In response to our audit report, COPS and OVW concurred with the all of our recommendations and discussed the actions they have taken and others they plan on implementing to address our findings. OJP also concurred with the majority of our recommendations and discussed the actions they plan on implementing to address our findings. However, the OIG has identified several issues in OJP’s response to our draft report (see Appendix V) that we believe should be addressed. As a result, we are providing the following comments on OJP’s response to the draft report.

In Appendix V, pages 66 through 67, OJP provided the following general statement in response to the report:

The Office of Justice Programs does not agree with the OIG’s interpretation that OJP’s practice of allowing grantees to draw down grant funds more than 90 days after the end date of the grant period violates Federal regulations (28 C.F.R. §66.23 and §66.50). The Code of Federal Regulations, specifically 28 C.F.R. §66.23(b), states that “a grantee must liquidate all obligations incurred under the award not later than 90 days after the end of the funding period…to coincide with the submission of the annual Financial Status Report (SF-269).” The section of 28 C.F.R. that details guidance regarding drawdown of grant funds is 28 C.F.R. §66.50(d) (Cash Adjustments), which states that the Federal agency will make prompt payment to the grantee for allowable reimbursable costs.

The OIG agrees that C.F.R. §66.23(b) refers to the liquidation of grant funds. However, in our judgment this section of the C.F.R. requires grantees to liquidate all outstanding obligations and draw down allowable funds within 90 days after the end of the grant, as suggested by the title of C.F.R. §66.23 “Period of Availability of Funds.”

Further, the OIG disagrees with the statement that “The section of 28 C.F.R. that details guidance regarding drawdown of grant funds is 28 C.F.R. §66.50(d) (Cash Adjustments).” As stated on page 30 of the report, the section that details guidance regarding the final drawdown of grant funds is 28 C.F.R. §66.50(b) not 28 C.F.R. §66.50(d). 28 C.F.R. §66.50(d), which is referred to by OJP in its response, states that “the federal agency will make prompt payment to the grantee for allowable reimbursable costs.” However, that section of the C.F.R. refers to the awarding agencies responsibilities to make prompt payment once the final drawdown occurs, rather than the length of time grantees are allowed to make the final drawdown. 28 C.F.R. §66.50(b) refers to the grantee’s responsibilities to submit, within 90 days after the expiration or termination of the grant, all financial, performance, and other reports required as a condition of the grant. According to 28 C.F.R. §66.50(b)(3), within 90 days after the expiration of the grant, the grantee must submit the final request for payment (drawdown).⁴³ Additionally, as stated on page 31 of the report, the OJP Financial Guide also requires grantees to request final payment for reimbursement of expenditures incurred prior to the grant expiration date in conjunction with the submission of the final financial report, which according to 28 C.F.R. §66.50(b) is due within 90 days after the grant end date.⁴⁴ Therefore, the OIG maintains that it is correct in its interpretation of the C.F.R. related to the fact that OJP’s practice of allowing grantees to draw down grant funds more than 90 days after the end date of the grant period violates federal regulations.

In Appendix V, page 67, OJP also provided the following general statement in response to the report:

Obligations incurred during the grant period and liquidated within 90 days after the end date of the funding period are allowable expenditures. Since the obligations are appropriately incurred, it is consistent with the clear statutory intent of the appropriation for the grantee to be permitted to draw down grant funds to reimburse itself for costs incurred during the grant period.

We agree that obligations incurred during the grant period and liquidated within 90 days after the end date are allowable expenditures. However, as stated previously, 28 C.F.R. §66.50(b), requires grantees to draw down grant funds for all allowable expenditures within 90 days after the expiration of the grant. As stated on page 30 of the report, at the request of the grantee, the DOJ awarding agency may extend the liquidation period. However, according to 28 C.F.R. §66.50 and OJP’s grant closeout policies and procedures, OJP must ensure that expired grants are closed within 180 days after the grant end date. As a result, extensions of the grant liquidation must not exceed 180 days after the grant end date. In its response, OJP incorrectly implies that as long as the grantee incurs allowable expenditures, the grant funds may be draw down for an indefinite period of time.

