Background

		Asset Forfeiture Process

For both the Justice and the Treasury program, the asset forfeiture  process involves a number of key steps, including necessary planning of  the seizure, seizing and taking custody of the asset, notifying interested  parties, and addressing any claims and petitions. Noncash personal  property, such as vehicles, airplanes, jewelry, and collectibles, that has  been seized must be stored and maintained until it is either returned to  the owner or has been forfeited to the government and then disposed of.  Seized and forfeited real property, while not stored, must also be  maintained. Once property is forfeited to the government, it is  subsequently sold, put into official use, destroyed, or transferred to  another agency. In fiscal year 2011, Justice was responsible for  overseeing 452 pieces of real property at a value of about $97 million,  and over 3,000 pieces of personal property at a value of about $74  million. Treasury was responsible for 251 pieces of real property at a  value of about $41 million, and over 15,000 pieces of personal property at  a value of about $20 million. Cash and monetary instruments that have  been forfeited and property that has been forfeited and sold are  subsequently deposited in the forfeiture fund, in the case of Justice—the  AFF—and for Treasury—the TFF. Money collected in the funds is used  to pay for expenses related to the asset forfeiture program and for other  law enforcement initiatives. Figure 1 demonstrates the key steps  involved in the asset forfeiture process.
The primary mission of the Justice Asset Forfeiture Program is to prevent  and reduce crime by disrupting, damaging, and dismantling criminal  organizations through the use of the forfeiture sanction. The program has  three primary goals: (1) to punish and deter criminal activity by depriving  criminals of property used or acquired through illegal activities; (2) to  enhance cooperation among foreign, federal, state, and local law  enforcement agencies through the equitable sharing of assets recovered  through the program; and as a by-product, (3) to produce revenues in  support of future law enforcement investigations and related forfeiture  activities. The Justice Asset Forfeiture Program includes activity by the  Department of Justice components as shown in table 1, as well as  several components outside of the department.
Likewise, the mission of the Treasury Forfeiture Program is to  affirmatively influence the consistent and strategic use of asset forfeiture  by Treasury law enforcement bureaus to disrupt and dismantle criminal  enterprises. The program has four primary goals: (1) to deprive criminals  of property used in or acquired through illegal activities; (2) to encourage  joint operations among federal, state, and local law enforcement  agencies, as well as foreign countries; (3) to strengthen law enforcement;  and (4) to protect the rights of the individual.
The Treasury Executive Office for Asset Forfeiture administers the TFF,  which is the receipt account for the deposit of non-tax forfeitures made by  member agencies. The member agencies include one Department of the  Treasury agency and four Department of Homeland Security (DHS)  agencies, as shown in table 2.

	Justice and Treasury Have Shown Limited Progress since 2003 in Consolidating Asset Forfeiture Property Management Activities

Since 2003, Justice and Treasury have taken some steps to explore  coordinating forfeiture program efforts, including sharing a website for  posting notifications, pursuing a contract for seizure efforts abroad, and  potentially sharing recycling facilities. However, the departments have  made limited progress in sharing storage facilities or contracts, and  Justice and Treasury have not fully explored the possibility of coordinating  the management of their assets that could be consolidated to achieve  efficiencies, effectiveness, and cost savings. As a result, each department  maintains separate IT asset tracking systems, separate contracts, and  separate storage facilities.

		Some Efforts Have Been Made or Are Under Way to Coordinate Forfeiture Activities but the Departments Continue to Maintain Separate Programs

