoners are housed in the Annex, the USMS could save more than $2.5 million annually by disallowing the surcharge.

[SENSITIVE INFORMATION REDACTED]
Report No. GR-80-97-017, September 1997

The USMS awarded [SENSITIVE INFORMATION REDACTED] County an IGA effective December 15, 1990, for the detention of federal prisoners. [SENSITIVE INFORMATION REDACTED] County, in turn, contracted with [SENSITIVE INFORMATION REDACTED] to provide jail services at its [SENSITIVE INFORMATION REDACTED] County Detention Facility. For the calendar year 1996, [SENSITIVE INFORMATION REDACTED] County billed the USMS for 43,303 inmate days, at a rate of $62 per jail-day, for a total of $2,690,986. After reviewing the direct and indirect costs for the [SENSITIVE INFORMATION REDACTED] facility for 1996, we determined that [SENSITIVE INFORMATION REDACTED] County only had allowable costs to support a rate of $47.72. Our audit determined that the jail-day rate included the following unallowable costs:

• Interest on funds invested in the [SENSITIVE INFORMATION REDACTED] facility making funds unavailable for other purposes ($856,079);

• Liability insurance to cover the self-insured retention provision of its insurance policy ($500,000). The expense was not incurred;⁷⁰ and

• Indirect costs ($18,398) and a management fee (profit) ($199,513) that was not allocable to the detention facility.

As a result, the USMS paid $619,795 in unallowable and unsupported costs in FY 1996. If this rate were applied in 1997, assuming the same number of inmate days, the USMS would save an additional $619,795.

[SENSITIVE INFORMATION REDACTED]
Report No. GR-50-97-014, September 1997

The IGA was initially approved in 1984 at a jail-day rate of $65, and later modified to $75 per jail day. Since the IGAs inception in 1984, [SENSITIVE INFORMATION REDACTED] County did not submit a cost sheet, or any other cost data to support its rates. Instead, the rates were based solely on [SENSITIVE INFORMATION REDACTED] County Board resolutions.

We reviewed the County’s actual jail costs for two fiscal years, 1990 and 1996. We selected 1990 because it was the last full year that the $65 jail-day rate was in effect, and 1996 because it was the last full year of the $75 jail-day rate. At the time of our audit, the $75 jail-day rate was still in effect.

After performing tests of selected FY 1990 and 1996 costs, we found that [SENSITIVE INFORMATION REDACTED] County overbilled the USMS a total of $140,667. For 1990, we determined that the cost data supported a rate of $57.69, which was $7.31 less than the rate of $65 that was being paid at that time. For 1996, we determined that the cost data supported a rate of $69.20, which was $5.80 less than the rate of $75 that was being paid at that time. If the $69.20 rate was applied in 1997, the USMS could have saved an additional $118,042.

[SENSITIVE INFORMATION REDACTED]
Report No. GR-90-97-015, September 1997

After analyzing [SENSITIVE INFORMATION REDACTED] County’s direct and indirect costs, we determined that direct costs associated with “Victim Notification” ($40,194) and indirect costs associated with “Victim Notification” ($12,273) and “Equipment Use Allowance” ($12,000) were unallowable. [SENSITIVE INFORMATION REDACTED] County’s allowable costs only supported a rate of $58.90 instead of the $61.25 rate the USMS paid. As a result, the USMS overpaid [SENSITIVE INFORMATION REDACTED] County $8,307 during FY 1996. If the USMS implemented the $58.90 rate for FY 1997, the USMS could have saved $41,390.

[SENSITIVE INFORMATION REDACTED]
Report No. GR-90-98-001, October 1997

The USMS awarded [SENSITIVE INFORMATION REDACTED] County an IGA in April 1994 for the detention of federal prisoners. Effective October 1, 1994, the USMS modified [SENSITIVE INFORMATION REDACTED] County’s agreement to include [SENSITIVE INFORMATION REDACTED] facility at a temporary rate of $61.25 per day per prisoner. In addition, the modified agreement included a provision for transport and guard services to and from medical appointments at a rate of $13.50 per hour to be reimbursed to the County by the USMS. However, our audit noted that the jail-day rate of $61.25 already included the transportation and escort services to and from the courthouse for federal prisoners.

