OFFICIAL 

USE ONL L 

USE ONLY 

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Review of the Quality of Data 

Submitted by Department of 

Homeland Security Recipients of 

American Recovery and 

Reinvestment Act of 2009 Funds
 

OIG-11-15 November 2010 
Office of Inspector General 

U.S. Department of Homeland Security 

Washington, DC 20528 

 November 19, 2010 

MEMORANDUM FOR: The Honorable Brian De Vallance 

 Counselor to the Secretary 

 Department of Homeland Security

FROM: Richard L. Skinner 

 Inspector General 

 

SUBJECT: Review of the Quality of Data Submitted by Department of 

Homeland Security Recipients of American Recovery and 

Reinvestment Act of 2009 Funds 

Attached for your information is our final letter report: Review of the Quality of Data 

Submitted by Department of Homeland Security Recipients of American Recovery and 

Reinvestment Act of 2009 Funds. Since the report contains no recommendations to 

departmental management, we did not solicit formal comments. 

Consistent with our responsibility under the Inspector General Act, we are providing 

copies of our report to appropriate congressional committees with oversight and 

appropriation responsibility over the Department of Homeland Security. Also, we will 

post the report on our website for public dissemination. 

Should you have any questions, please call me, or your staff may contact Ms. Anne L. 

Richards, Assistant Inspector General for Audits, at (202) 254-4100. 

Attachment 
AMOUNT 

(in 

COMPONENT millions) ACTIVITY 

Transportation Security $1,000 Procurement and installation of baggage and 

Administration (TSA) passenger explosive detection systems at selected 

airports 

 

U.S. Customs and Border $680 Construction/renovation of land ports of entry, 

Protection (CBP) purchase of non-intrusive inspection systems, 

development and deployment of the Secure 

Border Initiative Program, and the upgrade of 

tactical communications 

 

Federal Emergency $610 Grants for Emergency Food and Shelter National 

Management Agency Board Program, Public Transportation and 

(FEMA) Railroad Security Assistance, Port Security, and 

Assistance to Firefighters for the 

construction/renovation of non-federal fire 

stations 

 

U.S. Coast Guard (USCG) $240 Alteration of bridges, improvements to shore 

facilities, and repairs to vessels 

Office of the Under $200 Continued development of the DHS consolidated 

Secretary for Management headquarters 

(USM) 

U.S. Immigration and $20 Upgrades to tactical communications systems 

Customs Enforcement (ICE) 

Background 

The American Recovery and Reinvestment Act of 2009 (Recovery Act) made available to 

federal agencies approximately $787 billion for preserving and stimulating economic 

growth in the United States. The Act also created the Recovery Accountability and 

Transparency Board (Recovery Board) to “coordinate and conduct oversight of covered 

[Recovery Act] funds to prevent fraud, waste, and abuse.” 

DHS Recovery Act Funding 

The Department of Homeland Security (DHS) received Recovery Act funds of $2.75 

billion for the following activities: 

To help complete these activities, DHS awarded contracts and grants to government, nonprofit, and for-profit organizations (collectively referred to as recipients). Section 1512 

of the Recovery Act requires recipients to submit reports on use of funds not later than 10 

days after the end of each calendar quarter. The reports include information on the status 

of recovery funds; lists of projects undertaken; and project information, such as jobs 

1
 
 

 

created. Recipients submit data through www.FederalReporting.gov, the online Web 

portal that collects all Recovery Act recipient reports. 

Office of Management and Budget (OMB) memoranda1

 present Section 1512 reporting 

guidance for federal agencies and grantees and Clause 52.204-11 of the Federal 

Acquisition Regulations (FAR) contains instructions for contractors. 

Recovery Board 

As part of its oversight activities, the Recovery Board has been working with federal 

Inspectors General to complete a multi-phased approach to assess recipient reporting. 

Phase I reviews provided a snapshot of agencies’ data review processes before the start of 

the first reporting period in October 2009. The phase II review assessed the data review 

processes at seven agencies after the first reporting period which ended on June 30, 2009. 

Phase III focused on controls and processes of agencies and recipients to ensure data 

reliability and transparency. One part of Phase III reviewed the internal controls of 

federal agencies to ensure that recipient data are accurate, complete, timely, and free of 

significant errors or material omissions. A second part of Phase III, in which we 

participated, covered recipient processes for compiling and reporting on the data elements 

listed in the next section. 