In 2003, we reported that Justice’s and Treasury’s progress in improving  the management of and accountability for seized and forfeited property,  and their demonstrated commitment to communicate and coordinate  where joint efforts could help reduce costs and eliminate duplicative  activities, were sufficient to remove the high-risk designation from the  asset forfeiture programs. We noted that Justice and Treasury were  moving toward sharing website locations for Internet sales, sharing  selected vehicle storage and warehouse facilities, and exploring  opportunities to jointly contract for specific services in high-volume areas.  However, the departments have not assessed the feasibility of  consolidating asset management activities and continue to separately  manage assets.
Since 2003, Justice and Treasury have coordinated in other areas such  as developing and sharing a single electronic certification form and  database to collect, process, and analyze the submission of online forms  from state and local law enforcement agencies participating in the  Equitable Sharing Program and sharing a website to post forfeiture  notices to the public. According to Treasury officials, since 2008  Treasury has saved approximately $1.8 million in advertising costs  because of the migration of advertising notices to the shared website.addition, Justice and Treasury officials noted other cooperative efforts  they have planned or under way, which include the following:  Justice procured a contract for claims administration in large-scale  victim remission cases that participating agencies of each program  will be able to use. According to Justice officials, as of August 2012  implementation was under way.
Justice and Treasury are pursuing an international property contract  for use by both departments for seizure efforts related to real and  personal property located abroad, and the departments expect to  award a contract by October 2013.
Justice uses Treasury’s Bureau of Public Debt brokerage account in  order to dispose of forfeited paper stocks and bonds rather than  opening its own account for the disposal of such securities.
Treasury is exploring the possibilities of using Justice’s UNICOR as a  recycler of seized and forfeited goods and, as of June 2012, had  conducted several site visits to selected UNICOR recycling facilities to  review the program and ensure adequate security measures were in  place during the recycling process.
Treasury provided its personal and real property contract structures to  Justice for informational purposes in an effort to share information and  to assist in their procurement process.
Senior officials from both departments also stated that they routinely  consult and coordinate with each other to ensure that they develop  consistent policies and practices relating to many areas of the programs,  especially for major policies such as equitable sharing and third-party  victims.
Additionally, Justice and Treasury had contracted for a study in 2000 to  identify opportunities for increased cooperation and sharing of agency  and contractor resources. The study contained recommendations for  improving the effectiveness and efficiency of property management  functions. For example, the study recommended sharing fixed-cost  vehicle storage facilities and jointly disposing of vehicles, vessels, and  aircraft. The study also recommended that Treasury consolidate its IT  asset tracking systems into one. However, Justice rejected the findings of  the study because it asserted that the contractor did not satisfy the terms  of the contract. For example, the contractor was supposed to develop  performance metrics for property management and disposition but,  according to Justice, did not do so. As a result, the departments continue  to separately manage and dispose of their seized and forfeited property.  According to Justice and Treasury officials, when Congress passed a law  establishing the TFF in 1992, it recognized the differences in the  programs’ missions, which warranted creating separate programs, and  this encouraged independent operational decisions that eventually  created differences between the two programs. Treasury officials further  noted that with the enactment of the Homeland Security Act of 2002 and  the creation of DHS in 2003, Congress did not choose to mandate any  consolidation of the programs, and therefore Congress’ intent was that  the programs remain separate. We recognize the separate legal  authorities of the asset forfeiture funds, but those legal authorities do not  preclude coordinating more or consolidating certain asset management  activities within the programs that we have found to be duplicative over  the years across the federal government. Further, after the statutory  creation of the Treasury Forfeiture Fund in 1992, a 1995 House  Appropriations Committee report directed Justice to review the feasibility  of consolidating Justice and Treasury contracts with vendors that provide  asset management and disposal services for both agencies, in order to  address duplication and provide cost savings. Additionally, over the past  2 years, pursuant to a statutory mandate, we have reported on many  areas that appear to be duplicative, overlapping, or fragmented. These  past reports have suggested that federal agencies could increase their  efficiency and effectiveness by consolidating their physical infrastructure  or management functions.