As shown in Table 12 on page 32 of the report, OJP’s failure to enforce the federal regulations and its own policy related to the 90 day grant liquidation period has resulted in questioned costs totaling over $290 million. It is also important to note that in addition to allowing grantees to draw down funds after the end of the 90 days liquidation period, OJP was not closing grants within 180 days after the grant end date. As a result, OJP allowed grantees to make 1,429 drawdowns totaling $100.39 million more than 1 year after the grant expired. Of this amount, OJP allowed grantees to make 243 drawdowns totaling $24.75 million more than 2 years after the grant expired. Further, as stated on pages 34 through 35 of the report, based on a sample of 66 grants with drawdowns totaling $75.90 million that occurred more than 90 days past the grant end date, we found that the drawdowns included unallowable costs totaling $5.7 million for expenditures obligated after the grant end date or paid after the end of the 90-day liquidation period. We also identified unsupported drawdowns totaling $574,940. Additionally, for drawdown totaling $13.04 million we were unable to determine if the drawdowns included unallowable or unsupported costs because the accounting records or supporting documentation was no longer available.

The timely closeout of grants is an essential financial management practice to identify any excess and unallowable funds that should be returned by the grantee, as well as unused funds that should be deobligated and put to better use. The financial issues related to DOJ’s failure to close out grants in a timely manner are detailed in Findings II and III of this report. However, it should be noted that as a result of DOJ’s failure to close grants timely, we identified questioned costs and funds to be put to better use totaling over $726 million, representing funds that could have been used to provide DOJ with additional resources needed to fund other programs or returned to the federal government’s general fund. About 71 percent of the dollar-related findings occurred more than 6 months after the grant end date. In our opinion, the majority of the dollar‑related findings would most likely not have occurred if COPS, OJP, and OVW closed grants in a timely manner. Therefore, it is important that OJP ensures that grantees draw down grant funds for all allowable expenditures within 90 days after the expiration of the grant, in accordance with the timeframes established in 28 C.F.R. §66.50(b), and that any extensions of the grant liquidation period do not exceed 180 days past the grant end date.

In Appendices IV through VI, pages 60 through 79, COPS, OJP, and OVW provided responses to the OIG recommendations, which we analyze in turn:

1. Resolved (COPS). This recommendation can be closed when we receive documentation supporting that COPS has revised its closeout policies and procedures to include the requirement that expired grants are closed within 6 months of the grant end date.

2. Resolved (COPS). This recommendation can be closed when we receive documentation supporting that COPS has revised its closeout policies and procedures to include specific timeframes are established for each closeout task to ensure that grants are closed within the 6 month period.

3. Resolved (COPS). This recommendation can be closed when we receive documentation supporting that COPS has increased the number of vetting cycles performed in order to expedite the identification of eligible grants for closure and is using proactive database queries and management reports, to monitor the progress of eliminating the closeout backlog, as well as using the tracking system to ensure that future expired grants are closed within 6 months of the grant end date.

4. Resolved (OJP). This recommendation can be closed when we receive documentation that OJP has fully implemented the Business Process Improvement (BPI) recommendations.

5. Closed (OJP).

6. Resolved (OVW). This recommendation can be closed when we receive documentation supporting that OVW has revised and fully implemented grant closeout policies and procedures to ensure that grants are closed within 6 months of the grant end date.

7. Resolved (OVW). This recommendation can be closed when we receive documentation supporting that OVW has established a system to track progress towards closing expired grants, as well as eliminating the backlog of expired grants.

8. Resolved (COPS). This recommendation can be closed when we receive documentation supporting that COPS has developed and implemented policies and procedures to ensure that grantees are not allowed to draw down funds more than 90 days after the grant end date without requesting and receiving an extension.