Data Elements Covered by Review 

1. Number of Jobs. Contractors and grantees report an estimate of the number of jobs 

funded by the Recovery Act for the quarter. Grantees must also include the number of 

jobs funded by sub grantees (entities which receive flow-through grant funds) and 

vendors. Contractors, however, are not required to report jobs ascribed to subcontracts. 

2. Total Federal Amount of Recovery Act Funds Received or Invoiced. Grantees report 

the total cumulative amount of Recovery Act funds received from the federal agency. 

Contractors report the total cumulative amount of funds invoiced to the agency for 

federal payment. 

3. Total Amount of Recovery Act Expenditures. Grantees report the total cumulative 

amount of Recovery Act funds received that were spent on projects or activities. 

Contractors do not report this data element. 

4. Project Status. Grantees and contractors report the completion status of the project or 

activity funded by the Recovery Act by selecting one of four options - not started, less 

than 50% completed, 50% or more completed, and fully completed. 

1 Memorandum M-09-21, Implementing Guidance for the Reports on Use of Funds Pursuant to the 

American Recovery and Reinvestment Act of 2009, June 22, 2009. Memorandum M-10-08, Updated 

Guidance on the American Recovery and Reinvestment Act - Data Quality, Non-Reporting Recipients, and 

Reporting of Job Estimates, December 18, 2009. Memorandum M-10-14, Updated Guidance on the 

American Recovery and Reinvestment Act, March 22, 2010. 

2
 
 

Table: Summary of Recovery Act Reporting Results for the Reporting Period 

Ending December 31, 2009 

Data Element 

Grantees (9) Contractors (8) 

Grant and 

Contract 

Recipients (17) 

No. Reporting 

Consistent with 

Guidance 

No. Reporting 

Consistent with 

Guidance 

Total No. 

Reporting 

Consistent with 

Guidance 

Yes No Yes No Yes No 

Jobs 0 9 0 8 0 17

Funds Received/Invoiced 1a 1 7 b 0 8 1 

Expenditures 1c 5 N/Ad N/Ad 1 5 

Project Status 8 1 8 0 16 1 

Final Report 8 1 8 0 16 1 

a

 Of the nine grantees reviewed, we excluded seven grantees from the Funds Received/Invoiced data 

element because they reported having received/invoiced no Recovery Act funds as of 12/31/09. b Of the eight contractors reviewed, we excluded one contractor from the Funds Received/Invoiced 

data element because the contractor reported having not submitted invoices for Recovery Act funds 

as of 12/31/09. 

c Of the nine grantees reviewed, we excluded three grantees from the Expenditures data element 

because they reported having not received or expended any Recovery Act funds as of 12/31/09. d

 Contractors were not required to report expenditures. 

 

 

5. Final Report. Grantees and contractors report whether the report is their final report 

submission. 

This report covers recipient reporting for the quarter ending December 31, 2009. For that 

quarter, DHS recipients reported jobs funded by the Recovery Act of 6472, funds 

received or invoiced of $170 million3, and expenditures of $123 million3 . 

Results of Review 

The 17 recipients we reviewed used processes that provided reasonable assurance of 

compliance with the applicable reporting requirements for three of the five data elements 

included in our review. Furthermore, even though none of the recipients calculated the 

number of jobs in full compliance with the applicable OMB and FAR guidance, the 

majority of the job estimates appeared to reflect the actual job impact of the Recovery 

Act funds expended. We also determined that five of the nine grantees used reasonable 

methods to compute total Federal funds expended even though their methods were 

inconsistent with the OMB guidance, and identified other minor reporting issues with 

grantees. The results of our review of recipient reporting are summarized in the 

following table. 

2

 Number reported in Recovery.gov for DHS for the period covered by audit. 

3

 Amount reported in DHS data extract for March 25, 2010. 

