Department of Homeland Security
 

The State of Montana’s Management of State 

Homeland Security Program Grants Awarded During 

Fiscal Years 2007 through 2009 

OIG-12-16 December 2011
 
Office Offce of Inspector General ofInspector General

U.S. U.S. Department of Homeland Security Department of Homeland Security

Washington, Washington, DC 20528 DC 20528

Homeland Homeland

Security Securi ty

DEC DEe 09 2011 09 2011

Preface Preface

The The Department of Department of Homeland Homeland Security (DHS) Office of Security (DHS) Office ofInspector Inspector General (GIG) was General (OIG) was

established established by the Homeland Security Act of2002 (Public Law 107-296) by amendment by the Homeland Security Act of2002 (Public Law 107-296) by amendment

toto the Inspector General Act of 1978. This is one of a series of audit, inspection, and the Inspector General Act of1978. This is one of a series of audit, inspection, and

special special reports prepared as part of our oversight responsibilities to promote economy, reports prepared as part of our oversight responsibilities to promote economy,

efficiency, efficiency, and effectiveness within the Department. and effectiveness within the Department.

This This report addresses the State of Montana's management of State Homeland Security report addresses the State ofMontana's management of State Homeland Security

Program Program grants. We contracted with the independent public accounting firm Foxx & grants. We contracted with the independent public accounting firm Foxx &

Company Company to perform the audit. The contract required that Foxx & Company perform its to perform the audit. The contract required that Foxx & Company perform its

audit audit according to generally accepted government auditing standards. Foxx & according to generally accepted government auditing standards. Foxx &

Company's Company's report identifies four reportable conditions where State management of the report identifies four reportable conditions where State management ofthe

grant grant funds could be improved, resulting in 13 recommendations addressed to the funds could be improved, resulting in 13 recommendations addressed to the

Assistant Administrator, Grants Programs Directorate. Foxx & Company is responsible Assistant Administrator, Grants Programs Directorate. Foxx & Company is responsible

for the attached auditor's report dated November 18,2011, and the conclusions expressed for the attached auditor's report dated November 18,2011, and the conclusions expressed

in the report. in the report.

The recommendations herein have been developed to the best knowledge available to our The recommendations herein have been developed to the best knowledge available to our

office, and have been discussed in draft with those responsible for implementation. We office, and have been discussed in draft

~ifi

with those responsible for implementation. We

trust this report wil result in more effective, efficient, and economical operations. We trust this report will result in more effective, efficient, and economical operations. We

express our appreciation to all of those who contributed to the preparation of this report. express our appreciation to all ofthose who contributed to the preparation ofthis report.

Ãne L. Ricnards Anne ~ifdJ L. Ricnards

Assistant Inspector General for Audits Assistant Inspector General for Audits
November 18, 2011 

Ms. Anne L. Richards 

Assistant Inspector General for Audits 

Office of Inspector General 

U.S. Department of Homeland Security 

245 Murray Drive, S.W. Building 410 

Washington, D.C. 20528 

Dear Ms. Richards: 

Foxx & Company performed an audit of the State of Montana’s management of the 

Department of Homeland Security’s State Homeland Security Program grants for Fiscal 

Years 2007 through 2009. The audit was performed in accordance with our Task Order 

No. 11 under TPD-FIG-BPA-07-0007 dated September 28, 2010. This report presents 

the results of the audit and includes recommendations to help improve the State’s 

management of the audited State Homeland Security Program grants. 

Our audit was conducted in accordance with applicable Government Auditing Standards, 

2007 revision. The audit was a performance audit as defined by Chapter 1 of the 

Standards and included a review and report on program activities with a compliance 

element. Although the audit report comments on costs claimed by the State, we did not 

perform a financial audit, the purpose of which would be to render an opinion on the 

State of Montana’s financial statements or the funds claimed in the Financial Status 

Reports submitted to the Department of Homeland Security. 

We appreciate the opportunity to have conducted this audit. Should you have any 

questions, or if we can be of any further assistance, please call me at (513) 639-8843. 

Sincerely, 

Foxx & Company 

Martin W. O’Neill 

Partner 
Executive Summary ........................................................................................................... 1 

Background ........................................................................................................................ 2 

Results of Audit ................................................................................................................. 2 

Measurement of Goals and Objectives ........................................................................ 3 

Recommendations ........................................................................................................ 7 

Management Comments and Auditors’ Analysis ........................................................ 7 

Compliance with Property Management Requirements .............................................. 8 

Recommendations ...................................................................................................... 10 

Management Comments and Auditors’ Analysis ...................................................... 10 

Subgrantee Performance Monitoring ......................................................................... 11 

Recommendations ...................................................................................................... 13 

Management Comments and Auditors’ Analysis ...................................................... 14 

Financial Management Controls ................................................................................ 15 

Recommendations ...................................................................................................... 18 

Management Comments and Auditors’ Analysis ...................................................... 18 

Appendices

Appendix A: Purpose, Scope, and Methodology ..................................................... 20 

Appendix B: Management Comments to the Draft Report ..................................... 24 

Appendix C: Homeland Security Grant Program Background ............................... 42 

Appendix D: Montana State Administrative Agency Organization Chart .............. 43 

Appendix E: Report Distribution ............................................................................ 44 

Abbreviations

DHS Department of Homeland Security 

FEMA Federal Emergency Management Agency 

FY fiscal year 

OIG Office of Inspector General 

Table of Contents/Abbreviations 
OIG
 Department of Homeland Security 

Office of Inspector General 

Executive Summary 

Public Law 110-53, Implementing Recommendations of the 9/11 

Commission Act of 2007, requires the Department of Homeland 

Security, Office of Inspector General, to audit individual states’ 

management of State Homeland Security Program and Urban 

Areas Security Initiative grants. This report responds to the 

reporting requirement for the State of Montana. 

The objectives of the audit were to determine if the State of 

Montana distributed and spent State Homeland Security Program 

grant funds (1) effectively and efficiently and (2) in compliance 

with applicable federal laws and regulations. In addition, the 

extent to which grant funds enhanced the State of Montana’s 

ability to prevent, prepare for, protect against, and respond to 

natural disasters, acts of terrorism, and other man-made disasters 

were addressed. The audit included a review of approximately 

$16.5 million in State Homeland Security Program grant funds 

awarded to Montana during fiscal years 2007 through 2009. 

Generally, Montana did an efficient and effective job of 

administering program requirements in accordance with grant 

guidance and regulations. The State’s plans linked funding to allhazard capabilities and to goals that were established based on risk 

assessments. 

However, we identified four areas for improvement: measurement 

of goals and objectives, compliance with property management 

requirements, subgrantee performance monitoring, and financial 

management internal controls. 

Our 13 recommendations call for the Federal Emergency 

Management Agency (FEMA) to initiate improvements which, if 

implemented, should help strengthen program management, 

performance, and oversight. 

FEMA and Montana officials provided written comments and 

concurred with our findings and recommendations. Their 

comments are included in their entirety in appendix B. 

The State of Montana’s Management of State Homeland Security Program Grants 

Awarded During Fiscal Years 2007 through 2009 

Page 1
 
Background 

The Homeland Security Grant Program provides federal funding to 

help state and local agencies enhance capabilities to prevent, 

protect against, respond to, and recover from terrorist attacks, 

major disasters, and other emergencies. 

The State of Montana (State) received $19.7 million in Homeland 

Security Grant Program funds over the course of fiscal years (FY) 

2007, 2008, and 2009, $16.5 million of which was State Homeland 

Security Program grants. Appendix A provides details on the 

purpose, scope, and methodology for this audit, and appendix C 

provides background on the Homeland Security Grant Program. 

The Governor of Montana designated the Montana Disaster and 

Emergency Services, Department of Military Affairs, as the State 

Administrative Agency, the entity responsible to administer the 

Homeland Security Grant Program. The State Administrative 

Agency is responsible for managing the grant programs in 

accordance with established federal guidelines and allocating funds 

to local, regional, and other state government agencies. The 

Montana State Administrative Agency organization is depicted in 

appendix D. 

Within Montana, the State Administrative Agency subawarded 

Homeland Security Grant Program funds to 25 separate 

subgrantees during FYs 2007 through 2009. 

Results of Audit 

Montana’s Grants Management Practices Were Generally 

Effective, But Required Some Improvements 

Generally, the State did an efficient and effective job of administering 

program requirements in accordance with grant guidance and regulations. 

The State’s plans linked funding to all-hazard capabilities and to goals that 

were established based on risk assessments. However, improvements were 

needed to enhance Montana’s management of the grants in the areas of: 

 Measurement of goals and objectives, 

 Compliance with property management requirements, 

 Subgrantee performance monitoring, and 

 Financial management internal controls. 

The State of Montana’s Management of State Homeland Security Program Grants 

Awarded During Fiscal Years 2007 through 2009 

Page 2
 
We have made 13 recommendations that are designed to enhance the 

effectiveness of the State’s grants management and overall use of the grant 

funds to improve preparedness and response capabilities. 

Measurement of Goals and Objectives 

The Montana State Administrative Agency could not demonstrate 

improvement and accomplishments resulting from the State Homeland 

Security Program awards. The Agency had not developed measurable 

goals and objectives consistent with federal requirements which provided 

an adequate basis for measuring improvements in the State’s preparedness 

and response capabilities. Also, the Agency did not have an effective 

systematic method for the collection of performance-related data. As a 

result, the State does not have a system to evaluate and document the 

effect that grant funds had on the capability of the State Administrative 

Agency and the subgrantees. 

Code of Federal Regulations Title 44 §13.40 (a), Monitoring and 

reporting program performance, requires that grantees monitor grant and 

subgrant supported activities to assure that performance goals are being 

achieved. In addition, Department of Homeland Security (DHS) State and 

Urban Area Homeland Security Strategy, Guidance on Aligning Strategies 

with the National Preparedness Goal, dated July 22, 2005, states that an 

objective sets a tangible and measurable target level of performance over 

time against which actual achievement can be compared, including a goal 

expressed as a quantitative standard, value, or rate. Therefore, an 

objective should meet the following criteria: 

 Specific, detailed, particular, and focused — helping to identify 

what is to be achieved and accomplished; 

 Measurable — quantifiable, providing a standard for comparison, 

and identifying a specific achievable result; 

 Achievable — the objective is not beyond a State, region, 

jurisdiction, or locality’s ability; 

 Results-oriented — identifies a specific outcome; and 

 Time-limited — a target date exists to identify when the objective 

will be achieved. 

Table 1 identifies shortcomings with two of Montana’s goals and 

objectives from its 2007 Strategic Plan. These two are typical examples 

from the State’s nine goals. 

The State of Montana’s Management of State Homeland Security Program Grants 

Awarded During Fiscal Years 2007 through 2009 

Page 3
 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 1: Examples of FY 2007 Strategic Plan Goals and Objectives Shortcomings 

Strategic Goal #2: Establish and strengthen a statewide interoperable public safety 

communication system. 

OBJECTIVES SHORTCOMINGS 

2.1 Implement the Statewide Interoperable 

Public Safety Radio Communications Plan 

recommended by the Statewide 

Interoperability Executive Council. 

No target date for completion. No expression 

of specific outcome such as documenting 

results of implementation. 

2.2 Deploy backbone technology across 

large geographic regions and subsequently to 

deploy digital technology to all users. 

No target date for completion. No details on 

identifying regions, areas, or users. 

2.3 Design and implement a statewide 

enhanced 911 network. 