9. Resolved (COPS). This recommendation can be closed when we receive documentation supporting that COPS has requested that OJP add a control to their grant payment system prohibiting grantees from drawing down funds after the end of the 90-day liquidation period.

10. Resolved (COPS). This recommendation can be closed when we receive documentation supporting that COPS has remedied the $226,856,849 in questioned costs related to draw downs occurring more than 90 days past the grant end date.

11. Resolved (COPS). This recommendation can be closed when we receive documentation supporting that COPS has requested that OJP ensure that the current grant payment system include a control to prohibit negative award balances, such as total payments in excess of the net award amount.

12. Resolved (COPS).This recommendation can be closed when we receive documentation supporting that COPS has remedied the $45,688 in questioned costs related to grants for which the drawdowns exceeded the total award amount.

13. Resolved (COPS). This recommendation can be closed when we receive documentation supporting that COPS has developed and implemented policies and procedures to ensure that grantees are not allowed to draw down funds for unallowable expenditures obligated after the grant end date.

14. Closed (COPS).

15. Closed (COPS).

16. Unresolved (OJP). OJP does not concur with our recommendation to ensure that grantees are not allowed to draw down funds more than 90 days after the grant end date without requesting and receiving an extension not to exceed 90 days. In Appendix V, pages 67 through 68, OJP provided the following statement in response to recommendation 16:

The Office of Justice Programs agrees, in part, with the recommendation as it relates to no-cost extensions of the liquidation period. Per OJP’s revised grant closeout policies and procedures (see Attachment 3), once the grant period ends, grantees may not initiate a request for a no-cost extension. No‑cost extensions after the grant end date must be initiated by the Grant Manager. If a no-cost extension is not approved, grantees are required to complete closeout requirements within 90 days after the end date of the grant. In turn, the Grant Manager has 30 days (i.e., within 120 days after the end date of a grant) to submit a standard or administrative closeout package to OC. Once the closeout process is initiated, a Grant Adjustment Notice (GAN) is processed to place a hold on any remaining funds that exceed total Federal expenditures as reported on the final Financial Status Report.

In its response, OJP states that it agrees “in part” with the recommendation. The OJP response then details the no-cost extension process. However, the OJP response does not address the recommendation to ensure that grantees are not allowed to draw down funds more than 90 days after the grant end date. Further, the response does not provide any information as to why OJP only agrees with the recommendation “in part.”

In its response, OJP also implies that as long as the grantee incurs allowable expenditures, the grant funds may be draw down for an indefinite period of time. However, this practice contradicts 28 C.F.R. §66.50(b), which states that within 90 days after the expiration of the grant, the grantee must submit the final request for payment (drawdown). Additionally, the practice contradicts the OJP Financial Guide, which requires grantees to request final payment for reimbursement of expenditures incurred prior to the grant expiration date in conjunction with the submission of the final financial report, which according to 28 C.F.R. §66.50(b) is due within 90 days after the grant end date.

This recommendation can be resolved when OJP provides an acceptable corrective action plan that addresses the recommendation to ensure that grantees are not allowed to draw down funds more than 90 days after the grant end date without requesting and receiving an extension.

17. Unresolved (OJP). OJP does not concur with our recommendation to ensure that the current grant payment system includes a control to prohibit grantees from drawing down funds after the 90-day liquidation period. In Appendix V, pages 67 through 68, OJP provided the following statement in response to recommendation 17:

The Office of Justice Programs agrees, in part, with the recommendation. As previously stated on page 1, OJP does not agree that grantees should be prohibited from drawing down funds after the 90-day liquidation period. As discussed during the exit conference with your staff, OJP is in the process of converting its accounting system and anticipates changing its current payment system. Therefore, OJP does not believe it would be cost effective to re-program the current payment system.

