Review of the

Port Security Grant Program

DEPARTMENT OF HOMELAND SECURITY

Office of Inspector General

Office of Inspections, Evaluations, & Special Reviews

OIG-05-10 January 2005

Offi ce of Inspector General

U.S. Department of Homeland Security

Washington, DC 20528

Preface

The Department of Homeland Security (DHS) Offi ce of Inspector General (OIG) was established 

by the Homeland Security Act of 2002 (Public Law 107-296) by amendment to the Inspector 

General Act of 1978. This is one of a series of audit, inspection, and special reports prepared 

by the OIG as part of its DHS oversight responsibility to promote economy, effectiveness, and 

effi ciency within the department.

This report assesses the strengths and weaknesses of the department’s port security grant 

program. It is based on interviews with employees and offi cials of relevant agencies and 

institutions, direct observations, and a review of applicable documents.

The recommendations herein have been developed to the best knowledge available to the OIG, 

and have been discussed in draft with those responsible for implementation. It is my hope that 

this report will result in more effective, effi cient, and economical operations. I express my 

appreciation to all of those who contributed to the preparation of this report.

Richard L. Skinner

Acting Inspector General

Review of the Port Security Grant Program Page 1

Contents

 Introduction ......................................................................................................................................3

 Results in Brief ................................................................................................................................3

 Background ......................................................................................................................................7

 Purpose, Scope, and Methodology .................................................................................................12

 Findings .........................................................................................................................................13

 Port Security Grants and National Strategic Considerations ................................................13

 Project Evaluation and Selection Process .............................................................................20

 Funding Private Sector Projects ............................................................................................33

 Status of Funds and Project Monitoring ...............................................................................38

 Dichotomy Between TSA and ODP Approaches ..................................................................40

Figures

 Figure 1: Summary of Port Security Grant Programs ...........................................................10

 Figure 2: Total Projects and Funding Requested vs. Awarded .............................................11

 Figure 3: Comparison of TSA Appropriation Authority and MTSA Grant Authority ..........14

 Figure 4: Sample Scoring Matrix .........................................................................................22

 Figure 5: Allocation of Funds ...............................................................................................34

 Figure 6: Status of Funds ......................................................................................................39

Appendices

Appendix A: Summary Tables of TSA Port Security Grants ......................................................46

 Appendix B: Management Comments ........................................................................................48

 Appendix C: OIG Evaluation of Management Comments .........................................................57

 Appendix D: Recommendations .................................................................................................66

 Appendix E: Major Contributors to this Report .........................................................................68

 Appendix F: Report Distribution ................................................................................................69
Page 2 Review of the Port Security Grant Program

Contents

Abbreviations

CFR Code of Federal Regulations

COTP Captain of the Port

 DOD Department of Defense

 ERB Executive Review Board

 FMSC Federal Maritime Security Coordinator

 FY Fiscal Year

 GAO Government Accountability Office

 IAIP Information Analysis and Infrastructure Protection

 MARAD Maritime Administration, Department of Transportation

 MTSA Maritime Transportation Security Act of 2002

 NIPP National Infrastructure Protection Plan

 NRB National Review Board

 ODP Office for Domestic Preparedness

 OIG Office of Inspector General

 P.L. Public Law

 PSRAT Port Security Risk Assessment Tool

 SLGCP Office of State and Local Government Coordination and Preparedness

 SRB Selection Review Board

 TSA Transportation Security Administration

 UASI Urban Area Security Initiative

 USCG United States Coast Guard
Review of the Port Security Grant Program Page 3

OIG

Department of Homeland Security

Office of Inspector General

Introduction 

The terrorist attacks of September 11, 2001, against the United States resulted 

in a renewed focus on protecting the country’s transportation systems, including 

seaports and port facilities. In 2002, Congress provided funding to the 

Transportation Security Administration (TSA), then under the Department of 

Transportation, to enhance the security of ports and other facilities. TSA, along 

with the Maritime Administration (MARAD) and the U.S. Coast Guard (USCG), 

developed the Port Security Grant Program. The purpose of this program is 

to reduce the vulnerability of American ports to potential terrorist attacks by 

enhancing facility and operational security. To date, the program has awarded 

over $560 million for over 1,200 projects.1

We reviewed the design and goals of the program, potential duplication of other 

programs, the roles and responsibilities of participating agencies, and the grant 

evaluation and selection process. We conducted our review between December 

2003 and May 2004. 