No target date for completion. No criteria as 

to what constitutes “enhanced.” No 

expression of specific outcome such as 

documenting results of implementation. 

2.4 In conjunction with the Public Safety 

Services Office continue planning, assisting, 

education and implementation of public 

safety communications projects in Montana. 

No target date for completion. Open-ended. 

Specific outcome such as documentation of 

shared information not expressed. 

2.5 Develop an education and outreach 

program within six months. 

Meets criteria. 

2.6 Procure equipment to enhance 

interoperable communications using 

available funding. 

No criteria as to what constitutes “enhance.” 

No target date set for completion. 

2.7 Support planned exercises. No target date for completion. No expression 

of specific outcome such as how exercises 

will be identified or information shared after 

completion. 

Strategic Goal #7: Strengthen chemical, biological, radiologic, nuclear, explosive (CBRNE) 

decontamination, detection, and response. 

OBJECTIVES SHORTCOMINGS 

7.1 Enhance geographic information 

systems capabilities to support the planning, 

response, and recovery of a CBRNE event. 

No target date for completion. No specifics 

as to which capabilities will be enhanced. 

7.2 Sustain advance hazmat, explosive 

ordnance disposal, and tactical law 

enforcement response capabilities. 

No target date for completion. No provisions 

for identifying law enforcement capabilities 

or how capabilities would be sustained. 

7.3 Identify recovery measures associated 

with this goal. 

No target date for completion. No specifics 

for how measures will be identified. 

7.4 Provide training to strengthen CBRNE 

detection, response, and decontamination 

capabilities. 

No target date for completion. No specifics 

on who will be trained, how training is 

delivered, and how training results are 

measured. 

7.5 Exercise local, tribal, and state response 

plans and procedures to test the level of 

detection, response, and decontamination 

capabilities. 

No target date for completion. No criteria 

provided for assessing capabilities. 

7.6 Identify the preventive detection aspects 

of CBRNE capabilities. 

No target date for completion. No criteria for 

determining which detection aspects will be 

identified and measured. 

The State of Montana’s Management of State Homeland Security Program Grants 

Awarded During Fiscal Years 2007 through 2009 

Page 4
 
 

Taken as a whole, the State’s goals and objectives: 

 Were broad-based, 

 Were not always in compliance with the federal requirements, and 

 Did not allow for the measuring progress in preparedness and 

response capabilities. 

The lack of measurement capability, specifics, and target completion dates 

in the state-wide goals and objectives also impacted the measurement of 

progress at the subgrantee level. 

The Montana State Administrative Agency required subgrantees to 

periodically submit standardized progress reports as a part of the 

subgrantee award letter package. The report form requested that the 

subgrantee describe the activities accomplished during the preceding 

quarter, any difficulties in accomplishing activities or needed timeframe 

readjustments, and funding used during the period. Not all subgrantees 

submitted progress reports and, of those that did, the information was 

unclear and did not relate to measuring improvement. 

We found that the subgrantee progress reports did not contain information 

that would enable the State to measure and oversee the progress made in 

achieving the goals, objectives, and milestones identified for the 

individually funded programs. For example, the FY 2007 Interoperability 

Montana investment justification requested $3.7 million to meet five 

milestones. However, the progress reports for this grant did not indicate 

how well the funds were being spent, nor did the reports specifically 

discuss the progress being made on particular milestones prior to the 

milestones being reached. Table 2 shows the milestones and the progress 

made as of June 30, 2010, as reported by the subgrantee. 

Table 2: Milestone Status on FY 2007 Interoperability 

Montana Investment Justification (as of June 30, 2010)
 

Milestone Milestone Status 

(as of June 30, 2010) 

1. Complete site acquisition, building, and equipment 

installation for three Northern Tier sites. 

Sites were complete. 

2. Tie the master controller at Helena to the Northern Tier. No status given. 

3. Adopt standard operating procedures in accordance with 

SAFECOM (public safety communications) guidelines. 

No status given. 

4. Outfit and train 14 law enforcement officials to use 

radios compatible with the new towers 

Training plan submitted to 

the State Administrative 

Agency for approval. 

5. Test and evaluate the system. An exercise was being 

planned for later in 2010. 

The State of Montana’s Management of State Homeland Security Program Grants 

Awarded During Fiscal Years 2007 through 2009 

Page 5
 
While the milestones are specific and are capable of measurement, the 

progress reports are incomplete and did not provide information during the 

grant period concerning the extent to which the milestones were met or 

would be delayed. For example, concerning Milestone 1, the June 2010 

report noted that the sites were complete and inspected but no mention 

was made as to whether or not the sites were operational. For 2008 and 

2009, the subgrantee progress reports did not report on whether or not the 

milestone would be met. 

Milestone 2 indicated that upon tower completion, the towers were to be 

tested for connectivity to a radio controller in Helena, Montana. 

Completion was scheduled for December 2008 but no activity was 

reported until the March 2009 progress report. 

Milestone 4 specified that 14 officers would be outfitted and trained to use 

radios. Outfitting and training was to be completed by December 2009. 

However, while initial progress on this milestone was reported in the 

March 30, 2009 progress report, it was not until the December 2009 

progress report that a request for training funds was reported. 

Because of minimal State Administrative Agency guidance as to what was 

expected of subgrantees in their progress reports, the subgrantees were left 

to interpret the degree to which accomplishments were reported. The 

State Administrative Agency did not request subgrantees to report on the 

status of achieving program goals, objectives, and milestones. 

The State Administrative Agency funded activities without knowing the 

extent that funds previously provided to subgrantees had impacted the 

subgrantee’s ability to meet specific program goals. Also, the State did 

not know the extent to which additional funds were needed for the 

individual programs. 

Without measurable goals and objectives and a mechanism to collect 

objective, results-oriented data from local jurisdictions and first 

responders, the State did not have a basis to evaluate the effect of grant 

expenditures on its preparedness and response capabilities. Also, the State 

was unable to determine progress toward goals and objectives when 

making funding and management decisions. 

The State of Montana’s Management of State Homeland Security Program Grants 

Awarded During Fiscal Years 2007 through 2009 

Page 6
 
Recommendations 

We recommend that the Assistant Administrator, Grant Programs 

Directorate, require the Administrator, Montana Disaster and 

Emergency Services to: 

Recommendation #1: Develop strategic goals and objectives 

applicable to capabilities that are specific, measurable, achievable, 

results-oriented, and time limited. 

Recommendation #2: Develop performance measures and collect 

and analyze performance data from subgrantees to measure 

progress towards achieving goals and objectives. 

Recommendation #3: Require subgrantees to use the 

performance measures to report activity accomplishments in 

quarterly progress reports, including the status of goals, objectives, 

and milestone achievements. 

Recommendation #4: Summarize the progress reported each 

quarter by program and incorporate the progress and projected 

funding needs into the State’s process for preparing subsequent 

years’ applications for Homeland Security Grant Program funds. 

Management Comments and Auditors’ Analysis 

FEMA concurred with the findings and recommendations, and 

commented that it would benefit Montana to assess capabilities on 

an ongoing basis if the state has clearly stated goals and objectives. 

FEMA will request the State develop strategic goals and specific 

objectives applicable to capabilities, and submit the outline of the 

goals and objectives to FEMA within 90 days of receipt of the final 

report. 

FEMA noted that there is not sufficient evidence that Montana is 

aware of the progress subgrantees are making against the goals and 

objectives stated in their grant applications. FEMA attributed this 

deficiency to a staff shortage. FEMA will request the State 

develop performance measures and collect and analyze 

performance data from subgrantees to measure progress towards 

achieving goals and objectives. FEMA will also direct the 

Administrator, Montana Disaster and Emergency Services to 

ensure that there is sufficient qualified staff to oversee and 

administer all awards issued by FEMA, including subject matter 

The State of Montana’s Management of State Homeland Security Program Grants 

Awarded During Fiscal Years 2007 through 2009 

Page 7
 
 

experts. These actions are to be completed within 90 days of 

receipt of the final report. 

Concerning quarterly progress reports, FEMA will request the 

State to require subgrantees to report accomplishments in quarterly 

progress reports, including the status of goals, objectives, and 

milestone achievements. These actions are to be completed within 

90 days of receipt of the final report. 

FEMA will also request the State summarize the progress reported 

each quarter by program, and incorporate the progress and 

projected funding needs into the State’s process for preparing 

subsequent years’ grant applications. These actions will be 

completed within 120 days of receipt of the final report FEMA 

requested that recommendations 1 through 4 be resolved and open 

pending implementation of the stated corrective actions. 

Montana Disaster and Emergency Services officials also agreed 

with the findings and recommendations. They acknowledged that 

the State’s goals and objectives in the past have been too broadbased and the officials are in the process of making them more 

specific. Progress on measurable objectives will be reported by 

subrecipients on a quarterly basis using expanded reporting forms 

clearly demonstrating project progress. If progress is not 

sufficient, the subgrantee will be identified for monitoring, 

technical assistance, and withholding of funds until satisfactory 

progress is made. Montana officials also stated that they will 

submit quarterly reports to FEMA summarizing subgrantee 

progress. 

If properly implemented, the corrective actions proposed by 

FEMA and the State should resolve the condition identified in the 

audit. The recommendations are considered resolved, but will 

remain open until the corrective actions have been implemented. 

Compliance with Property Management Requirements 

State subgrantees did not always maintain property management records 

in accordance with federal requirements. Property record requirements 

were not being followed at 14 of 22 subgrantees we visited. As a result, 

the State did not have reasonable assurance that the assets procured with 

federal funds were adequately safeguarded to prevent loss, damage, or 

theft of the property. 

The State of Montana’s Management of State Homeland Security Program Grants 

Awarded During Fiscal Years 2007 through 2009 

Page 8
 
Code of Federal Regulations Title 44 §13.32 (d) Management 

Requirements, establishes procedures for managing equipment (including 

replacement equipment), whether acquired in whole or in part with grant 

funds. Under Title 44 §13.3, Definitions, equipment means tangible, nonexpendable, personal property having a useful life of more than one year 

and an acquisition cost of $5,000 or more per unit. The federal property 

management regulations include the following minimum requirements: 

	 Maintain property records that include a description of the 

property, a serial number or other identification number, the source 

of property, who holds title, the acquisition date, the cost of the 

property, percentage of Federal participation in the cost of the 

property, the location, use and condition of the property, and any 

ultimate disposition data including the date of disposal and sale 

price of the property. 

	 Take a physical inventory of the property and reconcile the results 

with the property records at least once every 2 years and maintain a 

control system to ensure adequate safeguards to prevent loss, 

damage, or theft of the property. 

	 Perform adequate maintenance procedures to keep the property in 

good condition. 

The federal requirements are included by reference in the state grant 

agreements with subgrantees. 

While FEMA guidance for the State Homeland Security Program requires 

grantees and subgrantees to follow federal requirements when managing 

and maintaining property management records for equipment purchased 

with grant funds, 14 of the 22 subgrantees who purchased equipment with 

State Homeland Security Program funding were not following this 

guidance. The following is a summary of these shortcomings. 

	 11 of the 14 subgrantees did not perform periodic physical 

inventories which were required at least once every 2 years,
 

	 7 of 14 subgrantees were unable to determine which fiscal years’ 

State Homeland Security Program funds were used to procure 

equipment, and 

	 5 of 14 subgrantees did not mark or affix labels to indicate the 

property was purchased with Homeland Security funding. 