As stated previously, the OIG believes that its interpretation of the C.F.R. that OJP’s practice of allowing grantees to draw down grant funds more than 90 days after the end date of the grant period violates federal regulations. Specifically, 28 C.F.R. §66.50(b), requires grantees to draw down grant funds for all allowable expenditures within 90 days after the expiration of the grant. Additionally, the OJP Financial Guide also requires grantees to request final payment for reimbursement of expenditures incurred prior to the grant expiration date in conjunction with the submission of the final financial report, which according to 28 C.F.R. §66.50(b) is due within 90 days after the grant end date.

OJP did inform the OIG previously that it was in the process of converting its accounting system; however, according to OJP officials, the new accounting system will not be implemented until FY 2009. As a result, if OJP does not believe that it will be cost effective to re‑program the current payment system, it needs to provide documentation supporting that re‑programming the current payment system to include a control prohibiting grantees from drawing down funds after the 90-day liquidation period is not cost effective. Further, OJP needs to provide an alternative corrective action plan that details how OJP will prohibit grantees from drawing down funds after the end of 90‑day liquidation period until the new accounting system is fully implemented.

OJP also stated with regard to recommendation 17 that:

The Grants Management System (GMS) Grants Closeout Module, once implemented, will enable OJP to automatically process a GAN to temporarily hold funds once the closeout process is initiated. If it is determined during the financial reconciliation of the grant that the grantee is entitled to draw down additional funds to cover allowable expenditures incurred during the grant period, the hold will be removed to allow the grantee to make a final drawdown.

The OIG agrees that OJP needs to include a control in the GMS Grants Closeout Module, once implemented, which ensures that a temporary hold on grant funds occurs on the 91 st day after the end of the grant period to prevent grantees from drawing down funds more than 90 days past the grant end date. If OJP determines during the financial reconciliation that the grantee should be granted an extension of the liquidation period, then the hold may be removed. However, OJP needs to ensure that extensions to allow a final draw down based on the financial reconciliation are granted on a case by case basis and that the extension of the liquidation period does not exceed 180 days past the grant end date since expired grants are required to be closed with 180 days after the end of the grant.

OJP’s response to recommendation 17 also stated:

The Office of Justice Programs does not believe that it is necessary for the grantee to submit a separate no-cost extension request to enable them to make their final drawdowns. By allowing funds to be drawn down to cover otherwise allowable expenditures incurred during the grant period, OJP has effectively acceded to the request for a late drawdown. Further, while 28 CFR Part 66 provides that a grantee may request an extension of time to draw down funds for allowable expenditures incurred during the grant period, it does not specify the format that must be used for such a request. Such decisions are clearly within the administrative discretion of the agency.

The OIG does not disagree with the method used by the awarding agency in granting an extension of the period of time to draw downs. However, we believe that OJP needs to ensure that extensions to allow late draw downs are granted on a case by case basis and that any extension granted does not exceed 180 days past the grant end date since expired grants are required to be closed with 180 days after the end of the grant. Further, the basis for the extension and the approval of an extension to allow late draw downs should be fully documented.

In its response, OJP stated that it is in the process of converting its accounting system and anticipates changing its current payment system. Therefore, OJP does not believe it would be cost effective to re-program the current payment system. However, the OJP needs to provide documentation supporting that re‑programming the current payment system to include a control prohibiting grantees from drawing down funds after the 90-day liquidation period is not cost effective. Further, OJP needs to provide an alternative corrective action plan that details how OJP will prohibit grantees from drawing down funds after the end of 90‑day liquidation period until the new accounting system is fully implemented.

This recommendation can be resolved when OJP provides an acceptable corrective action plan that addresses the recommendation to ensure the current grant payment system includes a control to prohibit grantees from drawing down funds after the 90‑day liquidation period.

18. Unresolved (OJP). OJP does not concur with our recommendation to remedy the $290,055,575 in questioned costs related to drawdowns occurring more than 90 days past the grant end date.

The Office of Justice Programs does not agree with the finding related to this recommendation. As previously stated on page 1, OJP does not agree that grantees should be prohibited from drawing down funds after the 90-day liquidation period. Obligations incurred during the grant period and liquidated within 90 days after the end date of the funding period are allowable expenditures. Since the obligations are appropriately incurred, it is consistent with the clear statutory intent of the appropriation for the grantee to be permitted to draw down grant funds to reimburse itself for costs incurred during the grant period.