Results in Brief

The Port Security Grant Program provided funds for security within the maritime 

industry, generated additional investments, and significantly increased awareness 

of security needs. With no shortage of potential projects to choose from and 

limited funding, the program strove to award funds to projects that best matched 

its eligibility criteria. We observed good, respectful, working relationships among 

TSA, USCG, and MARAD, who collaborated to stand up a competitive grant 

program and leverage their expertise throughout multiple rounds of grant awards. 

However, the program’s strategic impact is less apparent and its purpose and goals 

require refinement to support national priorities effectively. Specifically:

1

 This includes $75 million made available by the Department of Homeland Security’s Office for Domestic Preparedness.
Page 4 Review of the Port Security Grant Program

• While the program’s eligibility criteria are directed broadly at national 

critical seaports, the current design of the program compromises 

the program’s ability to direct resources toward the nation’s highest 

priorities. 

• The program is attempting to reconcile the goals of the Maritime 

Transportation Security Act of 2002 (MTSA), 2 the competitive grant 

program mandated by Congress, and risk based direction of grant 

monies. MTSA is a nationwide security mandate that widely affects the 

maritime industry. The program is faced with the competing pressures 

of offsetting MTSA related costs while making competitive and risk 

based grant decisions to protect the nation’s most critical ports and port 

facilities.

• The program did not have the benefit of national key asset and critical 

infrastructure protection information now being developed by the 

Information Analysis and Infrastructure Protection (IAIP) directorate. 

Program administrators and IAIP, which is responsible for developing 

strategies for protecting the nation’s critical infrastructure, did not 

collaborate to integrate the program with broader national security 

initiatives. 

• Grant award decisions are made with the intent of expending all available 

funding and spreading funds to as many applicants as possible. The 

program funded projects despite dubious scores by its evaluators against 

key criteria, raising questions about the merits of several hundred 

projects. Frequently, headquarters and field reviewers did not agree about 

the eligibility or merit of projects and did not consistently document their 

rationale for recommending or not recommending funding.

• The question of where the private sector’s responsibility for preventing 

terrorism ends and where the federal government’s responsibility begins 

poses a dilemma for the Port Security Grant Program. DHS does not 

have a formal policy to provide financial assistance to private entities, a 

group that includes those that own and operate high risk facilities. Private 

entities have applied for and received substantial funding. Some of that 

funding went to projects that reviewers scored below average or worse 

during the evaluation process. 

2

 P.L. 107-295.
Review of the Port Security Grant Program Page 5

• At each level of the application review process, reviewers were 

challenged to meet short deadlines to evaluate, rate, and rank projects. 

This affected the ability of reviewers to document thoroughly their 

decisions and made subsequent levels of review more difficult. 

• After three rounds of the Port Security Grant Program, recipients spent 

only a small portion of the entire amount awarded. Of the $515 million 

awarded between June 2002 and December 2003, including $75 million 

provided under the Office for Domestic Preparedness’s (ODP’s) Urban 

Area Security Initiative (UASI), grant recipients had expended only 

$106.9 million, or 21% of total program awards as of September 30, 

2004. As a result, the majority of projects have not been completed and 

the program has not yet achieved its intended results in the form of actual 

improvements to port security. 

• Following TSA’s second round of grant awards in 2003, ODP made $75 

million available for port security grants under the UASI. The UASI 

is distinct from TSA’s program and had not been used for port security 

grants previously. ODP, in consultation with TSA and the Office of State 

and Local Government Coordination, 3 utilized a risk based approach, 4

which differed from the program’s original competitive process, to select 

14 eligible port areas and the corresponding funding amounts for each 

area. TSA then provided unfunded applications from its second round of 

grants to ODP, which in turn, funded 86 projects. The TSA, USCG, and 

MARAD National Review Board had reviewed these projects before they 

were submitted to ODP and determined that 82 did not merit funding. 

• Secretary Ridge moved TSA’s Port Security Grant Program into the 

Office of State and Local Government Coordination and Preparedness 

(SLGCP). SLGCP officials would like to combine elements of ODP’s 

discretionary risk based approach with TSA’s competitive program 

that relies on USCG and MARAD expertise for making grant award 

decisions. It is not clear how SLGCP will combine the elements of these 

programs.