Subgrantee staff told us that they were not fully aware of the property 

management requirements or had not focused on their responsibilities 

concerning record keeping, documentation, and inventories. Nevertheless, 

the property management requirements were included in the grant award 

The State of Montana’s Management of State Homeland Security Program Grants 

Awarded During Fiscal Years 2007 through 2009 

Page 9
 
letter and as a separate attachment in the grant agreements between the 

State and each subgrantee. 

In addition, we noted a unique situation that pertained to the title of assets 

procured for the Interoperability Montana program. At least one county 

subgrantee indicated that while they were responsible for erecting radio 

towers on county property, the county was unclear as to which entity 

actually owned the equipment—the county or Interoperability Montana. 

Also, the subgrantee was not sure which entity was ultimately responsible 

for maintenance. 

As a result, the State did not have reasonable assurance that the assets 

procured with federal funds were adequately safeguarded to prevent loss, 

damage, or theft of the property or if title was clearly established. Without 

the required property management records, the potential exists for poor 

internal control over the maintenance, safeguarding, and accounting for 

equipment procured with federal funds. 

Recommendations 

We recommend that the Assistant Administrator, Grant Programs 

Directorate, require the Administrator, Montana Disaster and 

Emergency Services to: 

Recommendation #5: Establish policies and procedures to 

enforce the property management requirements for equipment 

purchased with federal funds by subgrantees. 

Recommendation #6: Require subgrantees to furnish plans for 

performing biennial physical inventories within a specified 

timeframe and to provide details on how all subgrantees will 

become compliant with property management requirements. 

Recommendation #7: Clarify ownership of equipment furnished 

with federal funds particularly with arrangements between 

Interoperability Montana and its partner subgrantee jurisdictions. 

Management Comments and Auditors’ Analysis 

FEMA concurred with the findings and recommendations. FEMA 

commented that it will request that Montana Disaster and 

Emergency Services establish policies and procedures to enforce 

property management requirements for subgrantee equipment 

purchased with federal funds within 45 days of receipt of the final 

report. FEMA will request also that Montana furnish plans for 

The State of Montana’s Management of State Homeland Security Program Grants 

Awarded During Fiscal Years 2007 through 2009 

Page 10
 
performing annual physical inventories and provide details on how 

all subgrantees will become compliant with property management 

regulations within 60 days of receipt of the final report. 

Concerning the issue of equipment ownership regarding 

Interoperability Montana and its partner jurisdictions, FEMA will 

request that Montana clarify ownership, and provide an inventory 

of all equipment purchased by Interoperability Montana with DHS 

grant funds. The list is to include, among other things, equipment 

identifiers, price, applicable grant program funding year, and the 

jurisdiction responsible for the equipment, and is to be completed 

within 30 days of receipt of the final report. FEMA requested that 

recommendations 5 through 7 be resolved and open pending 

implementation of the stated corrective action. 

The Montana Disaster and Emergency Services officials also 

agreed with the findings and recommendations, and stated they 

will update its property management policies to include inventory 

schedules, improved forms, lists of all items over $5,000, and 

physical inventories no less than every 2 years. The State will 

establish a schedule of subgrantee inventory due dates, and require 

submission with the subgrantee grant applications. Relating to 

Interoperability Montana and equipment ownership, Disaster and 

Emergency Services officials stated that verification of equipment 

has commenced, and that Interoperability Montana has submitted 

equipment transfer letters outlining ownership, signed by the 

partner subgrantees. 

If properly implemented, the corrective actions proposed by 

FEMA and the State should provide reasonable assurance that 

assets procured with federal funds are adequately safeguarded to 

prevent loss, damage, or theft; and that ownership is clearly 

delineated. The recommendations are considered resolved, but 

will remain open until the corrective actions have been 

implemented. 

Subgrantee Performance Monitoring 

The Montana State Administrative Agency needs to improve subgrantee 

performance monitoring. In its February 2010 Single Audit Report on 

State Administrative Agency management of homeland security grants, 

the Montana Legislative Audit Division noted that in FY 2008, the 

Montana State Administrative Agency failed to monitor any of its 

subgrantees. Moreover, the report noted that, in FY 2007, the State 

Administrative Agency received notification of seven audit findings in 

The State of Montana’s Management of State Homeland Security Program Grants 

Awarded During Fiscal Years 2007 through 2009 

Page 11
 
 

subgrantee audit reports. Additionally, the Legislative Audit report found 

that the department’s subgrantee monitoring tracking spreadsheet did not 

include six1

 subgrantees. The Legislative Audit Division recommended 

that the State Administrative Agency implement effective subgrantees 

monitoring controls to ensure its subgrantees comply with the federal 

requirements. However, the department did not issue management 

decisions or require corrective action on five of the audit findings within 

the required timeframe. 

According to the Code of Federal Regulations Title 44 §13.40, Monitoring 

and Reporting Program Performance, grantees are required to provide 

day-to-day management of all grants and subgrant supported activities, 

and ensure that grant recipients comply with applicable federal 

requirements and achieve program performance goals. This regulation 

also specifies that grantee monitoring programs cover each program, 

function or activity, and require subgrantees to adhere to the same 

performance monitoring and reporting standards as required of grantees. 

The Montana State Administrative Agency also recommends that grant 

recipients provide various documents to describe their activities and 

expenditures. 

Office of Management and Budget Circular A-133, Part 3-M, Subrecipient 

Monitoring, also includes grantee monitoring requirements. Part 3-M 

states that grantees are responsible for monitoring subgrantee use of 

federal awards through reporting, site visits, regular contact, or other 

means. Grantee monitoring should provide reasonable assurance that the 

subgrantee administers federal awards in compliance with laws and 

regulations, as well as the provisions of contracts or grant agreements. 

The Montana State Administrative Agency management informed us that 

no subgrantee site visits were made during the grant years that we 

reviewed. Minimal oversight was accomplished through periodic contact 

with subgrantee staff, review of subgrantee grant applications, and 

processing of reimbursement requests. Montana State Administrative 

Agency officials said that considerable staff turnover, including the State 

Administrative Agency Director’s position, had been experienced in the 

last several years. In addition, the officials said that the State 

Administrative Agency’s ability to monitor subgrantees has been affected 

by the limited number of staff available to do the monitoring. The three 

fiscal year grants included in our review were essentially managed by one 

individual. 

1

 The scope of the Legislative Division audit included 84 subgrantees for all Homeland Security Grant 

Programs including State Homeland Security Program. However, the State Administrative Agency only 

accounted for 78 of the 84. 

The State of Montana’s Management of State Homeland Security Program Grants 

Awarded During Fiscal Years 2007 through 2009 

Page 12
 
For the three fiscal years we examined, Montana’s monitoring program 

procedures did not indicate how often monitoring visits would be 

conducted. Even as late as March 2011, no action had been taken on when 

site visits would begin nor had the State Administrative Agency made any 

site visits. However, in February 2011, a monitoring policy revision 

indicated that the State Administrative Agency would perform on-site 

visits for two separate subgrantees each fiscal year. State Administrative 

Agency officials said they have considered involving their six Montana 

state district representatives as more active participants in overall 

management. The Montana State Administrative Agency did hire a parttime contractor to monitor its largest subgrantee, Interoperability Montana 

in August 2010. The contractor worked four hours per day but had not 

visited the Interoperability Montana subgrantee as of April 2011. 

The State Administrative Agency’s sporadic contacts with subgrantee 

staff, the review of subgrantee grant applications, and processing of 

reimbursement requests are not sufficient to: 

 Observe local administrative practices, 

 Evaluate whether grant funds are being used effectively and 

efficiently, 

 Determine whether subgrantees are complying with grant 

requirements and associated federal regulations, and 

 Assess subgrantee progress in achieving preparedness goals and 

objectives. 

Montana’s on-site monitoring program was hampered because the State 

had not dedicated the necessary resources to monitor the subgrantees’ 

performance. Moreover, the State Administrative Agency did not have 

adequate information to assess whether or not the subgrantees were 

efficiently and effectively using State Homeland Security Program grant 

funds to accomplish program objectives. Consequently, the State 

Administrative Agency did not provide necessary management support at 

the planning, execution, or review levels to enable consistent and 

responsible grant oversight. 

Recommendations 

We recommend that the Assistant Administrator, Grant Programs 

Directorate, require the Administrator, Montana Disaster and 

Emergency Services to: 

Recommendation #8: Establish policy and monitoring 

procedures that include the frequency of visits, methodology for 

The State of Montana’s Management of State Homeland Security Program Grants 

Awarded During Fiscal Years 2007 through 2009 

Page 13
 
selecting subgrantees to visit, and a protocol for reviewing 

financial and performance related activities during the visits. 

Recommendation #9: Develop a uniform set of procedures for 

monitors to use during evaluations of subgrantee program 

performance to ensure consistency in the scope and methodology 

of the evaluations from subgrantee to subgrantee. 

Management Comments and Auditors’ Analysis 

FEMA concurred with the findings and recommendations. 

According to FEMA, subgrantee monitoring is critical to ensuring 

that projects are executed as planned and that subgrantees are in 

compliance with the terms of their grant agreements. FEMA will 

request that Montana, within 90 days of receipt of the final report, 

establish policy and monitoring procedures that will include, 

among other requirements: 

 A clear method for selecting subgrantees to be visited, 

 Frequency of monitoring visits each year, and 

 Processes to review and conduct analyses of subrecipients’ 

financial, programmatic, and administrative policies and 

procedures. 

FEMA also said the State will be requested to establish a uniform 

set of monitoring procedures to facilitate consistency in the scope 

and methodology of the evaluation of subgrantees. The protocols 

are to be completed within 90 days of receipt of the final report. 

FEMA requested that recommendations 8 and 9 be resolved and 

open pending implementation of the stated corrective actions. 

Montana Disaster and Emergency Services officials also agreed 

with the findings and recommendations, and commented that the 

State had been monitoring subgrantees when the fiscal years 2007 

through 2009 grant awards were made and will continue to do so, 

as required. In this regard, our report and the Montana Legislative 

Audit Division found that subgrantee performance monitoring 

needed to be improved. Resource issues, incomplete monitoring 

procedures, and sporadic subgrantee contacts all contributed to 

inefficient monitoring. 

Montana noted that active monitoring, with both desk-top and site 

visits, has greatly increased in the last year (i.e., during fiscal year 

2010). Monitoring documentation has been enhanced and a grant 

monitoring cycle will be developed to include scheduled 

The State of Montana’s Management of State Homeland Security Program Grants 

Awarded During Fiscal Years 2007 through 2009 

Page 14
 
monitoring, using both desk-top and site visits. The State will 

review and revise its standardized monitoring procedure, and use 

improved monitoring forms, designed during FEMA-provided 

technical assistance training in September 2011, during all 

monitoring visits. 

If properly implemented, the corrective actions proposed by 

FEMA and the State will resolve the condition identified during 

the audit. The recommendations are considered resolved, but will 

remain open until the corrective actions have been implemented. 

Financial Management Controls 

The Montana Disaster and Emergency Services did not comply with 

federal requirements for financial grant management. We noted 

deficiencies which included (1) incomplete subgrantee file information 

regarding award letters and supporting documentation for reimbursement 

requests and (2) inadequate coordination between the State Administrative 

Agency and the supporting administrative office responsible for paying 

subgrantee invoices submitted for payment. As a result, Montana was not 

in compliance with federal financial management requirements, was not 

aware of the status of grant awards and expenditures, and could not assess 

the true costs of program performance. 