This also relates to the issue of whether the C.F.R. allows grantees to draw down grant funds more than 90 days after the end date of the grant period. As noted above, we believe that 28 C.F.R. §66.50(b), requires grantees to draw down grant funds for all allowable expenditures within 90 days after the expiration of the grant. Additionally, the OJP Financial Guide also requires grantees to request final payment for reimbursement of expenditures incurred prior to the grant expiration date in conjunction with the submission of the final financial report, which according to 28 C.F.R. §66.50(b) is due within 90 days after the grant end date.

OJP’s response implies that there is no remedy for grantees to draw down funds after the 90-day liquidation period. As stated, previously, federal regulations allow for, at the request of the grantee, an extension of the 90-day liquidation period to draw down allowable costs. However, as stated on page 33 of the report, we found no evidence that the grantees requested extensions of the 90-day liquidation period for these grants and no extensions were provided.

Further, OJP’s response fails to adequately address the $290,055,575 in questioned costs related to drawdowns occurring more than 90 days past the grant end date or how it will remedy the questioned costs.

In its response, OJP implies that as long as the grantee incurs allowable expenditures, the grant funds may be draw down for an indefinite period of time. However, this practice contradicts 28 C.F.R. §66.50(b), which states that within 90 days after the expiration of the grant, the grantee must submit the final request for payment (drawdown). Additionally, the practice contradicts the OJP Financial Guide, which requires grantees to request final payment for reimbursement of expenditures incurred prior to the grant expiration date in conjunction with the submission of the final financial report, which according to 28 C.F.R. §66.50(b) is due within 90 days after the grant end date.

This recommendation can be resolved when OJP provides an acceptable corrective action plan that addresses the recommendation to remedy the $290,055,575 in questioned costs related to drawdowns occurring more than 90 days past the grant end date.

19. Unresolved (OJP). OJP does not concur with our recommendation to ensure that the current grant payment system includes a control to prohibit negative award balances, e.g., total payments in excess of the net award amount. In Appendix V, page 69, OJP provided the following statement in response to recommendation 19:

The Office of Justice Programs does not agree with the finding related to this recommendation. The current grant payment system, the Phone Activated Paperless Request System (PAPRS), includes automated controls to ensure that the total funds paid do not exceed the award amount. However, there are a small number of grant records in the Integrated Financial Management Information System (IFMIS), OJP’s accounting system, that contain errors related to the conversion to IFMIS from the prior accounting system, ATOMIC. The reporting errors relate only to IFMIS, and OC and the Office of the Chief Information Officer are working with the IFMIS developer to resolve the issue.

In its response, OJP states that it does not agree with the finding related to the recommendation. However, OJP’s response goes on to explain that there are in fact grant records that have negative award balances resulting from the conversion to IFMIS from the prior accounting systems. OJP’s response further details its plans for remedying the negative award balances by working with the IFMIS developer. Therefore, OJP’s response appears to concur with the finding related to the recommendation rather than disagree.

OJP states also that the current grant payments system, PAPRS, already includes automated controls to ensure that the total funds paid do not exceed the award amount. Therefore, OJP needs to provide documentation supporting that the PAPRS system includes automated controls to ensure that the total funds paid do not exceed the award amount.

This recommendation can be resolved when OJP provides an acceptable corrective action plan that addresses the recommendation to ensure that the current grant payment system includes a control to prohibit negative award balances.

20. Unresolved (OJP). OJP does not concur with our recommendation to remedy the questioned costs totaling $442,108 related to grants for which the drawdowns exceeded the total award. In Appendix V, page 69, OJP provided the following statement in response to recommendation 20:

The Office of Justice Programs does not agree with the finding related to this recommendation. As stated in response to Recommendation 19 above, the errors noted relate to the conversion to IFMIS from the prior accounting system. To address the questioned costs, by January 31, 2007, OJP will provide documentation that supports that the grantees noted were only able to draw down funds up to the award amount.

