Office of Justice Programs, National Institute of Justice
Secure Weapons Systems Technology Grant Awarded to
FN Manufacturing, LLC, Columbia, South Carolina

Audit Report GR-40-06-004
March 2006
Office of the Inspector General

Executive Summary

The Office of the Inspector General, Audit Division has completed an audit of a smart gun technology grant awarded by the Office of Justice Programs (OJP), National Institute of Justice (NIJ) to FN Manufacturing, LLC. The goal of the smart gun technology project is to apply microelectronics, “smart weapon” technologies, to prevent an unauthorized user from firing a law enforcement officer’s handgun. Between June 2001 and September 2005, OJP awarded FN Manufacturing a grant totaling $2,306,156, to develop and test a prototype “smart” handgun and to research possible microelectronics that would fit inside a handgun grip. According to NIJ officials, the smart gun technology project is not completed, but the work FN Manufacturing has done will further advance the technology.

FN Manufacturing has developed a “smart” handgun.1 The microelectronic technology uses a wrist or finger worn transponder to activate the handgun. Testing of the microelectronics was performed at different phases of development and continued at the end of our fieldwork. At the time of our audit, FN Manufacturing was finalizing the miniaturization of the handgun electronics for insertion of biometrics, which FN Manufacturing continues to research.2

As part of our review, we assessed FN Manufacturing’s grant performance by comparing results reported to OJP in semi-annual progress reports to the grant objectives that FN Manufacturing set forth in its initial grant application. We also assessed compliance with six essential grant conditions. We found that FN Manufacturing was completing performance required under the grant and generally complied with grant requirements. With regard to the six essential grant conditions reviewed, we found material weaknesses in two of the six areas. Those areas are grant expenditures and grant financial status and progress reports.

As a result of the deficiencies listed below, we identified $237,172 in dollar-related findings, which are made up of questioned costs and grant funds to be put to better use.3

  • FN Manufacturing did not obligate all grant funds prior to the end date of the grant. Consequently, we recommend that $97,143 in grant funds be put to better use.
  • Fourteen of the forty expenditure transactions tested were not fully supported. Consequently, we question $82,402.
  • Eight positions which were charged to grant funds could not be matched to positions in the OJP approved budget. Consequently, we question $57,627.
  • The four initial financial status reports were filed as many as 287 days late.
  • Three grant progress reports were filed as many as 127 days late.
  • FN Manufacturing transferred funds between direct cost categories in excess of 10 percent of its total budget without prior OJP approval. However, since a grant extension had been granted until September 30, 2005, and not all funds had been drawn down, we took no exception in the form of dollar findings, and instead recommend improvement to management and controls over budgetary categories.

These items are discussed in detail in the Findings and Recommendations section of the report. Our audit objectives, scope, and methodology appear in Appendix I.

We discussed the results of our audit with FN Manufacturing officials and have included their comments in the report as applicable. In addition, we requested a response to our draft audit report.


  1. A “smart” handgun involves using embedded microelectronic technology to disable the firearm for an unauthorized user.
  2. Biometrics are automated methods of recognizing a person based on physiological or behavioral characteristics.
  3. The Inspector General Act of 1978, as amended, contains our reporting requirements for questioned costs and funds put to better use. However, not all findings are dollar-related. See Appendix II for a breakdown of our dollar-related findings and for a definition of funds put to better use.