3
 
 

 

Recipient Jobs Estimates Not Based On Federal Guidance 

OMB memorandum M-10-08 changed the method for grantees to calculate jobs created 

or retained by Recovery Act funding. The updated guidance requires grantees to estimate 

the number of Recovery Act jobs created or retained based on: (1) work performed by the 

grantees only in the quarter being reported (not cumulative); (2) work performed by sub 

grantees and vendors; and (3) a calculation that divides the total actual hours worked in 

funded jobs by the number of hours representing a full work schedule for the kind of job 

being estimated. The calculation converts part-time and temporary jobs into “full-time 

equivalent” (FTE) jobs. The resulting FTEs are adjusted as appropriate to count only 

the portion corresponding to the share of jobs funded by Recovery Act funds. The revised 

guidance was issued on December 18, 2009, and was applicable for the reporting period 

ended December 31, 2009. The FAR contained similar guidance for contractors except 

that contractors were not required to report jobs related to subcontracts. None of the 17 

recipients completely followed the guidance for computing jobs. 

Examples of common errors follow: 

•	 Two grantees and two contractors reported jobs they expected to create or retain in 

the future. For instance, one recipient used total project hours included in its contract 

proposal as the basis of its jobs estimate. Another recipient reported positions that it 

intended to fill during a subsequent reporting period. 

•	 Four grantees and two contractors reported jobs based upon positions created or 

retained, rather than the Recovery Act funded hours worked in those positions during 

the reporting period. 

•	 One grantee reported jobs based on the project tasks completed during the period. 

The recipient calculated the number of jobs using a standard number of hours by 

position required to complete the project tasks. 

•	 One contractor reported jobs cumulatively. 

•	 Five grantees reported total jobs related to a project even though the Recovery Act 

funded only 90 or 95% of total project costs. 

Five recipients told us that, due to the nature of their projects, calculating jobs based upon 

actual hours worked on Recovery Act funded activities would have been unfeasible or 

unduly costly and burdensome. For example, four grantees that received Recovery Act 

funds to adapt airports for the installation of explosive detection systems had ongoing 

airport construction projects prior to the receipt of the Recovery Act funds. As a result, 

they used the Recovery Act funds to finance contract modifications for the additional 

work necessary to ready the airports for installation of the explosive detection systems. 

The grantees said that the construction contracts did not contain a requirement to track 

and report hours worked on the Recovery Act funded part of the projects because they 

awarded the contracts before receiving Recovery Act funds. 

4
 
Consequently, the grantees developed alternate methods to estimate jobs, none of which 

appeared to pose an unreasonable risk of material misreporting. For example, one 

grantee estimated jobs based upon the Recovery Act project tasks completed during the 

reporting period by relying on the contractors’ knowledge of the usual number of labor 

hours by job type required to perform a particular task. In another instance, the grantee 

reported jobs based upon the contractors’ estimate of the percentage of the total hours by 

job type worked during the reporting period that were attributable to the Recovery Act 

project. 

We also identified errors applicable only to contractors. In four instances, contractors 

included jobs pertaining to subcontracts in their quarterly estimates. Specifically, 174 

(56%) of 309 reported jobs were related to subcontracts. Generally, the contractors 

included subcontractor jobs because they believed the subcontractors were an integral 

part of the contract deliverable. Contractors also believed that not including subcontractor 

jobs diminishes the impact on jobs of the Recovery Act contracts. 

In July 2010, the Civilian Agency Acquisition Council and the Defense Acquisition 

Regulations Council amended the FAR to revise the clause FAR 52.204-11. The revised 

clause requires a contractor to estimate the number of jobs created and retained by the 

prime contractor and all first-tier subcontracts valued at $25,000 or more. The revised 

clause will be used for all new solicitations and contracts issued on or after July 2, 2010, 

the effective date of the revision. The new clause does not require renegotiation of 

existing Recovery Act contracts or its use in modifications made to existing contracts 

Grant Reported Expenditures Not Based on Federal Guidance 

Four grantees inappropriately reported project expenditures of $12,094,611 as Recovery 

Act funds expended. While this appeared reasonable, it was not consistent with OMB 

guidance which limits the amount to be reported for expenditures to the amount of 

expenditures for which Federal reimbursement has been received. OMB Memorandum 

M-09-21 defines expenditures as “the amount of Recovery funds received that were used 

to pay for projects or activities.” [emphasis added] 

In the grantees’ opinion, the economic stimulatory effect, including job creation and 

retention, occurred when they spent funds on their projects, as opposed to when they 

received federal reimbursement. As one grantee noted, reporting expenditures according 

to the OMB definition would have resulted in a “disconnect” between Recovery Act 

project expenditures and the resulting impact on jobs retention and creation. 