		Justice and Treasury Have Made Limited Progress to Decrease Duplication in the Management of Assets in the Justice and Treasury Forfeiture Programs

While the departments were moving toward more coordination in 2003,  limited progress has been made since then in sharing the management of  its assets. Specifically, the departments continue to maintain separate IT  asset tracking systems, storage facilities, and contracts.
Justice and Treasury maintain four separate IT asset tracking systems— one for Justice and three for Treasury—to support their respective asset  forfeiture program activities, and these four tracking systems have similar  functionality. In February 1995, we reported that Justice and Treasury  were pursuing consolidation of IT asset tracking systems and that both  departments had agreed to develop, implement, manage, operate,  enhance, and support a consolidated IT asset tracking system.  According to Justice officials, Treasury had intended to use Justice’s  system and participated for 2 years in its design, development, and  implementation, but subsequently withdrew to use its own tracking  system. Treasury officials stated that they developed their own IT asset  tracking system that would link to the program’s financial system of record  in order to satisfy the Chief Financial Officers Act of 1990 and the federal  financial requirements mandated by the Federal Accounting Standards  Advisory Board. Our prior work shows that information technology  solutions can be identified in areas in which agencies have made  individual investments for systems that are common and duplicative. For  example, the federal payroll consolidation initiative consolidated 26  payroll systems to four shared-service centers, standardized payroll  policies and procedures, and resulted in achieving cost effectiveness  through economies of scale and the elimination of duplicative systems.  Further, in 1996, we reported that Treasury recognized that the Justice IT  asset tracking system could be modified to meet the Treasury financial  reporting requirements but believed that developing a new system to  meet the requirements was preferable.officials stated that they had not compared the different systems to  determine similarities or differences between them or whether  consolidation was feasible or desirable. Treasury officials stated that they   In 2012, Justice and Treasury  did not believe that consolidation would be cost-effective, and Justice and  Treasury continue to use separate systems to perform similar functions  that reside on different hardware and software platforms.
We analyzed the major functions of Justice and Treasury’s four systems  and found that all systems perform similar functions that are duplicative  across government agencies overseeing asset forfeiture programs, as  shown in table 3. All four systems have the ability to record seizures,  details on the asset, movement of the asset through various stages, and  disposition of the asset. Further, all systems could generate detailed and  various reports related to the management of assets.
Officials at CBP, the agency responsible for managing SEACATS—the  Treasury system of record—stated that a committee had been  established in 2011 to begin an IT evaluation of an analysis of  alternatives that would explore combining the three IT asset tracking  systems under the Treasury program. However, just as the effort began,  funding for the evaluation was eliminated because of overall federal  government program budget cuts. While CBP attempted an evaluation,  officials responsible for the overall Treasury program stated that given the  unique requirements of Treasury participating agencies, it would not be  beneficial to develop a consolidated asset tracking system. Likewise,  according to Justice officials, Justice has done little outreach to the  Treasury participating agencies about coordinating or consolidating IT  asset tracking systems. However, Justice officials believed that there was  room to consolidate asset tracking systems, and said a “best of breed”  approach could be used, wherein the best features from each system  would be combined. Further, in our analysis of the systems, we found that  the technology in the Treasury system of record, SEACATS, was based  on 1990s mainframe technology with no existing formal documentation;  officials from the Office of Information Technology would like to move the  application from the mainframe to a more modern technology  environment. According to Justice and Treasury data, the cost of  developing, maintaining, and overseeing their four asset tracking systems  in fiscal year 2011 totaled $16.2 million for CATS and $10.4 million  combined for the three Treasury asset tracking systems.