Code of Federal Regulations Title 44 §13.20, Standards for financial 

management systems and the Department of Homeland Security Financial 

Guide require that grantees maintain an accounting system together with 

adequate internal controls to assure grant expenditures are allowable, 

allocable, authorized, and consistent with federal, State, and grant 

requirements. The standards require also that the fiscal controls and 

accounting procedures: 

	 Permit preparation of reports required by federal laws and 

regulations authorizing the grant, 

	 Permit the tracing of funds to a level of expenditures adequate to 

establish that such funds have not been used in violation of the 

restrictions and prohibitions of applicable statutes, 

	 Provide for source documentation such as cancelled checks, paid 

bills, payrolls, time and attendance records, and subgrant award 

documents, and 

	 Enable actual expenditures to be compared with budgeted 

amounts. 

Montana State Administrative Agency subgrantee files were not always 

complete and did not permit corroboration with other documents. For 

The State of Montana’s Management of State Homeland Security Program Grants 

Awarded During Fiscal Years 2007 through 2009 

Page 15
 
example, State Administrative Agency officials could not provide 

supporting grant award letters that totaled $477,000 out of $3.4 million in 

awards which was selected for testing for fiscal years 2007 through 2009. 

Additionally, State Administrative Agency had difficulty reconciling 

subgrantee award amounts with expenditures even though State 

Administrative Agency prepared its budgets by these expense categories. 

We asked State Administrative Agency officials to prepare a schedule 

comparing the award amount with expenses classified as equipment, 

training, or exercises. A State Administrative Agency official stated that 

the schedule could not be completed in full because State Administrative 

Agency internal financial documents could not produce the necessary data. 

Concerning invoices, State Administrative Agency did not always have 

documentation in its files to support subgrantee reimbursement requests 

even though subgrantees were required to submit invoices. For fiscal 

years 2007 through 2009, State Administrative Agency officials could not 

provide supporting documents (i.e., invoices, payroll, or other relevant 

information) to support expenditures incurred by four subgrantees which 

totaled $938,601 as shown in the following table. 

Table 3: Unsupported Subgrantee Requests for Reimbursement 

Made to Montana State Administrative Agency 

Subgrantee Expense Type Amount 

1 Invoices $39,294 

2 Payroll $72,000 

3 Payroll $159,175 

4 Invoices $668,132 

Total $938,601 

Notwithstanding the issues with maintaining supporting documentation in 

its files, the State Administrative Agency revised its policy in July 2010 

and stipulated that subgrantees were no longer required to submit invoices 

as support for their reimbursement requests. The invoices were to be kept 

by the subgrantees and made available if requested by the State 

Administrative Agency. 

The State Administrative Agency did not keep its designated payment 

office, the Centralized Services Division, informed of the award amounts 

to individual subgrantees. Without this basic information, the Centralized 

Services Division did not know the current status of subgrantees’ accounts 

even though it was responsible for payment. 

The State of Montana’s Management of State Homeland Security Program Grants 

Awarded During Fiscal Years 2007 through 2009 

Page 16
 
The State Administrative Agency did not provide copies of subgrantee 

award letters to its Centralized Services Division that showed how much 

each subgrantee was awarded. This information would have allowed the 

Centralized Services Division to keep a running comparison on budgeted 

amounts against actual subgrantee reimbursement requests. Without this 

information, the possibility existed that a subgrantee could be reimbursed 

for an amount larger than was awarded. In this regard, during our visits, 

we found one subgrantee that had actually been reimbursed $3,562 more 

than was initially awarded. The additional amount was taken from the 

State Administrative Agency’s management and administration account to 

supplement the subgrantee’s request and Centralized Services was not 

advised. 

According to the Centralized Services Administrator, the State 

Administrative Agency did not always compare submitted invoices with 

the award amount and overpayments could be made. If State 

Administrative Agency judged an invoice as proper for payment, State 

Administrative Agency directed the Centralized Services Division to 

reimburse the subgrantee. Additionally, according to a June 30, 2009, 

Single Audit Report performed by the Montana Legislative Audit 

Division, the State Administrative Agency did not follow department 

controls. These included project management invoices that were not 

approved by a project director and $4,654 of costs which were paid 

without meeting documentation requirements. 

The State Administrative Agency did not place sufficient priority on 

adherence to required internal control procedures. This lack of attention 

was confirmed as the State Administrative Agency did not maintain an 

up-to-date and complete subgrantee filing system, did not perform 

reconciliations between award amounts and invoices, and did not share 

needed information with the Centralized Services Division as the 

designated payment office. 

Because the Montana State Administrative Agency did not exercise 

financial management of all subawards including compliance with 

applicable federal requirements, the State of Montana was unable to 

determine the actual status of State Homeland Security Program grant 

funding. The danger of overdrawing accounts was clearly present without 

a working subgrantee fund balance. In addition, without obtaining 

supporting documentation before paying subgrantees, $938,601 was 

unsupported. With no clear indication by type of expenditure, neither the 

State Administrative Agency nor DHS could assess the true costs of 

program performance. 

The State of Montana’s Management of State Homeland Security Program Grants 

Awarded During Fiscal Years 2007 through 2009 

Page 17
 
Recommendations 

We recommend that the Assistant Administrator, Grant Programs 

Directorate, require the Administrator, Montana Disaster and 

Emergency Services to: 

Recommendation #10: Revise the State Administrative Agency’s 

existing financial internal control system to ensure that policies 

and procedures enable a comprehensive accounting of individual 

subgrantee finances from initial award to grant closeout. 

Recommendation #11: Establish procedures to ensure that the 

Centralized Services Division receives all financial information 

necessary to ensure that payments are properly authorized and that 

account balances are kept current. 

Recommendation #12: Establish procedures to include periodic 

inspections of subgrantee supporting documentation for 

reimbursement requests. 

Recommendation #13: Provide adequate documentation for the 

unsupported subgrantee reimbursements or recover the $938,601 in 

State Homeland Security Program grant funds for return to FEMA. 

Management Comments and Auditors’ Analysis 

FEMA concurred with the findings and recommendations. FEMA 

stated that Montana Disaster and Emergency Services should 

review drawdown subgrantee requests to ensure that costs are 

allowable, allocable, and reasonable within the grant funded 

projects. FEMA will request that the Montana Disaster and 

Emergency Services, within 60 days of receipt of the final report, 

revise its existing financial internal control system to ensure that 

policies and procedures enable a comprehensive accounting of 

individual subgrantee finances from initial award to grant closeout. 

FEMA will also request the State to establish procedures to ensure 

that the Centralized Services Division receives all financial 

information necessary to ensure that payments are properly 

authorized and that account balances are kept current. The State 

will also be requested to establish procedures to include periodic 

inspections of subgrantee supporting documentation such as time 

allocation sheets, receipts, and contracts. Both actions are to be 

completed within 60 days of receipt of the final report. 

The State of Montana’s Management of State Homeland Security Program Grants 

Awarded During Fiscal Years 2007 through 2009 

Page 18
 
Regarding the $938,601 in unsupported subgrantee requests, 

FEMA agrees that Montana should provide adequate 

documentation or return the questioned amount. FEMA has 

requested that Montana Disaster and Emergency Services provide, 

within 90 days of receipt of the final report, adequate supporting 

records which FEMA will review for reasonableness. FEMA 

requested that recommendations 10 through 13 be resolved and 

open pending implementation of the stated corrective actions. 

Montana Disaster and Emergency Services officials also agreed 

with the finding and recommendations, noting that the State has 

followed and been in compliance with federal requirements for 

financial grant management. The officials stated that a full review 

of State and federal financial requirements, in addition to utilizing 

current and future technologies and any necessary revisions of 

internal financial controls, was being conducted. 

State officials also said that the sharing of award and programmatic 

information with its centralized payment office has been enhanced 

via a shared computer drive and more frequent electronic 

communication. State officials stated they will also review and 

make necessary changes to their policies, specifically requiring 

supporting documentation for all expenditures, and that an 

electronic file management system was being developed to store 

and access documents. 

Concerning our recommendation relating to the unsupported 

subgrantee reimbursements of $938,601, Montana Disaster and 

Emergency Services officials provided documentation in 

conjunction with their comments on the draft report. Our review 

of the submitted purchase orders, invoices, vouchers, and payroll 

timesheets concluded that the reimbursements were fully supported 

by appropriate documentation. As a result, we consider the 

$938,601 fully accounted for and no longer questioned. 

If properly implemented, the corrective actions proposed by 

FEMA and the State will resolve the condition identified during 

the audit. Recommendations 10, 11, and 12 are considered 

resolved, but will remain open until the corrective actions have 

been implemented. Recommendation 13 is considered resolved 

and closed. 

The State of Montana’s Management of State Homeland Security Program Grants 

Awarded During Fiscal Years 2007 through 2009 

Page 19
 
 

 

Appendix A 

Purpose, Scope, and Methodology 

The objective of this audit was to determine whether the State of 

Montana distributed and spent State Homeland Security Program 

grant funds strategically, effectively, and in compliance with laws, 

regulations, and guidance. The goal of this audit is to identify 

problems and solutions in order to assist FEMA and the State to 

improve the nation’s ability to prevent and respond to all hazards 

on a local as well as a statewide level. 

The scope of this audit included the plans developed by the State to 

improve preparedness and all hazards response, the goals set 

within those plans, the measurement of progress towards the goals, 

and the assessments of performance improvement that result from 

this activity. Further, the scope included the assessment of these 

activities within the context of risk to determine if the State’s plans 

produced strategic performance improvements related to the 

highest areas of risk rather than merely producing improvements in 

a broader sense. 

Together, the entire Homeland Security Grant Program and its five 

interrelated grant programs fund a range of preparedness activities, 

including planning, organization, equipment purchase, training, 

exercises, and management and administration costs. Because of 

the interrelationship of these grant programs, all were considered 

when evaluating the planning cycle and the effectiveness of the 

overall grant program. However, only State Homeland Security 

Program funding together with the equipment and programs 

supported by that funding was reviewed for compliance. 

Within Montana, we visited 22 total sites which included the State 

Administrative Agency and 21 subgrantees as shown below: 

Montana Disaster and Emergency Services, State Administrative 

Agency 

Montana State Agencies 

 Department of Administration 

 Department of Corrections 

 Department of Justice 

 Governor’s Office of Community Service 

 Interoperability Montana 

 Montana Highway Patrol 

The State of Montana’s Management of State Homeland Security Program Grants 

Awarded During Fiscal Years 2007 through 2009 

Page 20
 
Appendix A 

Purpose, Scope, and Methodology 

Cities 

 Billings 

 Helena 

Counties 

 Flathead 

 Gallatin 

 Hill 

 Jefferson 

 Judith Basin 

 Lewis and Clark 

 Missoula 

 Park 

 Pondera 

 Richland 

 Roosevelt 

 Yellowstone 

Native American Tribe 

 Confederated Salish and Kootenai Tribes 

The HSGP awards to Montana for fiscal years 2007 through 2009 

included the following programs and awards: 

Homeland Security Grant Program 

FYs 2007 through 2009 

Funded Activity FY 2007 FY 2008 FY 2009 Total 

State Homeland 

Security Program $3,820,000 $6,170,000 $6,524,500 $16,514,500 

Law Enforcement 

Terrorism 

Prevention Program 

$2,730,000 Not 

Applicable 

Not 

Applicable $2,730,000 

Citizen Corps 

Program $136,289 $136,893 $136,658 $409,840 

Grand Total $6,686,289 $6,306,893 $6,661,158 $19,654,340 

Source: Federal Emergency Management Agency 

The 22 sites visited received: 

 90% of the 2007 SHSP grant, 

 99% of the 2008 SHSP grant, and 

 83% of the 2009 SHSP grant. 