 

Minor Reporting Issues 

We identified minor errors in reporting in the data elements for funds received or 

invoiced, project status, and final report, as follows: 

•	 One grantee overstated the Recovery Act funds received from the awarding agency. 

OMB Memorandum M-09-21 defines funds received as “the total cumulative amount 

5
 
of Recovery Act funds received from the agency.” The recipient’s reported amount 

included project expenditures that were pending reimbursement or were grantee 

funded. 

•	 One grantee reported the status of its project as “not started.” Nevertheless, the 

recipient also reported an expenditure amount and project accomplishments for the 

quarter. The recipient confirmed that the project was ongoing for the quarter ended 

December 30, 2009, and that the “not started” status was incorrect. 

•	 One grantee reported that its report for the period ended December 31, 2009, was its 

“final report.” However, other data elements, such as project status, funds received 

and expended, and project accomplishments for the quarter indicated that the project 

was not complete. The recipient confirmed that the report submission for the quarter 

ended December 31, 2009, was not the final report and that the reporting of such was 

incorrect. 

Since the consolidated report as published by the Recovery Board contains 

recommendations to federal officials to clarify reporting instructions for federal agencies 

and recipients, this report contains no additional recommendations. The information in 

the report is intended to assist the department in its continued oversight of recipient 

reporting. 

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Appendix A 

Purpose, Scope, and Methodology 

The objective of this audit was to determine whether selected Recovery Act recipients’ 

processes for compiling and reporting selected data provided reasonable assurance of 

compliance with reporting requirements contained in Section 1512 of the Recovery Act. 

The review focused on five data elements - number of jobs, total Federal amount of 

Recovery Act funds received or invoiced, total Federal amount of Recovery Act funds 

spent, project status and final report. We examined reporting for the quarter ended 

December 30, 2009. 

We reviewed the processes of recipients who had reported the largest number of jobs 

created or retained and other recipients located in the same vicinity. These 17 recipients 

received Recovery Act awards from Transportation Security Administration, U.S. 

Customs and Border Protection, Federal Emergency Management Agency, and U.S Coast 

Guard. 

We also reviewed applicable federal, DHS, and recipient policies and procedures, 

interviewed key recipient personnel to understand and evaluate reporting processes and 

related controls, reviewed available documentation supporting recipient reports, and 

performed limited analytical procedures, such as logic and reasonableness checks of data 

quality. We performed fieldwork at recipient locations in six states and Washington D.C. 

We conducted this performance audit between April 2010 and October 2010 pursuant to 

the Inspector General Act of 1978, as amended, and according to generally accepted 

government auditing standards. 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. 

We appreciate the cooperation by management and staff from DHS and from the 

recipients in providing the information and access necessary to accomplish this review. 

7
 
Appendix B 

Major Contributors to this Report 

Roger LaRouche, Director 

Jerome Fiely, Desk Officer 

Shawn Cosman, Auditor 

8
 
 

 

Appendix C 

Report Distribution 

Department of Homeland Security 

Secretary 

Deputy Secretary 

Chief of Staff 

Deputy Chief of Staff 

General Counsel 

Executive Secretary 

Senior Counselor to the Secretary 

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 

DHS ARRA Coordinator 

DHS Component Liaison, FEMA 

DHS Component Liaison, CBP 

DHS Component Liaison, TSA 

DHS Component Liaison, USCG 

DHS Component Liaison, ICE 

Office of Management and Budget 

Chief, Homeland Security Branch 

DHS OIG Budget Examiner 

Congress 

Congressional Oversight and Appropriations Committees, as 

appropriate 

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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, or visit the OIG web site at www.dhs.gov/oig. 

OIG HOTLINE 

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

misconduct relative to department programs or operations: 

• Call our Hotline at 1-800-323-8603; 

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

• Email us at DHSOIGHOTLINE@dhs.gov; or 

• Write to us at: 

DHS Office of Inspector General/MAIL STOP 2600, 

Attention: Office of Investigations - Hotline, 

245 Murray Drive, SW, Building 410, 

Washington, DC 20528. 

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