Our audit also identified the following unallowable and unsupported costs:

• Interest expense of over $4.6 million. [SENSITIVE INFORMATION REDACTED] stated that this interest expense was not an out-of-pocket expense, but rather, the cost of [SENSITIVE INFORMATION REDACTED] investing its funds in the detention facility, making the funds unavailable for other purposes;

• Liability insurance to cover the self-insured retention provision of its insurance policy ($500,000). The expense was not incurred;

• Administrative fee of $884,750 based upon [SENSITIVE INFORMATION REDACTED] contract with [SENSITIVE INFORMATION REDACTED] County. The contract provides that “the county will pay to [SENSITIVE INFORMATION REDACTED] all funds received by the county pursuant to the IGAs, less an administrative fee of $2.00 per inmate housed per day....” The audit of [SENSITIVE INFORMATION REDACTED] County determined that the county did not claim any expense nor did we identify any expense for the administration of this contract in our audit. In addition, this fee did not in any way benefit the IGA. To the contrary, its effect was to cost the USMS an additional $2.00 per prisoner for which the USMS received no actual goods or services in return;

• Management fee of $1,576,729, which [SENSITIVE INFORMATION REDACTED] defined as its profit on the operation of detention facilities;

• Depreciation expense that was overstated by over $1.3 million; and

• Indirect costs in excess of $98,000.

For calendar year 1996, [SENSITIVE INFORMATION REDACTED] County billed the USMS for 180,331 jail days, at a temporary rate of $61.25 per jail day for a total of $11,044,049. After reviewing the direct and indirect costs, we determined that the USMS overpaid [SENSITIVE INFORMATION REDACTED] by over $3.7 million. Our audit also determined that if the USMS implemented the audited rate of $40.70 for 1997, it could save an additional $2,587,903.

[SENSITIVE INFORMATION REDACTED]
Report No. GR-80-98-002, October 1997

The USMS awarded [SENSITIVE INFORMATION REDACTED] County an IGA that established a jail-day rate of $45. [SENSITIVE INFORMATION REDACTED] County, in turn, contracted with [SENSITIVE INFORMATION REDACTED] to provide jail services at the [SENSITIVE INFORMATION REDACTED] County Jail/Juvenile Center. Our audit of [SENSITIVE INFORMATION REDACTED] County’s costs revealed that for 1996, [SENSITIVE INFORMATION REDACTED] County costs supported a rate of $62.22, despite claiming in its jail-day rate $626,521 in unallowable and unsupported costs. Unallowable expenditures included gifts, donations, entertainment costs, medical expenses for non-federal prisoners, interest, management fee (profit), and double-counting salaries and benefits of four full-time transportation officers that were billed to the USMS under a separate transportation and guard rate.

[SENSITIVE INFORMATION REDACTED]
Report No. GR-40-98-003, December 1997

In December 1995, the USMS signed an IGA with the [SENSITIVE INFORMATION REDACTED]. The base for the [SENSITIVE INFORMATION REDACTED] cost proposal included $528,561 in unallowable costs and $547,572 in unsupported costs, including the following:

• Temporary housing units used prior to the new jail being occupied. These costs were no longer being incurred, and as such, did not benefit the USMS ($347,867) (consultant and contract services);

• Use allowance of $40,000 because the base included $2 million, which the USMS provided toward construction of the jail under a CAP with Forsyth County; and

• Indirect costs of almost $400,000 that were unsupported.

Our audit determined that the jail-day rate was overstated by $5.62 per jail day. This overstatement resulted in overpayments of as much as $184,920 between December 1, 1995 and August 31, 1997. Also, based on actual federal prisoner jail days for September 1996 through August 1997, the USMS could have saved about $98,350 annually by reducing the jail-day rate by $5.62.