3

 The Office of State and Local Government Coordination and the ODP were moved into the Office of State and Local Government 

Coordination and Preparedness on May 17, 2004.

4

 The UASI Port Security Grant Program is distinct from the primary UASI grant program. The primary UASI grant program identified and 

awarded formula grants to 50 high threat urban areas. The program utilized a different methodology to derive the funding amounts for the 

14 selected port areas. 
Page 6 Review of the Port Security Grant Program

• Port security grants were awarded through two different statutory 

authorities, TSA’s appropriation and ODP’s UASI program, which have 

different award processes and eligibility requirements. A third authority, 

MTSA, mandates security requirements for port facilities and vessels 

and contains another grant authority intended to offset the costs of the 

security mandates. The consolidation of ODP’s UASI program and TSA’s 

Port Security Grant Program into SLGCP and the impact of MTSA cloud 

the statutory intent and future direction of port security grants.

We are recommending that the Executive Director, Office of State and Local 

Government Coordination and Preparedness:

Recommendation #1: Determine to what extent the program should incorporate 

MTSA requirements.

Recommendation #2: Incorporate critical infrastructure and key asset data from 

IAIP into the evaluation of proposed port security projects. Among the changes to 

consider:

• The addition of an IAIP official on the Executive Review Board;

• Use of the IAIP national asset database to identify critical facilities in 

need of mitigation with a view toward soliciting proposals from these 

facilities; and

• Collaborating with IAIP in an outreach program to improve the quality of 

vulnerability assessments and proposals.

Recommendation #3: Consider changing the weighting of the evaluation criteria, 

with greater emphasis placed on the criteria that reduce critical vulnerabilities.

Recommendation #4: Cease the practice of funding projects that do not meet the 

definition of a Priority I project. Consider implementing a scoring threshold that 

ensures that projects not meeting that threshold are not funded. Consider seeking 

a change in appropriations language to have these grant funds designated as “noyear monies” to reduce the impetus to fund doubtful projects.

Recommendation #5: Require reviewers to document their decisions in 

the grants management system, particularly when they are inconsistent with 

recommendations from a lower level of review. 

Recommendation #6: Develop parameters that define applicant eligibility under 

the “nationally important economic port or terminal,” “responsible for movement 
Review of the Port Security Grant Program Page 7

of a high number of passengers,” and “responsible for the movement of hazardous 

cargo” criteria.

Recommendation #7: Communicate information to field reviewers to educate 

them on eligibility. Improve dissemination of “lessons learned” at all levels of 

review.

Recommendation #8: Evaluate timeframes for reviewing applications with an 

emphasis on providing more time for review in the field and by the ERB.

Recommendation #9: Clarify department policy on funding private sector 

projects. In the absence of such policy, and if funding private sector projects is 

continued: (1) examine private sector projects to preclude the funding of cost of 

business expenses; (2) develop financial eligibility criteria, including an income 

test or cost-benefit analysis; and (3) consider giving greater preference to projects 

that are submitted jointly by private and public entities.

Recommendation #10: Accelerate the acquisition of more information from 

applicants about the scope of their projects. 

Recommendation #11: Ensure that the program has sufficient operational 

expertise to administer the program after the award is made.

Recommendation #12: Seek clarification on the legislative intent for the program 

(sector-specific vs. larger infrastructure protection initiatives) and construct a 

unified program (policy, purpose, process, and eligibility) to comply with that 

intent. 

Background

TSA, originally part of the Department of Transportation, was created by the 

Aviation and Transportation Security Act of 2001,5

 which was signed into law on 

November 19, 2001. Shortly thereafter, on January 10, 2002, Congress passed 

the Department of Defense (DOD) Appropriations Act of Fiscal Year (FY) 

2002,6 which included funding for port security grants. Congress made over $93 

million available to the Under Secretary of Transportation for Security to award 

5

 P.L. 107-71.