As we reported in May 2012, consolidating management functions, such  as information technology services, can increase the efficiency and  effectiveness of programs or contribute to cost savings, but information is  needed to help effectively evaluate consolidation proposals and  activities. As shown in table 4, fundamental questions should be  answered while considering consolidation because, while consolidation is  beneficial in some situations, it is not in others. Consolidation initiatives  can be immensely complex, politically charged, and costly and are not  quick, easy, or automatic ways of producing desired change. As a result,  a case-by-case analysis is necessary—evaluating the goals of the  consolidation against the realistic possibility of the extent to which those  goals would be achieved—to ensure effective stewardship of government  resources in a constrained budget environment. By conducting a study  that takes into account the expected costs, benefits, and other key  questions to consider when evaluating consolidation proposals, Justice  and Treasury would have the information needed to determine if  consolidation would result in improvements such as increases in  efficiency, effectiveness, or cost savings.
Justice and Treasury have made limited progress in sharing storage  facilities or contracts and continue to separately store assets seized  under each program. In some cases, storage facilities are located in the  same geographic area. Under the Justice program, the Marshals  Service—the primary custodian of Justice’s seized assets—generally  takes a decentralized approach to facility and contract management. In  fiscal year 2011, the Marshals Service had multiple contracts for the  management, storage, and disposal of assets at a cost of about $19  million. Treasury, using a centralized approach, has two nationwide  contracts that provide custodial services either directly or through  subcontracts with other vendors at a cost of about $49 million for fiscal  year 2011. Treasury reported overseeing 5 government warehouse  facilities, 61 vehicle locations, and 82 outside specialty vendor locations  such as cold storage or storage of hazardous materials. Justice and  Treasury stated that the volume and types of properties seized by the  participating agencies of each department vary. For example, according  to Treasury officials, CBP seizes and holds a much higher volume of  items that have no resale value to the government, such as narcotics and  contraband, than Justice. While there are some variations in the types of  properties seized, both departments also seize similar assets such as  vehicles and real property.
Our analysis of contracted asset storage facilities showed that about 23 to  40 percent of Marshals and Treasury’s contracted facilities in each  category are in close proximity to one another—or within 20 miles or less  of one another. Because there is some variation in the types and volumes  of assets seized under each program, we analyzed storage locations for  assets that both departments seize and that generally are managed  similarly. In our analysis, we examined a total of 212 contract-owned  asset storage facilities utilized by Marshals and Treasury as of June 2012  for the storage of three categories of assets—vehicles (143), vessels  (54), and aircraft (15). As shown in figure 2, each agency maintains, for  example, vehicle storage facilities in numerous states and territories  across the country. However, several states—including the border states  of Texas and California in addition to Florida—contain higher  concentrations of vehicle storage facilities.
With respect to contracted vehicle storage facilities, our analysis shows  that Treasury uses 61 of the 143 vehicle storage facilities, of which 40  percent are located 20 miles or less from a Marshals contracted vehicle  storage facility. This includes 4 facilities, managed by the same vendor,  which Treasury shares with Marshals under separate contracts, as shown  in figure 3.
Vendors at one of the vehicle facilities we visited stated that because of  the small size of the facility, they were at full capacity and could not  accommodate more vehicles; however officials managing the other, larger  facility nearby that we visited stated that there would be room for  additional vehicles. We recognize that excess capacity might not exist for  all vehicle storage facilities that are near one another, and that other  factors might influence whether vehicle storage facilities could be shared,  such as different agency contracting rules and specialized requirements.  However, this example indicates that the potential for sharing resources  exists and could be further explored.