[SENSITIVE INFORMATION REDACTED]
Report No. GR-90-98-004, January 1998

Two detention facilities were used to satisfy the requirements of this IGA, the [SENSITIVE INFORMATION REDACTED] County Detention Center, and the [SENSITIVE INFORMATION REDACTED]. Our audit determined that the jail-day rates included unallowable and unsupported costs totaling over $5.6 million, which resulted in the USMS overpaying the [SENSITIVE INFORMATION REDACTED] County Sheriff’s Office over $254,000 during FY 1990.

[SENSITIVE INFORMATION REDACTED]
Report No. GR-70-98-004, March 1998

We determined that the negotiated jail-day rate was reasonable and based on allowable and allocable costs.

[SENSITIVE INFORMATION REDACTED]
Report Number GR-50-98-023, July 1998

In January 1997, the [SENSITIVE INFORMATION REDACTED] County Jail requested a jail-day rate increase from $41.50 to $50.24 per prisoner. However, upon the USMS’s review of the cost sheet, the USMS established a rate of $52.50.

We determined that the cost sheet supporting the rate increase was improperly completed. The jail did not provide actual costs as required. The IGA modification stipulated that actual costs from the latest accounting period be used to determine the jail-day rate instead of estimates. According to the USMS’s negotiation records, 1996 actual costs were used to prepare the cost sheet. However, we determined that various budget estimates were actually used to prepare the cost sheet.

As a result of using budget estimates instead of actual costs, our audit identified unsupported and unallowable costs in the jail-day rate including attorney expenses also claimed as an indirect cost, and more than $744,000 claimed for housing non-federal inmates in another detention facility. Our audit also revealed that the prisoner days claimed by the jail were understated (439,483 as opposed to the 417,925 jail days claimed). This resulted in a jail-day rate of $42.92, which is $9.58 less than the rate of $52.50. Assuming that the federal government uses about the same amount of jail days in 1998 as it did in 1997, the USMS could have saved about $245,095.

[SENSITIVE INFORMATION REDACTED]
Report No. GR-40-98-027, September 1998

For the FY 1997, the [SENSITIVE INFORMATION REDACTED] billed the USMS for 23,229 jail days at a rate of $39.61 per day, for a total of about $920,000. Our audit determined that the [SENSITIVE INFORMATION REDACTED] included over $1.4 million in unsupported and unallowable costs in its jail-day rate. Unallowable costs included not subtracting from the construction costs CAP funds in calculating the use allowance, and medical expenses for non-federal inmates. As a result, the [SENSITIVE INFORMATION REDACTED] overbilled the USMS $177,934 during FY 1997.

[SENSITIVE INFORMATION REDACTED]
Report No. GR-50-99-001, November 24, 1998

The USMS and [SENSITIVE INFORMATION REDACTED] were operating under an interim letter contract effective December 29, 1997. Our review of the contract proposal and interim letter contract revealed that [SENSITIVE INFORMATION REDACTED] overstated its quotes. In 1997, [SENSITIVE INFORMATION REDACTED] billed the USMS for 109,855 jail days at an average cost of $76.40 per day, for a total of $8,415,334. In addition, through July 31, 1998, [SENSITIVE INFORMATION REDACTED] billed the USMS a total of $5,161,010 for 64,650 jail days at $79.83 per day plus an additional $20,170 for other contracted services. Our audit of the jail-day rate revealed that [SENSITIVE INFORMATION REDACTED] allowable expenses only supported a rate of $49.13. The original rate accounted for over $1.9 million in unallowable costs, such as management fees and indirect costs. Consequently, we concluded that the USMS overpaid [SENSITIVE INFORMATION REDACTED] by about $3 million for detention services in 1997. Also, the USMS overpaid [SENSITIVE INFORMATION REDACTED] about $1.9 million under the letter contract through July 31, 1998, and could realize savings of about $4,516,035 for the remainder of 1998 through December 1999 by implementing the revised jail-day rate.