6

 P.L. 107-117.
Page 8 Review of the Port Security Grant Program

competitive grants to critical national seaports. These grants were to finance the 

cost of enhancing facility and operational security as determined by the Under 

Secretary of Transportation for Security, the Administrator of MARAD, and the 

Commandant of USCG. The grants could be used for security assessments and 

for implementation of measures once assessments had been performed. Congress 

did not intend for the funding to displace current security funding and activities 

either provided by the ports or by federal agencies, but rather that it be used for 

additional security activities that were not being performed at the ports at that 

time.7 On February 28, 2002, MARAD, on behalf of TSA, requested applications 

for the first round of port security grants based on the DOD provisions. Four 

months later, it awarded the initial round of grants, which totaled $92 million and 

funded 24 security assessment projects, 14 proof-of-concept projects, and 106 

facility and operational security enhancement projects.8

On November 25, 2002, President Bush signed MTSA. MTSA is designed to 

protect the nation’s ports and waterways from a terrorist attack. MTSA was based, 

in part, on recommendations from the Interagency Commission on Crime and 

Security in U.S. Seaports. In its Fall 2000 report, the Commission concluded that 

the state of security at U.S. seaports generally ranged from poor to fair, control 

of access to seaports or sensitive areas within seaports was often lacking, and the 

vulnerability of American ports to potential terrorist attacks was high. 

Section 70107 of MTSA authorized the Secretary of Transportation, acting 

through the MARAD Administrator, to establish a grant program for making a fair 

and equitable allocation among port authorities, facility operators, and state and 

local agencies. However, Congress did not appropriate funds toward MARAD’s 

grant authority. Rather, Congress appropriated additional grant funds to TSA and 

required that the grants be awarded under the terms and conditions of the earlier 

DOD Appropriations Act of FY 2002. 

Capitalizing on progress made during the initial round, TSA conducted three 

more rounds of port security grants. On January 14, 2003, the Under Secretary of 

Transportation invited applications for the second round of port security grants. 

Four and one-half months later, TSA awarded $169 million to 199 applicants for 

392 projects.9 On June 21, 2003, TSA invited applications for the third round of 

7

 House of Representatives Conference Report 107-350, Division B, Chapter 11, Department of Transportation, Transportation Security 

Administration. 8

 Data obtained from MARAD’s grant management system. MARAD developed the original web-based grant management system and 

administered the first round of grants on behalf of TSA. 

9 TSA became part of the Department of Homeland Security on March 1, 2003.
Review of the Port Security Grant Program Page 9

grants; five and one-half months later it awarded $179 million to 235 applicants 

for 442 projects.10 In total, the first three rounds combined to fund 978 projects at 

a cost in excess of $440 million. Most grant awards were for access controls and 

physical enhancements (see Appendix A). 

In addition to the $169 million awarded by TSA in round two, ODP provided $75 

million under the UASI program to 49 applicants for 86 port security projects, 

bringing total awards for the first three rounds to approximately $515 million.11

The UASI program, separate and distinct from TSA’s competitive grant program, 

provides discretionary grants for high-density and high-threat urban areas. UASI 

grants typically address the equipment, training, planning, and exercise needs 

of these areas. Prior to this, the UASI had not been used for port security grants. 

Unlike TSA, ODP did not use a competitive grant award process. Rather, in 

working with TSA and the Office of State and Local Government Coordination, 

ODP utilized a risk based process to identify eligible port areas and grant award 

amounts even before applications were submitted. While ODP did not use the 

same type of grant award process, ODP did rely on TSA to forward unfunded 

project applications from TSA’s second round of grants. ODP then made grant 

awards for its projects from these applications. 

On May 5, 2004, TSA requested applications for round four of the program. 

On September 13, 2004, TSA awarded $49.4 million for 154 projects to 120 

recipients.12

10 Funding for round two was a combination of $150 million in FY 2003 Consolidated Appropriations (P.L. 108-7) and $20 million from 

the FY 2003 Wartime Supplemental Appropriations Act (P.L.108-11). Funding for round three was a combination of $104 million in FY 

2002 Supplemental Appropriations Act for Further Recovery From and Response to Terrorist Attacks on the US (P.L. 107-206) and $75 

million of the $125 million set aside from the FY 2004 Homeland Security Appropriations Act (P.L. 108-90).

11 The UASI derives its program and spending authorities from the USA PATRIOT Act, P.L. 107-56 § 1014; the Emergency Wartime 

Supplemental Appropriations Act of 2003 (P.L. 108-11), Title I, Chapter 6 ($700 million, of which $75 million was obligated for round 

two); and the Department of Homeland Security Appropriations Act of 2004, P.L. 108-90, Title III ($725 million). See page 40 for further 

information on ODP and the UASI.