The State of Montana’s Management of State Homeland Security Program Grants 

Awarded During Fiscal Years 2007 through 2009 

Page 21
 
 

Appendix A 

Purpose, Scope, and Methodology 

At each location, we interviewed responsible officials, reviewed 

documentation supporting State and subgrantee management of the 

awarded grant funds (including expenditures for equipment, 

training, and exercises), and at each location where grant funds 

were used to procure equipment, physically inspected some of the 

items. In addition, we met with first responder representatives, 

such as police and sheriffs’ departments, to discuss grant processes 

and the benefits that grant funds have brought to their organization 

and communities. 

We conducted reviews at FEMA headquarters, State of Montana 

offices, regional law enforcement organizations, county and city 

subgrantee organizations, and a Native American tribe. At these 

locations, the audit team conducted interviews with key officials 

directly involved in the management and administration of the 

State of Montana Homeland Security Grant Program. To 

determine the effectiveness of Montana’s grant program as well as 

compliance with Montana’s Homeland Security Strategy and 

applicable grant requirements, the team reviewed and analyzed 

data related to grant management and associated processes 

identified by the team and discussed with Montana state officials 

during the audit. 

We conducted the audit between December 2010 and May 2011, in 

accordance with Government Auditing Standards as prescribed by 

the Comptroller General of the United States (2007 Revision). 

Those Standards require that we plan and perform the audit to 

obtain sufficient, appropriate evidence to provide a reasonable 

basis for our findings and conclusions based upon our audit 

objectives. We believe that the evidence obtained provides a 

reasonable basis for our findings and conclusions based upon our 

audit objectives. 

Although this audit included a review of costs claimed, we did not 

perform a financial audit of those costs. This was a performance 

audit as defined by Chapter 1 of the Standards, and included a 

review and report of program activities with a compliance element. 

Foxx & Company was not engaged to and did not perform a 

financial statement audit, the objective of which would be to 

express an opinion on specified elements, accounts, or items. 

Accordingly, Foxx & Company was neither required to review, nor 

express an opinion on, the costs claimed for the grant programs 

included in the scope of the audit. Had Foxx & Company been 

required to perform additional procedures, or conducted an audit of 

The State of Montana’s Management of State Homeland Security Program Grants 

Awarded During Fiscal Years 2007 through 2009 

Page 22
 
Appendix A 

Purpose, Scope, and Methodology 

the financial statements in accordance with generally accepted 

auditing standards, other matters might have come to their 

attention that would have been reported. This report relates only to 

the programs specified and does not extend to any financial 

statements of the State of Montana. 

While the audit was being performed and the report prepared under 

contract, the audit results are being reported by the DHS Office of 

Inspector General to appropriate Federal Emergency Management 

Agency and State of Montana officials. 

The State of Montana’s Management of State Homeland Security Program Grants 

Awarded During Fiscal Years 2007 through 2009 

Page 23
 
Appendix B 

Management Comments to the Draft Report 

The State of Montana’s Management of State Homeland Security Program Grants 

Awarded During Fiscal Years 2007 through 2009 

Page 24
 

u.s. Dell:lrtmcnt of Homelnnd Seeurity

Washinglon. DC 20472

OCT 05 2011

MEMORANDUM FOR: Anne L. Richards

Assistant Inspector General for Audits

Office ofInspector General

~.~",,"", fir

FROM: David J. Kaufinan '

Director

Office of Policy and Program Analysis

SUBJECT: Federal Emergency Management Agency's (FEMA's) Response to

Draft OIG Report, The State ofMontana Management ofState

Homeland Security Program (SHSP) and Urban Areas Secllrity

Initiatives (UASJ) Grants Awarded during Fiscal Years 2007 through

2009

Thank you for the opportunity to comment on your draft report. The findings in the report will be

used to strengthen the effectiveness and efficiency of how we execute and measure our programs.

We recognize the need to continue to improve the process, including addressing the

recommendations raised in this report. Our responses to the recommendations are as follows:

OIG Recommendation #1: We recommend that the Assistanl Administrator, Grant Programs

Directorate, require the Director, Montana Disaster and Emergency Services to develop strategic

goals and objectives applicable to capabilities that are specific, measurable, achievable, resultsoriented, and time limited.

FEMA Response: FEMA concurs with this recommendation.

It will benefit the State to be able to assess their capabilities on an ongoing basis ifthey have clearly

stated strategic goals and objectives. FEMA will request the Director, Montana Disaster and

Emergency Services (MT DES) develop strategic goals and specific objectives applicable to

capabilities. The State should identify means of measurement for each goal and objective, ensure

they are reasonably achievable within the time period allocated for each grant award and identify

specific timeframes for completion and articulate end results.

The strategic goals and objectives should include:

a) Specific goals and objectives which directly relate to the State Homeland Security

Strategy;

www.fcma.gov

 
 

Appendix B 

Management Comments to the Draft Report 

The State of Montana’s Management of State Homeland Security Program Grants 

Awarded During Fiscal Years 2007 through 2009 

Page 25
 

b) Identify how each goal and objective will be measured for success and progress

towards completion;

c) Identify a clear timeframe for achieving the goal and objective;

d) Ifthe goal will span multiple years and longer term objectives, identify which grant

programs might align to those goals and what plans are being developed to ensure the

end goal or objective can be reached; and

e) Identify the end result of each goal and objective (Le., what capability will be

enhanced, how, for how long, who will be impacted, how will they be impacted).

This outline ofstrategic goals and objectives should be submitted to the assigned FEMA

program analyst within 90 days ofreceipt ofthe final report via the grantee notification.

FEMA requests that this recommendation be resolved and open pending implementation ofthe

stated corrective action.

OIG Recommendation #2: We recommend that the Assistant Administrator, Grant Programs

Directorate, require the Director, Montana Disaster and Emergency Services to develop

performance measures and collect and analyze performance data from subgrantees to measure

progress towards achieving goals and objectives.

FEMA Response: FEMA concurs with this recommendation.

At this time, there is not sufficient evidence that the State is aware ofthe progress subgrantees

are making against the goals and objectives stated in applications. This is largely due to a

shortage ofstaff assigned to financially and programmatically manage and oversee FEMA

awards. Additional staffshould be allotted to overseeing the programmatic implementation and

administration ofFEMA awards to enhance the State's abilities to effectively manage FEMA

awards. FEMA will request the Director ofMT DES develop performance measures and collect

and analyze performance data from subgrantees to measure progress towards achieving goals and

objectives.

Further, FEMA will direct the Director ofMT DES to ensure that there is sufficient qualified

staffto programmatically and financially oversee and administer all awards issued by FEMA.

Qualified staff assigned to oversee the implementation ofFEMA programs should, at a

minimum, include subject matter experts with experience in emergency planning, emergency

operations, first responder equipment, first responder/emergency management training, first

responder/emergency management exercises, and interoperable communications. Qualified staff

assigned to oversee the management and administration ofFEMA grant programs should include

subject matter experts in the management offederal grant awards or be provided formal ongoing

training to begin within 60 days ofhire date.

The State ofMontana's performance measurement ofsubgrantees should include:

a) Clearly stated milestones and timeframes for completion;

b) Progress toward meeting goals and objectives;

c) Challenges or delays in meeting goals and objectives;

2
Appendix B 

Management Comments to the Draft Report 

The State of Montana’s Management of State Homeland Security Program Grants 

Awarded During Fiscal Years 2007 through 2009 

Page 26
 

d) Actions the state is taking to assist with challenges, delays, or lack ofprogress; and

e) Anticipated completion date of each goal and objective.

These actions will be completed by MT DES within 90 days ofreceipt ofthe final report via the

grantee notification. Updates will be sent to the assigned FEMA Program Analyst every 90 days

until the corrective actions are complete.

FEMA requests that this recommendation be resolved and open pending implementation ofthe

stated corrective action.

OIG Recommendation #3: We recommend that the Assistant Administrator, Grant Programs

Directorate, require the Director, Montana Disaster and Emergency Services to require subgrantees to use the performance measures to report activity accomplishments in quarterly

progress reports, including the status of goals, objectives, and milestone achievements.

FEMA Response: FEMA concurs with this recommendation.

FEMA will request the Director, MT DES require subgrantees to use the performance measures

to report activity accomplishments in quarterly progress reports, including the status ofgoals,

objectives, and milestone achievements.

Quarterly reporting from subgrantees should include:

a) Clearly stated goals and objectives with milestones and timeframes for completion;

b) Progress toward meeting goals and objectives;

c) Challenges or delays in meeting goals and objectives and how these are being

addressed; and

d) Anticipated completion date of each goal and objective.

These actions will be completed by MT DES within 90 days ofreceipt ofthe final report via the

grantee notification. Updates will be sent to the assigned FEMA Program Analyst every 90 days

until the corrective actions are complete.

FEMA requests that this recommendation be resolved and open pending implementation ofthe

stated corrective action.

OIG Recommendation #4: We recommend that the Assistant Administrator, Grant Programs

Directorate, require the Director, Montana Disaster and Emergency Services to summarize the

progress reported each quarter by program and incorporate the progress and projected funding

needs into the State's process for preparing subsequent years' applications for Homeland

Security Grant Program funds.

FEMA Response: FEMA concurs with this recommendation.

3

 
 

Appendix B 

Management Comments to the Draft Report 

The State of Montana’s Management of State Homeland Security Program Grants 

Awarded During Fiscal Years 2007 through 2009 

Page 27
 

FEMA will request the Director, MT DES summarize the progress reported each quarter by

program and incorporate the progress and projected funding needs into the State's process for

preparing subsequent years' applications for Homeland Security Grant Program funds.

Application Review for subsequent years should include at a minimum:

a) Statns ofsubgrantee programmatic and financial reporting (i.e., have reports been

submitted? Have they been submitted on time?);

b) Progress ofsubgrantee on related projects (Le., ifthe projects being proposed build on

capabilities funded by earlier grant awards are those earlier projects complete'!

Incomplete? Is the completion contingent on the funding being requested?);

c) Is the applicant drawing funds down regularly? -- and

d) What capabilities are being built or enhanced?

These actions will be completed by MT DES within 120 days ofreceipt ofthe final report via the

grantee notification. Updates will be sent to the assigned FEMA Program Analyst every 90 days

until the corrective actions are complete.

FEMA requests that this recommendation be resolved and open pending implementation ofthe

stated corrective action.

OIG Recommendation #5: We recommend that the Assistant Administrator, Grant Programs

Directorate, require the Director, Montana Disaster and Emergency Services to establish policies

and procedures to enforce the property management requirements for equipment purchased with

federal funds by subgrantees.

FEMA Response: FEMA concurs with this recommendation.

FEMA will request the Director, MT DES establish policies and procedures to enforce the

property management requirements for equipment purchased with federal funds by subgrantees.

Policies and procedures for property management of equipment purchased with federal funds

should include at a minimum:

a) Processes for equipment control management to include DES responsibilities, subgrantee responsibilities and property identification requirements;

b) Processes for equipment acquisition;

c) Process for transferring of property;

d) Process for disposition ofproperty;

c) Process for lost, stolen, or damaged property; and

f) Annual inventory requirements and equipment inventory templates. Equipment

inventory templates which identify date ofinventory, equipment name, identifying

information such as serial numbers, purchase date, purchase price, grant program

equipment was purchased under, location of equipment, disposition of equipment,

and name ofindividual taking the inventory.