[SENSITIVE INFORMATION REDACTED]
Report No. GR-90-01-006, December 2000

The USMS entered into an IGA with [SENSITIVE INFORMATION REDACTED] Department of Corrections (DOC) to ensure adequate detention space was available.⁷¹ Further, in exchange for guaranteed bed space, the USMS awarded $3 million in CAP funding. The IGA was modified, effective October 1997, to reduce the jail-day rate from $130 to $97.71. The reduction was based upon the result of a USMS audit of costs incurred by the DOC and the total jail days used in FY 1997.

Our audit revealed that the jail-day rate included the following unallowable costs:

• salaries and related benefits of personnel in the Parole Services Division, and three federally funded positions in the Forensics Unit (personnel);

• medical services provided off-island to local prisoners that did not benefit federal detainees (medical); and

• food and supplies provided for the Governor’s house (food and kitchen supplies);

In addition, we determined that [SENSITIVE INFORMATION REDACTED] received almost $500,000 in offsetting credits resulting from rental income associated with the prison commissary and federal grants. As a result of our audit, we determined that the USMS overpaid [SENSITIVE INFORMATION REDACTED] $2,131,214 from October 1, 1998 through September 30, 2000.

[SENSITIVE INFORMATION REDACTED]
Report No. GR-70-01-005, June 2001

During 2000, the USMS paid $280,050 to house an average of 17 detainees per day. Our audit of [SENSITIVE INFORMATION REDACTED] actual costs and average daily population during this period revealed that the USMS overpaid York $7.93 a day for its average daily population of 17 detainees, for an overpayment of $49,340.⁷² Our report noted the following exceptions: (1) salaries, fringe benefits, and trailer rent related to an Outmate Program that did not benefit federal prisoners; and (2) revenue accounts for the Outmate Program and food rebates were not offset from total operating costs of the prison.⁷³ As part of our audit, we also calculated that the USMS could have saved $54,000 in 2001 by implementing the audited rate.

[SENSITIVE INFORMATION REDACTED]
Report No. GR-60-03-001-R, November 2002

During 2000 and 2001, the USMS paid the [SENSITIVE INFORMATION REDACTED] $4.3 million. Our audit revealed that the [SENSITIVE INFORMATION REDACTED] had not prepared a cost sheet to support the current jail-day rate. Our audit of the [SENSITIVE INFORMATION REDACTED] actual costs and average daily population also revealed that the USMS overpaid the [SENSITIVE INFORMATION REDACTED] by about $17 a day for its average daily population of 6,100 in 2000 and 5,700 in 2001, for an overpayment of $976,947 in 2000, and $779,585 in 2001.⁷⁴ Our report noted the following exceptions: (1) state-certified deputies earned an additional $150 per pay period in state supplemental pay, which was not a direct labor cost for the [SENSITIVE INFORMATION REDACTED]; (2) the criminal sheriff was an elected official whose salary was an unallowable expense; (3) salaries and fringe benefits of employees patrolling the [SENSITIVE INFORMATION REDACTED]; (4) employee health insurance and workmen’s compensation not paid by the [SENSITIVE INFORMATION REDACTED] were unallowable; (5) salaries related to the Criminal District Court and Clerk of the Court were unallowable; (6) unsupported costs related to legal and legal settlement costs classified as liability and property damage; (7) an extravagant cell phone expense; (8) unallowable costs associated with the Sheriff’s travel and the purchase of a Chevrolet Suburban assigned to the Sheriff; and advertising, cabling, video, boat slip rental, drug grant expenses and supplies that were not related to the housing of federal inmates; and (9) capital outlays that should have been depreciated.

[SENSITIVE INFORMATION REDACTED]
Report No. GR-30-05-002, January 2005

Our audit of actual costs and daily population revealed that the Sheriff’s Office’s records supported the rate paid by the USMS.

[SENSITIVE INFORMATION REDACTED]
Report No. GR-30-05-004, March 2005

The USMS established an IGA for detention services with the [SENSITIVE INFORMATION REDACTED] in 1991. In accordance with the IGA, the [SENSITIVE INFORMATION REDACTED] submitted a cost sheet for detention services based on estimated FY 1991 costs. Although the cost sheet only supported a rate of $36.64, the USMS agreed to a $50 jail-day rate. In 1999, the USMS added a transportation guard rate of $16.25 per hour plus mileage for transporting federal detainees to court and medical appointments.