In its response, OJP states that it does not agree with the finding related to this recommendation. However, OJP’s response goes on to explain that there are in fact grant records that have negative award balances resulting from the conversion to IFMIS from the prior accounting systems. OJP’s response further details its plans for remedying the questioned costs. Therefore, OJP’s response appears to concur with the finding related to the recommendation rather than disagree.

This recommendation can be resolved when OJP provides an acceptable corrective action plan that addresses the recommendation to remedy the questioned costs totaling $442,108 related to grants for which the drawdowns exceeded the total award.

21. Resolved (OJP). This recommendation can be closed when we receive documentation supporting that OJP has incorporated post-closeout monitoring of grants to its risk-based financial monitoring to detect unallowable expenditures obligated after the grant end date.

22. Resolved (OJP). OJP agreed with our recommendation to ensure that grantees are not allowed to draw down excess funds for unsupported expenditures. However, in Appendix V, page 70, OJP provided the following statement in response to recommendation 22:

The Office of Justice Programs agrees with this recommendation. However, it is important to note that it is not, and has never been, OJP’s practice to allow grantees to draw down any funds for unsupported expenditures (or report/claim expenditures that are unsupported on the Financial Status Reports). Grant recipients are required to comply with the applicable Office of Management and Budget Circulars and the OJP Financial Guide. As part of its fiduciary responsibility, OJP has a comprehensive financial monitoring program, which includes on-site, desk monitoring, and excess cash reviews of grantee compliance with these requirements and other specific grant requirements. In addition, OC follows up and ensures resolution of all issues, including questioned costs identified during OIG grant audits and Office of Management and Budget Circular A-133 audits transmitted through the OIG.

The OIG agrees with the statement that OJP is not in the practice of allowing grantees to draw down funds for unsupported expenditures. However, as stated on pages 34 through 35 of the report, based on a sample of 66 grants with drawdowns totaling $75.90 million that occurred more than 90 days past the grant end date, we found that the drawdowns included unsupported costs totaling $574,940. In our judgment, these unsupported costs occurred in part because of OJP’s failure to closeout expired grants timely. Therefore, OJP should ensure that financial reconciliation is conducted timely to identify any unsupported costs

This recommendation can be closed when OJP provides documentation supporting that financial reconciliations will be conducted timely to identify any unsupported costs.

23. Unresolved (OJP). OJP does not concur with our recommendation to immediately discontinue the practice of allowing grantees to drawdown excess funds for unsupported expenditures. In Appendix V, pages 70, OJP provided the following statement in response to recommendation 23:

The Office of Justice Programs does not agree with this recommendation. As stated in response to Recommendation 22, it is not, and has never been, OJP’s practice to allow grantees to draw down any funds for unsupported expenditures (or report/claim expenditures that are unsupported on the Financial Status Reports).

As stated previously, the OIG agrees that it is not OJP’s practice to allow grantees to draw down funds for unsupported expenditures. However, as stated on pages 34 through 35 of the report, based on a sample of 66 grants with drawdowns totaling $75.90 million that occurred more than 90 days past the grant end date, we found that the drawdowns included unsupported costs totaling $574,940. In our judgment, these unsupported costs incurred in part because of OJP’s failure to closeout expired grants timely. Therefore, OJP should ensure that financial reconciliation is conducted timely to identify any unsupported costs.

This recommendation can be resolved when OJP provides an acceptable corrective action plan to ensure that financial reconciliations are conducted timely to identify any unsupported costs.

24. Resolved (OVW). This recommendation can be closed when we receive documentation supporting that OVW has developed and implemented policies and procedures to ensure that grantees are not allowed to draw down funds more than 90 days after the grantee end date without requesting and receiving an extension.