These actions will be completed by MT DES within 45 days ofreceipt ofthe final report via the

grantee notification and will be sent to the assigned FEMA Program Analyst.

4
Appendix B 

Management Comments to the Draft Report 

The State of Montana’s Management of State Homeland Security Program Grants 

Awarded During Fiscal Years 2007 through 2009 

Page 28
 

FEMA requests that this recommendation be resolved and open pending implementation ofthe

stated corrective action.

OIG Recommendation #6: We recommend that the Assistant Administrator, Grant Programs

Directorate, require the Director, Montana Disaster and Emergency Services to require subgrantees to furnish plans for performing biennial physical inventories within a specified

timeframe and to provide details on how all subgrantees will become compliant with property

management requirements.

FEMA Response: FEMA concurs with this recommendation.

FEMA will request the Director ofMT DES to furnish plans for performing annual physical

inventories within a specified timeframe and to provide details on how all subgrantees will

become compliant with property management requirements.

FEMA will request the Director ofMT DES, as a part of a comprehensive monitoring protocol,

request subgrantees furnish copies of annual inventory templates, questions relating to the

maintenance of equipment; location of equipment; labling of equipment; transfer of equipment;

lost, stolen or damaged equipment; and disposition of equipment.

These actions will be completed within 60 days ofreceipt ofthe final report via the grantee

notification and updates will be sent to the assigned FEMA Program Analyst every 90 days until

the corrective actions are complete.

FEMA requests that this recommendation be resolved and open pending implementation ofthe

stated corrective action.

OIG Recommendation #7: We recommend that the Assistant Administrator, Grant Programs

Directorate, require the Director, Montana Disaster and Emergency Services to clarify ownership

of equipment furnished with federal funds particularly with arrangements between

Interoperability Montana and its partner subgrantee jurisdictions.

FEMA Response: FEMA concurs with this recommendation.

During conference calls and follow-up correspondence on June 9, 2011, FEMA requested an

inventory listing of all equipment purchased by Interoperability Montana since 2006. FEMA

will request the Director ofMT DES clarify ownership ofequipment furnished with federal

funds, particularly with arrangements between Interoperability Montana and its partner

subgrantee jurisdictions.

FEMA will request the Director ofMT DES provide the requested inventory of all equipment

purchased by Interoperability Montana using any past or currently active FEMA Homeland

Security Grant funds to include the following information:

a) Equipment name;

b) Identifying information such a serial numbers, etc.;

5

 
Appendix B 

Management Comments to the Draft Report 

The State of Montana’s Management of State Homeland Security Program Grants 

Awarded During Fiscal Years 2007 through 2009 

Page 29
 

c) Purchase date;

d) Purchase price;

e) Grant program and applicable year equipment was purchased under;

t) Location of equipment;

g) Disposition of equipment; and

h) Jurisdiction responsible for equipment.

These actions will be completed within 30 days ofreceipt ofthe final report via the grantee

notification and will be sent to the assigned FEMA Program Analyst.

FEMA requests that this recommendation be resolved and open pending implementation ofthe

stated corrective action.

OIG Recommendation #8: We recommend that the Assistant Administrator, Grant Programs

Directorate, require the Director, Montana Disaster and Emergency Services to establish policy

and monitoring procedures that include the frequency ofvisits, methodology for selecting subgrantees to visit, and a protocol for reviewing financial and performance related activities during

the visits.

FEMA Response: FEMA concurs with this recommendation.

Monitoring subgrantees is critical to ensuring that projects are being executed as planned and

that subgrantees are within compliance ofthe terms oftheir grant agreements. FEMA will

request that the Director, MT DES establish policy and monitoring procedures that include the

frequency ofvisits, methodology for selecting subgrantees to visit, and a protocol for reviewing

financial and performance related activities during the visits.

The updated policy and monitoring procedures should include:

a) A clear method for selecting subgrantees to be visited;

b) The number or frequency ofmonitoring visits each year for all FEMA Homeland

Security Grant Programs;

c) The protocols to be followed during the monitoring visits; and

d) Process to review and conduct analysis ofsubrecipient's financial, programmatic and

administrative policies and procedures, such as:

1. accounting for receipts and expenditures,

2. cash management, maintaining adequate financial records,

3. means of allocating and tracking costs,

4. contracting and procurement policies and records,

5. payroll records and means of allocating staff costs,

6. property/equipment management system(s),

7. progress of project activities.

These actions will be completed within 90 days ofreceipt ofthe final report via the grantee

notification and updates will be sent to the assigned FEMA Program Analyst every 90 days until

the corrective actions are complete.

6

 
Appendix B 

Management Comments to the Draft Report 

The State of Montana’s Management of State Homeland Security Program Grants 

Awarded During Fiscal Years 2007 through 2009 

Page 30
 

FEMA requests that this recommendation be resolved and open pending implementation ofthe

stated corrective action.

OIG Recommendation #9: We recommend that the Assistant Administrator, Grant Programs

Directorate, require the Director, Montana Disaster and Emergency Services to develop a

unifonn set of procedures for monitors to use during evaluations ofsubgrantee program

perfonnance to ensure consistency in the scope and methodology ofthe evaluations from

subgrantee to subgrantee.

FEMA Response: FEMA concurs with this recommendation.

FEMA will request that the Director, MT DES establish a unifonn set ofmonitoring procedures

to facilitate consistency in the scope and methodology ofthe evaluation ofsubgrantees.

The protocols to be followed during the monitoring visits should review subrecipient's financial,

programmatic and administrative policies and procedures including:

I. Accounting for receipts and ex.penditures;

2. Cash management, maintaining adequate financial records;

3. Means of allocating and tracking costs;

4. Contracting and procurement policies and records;

5. Payroll records and means of allocating staff costs;

6. Property/equipment management system(s); and

7. Progress ofproject activities.

Within 120 days ofreceipt ofthe final report via the grantee notification, FEMA will require the

MT DES to complete these protocols and send updates to the assigned FEMA Program Analyst

every 90 days until the corrective actions are complete.

FEMA requests that this recommendation be resolved and open pending implementation ofthe

stated corrective action.

OIG Recommendation #10: We recommend that the Assistant Administrator, Grant Programs

Directorate, require the Director, Montana Disaster and Emergency Services to revise the State

Administrative Agency's existing financial internal control system to ensure that policies and

procedures enable a comprehensive accounting ofindividual subgrantee finances from initial

award to grant close-out.

FEMA Response: FEMA concurs with this recommendation.

Currently, funds are paid out by the Centralized Services Division without being first reviewed

by the Office ofHomeland Security (OHS) for programmatic compliance. The OHS should

review the drawdown requests first to ensure costs are allowable, allocable, and reasonable

within the grant funded projects.

7

 
FEMA will request the Director, MT DES revise the State Administrative Agency's existing

financial internal control system to ensure that policies and procedures enable a comprehensive

accounting ofindividual subgrantee finances from initial award to grant close-out.

Policies and procedures for financial internal control should at a minimum include:

a) Who is responsible for programmatic review and approval ofreimbursement requests;

b) Procedures to account for individual subgrantee finances for each separate grant award

from initial award to grant close-out;

c) Identification and location ofrequired supporting documentation (i.e., time allocation

sheets, receipts, contracts);

d) Identification ofmatch requirements;

e) Identification of program income;

f) Cross check of equipment purchased with the Responder Knowledge Base, Travel

policies; and

g) Cross check of approvals for overtime & backfill, Environmental Historic Preservation

requirements, training requests, and sole source contracts.

These actions will be completed by MT DES within 60 days ofreceipt ofthe final report via the

grantee notification and updates will be sent to the assigned FEMA Program Analyst every 90

days until the corrective actions are complete.

FEMA requests that this recommendation be resolved and open pending implementation ofthe

stated corrective action.

OIG Recommendation #11: We recommend that the Assistant Administrator, Grant Programs

Directorate, require the Director, Montana Disaster and Emergency Services to establish

procedures to ensure that the Centralized Services Division receives all financial information

necessary to ensure that payments are properly authorized and that account balances are kept

current.

FEMA Response: FEMA concurs with this recommendation.

FEMA will request that the Director, MT DES establish procedures to ensure that the

Centralized Services Division receives all financial information necessary to ensure that

payments are properly authorized and that account balances are kept current.

Procedures for distribution ofFEMA award information should include:

h) Provide copies of award documents and any adjustments to awards to the Centralized

Services Division; and

i) Provide copies of award documents and any adjustments to awards to any individual with

programmatic or financial responsibility for FEMA awards administration or

management.

8

 

Appendix B 

Management Comments to the Draft Report 

The State of Montana’s Management of State Homeland Security Program Grants 

Awarded During Fiscal Years 2007 through 2009 

Page 31
 
Appendix B 

Management Comments to the Draft Report 

The State of Montana’s Management of State Homeland Security Program Grants 

Awarded During Fiscal Years 2007 through 2009 

Page 32
 

These actions will be completed by MT DES within 60 days ofreceipt ofthe final report via the

grantee notification and updates will be sent to the assigned FEMA Program Analyst every 90

days until the corrective actions are complete.

FEMA requests that this recommendation be resolved and open pending implementation ofthe

stated corrective action.

OIG Recommendation #12: We recommend that the Assistant Administrator, Grant Programs

Directorate, require the Director, Montana Disaster and Emergency Services to establish

procedures to include periodic inspections ofsubgrantee supporting documentation for

reimbursement requests.

FEMA Response: FEMA concurs with this recommendation.

FEMA will request the Director, MT DES establish procedures to include periodic inspections of

subgrantee supporting documentation for reimbursement requests. As part of an ongoing

comprehensive monitoring plan, MT DES should develop procedures to periodically and

randomly request supporting documentation (i.e., time allocation sheets, receipts, contracts, etc.).

These actions will be completed by MT DES within 60 days ofreceipt ofthe final report via the

grantee notification and updates will be sent to the assigned FEMA Program Analyst every 90

days until the corrective actions are complete.

FEMA requests that this recommendation be resolved and open pending implementation ofthe

stated corrective action.

OIG Recommendation #13: We recommend that the Assistant Administrator, Grant Programs

Directorate, require the Director, Montana Disaster and Emergency Services to provide adequate

documentation for the unsupported subgrantee reimbursements or recover the $938,601 in State

Homeland Security Program grant funds for return to FEMA.

FEMA Response: FEMA concurs with this recommendation.

FEMA will request the Director, MT DES provide adequate documentation for the unsupported

subgrantee reimbursements or recover the $938,60I in State Homeland Security Program grant

funds for return to FEMA.

MT DES should provide the assigned FEMA program analyst with adequate supporting

documentation for questioned costs identified below within 90 days ofreceipt ofthe final report

via the grantee notification. Based on the documents provided, FEMA will review the $938,601

for reasonableness.

FEMA requests that this recommendation be resolved and open pending implementation ofthe

stated corrective action.