At our request, the [SENSITIVE INFORMATION REDACTED] submitted a new cost sheet in August 2004. Although the new cost sheet proposed a jail-day rate of $55, the cost sheet figures only supported a proposed rate of about $45. According to the USMS, in order to maintain the relationship with the [SENSITIVE INFORMATION REDACTED], the Assistant Director of the Prisoner Services Branch recommended that the [SENSITIVE INFORMATION REDACTED] withdraw its request for a rate increase, and the USMS would take no action to reduce [SENSITIVE INFORMATION REDACTED] rate.

Our audit of [SENSITIVE INFORMATION REDACTED] costs revealed that the [SENSITIVE INFORMATION REDACTED] FY 2003 allowable costs only supported a jail-day rate of $30.62. Applying these rates to jail days incurred in FYs 2003 and 2004, we determined that the USMS overpaid [SENSITIVE INFORMATION REDACTED] more than $2.8 million. Our report noted the following exceptions: (1) the [SENSITIVE INFORMATION REDACTED] included an unallowable accumulated leave liability that included the liability for leave for the past several years – perhaps as far back as 1991 (personnel); (2) salaries for transportation guards that were reimbursed under a separate transportation rate (personnel); (3) capital equipment (equipment with a cost of more than $5,000) was captured as Other Direct Costs in addition to depreciation being taken on the equipment (other direct costs); (4) unallowable premiums for hospitalization insurance for state and local inmates (other direct costs); (5) unsupported costs due to an error by the [SENSITIVE INFORMATION REDACTED] independent financial auditors (other direct costs); (6) non-capital equipment was captured as Other Direct Costs in addition to depreciation being taken on the equipment (equipment depreciation); and (7) revenue accounts for inmate telephone calls and the commissary were not offset from total operating costs of the prison (credits). In addition, we determined that the USMS could have saved over $1.4 million by implementing our audited rate in FY 2005.

[SENSITIVE INFORMATION REDACTED]
Report No. GR-40-05-011, September 2005

The USMS entered into an IGA Agreement with [SENSITIVE INFORMATION REDACTED] on September 24, 1999, for a temporary jail-day rate of $45. The temporary rate was made permanent on October 1, 2004, and remains in effect until September 30, 2006. Our audit questioned the following unallowable and unsupported costs:

• salaries of part-time employees and a training supervisor that were not properly supported;

• utility costs that were not properly supported;

• medical costs that either did not benefit USMS detainees or the same types of costs were paid separately by the USMS for its detainees;

• interest costs because the allocation method was not supported; and

• depreciation costs because the base for the depreciation overstated the building’s construction costs and included unallowable equipment.

In addition, our audit found that the cost sheet did not reflect all offsetting credits and income as required. For example, commissary income was understated by $18,685 and revenue from a workers release program was not reported to offset the facility’s operating costs. As a result, the USMS overpaid [SENSITIVE INFORMATION REDACTED] County over $1.2 million from July 1, 2002 through May 30, 2005.

[SENSITIVE INFORMATION REDACTED]
Report No. GR-60-06-002, October 2005

Our audit determined that the USMS overpaid the [SENSITIVE INFORMATION REDACTED] by over $5 million for FYs 2003 and 2004. The USMS established a jail-day rate of $59.91 with the [SENSITIVE INFORMATION REDACTED]. However, the [SENSITIVE INFORMATION REDACTED] accounting records for FYs 2003 and 2004 did not support this rate. Instead, the records for FY 2003 supported an audited rate of $42.39, and the records for FY 2004 supported an audited rate of $32.43. The large discrepancies in the jail-day rates were primarily due to the following:

• Increases in Occupancy. The original cost sheet, which was prepared in FY 1996, was based on an average daily population of 244, while the average daily population for FY 2004 increased 260 percent to 877.

• Large Offsetting Revenues. Beginning in FY 2004, additional offsetting revenue of over $2 million for federal reimbursements from the State Criminal Alien Assistance Program (SCAAP) and the Southwest Border Prosecution Initiative (SWBPI) were applied.