25. Resolved (OVW). This recommendation can be closed when we receive documentation supporting that OVW has requested that OJP add a control to their grant payment system prohibiting grantees from drawing down funds after the end of the 90-day liquidation period.

26. Resolved (OVW). This recommendation can be closed when we receive documentation supporting that OVW has remedied the $37,279,986 in questioned costs related to drawdowns occurring more than 90 days past the grant end date.

27. Resolved (OVW). This recommendation can be closed when we receive documentation supporting that OVW has requested that OJP ensure that the current grant payment system include a control to prohibit negative award balances, such as total payments in excess of the net award amount.

28. Resolved (OVW). This recommendation can be closed when we receive documentation supporting that OVW has remedied the $41,247 in questioned costs related to one grant for which drawdowns exceeded the total award amount.

29. Closed (OVW).

30. Resolved (OVW). This recommendation can be closed when we receive supporting documentation that OVW has developed and implemented a strategy, including increasing desk-based monitoring of grants and conducting outreach to grantees to ensure that grantees are not allowed to draw down excess funds for unsupported expenditures.

31. Closed (OVW).

32. Resolved (COPS). This recommendation can be closed when we receive documentation supporting that COPS has developed and implemented policies and procedures to ensure that all funds remaining on grants that have been expired for more than 90 days are deobligated and regranted, or returned to the general fund as necessary, within 180 days after the expiration of the grant.

33. Resolved (COPS). This recommendation can be closed when we receive documentation supporting that COPS has deobligated and put to better use the $88,587,211 in remaining funds related to expired grants that are more than 90 days past the grant end date.

34. Resolved (COPS). This recommendation can be closed when we receive documentation supporting that COPS has developed and implemented policies and procedures to ensure that all remaining grant funds are deobligated prior to closure.

35. Resolved (COPS). This recommendation can be closed when we receive documentation supporting that COPS has deobligated and put to better use the $2,849,825 in remaining funds related to grants that were reported as closed.

36. Resolved (COPS). This recommendation can be closed when we receive documentation supporting that COPS has remedied the $147,862 in questioned costs related to drawdowns occurring after the grant was reported as closed.

37. Resolved (OJP). This recommendation can be closed when we receive documentation supporting that OJP has revised its grant closeout process to ensure that grants are closed within 180 days, and as necessary, remaining grant funds are deobligated timely.

38. Unresolved (OJP). OJP does not concur with our recommendation to deobligate and put to better use the $61,082,443 in remaining funds related to expired grants that are more than 90 days past the grant end date. In Appendix V, pages 70 through 71, OJP provided the following statement in response to recommendation 38:

The Office of Justice Programs does not agree with the finding related to this recommendation. As previously stated on page 1, OJP does not agree that grantees should be prohibited from drawing down funds after the 90 day liquidation period. Obligations incurred during the grant period and liquidated within 90 days after the end date of the funding period are allowable expenditures. Since the obligations are appropriately incurred, it is consistent with the clear statutory intent of the appropriation for the grantee to be permitted to draw down grant funds to reimburse itself for costs incurred during the grant period.

Based on OJP’s preliminary review of the questioned costs related to this finding, a substantial portion of the questioned costs relate to grants that have been closed or are in financial reconciliation phase of the closeout process. By January 31, 2007, OJP will provide a current status on the grants identified.

As stated previously, the OIG believes that OJP’s practice of allowing grantees to draw down grant funds more than 90 days after the end date of the grant period violates federal regulations. Specifically, 28 C.F.R. §66.50(b) requires grantees to draw down grant funds for all allowable expenditures within 90 days after the expiration of the grant. Additionally, the OJP Financial Guide requires grantees to request final payment for reimbursement of expenditures incurred prior to the grant expiration date in conjunction with the submission of the final financial report which, according to 28 C.F.R. §66.50(b), is due within 90 days after the grant end date. Therefore, any drawdown not made within the 90-day liquidation period should be deobligated and put to better use within 180 days after the grant end date since expired grants are required to be closed with 180 days after the end of the grant.