9

 
Appendix B 

Management Comments to the Draft Report 

The State of Montana’s Management of State Homeland Security Program Grants 

Awarded During Fiscal Years 2007 through 2009 

Page 33
 

We thank you, again, for the opportunity to review and update our comments to your

recommendations contained in your final report. Should you have further questions regarding

our response, please do not hesitate to call FEMA's ChiefAudit Liaison, Brad Shefka, at 202-

646-1308. '

10

 
Appendix B 

Management Comments to the Draft Report 

The State of Montana’s Management of State Homeland Security Program Grants 

Awarded During Fiscal Years 2007 through 2009 

Page 34
 

DEPARTMENT OF MILITARY AFFAIRS

DISASTER & EMERGENCY SERVICES DIVISION

www.montanades.org Brian Schweitzer, Governor

STATE OF MONTANA

(406) 324-4777 1956 Mt. Majo Street, P.O. Box 4789 Fort Harrison, Montana 59636-4789

September 30, 20 II

Ms. Rhonda Honegger

Program Analyst, Western Division

DHS/FEMA

800 K Street, NW

Washington D.C. 20472-3625

RE: Office of Inspector General Audit Response

Dear rVls. Honegger:

On behalf ofthe Montana Department of Military Affairs, Disaster and Emergency Services

Division (DES), this letter is intended to serve as response to the recommendations made by the

Department of Homeland Security (DHS), Office of Inspector General relative to their audit ofthe

State ofMontana's management of the State Homeland Security Program that were awarded during

the Federal Fiscal Year 2007 through 2009.

Montana Disaster and Emergency Services would like to express our sincere appreciation for the

efforts of all ofthe representatives ofthe Department of Homeland Security Office oflnspector

General's Office and Foxx and Company for their dedication in assisting Montana with its elTorts to

improve processes and procedures for the effective and efficient management of the Homeland

Security Grant Programs. It has truly been a pleasure working with all of tile parties involved and an

education for me personally, as the new administrator for Montana DES.

Measurement ofGoals {mt! Objectives

DES DIVISION NARRATIVE:

Montana DES updated the State Homeland Security Strategy in January 0£201O. Montana DES

continues its efforts inl1lonitoring sub-recipients' goals and objectives using the sub-recipient's

application, the award letter that identifies the goals, objectives and milestones, quarterly progress

reports, implementing new policies and procedures and requiring sub-recipients to submit an

After Action Report at the end ofthe grant perfonnance period.

MONTANA DEPARTMENT OF MILITARY AFFAIRS

DISASTER AND EMERGENCY SERVICES DIVISION

1 018

 
Appendix B 

Management Comments to the Draft Report 

The State of Montana’s Management of State Homeland Security Program Grants 

Awarded During Fiscal Years 2007 through 2009 

Page 35
 

Recommendations

\Ve recommend that the Assistant Administrator, Grant Programs Directorate. require the

Director, IvlontMa Disaster and Emergency Services to:

Recommendation #1: Del'e1op strategic gO(lls and objectil'es applicable to c(lpabilities t!tat are

specific. 1'1U!asurahle. achievahle. resulLs-oriented. and time limited.

Response:

Montana Disaster and Emergency Services (DES) agrees with this recommendation and has

alrcady takcn stcps to improve CutTcnt procedures. II/fontana DES sets cach sub-recipient·s

measurable goals and objectives using the individual sub-recipient's grant application submitted

to the stak. Each applicant must mcet a number orrcquiremcnts and set measurable goals and

objectives that fit within the State Preparedness Report, Homeland Security Strategy goals and

objectives, Targd Capabilities and the National Priorities. \fontana DES recognizes that the

State's goals and objectives in the past have been too broad-based, and is in the process of making

them more specific.

Montana DES paI1icipated in FE~vlA provided Teclmical Assistance Training September 27-30,

2011 to obtain guidance and suggestions to facilitate improvement. Redesigned grant fonns such

as applications detailing measurable objectives are to be used staI1ing immediately. 2011 State

Homeland Security Grantecs will receive a conditional award letter until their applications arc

revised to meet grant requirements including specific measureable goals and objectives to be

complekd during thc !,'fant pcriod and returned to thc Division by Deccmbcr, 2011. lllcsc goals

'will include timelines and milestones as well as close-out and sustainment plans before grant

projects can begin. All applications must include project plans linked to specified investment

justifications.

In addition. Montana DES will begin the process to review and revise the State Strategic Plan in

coordination with the Senior Advisory Committee (SAC) and the Governor's OUice by March 31,

2012. The plan will be updated to include measureable objectives with specific results and

timelines for work on identified capabilities.

'''ill be fully implemented by :\larch 31, 2012

Recommendation #2: Develop performance measures and collect alld ana(v:;e performance

data from subgmnfees to me(lSIlre progress towards achiel'ing goals and objectives.

Response-:

Montana DES agrees with this recommendation and has already taken steps to improve current

procedures. The Technical Assistance held September 27-30.2011, assisted DES to create

improved applications. reporting, and grant management tools. Progress on the measurable

objectives detailed during the application process will be reported to 1\,10ntana DES by subrecipients on a quarterly basis using expanded programmatic and financial repol1ing fOllns clearly

demonstrating project progress. Progress will be specifically measured by a listing and percentage

MONTANA DEPARTMENT OF MILITARY AFFAIRS

DISASTER AND EMERGENCY SERVICES DIVISION

2of8

 
Appendix B 

Management Comments to the Draft Report 

The State of Montana’s Management of State Homeland Security Program Grants 

Awarded During Fiscal Years 2007 through 2009 

Page 36
 

ofindividual tasks completion, a reconciliation of financial status, and an explanation of

challenges and any possible delays or changes.

During any grant application pcriod, a pancl (not thc SAC) comprised of DES managemcnt

personnel will review grant applications for completeness including measureable objectives tied

lo specific national and state priorities. Applications deficient in these areas will be rdnmed to

potential sub-recipients for revision prior to their presentation to the SAC for consideration. The

SAC will include Subject \-falter Experts that will review and make reL'ommendations of

applications in their area of expertise. Applications for review and consideration must fit within

the state priorities.

PartiaDy implemented, fuD implementation by December 31, 2011

Recommendation #3: Require Sl/bgramees to use the performance meaSl/res to report activity

accomplishments in quarter~I'progress reports, inducting the .\·tatu.V ofgCJ(lls, objectives, and

milestone adlievemellts.

Response:

MontiUla DES agrees with this recommendation and has already taken steps to improve eunent

procedures. Progress on the measurable goals and objectives detailed during the application

process will be reported to r-;[onlana DES by the snb-recipicnts on a quarterly basis using progress

reports detailing project and milestone completion status. Ifthe progress or the repoliing of

progress is not suflieient the sub-recipient will be identified for monitoring, technical assistilllce,

andlor up to withholding oftllllds until satisfactory progress is made.

Pal"tially implemented, fuJI implementation b.y October 31,2011

Recommendation #4: Sununarize the progren' reported each quarter b,v program and

incorporate the progress andprojecfedfundillg needs into tile State's processfor preparing

subs'equent,vears' applicationsfor Homeland SeCllrity Grant Programfimds.

Response:

Montana J)ES agrees with this recommendation and has already taken steps forward to improve

its current procedures. Improved reports summarizing the progress of subgrantee projects will be

submitted quarterly to FE!vIA via email on a simple document as there is no opportunity to submit

such reports via website portals. A projects' effectiveness and impact on !vlontana's security will

he considcred hy DES and the SAC when preparing for future ycars' Homeland Security Grant

Program applications.

Partially implemented, full implementation b:y October 31,2011

MONTANA DEPARTMENT OF MILITARY AFFAIRS

DISASTER AND EMERGENCY SERVICES DIVISION

30f8

 
Appendix B 

Management Comments to the Draft Report 

The State of Montana’s Management of State Homeland Security Program Grants 

Awarded During Fiscal Years 2007 through 2009 

Page 37
 

Complitlnce with Property Management Requirements

DES DIVTSIO:,/ NARRATIVE:

Montana DES rcquircs thc grant sub-rccipicnts to t,)l1ow all Codc of Fcdcral Rcgulations. grant

guidance and Montana DES Division's intemal policies and procedures. Montana DES includes

fedcrally providcd Assuranccs and Conditions pCl1aining to propcrty managcmcnt on cvcry award

letter to sub-recipients. J\·Iontana DES also provides to the sub-recipients the proper Department

ofHomdand Scc'urity (DRS) markers to alIi,. to equipment purehascd with grant funds. I\Iontana

DES has in place an equipment tracking spreadsheet for the sub-recipient to use as a tool for their

elluipment mill1agemenL

Recommenda lion s

We recommend that the Assistant Administrator, Grant Programs Directorate, require the

Director, Montana Disaster and Emergency Services to:

Recommendalioll #5: F:.~tablish policies andprocedure.~to ellforce the property management

requirement~·for equipment purchasedwith federal jiwds by subgrrllltees.

Response:

Montana DES agrccs with this rccommcndation and has alrcady takcn stcps to improvc cuncnt

procedures. ;\ review and update of Montana DES's property management policies will be

completed by December 31,2011. Cpdates to Ille policies will include an inventory schedule and

a listing of items requiring tracking such as all equipment over $5,000, radios, projectors,

camcras, computcrs, printcrs, amI othcr e1edronic itcms. DES will rClJuirc a physical invcntory of

materials no less than every two years, but is considering an annual requirement. Improved

inventory fonns will be distributed to all sub-recipients to facilitak the physical inventory

proccdurc.

Pa."tially implemented, fuJI implementation by December 31, 2011

Recommendaliotl #6: Require subgramees to jilrnish plansfor performillg biellllial physical

inl'entories withill a ~pecifietl timeframe anti to prOl'iLle tletails on how all sllbgralltees will

become compliant with property mallagemellt reqrlirements.

Response:

MonUma DES agrees with this recommendation and has already taken steps to improve ,'lInent

procedures. Improve:d inventory fonus will be distributed to all sub-recipients to facilitate the

physical inventory procedure. A schedule of inventory due: daus for subgrantees will be

establishe:d for all ongoing grant years, with special e:mphasis on the cune:nt and future: years'

grants. Future: subgrantee:s will be required to submit, willI their application, inventory and

control scheduling in accordancc to grant requircmcnts.

P:II"tiaUy implemented, full implementation b)' Del,ember 31, 2011

MONTANA DEPARTMENT OF MILITARY AFFAIRS

DISASTER AND EMERGENCY SERVICES DIVISION

4of8

 
Appendix B 

Management Comments to the Draft Report 

The State of Montana’s Management of State Homeland Security Program Grants 

Awarded During Fiscal Years 2007 through 2009 

Page 38
 

RecommeJIdatioll # 7: Clarijr ownership ofequipmelltfumished with federal funds

particularly wilh arrangemellt.\· between lnteroperability ,\.fontana allll its partner subgrantee

jurisdictiollli.

Response:

Montana DES agnxs with this recommendation and has alrcady takcn steps to improvc c'uncnt

procedures. An inventory of equipment purchased by Interoperability Montana with federal grant

funds has alrcady hecn obtained and verification has commenccd. Tntcropcrahility \ofon11ma has

also submitted equipment transfer letters outlining ownership. signed by their partner subgriUltees. The new inventory [onus will be distributed to all interoperable commLlI1ieation subrecipients to facilitate the physical inventory procedure, and equipment location will be monitored

by l\fontana DES during the applicable grant period.

Partially implemented, full implementation by December 31,2011

Sllbgrantee PerfOrmance MOilitoring

DES DIVISIO~ NARRATIVE:

Mont/Ula DES maintains its compliance with all Federal requirements for sub-recipient

monitoring, and as indicated in 2 CPR Part 215.51 and OUR Circular A-133 Compliance

Supplement, Montana DES has been monitoring sub-recipient activities in fiscal years 2007.