For the storage of vessels, Treasury and Marshals use a total of 54  contracted facilities—23 facilities for Treasury and 31 for Marshals. Our  analysis shows that 39 percent (9 of 23) of the Treasury contracted  vessel storage facilities were located 20 miles or less from a Marshals  contracted vessel storage facility—including 1 facility that both Treasury  and Marshals use but under separate contracts, as shown in figure 4.
Treasury and Marshals also maintain 15 contracted facilities for the  storage of aircraft—7 facilities for Treasury and 8 for Marshals. Our  analysis shows that 28 percent (2 of 7) of the Treasury contracted aircraft  facilities were located 20 miles or less from a Marshals contracted vessel  storage facility, as shown in figure 5.
In addition to contracted facilities, in fiscal year 2011, Marshals reported  having 87 government-run storage locations and Treasury reported  overseeing 5 government warehouse facilities.participant in the Treasury program, reported using about 80 warehouses  where assets that cannot be handled by contractors—such as drugs,  weapons, and money—are stored. Treasury officials stated that sharing  warehouses would not be practical under Treasury’s current contract  structure. However, the practicality of sharing warehouses cannot be  known without more information. A study to evaluate the feasibility of  consolidation that included government-run storage facilities would  provide Treasury and Justice with information to determine whether  improved effectiveness, efficiencies, or cost savings were possible.
Additionally, CBP, as a  Marshals and Treasury also have separate contracts for the management  and disposal of real property, which includes single-family homes,  multifamily homes, warehouses, and land. In fiscal year 2011, Marshals  reported using one national contract for the management of real property  in every U.S. Marshals District except three. Treasury uses a similar  model for managing real property and also uses one national contract for  the management of real property, which includes maintaining and  eventually disposing of the property. Marshals and Treasury use different  national contractors, and have not evaluated the feasibility of  consolidating the contracting for real property management. They  therefore do not know if there could be improved effectiveness, efficiency  gains, or cost savings realized because of economies of scale.
In fiscal year 2011, Marshals had contracts for the management, storage,  and disposal of all assets at a cost of about $19 million. Treasury’s two  nationwide contracts—one for the management of personal property and  one for the management of real property—cost about $49 million for fiscal  year 2011. Given the resources needed to maintain separate asset  tracking systems, asset storage facilities, and contracts for the  management of property; consolidating these systems, storage facilities,  and contracts could result in increased efficiency, effectiveness, and cost  savings. However, gathering additional information would be important to  help effectively evaluate consolidation proposals and activities, as well as  any expected benefits.
Given the proximity of many Marshals and Treasury asset storage  facilities as detailed above, we asked officials from the two agencies if  they had studied the feasibility of consolidating their separate contracting  activities for the storage of similar assets. Both Marshals and Treasury  responded that, while they have attempted to consolidate storage  facilities where practical, they had not considered such an analysis  because of factors such as (1) the unique security requirements for their  stored assets; (2) variations in the types of assets maintained by each  agency that may create unique storage needs; (3) different contracting  rules and requirements for each agency; (4) the inability to accurately  predict the combined storage needs of both agencies, which affects their  ability to contract for these services; and (5) overall lack of assurance that  combining storage contracts will result in cost savings. However,  according to these same officials, the departments have not analyzed the  similarities or differences in each department’s security requirements,  storage needs, or contracting rules. Thus, the extent to which variations in  these factors hinder consolidation efforts is not known. Conducting a  study that assesses the feasibility of consolidation, including the costs,  benefits, and key questions to consider when evaluating consolidation,  would better position Justice and Treasury to determine if consolidation  would result in increases in efficiency, effectiveness, or cost savings.