• Overall Cost Control by Facility Management. Total allowable operating costs for the cost sheet were calculated at $5.3 million as compared to $10.3 million for FY 2004. As of the end of FY 2004, this represented spending increases of about 95 percent, while occupancy increased by 260 percent.

We disallowed inmate medical services because these charges were for services provided outside the facility and were paid for directly by the USMS. In addition, we disallowed care of prisoner costs because these charges were for security related to emergency medical care and court appearance and were addressed separately in the IGA with a fixed hourly rate and mileage rate.

[SENSITIVE INFORMATION REDACTED]
Report No. GR-30-06-001, December 2005

In November 1992 the USMS established a temporary IGA with the [SENSITIVE INFORMATION REDACTED] to house federal detainees at a jail-day rate of $65. Our audit also determined that the [SENSITIVE INFORMATION REDACTED] accounting records for FYs 2004 and 2005 did not support the jail-day rate of $65. Our audit determined that the USMS paid the WTRJ $65 even though the most recent cost sheet, dated October 1998, only supported a rate of $52.26. Further, the cost sheet was based on an average daily population of 353. However, the average daily population for FYs 2004 and 2005 were 667 and 655. The increase in average daily population represents an 89-percent increase for FY 2004 and an 85 percent increase for FY 2005. Salaries and fringe benefits represented the main area where unallowable costs were noted as follows:

• Five guards are dedicated solely to the work release program. The salaries and fringe benefits of the guards are not allocable to the calculation of the federal jail-day rate because federal detainees do not participate in the program; and

• Transportation costs that were reimbursed under the transportation rate of the IGA were also included in the jail-day rate.

Our audit determined that the USMS overpaid the [SENSITIVE INFORMATION REDACTED] by more than $2.8 million.

[SENSITIVE INFORMATION REDACTED]
Report No. GR-30-06-002, March 2006

Our audit of actual costs and daily population revealed that the records of the [SENSITIVE INFORMATION REDACTED] Department of Correction supported the rate paid by the USMS.

[SENSITIVE INFORMATION REDACTED]
Report No. GR-70-06-007, March 2006

68. OMB Circular A-87 states that depreciation and use allowances are means of allocating the cost of fixed assets to periods benefiting from asset use. Charges for use allowances or depreciation must be supported by adequate property records.

69. In June 1990, the USM in the Western District of Tennessee requested an IGA be issued to [SENSITIVE INFORMATION REDACTED] for the housing of federal prisoners. In July 1990, [SENSITIVE INFORMATION REDACTED] subcontracted with CCA to provide the detention services. CCA is a private provider of detention and corrections services for federal, state, and local governments.

70. Each [SENSITIVE INFORMATION REDACTED] facility is covered by one corporate-wide general liability insurance policy. [SENSITIVE INFORMATION REDACTED] allocates a share of the general policy’s cost to each facility based on a percentage of its rated capacity to total [SENSITIVE INFORMATION REDACTED] capacity. However, [SENSITIVE INFORMATION REDACTED] also included an annual charge of $500,000 for this facility to cover the self-insurance provision (i.e., deductible). According to [SENSITIVE INFORMATION REDACTED] officials, in order to comply with the terms of the liability insurance policy, [SENSITIVE INFORMATION REDACTED] must pay the first $500,000 per claim, per facility, per year.

71. The former Immigration and Naturalization Service (INS) also had an IGA with the DOC, which was included in the scope of our audit. However, for purposes of this report we did not include findings that pertained to INS.

72. The former INS also had an IGA with the [SENSITIVE INFORMATION REDACTED] County Prison, which was included in the scope of our audit. However, for purposes of this report we did not include findings that pertained to INS.

73. [SENSITIVE INFORMATION REDACTED] Outmate Program permits county prisoners, but not federal detainees, to work full-time through work release.

74. The former INS also had an IGA with the [SENSITIVE INFORMATION REDACTED], which was included in the scope of our audit. However, for purposes of this report we did not include findings that pertained to INS.