2008.2009,2010 and will continue to do so as required. Award letters to sub-recipients contain

all required federal award infonllation (e.g., catalog offederal Domestic Assistance title and

nU11lher, award name. nallle ofthe tederal awarding agency). DES provides all sub-recipients with

"Assurances and Certifications" attached to every award letter, a DES grant management

handbook IUld the Grant Guidance. Mont/Ulil DES sustains a filliUlcial management system to

provide accurate, current and complete disclosure ofthe financial results of each federallysponsored project or program in accordance with the reporting requirements set forth in §215.52.

Circular A-133 allows a pass-through entity to use its discretion to detenlline how best to properly

monitor their sub-recipients. VarioLls techniques sLlch as Desk Top monitoring, Site Visits

monitoring, Quarterly Repolts are used to meet the goals of monitoring. Montana DES ha~ six (6)

district representatives that regularly perfOlID site visit monitoring and technical support to all

sub-recipients. DES receives audit finding updates through the Centralized Services Division and

will follow-up and give corrective gtlidance on those audits through monitoring within six

months. If a sub-recipient continues to hc out of compliance the DES Administrator will take

these issues into consideration and take appropriate action.

Recommendations

\Ve recommend that the Assistant Administrator, Grant Programs Directorate, require the

Director, Montana Disaster and Emergency Services to:

MONTANA DEPARTMENT OF MILITARY AFFAIRS

DISASTER AND EMERGENCY SERVICES DIVISION

50f8

 
RecommeJIdatioll #8: Estflblisll policy alld mOllitorillg procedures tlUlt include tile freqlteJIcy

(ifJ'i~its, methodalogyfar wiecting subgrantees to J'L\'it, and a protocalfar reJ'iewingfillfll1cial

alld performallce related activities durulg the J'isits.

Response:

Montana DES agnxs with this recommendation and has alrcady takcn steps to improvc c'uncnt

procedures. Active monitoring. both with Desk Top and Site Visits, have been greatly increased

in the last year. The doc'lI111cntation 01' monitoring has heen enhanced, with greater preparation

and documentation to follow during future monitoring. Guidance on Monitoring was a large part

of the Tec1mical Assistance held for 1\10ntana DES on September 27-30, 20 II. A grant cycle will

be developed to include scheduled monitoring, both by Desk Top and Site Visits by December 31,

2011. This schedule will detail Desk Top monitoring of 100% of a.ll Montana's subgrantees mId

Site Visits to one third of all subgrantees each year. Technology such as teleconferences. scanned

documentation, photography and video will be used to combat geographic and climatic

challenges, hut will not replace scheduled personal visitation ofsuhgrantees.

Pa''tially implemented, full implementation by December 31, 2011

Recommendation #9: Develop a IIIIi/orm set ofproceduresfor monitors to lise miring

eJ'ai/lOtions ofsubgrantee programperformance to ensure cOllsisteJIl)' in the scope and

methodology ofthe evalltationsfrom slIbgrantee to sllbgrantee.

Response:

Montana DES agrees with this recommendation and has already taken steps to improve cunent

procedures. 'l11e Division currently has a standardized monitoring procedure, however, these

policies and fonns will be reviewed and revised by J\·larch 31, 2012. Improved monitoring fonns

designed during FEMA provided Technical Assistance training in September 20 II will be used

during all monitoring visits. A full monitoring schedule of all sub-grantees ,vill be established by

Deeemher31. 2011.

p,,,'tially implemented, full implementation b)' :\-Iardl 31, 2012

Financial Management Controls

DES DlVISIO:,\/ NARR-\.TIVE:

Montana DES has followed and been in compliance with federal requirements for financial grant

management. :vlontana DES partially relied on the assistanee ofthe budget analyst statfperson

previously under the Centralized Services Division and under,100d the accounting requirements

for the grll1lts ami financial management oversight.

MONTANA DEPARTMENT OF MILITARY AFFAIRS

DISASTER AND EMERGENCY SERVICES DIVISION

6of8

 

Appendix B 

Management Comments to the Draft Report 

The State of Montana’s Management of State Homeland Security Program Grants 

Awarded During Fiscal Years 2007 through 2009 

Page 39
 
Appendix B 

Management Comments to the Draft Report 

The State of Montana’s Management of State Homeland Security Program Grants 

Awarded During Fiscal Years 2007 through 2009 

Page 40
 

Recommendations

\Ve recommend that the Assistant Administrator, Grant Programs Directorate. require the

Director, IvfontMa Disaster and Emergency Services to:

Recommendation #1 0: Re~'ise ti,e Stllte ;1,lmillistrative i1genc.r·s existing financial imernal

control ~J'stem to ensure th at policies alltlprocedllre~' enable a comprehensil·e accounting of

uulividual sllbgrallteefuulllces from initial award to grant close-out.

Response:

Monlima DES agrees with this recommendatiun and has already taken steps to improve cunenl

procedures. i\ full review ofstate and t~deral financial requirements in addition to utilizing

current iUld future technologies iUld any necessary revisions of internal financial controls will be

completed by November 30. 2011.

Pal'tially implemented, full implementation by November' 30,2011

RecommeJIdation #11: 1'-stabli~'11 procedures to ensure that the Centralized Services Division

receive.~ a/lfUraIU:ial information neces'sary to ensure that payments are properly authorized

and tltat accoll/ll balO/lces are kept current.

Response:

IV[ontmra DES ah'l'ees with this recommendation and has already taken steps to improve c'unent

procedures, 'lhe sharing of award financial and programmatic information between DES's grant

office and Centralized Services Division has been enhanced via a shirred computer drive and more

trequent electronic communication. 'lhe department is also in the process of establishing an

electronic tile management system to store and access grant documents. Three binders of

suppolting documentation have been recently provided to the auditors.

Pal'tially implemented, full implementation b)' :'/ovember 30,2011

Recommendation #12: 1'-stabli~,1t procedures to illclrlde periodic mspeetions ofmbgrantee

sllpportulf( documentation for reimbursement requests.

Response:

Montana DES agrees with this recommendation and has already taken steps to improve cunent

procedures. Ivlontana's six District Representatives routinely verify siUuplings ofsupporting

docllmentation during their visits to subgrantees. Expenditures over $5.000 or of questionable

nature currently require suppolting documentation in order to be reimbursed. Montana DES will

review and make any necessary revisions to their policies by October 31. 20 II. One known

policy change will be the requirement for supporting documentation for all expenditures.

Partially implemented, full implementation by :'IIovember 30, 2011

MONTANA DEPARTMENT OF MILITARY AFFAIRS

DISASTER AND EMERGENCY SERVICES DIVISION

7of8

 
Recommelldation #13: Provide adeqllate docllmentation for the rlllSllpported sllbgrantee

reimbllrsements' or recover the $938,601 ill State Homeland Secllrity Program grantfllndsfor

retllm to FEMA.

Response:

Montana DES agrees with this recommendation and has already taken steps to provide

documentation to support the references expenditures. The Division is currently reviewing

documentation procedures to ensure all invoices for reinlbursement are associated with the subgrantee's grant file. Invoice supporting the $938,601 of expenditure have been included in the

three binders given to the auditors.

Supporting Documentat.ion pl"Ovided on Septembel' 26,2011

Sincerely,

Ed Tinsley, Administrator of Montana Disaster & Emergency Services

Cc:

Adjutant General Walsh

Sheena Wilson

Bill Moore

John Yakaitas

Paul Grinlstad

J.Lee Okeson

Steve Knecht

Jessica Davies

MONTANA DEPARTMENT OF MILITARY AFFAIRS

DISASTER AND EMERGENCY SERVICES DIVISION

8of8

Appendix B 

Management Comments to the Draft Report 

The State of Montana’s Management of State Homeland Security Program Grants 

Awarded During Fiscal Years 2007 through 2009 

Page 41
 
 

Appendix C 

Homeland Security Grant Program Background 

The Homeland Security Grant Program provides federal funding to 

help state and local agencies enhance their capabilities to prevent, 

protect against, respond to, and recover from terrorist attacks, 

major disasters, and other emergencies. The Homeland Security 

Grant Program encompasses several interrelated federal grant 

programs that together fund a range of preparedness activities, 

including planning, organization, equipment purchase, training, 

and exercises, as well as management and administration costs. 

Programs include: 

	 State Homeland Security Program provides financial 

assistance directly to each of the states and territories to 

prevent, respond to, and recover from acts of terrorism and 

other catastrophic events. The program supports the 

implementation of the State Homeland Security Strategy to 

address the identified planning, equipment, training, and 

exercise needs. 

	 Urban Areas Security Initiative provides financial assistance 

to address the unique planning, equipment, training, and 

exercise needs of high risk urban areas, and to assist in building 

an enhanced and sustainable capacity to prevent, respond to, 

and recover from threats or acts of terrorism and other 

disasters. Allowable costs for the urban areas are consistent 

with the State Homeland Security Program. Funding is 

expended based on the Urban Area Homeland Security 

Strategies. 

In addition, the Homeland Security Grant Program includes other 

interrelated grant programs with similar purposes. Depending on 

the fiscal year these include: 

 Metropolitan Medical Response System 

 Citizen Corps Program 

 Law Enforcement Terrorism Prevention Program 

(through FY 2007) 

The State of Montana’s Management of State Homeland Security Program Grants 

Awarded During Fiscal Years 2007 through 2009 

Page 42
 
           

Appendix D 

Montana State Administrative Agency Organization Chart 

Montana Department of Military Affairs 

Department

Director

Disaster and

Emergency

Services

Centralized

Services STARBASE ChallengeAcademy

Air National

Guard

Army National

Guard

Veterans

Affairs

Source: Montana Department of Military Affairs 

(as of February 25, 2011) 

The State of Montana’s Management of State Homeland Security Program Grants 

Awarded During Fiscal Years 2007 through 2009 

Page 43
 
 

Appendix E 

Report Distribution 

Department of Homeland Security 

Secretary 

Deputy Secretary 

Chief of Staff 

Deputy Chief of Staff 

General Counsel 

Executive Secretariat 

Director, GAO/OIG Liaison Office 

Assistant Secretary for Office of Policy 

Assistant Secretary for Office of Public Affairs 

Assistant Secretary for Office of Legislative Affairs 

Federal Emergency Management Agency 

Administrator 

Assistant Administrator, Grant Programs Directorate 

Federal Emergency Management Agency Audit Liaison 

Grant Programs Directorate Audit Liaison 

Office of Management and Budget 

Chief, Homeland Security Branch 

DHS OIG Budget Examiner 

Congress 

Congressional Oversight and Appropriations Committees, as 

appropriate 

The State of Montana’s Management of State Homeland Security Program Grants 

Awarded During Fiscal Years 2007 through 2009 

Page 44
 
 

 

ADDITIONAL INFORMATION AND COPIES 

To obtain additional copies of this report, please call the Office of Inspector General 

(OIG) at (202)254-4100, fax your request to (202)254-4305, e-mail your request to our 

OIG Office of Public Affairs at DHS-OIG.OfficePublicAffairs@dhs.gov, or visit our OIG 

websites at www.dhs.gov/oig or www.oig.dhs.gov. 

OIG HOTLINE 

To report alleged fraud, waste, abuse or mismanagement, or any other kind of criminal 

or noncriminal misconduct relative to Department of Homeland Security programs and 

operations: 

• Call our Hotline at 1-800-323-8603 

• Fax the complaint directly to us at (202)254-4292 

• E-mail us at DHSOIGHOTLINE@dhs.gov; or 

• Write to us at: 

DHS Office of Inspector General/MAIL STOP 2600, 

Attention: Office of Investigation - Hotline, 

245 Murray Drive SW, Building 410 

Washington, DC 20528 

The OIG seeks to protect the identity of each writer and caller.