	Conclusions

Justice and Treasury separately manage over $9 billion in seized assets.  The departments use different information systems and separate  contracts, and maintain separate storage facilities that are frequently  within 20 miles of a similar facility. While the agencies have taken some  steps to coordinate forfeiture program efforts, the current fiscal  environment and the billions of dollars of assets involved underscore the  need for agencies to examine how consolidating operations might  contribute to cost savings or effectiveness gains. By conducting a study  that takes into account the costs, benefits, and key questions to consider  when evaluating consolidation proposals, the departments could have  critical information to better identify whether increased efficiencies,  effectiveness, and cost savings can be realized.

	Recommendations for Executive Action

Given that information is needed to determine the feasibility of  consolidating potentially duplicative Justice and Treasury asset forfeiture  management activities, we recommend that the Attorney General and the  Secretary of the Treasury conduct a study to determine the feasibility of  consolidating asset management activities including, but not limited to,  the use of asset tracking systems and the sharing of vendor and contract  resources. This study should include the likely costs and benefits of  consolidation as well as GAO’s key questions to consider when  evaluating consolidation proposals.

	Agency Comments

We provided a draft of this report to Justice and Treasury for their review  and comment. Justice and Treasury did not provide official written  comments to include in this report. However, in e-mails received on  August 28, 2012, from Justice and Treasury officials, both departments  concurred with the recommendation. Justice further noted that once the  final report is issued, the department will provide a formal plan of action to  Congress within 60 days. Treasury also noted that DHS would need to be  consulted as part of the study since DHS owns and operates two of the IT  asset tracking systems used in the Treasury program. Both Justice and  Treasury provided technical comments, which we incorporated as  appropriate.
We are sending copies of this report to the Attorney General, the  Secretary of the Treasury, selected congressional committees, and other  interested parties. In addition, this report is be available at no charge on  the GAO website at http://www.gao.gov.
If you or your staff have any further questions about this report, please  contact me at (202) 512-9627 or maurerd@gao.gov. Contact points for  our Offices of Congressional Relations and Public Affairs may be found  on the last page of this report. Key contributors to this report are listed in  appendix I.

Appendix I: GAO Contact and Staff Acknowledgments

	GAO Contact

	Staff Acknowledgments

In addition to the contact named above, Sandra Burrell and Dawn Locke,  Assistant Directors, and Valerie Kasindi, Analyst-in-Charge, managed this  assignment. Samantha Carter and Mike Harmond made key contributions  to the report. Also contributing to this report were Chuck Bausell, Frances  Cook, Katherine Davis, Eric Hauswirth, Linda Miller, John Mingus, Gary  Mountjoy, Cynthia Saunders, Karl Seifert, and Janet Temko.

Summary:
Why GAO Did This Study

Both Justice and Treasury operate separate asset forfeiture programs that are designed to prevent and reduce crime through the seizure and forfeiture of assets that represent the proceeds of, or were used to facilitate, federal crimes. Annually, participating agencies within Justice and Treasury seize millions of dollars in assets as a result of their law enforcement activities. In fiscal year 2011, the combined value of assets in these two programs was about $9.4 billion. Beginning in 1988 and through 2003, Congress and GAO have called on Justice and Treasury to consolidate management activities between their programs. GAO was asked to assess the extent to which Justice and Treasury have assessed and acted on opportunities to coordinate or consolidate forfeiture property management activities since 2003 to reduce any duplication and achieve cost savings. GAO interviewed officials to determine actions under way or completed to consolidate their management activities. GAO also analyzed IT asset tracking systems functions and the geographic proximity of contracted facilities that store vehicles, vessels, and aircraft.

What GAO Found

Since 2003, the Departments of Justice (Justice) and the Treasury (Treasury) have taken some steps to explore coordinating forfeiture program efforts, including sharing a website for posting notifications and pursuing a contract for seizure efforts abroad. However, limited progress has been made to consolidate the management of their assets. According to department officials, when Congress established the Treasury Forfeiture Fund in 1992, it recognized the differences in the programs' missions, which warranted creating separate programs, and this encouraged independent operational decisions that eventually created differences between the programs. There are some differences between the programs, but both departments seize similar assets such as vehicles. Nevertheless, the departments have not assessed the feasibility of consolidation, including whether such efforts would be cost-effective, and continue to duplicate efforts by separately managing and disposing of their seized and forfeited property. Specifically, Justice and Treasury maintain four separate information technology (IT) asset tracking systems, which perform similar functions to support their respective asset forfeiture program activities. In addition, both departments procure separate national contracts for the management of real property and they separately store assets seized under each program that are in some cases located within the same geographic area. For example, both the United States Marshals Service (Marshals)--the primary custodian of Justice's seized assets--and Treasury maintain vehicle storage facilities, 40 percent of which are within 20 miles of each other. GAO recognizes the separate legal authorities of the asset forfeiture funds, but those authorities do not preclude consolidating certain management activities within the programs. Conducting a study to evaluate the feasibility of consolidation that considers associated costs and benefits, among other things, could help Justice and Treasury effectively identify the extent to which consolidation would help increase efficiency, effectiveness, and cost savings.

What GAO Recommends

GAO recommends that Justice and Treasury conduct a study to evaluate the feasibility, costs, and benefits of consolidating their asset management activities. Justice and Treasury concurred with GAO's recommendation.