Additionally, OJP’s response implies that there is no remedy for grantee’s to draw down funds after the 90-day liquidation period. As stated, previously federal regulations allow for, at the request of the grantee, an extension of the 90-day liquidation period to draw down allowable costs. However, OJP needs to ensure that extensions to allow late draw downs are granted on a case by case basis and that any extension granted does not exceed 180 days past the grant end date since expired grants are required to be closed with 180 days after the end of the grant. Further, the basis for the extension and the approval of an extension to allow late draw downs should be fully documented.

Further, OJP’s response fails to adequately address the $61,082,443 in funds to be put to better use related to expired grants more than 90 days past the grant end date.

In its response, OJP implies that as long as the grantee incurs allowable expenditures, the grant funds may be draw down for an indefinite period of time. However, this practice contradicts 28 C.F.R. §66.50(b), which states that within 90 days after the expiration of the grant, the grantee must submit the final request for payment (drawdown). Additionally, the practice contradicts the OJP Financial Guide, which requires grantees to request final payment for reimbursement of expenditures incurred prior to the grant expiration date in conjunction with the submission of the final financial report, which according to 28 C.F.R. §66.50(b) is due within 90 days after the grant end date. Therefore, any drawdown not made within the 90-day liquidation period should be deobligated and put to better use within 180 days after the grant end date since expired grants are required to be closed with 180 days after the end of the grant.

This recommendation can be resolved when OJP provides an acceptable corrective action plan that addresses the recommendation to deobligate and put to better use the $61,082,443 in remaining funds related to expired grants that are more than 90 days past the grant end date.

39. Resolved (OJP). This recommendation can be closed when we receive documentation supporting that OJP has revised its current grant closeout policy statement to ensure that remaining grant funds are deobligated prior to closure.

40. Resolved (OJP). This recommendation can be closed when we receive documentation supporting that OJP has deobligated and put to better use the $3,488,483 in remaining funds related to grants that were reported as closed.

41. Resolved (OVW). This recommendation can be closed when we receive documentation supporting that OVW has developed and implemented policies and procedures, in coordination with OJP, to ensure that all funds remaining on grants are deobligated within 180 days after the expiration of the grant and regranted, or returned to the general fund.

42. Resolved (OVW). This recommendation can be closed when we receive documentation supporting that the $14,285,431 in remaining funds related to expired grants that are more than 90 days past the grant end date have been deobligated and put to better use.

43. Resolved (OVW). This recommendation can be closed when we receive documentation supporting that OVW has developed and implemented policies and procedures, in coordination with OJP, to ensure that remaining funds are deobligated prior to closure.

44. Resolved (OVW). This recommendation can be closed when we receive documentation supporting that the $102,595 in remaining funds related to grants that were reported as closed have been deobligated and put to better use.

43. 28 C.F.R. § 66.50(b) requires that within 90 days after the expiration of the grant, the grantee must submit the final request for payment, Standard Form 270 (SF 270). The C.F.R. is outdated in that the DOJ awarding agencies no longer use the SF 270, Request for Advance or Reimbursement. Instead, grantees request funds (drawdown) using: (1) Phone Activated Paperless Request System (PAPRS); or (2) Letter-of-Credit Electronic Certification System (LOCES). Generally, funds will be deposited into the grantees financial institution within 48 hours after the drawdown request is received. In our judgment, although the DOJ awarding agencies no longer use the SF 270 cited in 28 C.F.R. § 66.50, grantees are still required to draw down all allowable grant funds within 90 days after the grant end date.

44. It should be noted that COPS has also interpreted 28 C.F.R. §66.23 and §66.50 as a requirement that grantees must drawdown all allowable grant funds with 90 days after the grant end date. As stated on page 31 of the report, each of the COPS Grant Owner's Manuals requires that grant funds must be obligated before the end of the grant period. The manuals also require that grantees request reimbursement for obligated funds within 90 days after the end of the grant period.