12 The source of round four funds is the FY 2004 Homeland Security Appropriations Act (P.L. 108-90). 
Page 10 Review of the Port Security Grant Program

Figure 1. Summary of Port Security Grant Programs

Program Lead 

Agency

Amount 

Awarded Characteristics

Port Security 

Grant 

Program

TSA

(USCG 

and 

MARAD 

participate 

also) 

FY 2002: 

1st round - $92 million

FY 2003:

2nd round - $169 million

FY 2004: 

3rd round - $179 million

4th round - $49.4 million

Competitive grant award process.

Intended for enhanced operational and facility 

security at ports, port facilities and vessels.

Urban Area 

Security 

Initiative

ODP FY 2003:

$75 million

Discretionary for large high-threat urban areas. 

Separate from its basic UASI program which 

provided formula grants to 50 urban areas 

for equipment, training, planning, exercise, 

operational needs, and critical infrastructure 

protection, ODP awarded port security grants 

to 14 high risk port areas. ODP collaborated 

with TSA and the Office of State and Local 

Government Coordination to identify the 

eligible port areas. TSA provided ODP with 

applications from its previously reviewed pool of 

applications.

MTSA Grant 

Program 

(unfunded)

MARAD $0 Fair and equitable allocation of grants.

Intended to offset the cost of implementing 

MTSA mandated facility and area maritime 

security plans including equipment, 

personnel, and other security related costs.

Applicant interest in TSA’s program has been strong and applicant requests have 

far exceeded available funds. Although the program has increased the number of 

projects funded each year, program funding continues to fall far short of demand. 
Review of the Port Security Grant Program Page 11

Figure 2. Total Projects and Funding Requested vs. Awarded 

To be eligible for grant funding under TSA’s program, applicants must be 

deemed to be a critical national seaport/terminal as defined by one or more of the 

following attributes:

• One of the 14 designated “strategic ports,” as designated by a MARAD 

port planning order.

• Controlled Port – Ports that have access controls for vessels from certain 

countries due to national security issues.13

• A nationally important economic port responsible for a large volume of 

cargo movement or for movement of products vital to U.S. economic 

interests as required for national security.

• Port or terminal responsible for the movement of a high volume of 

passengers. 

• Port or terminal responsible for the movement of hazardous cargo.

There are 361 seaports in the United States and they vary considerably by their 

size, type of commerce, and amount of cargo. Public seaports are generally 

owned and operated by local governments through a port authority; however, 

large portions of seaport real estate are often leased to the private sector by the 

local government operating as a landlord. In addition, many privately owned and 

operated terminals exist within seaports independent of the local port authority. 

13Controlled Ports are: New London/Groton, CT; Portsmouth, NH (including Kittery, ME, and Dover, NH, on the Piscataqua River); 

Hampton Roads, VA (including Norfolk, Newport News, Jamestown, Yorktown, and Portsmouth, VA); Charleston, SC; Kings Bay, GA; 

Port Canaveral, FL; Panama City, FL; Pensacola, FL; Port St. Joe, FL; Port Hueneme, CA; San Diego, CA; and Honolulu, HI. 
Page 12 Review of the Port Security Grant Program

Businesses operating in the seaport include terminal operators, ocean carriers, 

trucking companies, freight forwarders, brokers, and food servicing companies.14

Port facilities and vessels are eligible to receive grant funding if they meet any 

of the “critical national seaport/terminal” criteria cited above. This is determined 

during the application review process.

On January 23, 2004, Secretary Ridge announced DHS’ intention to consolidate 

ODP, then within the Directorate for Border and Transportation Security, with the 

Office of State and Local Government Coordination, which reports directly to the 

Secretary, to create the SLGCP. This action became effective on May 17, 2004. 

As a part of this action, TSA’s Port Security Grant Program and ODP’s UASI Port 

Security Grant Program were consolidated into SLGCP.

Purpose, Scope, and Methodology

We reviewed the design and goals of the Port Security Grant Program, the roles 

and responsibilities of agencies participating in the grants process, and the project 

selection and evaluation process. We looked for possible duplication between 

TSA’s and ODP’s grant programs. We assessed coordination between the 

program offices and DHS’ IAIP directorate, and how the grants strengthen critical 

infrastructure within the United States. We did not review TSA’s Operation Safe 

Commerce once we determined that it does not duplicate the Port Security Grant 

Program.

We interviewed management, program, and grant officials at several DHS 

organizations including TSA, USCG, IAIP, ODP, and SLGCP. We also 

interviewed officials at the Department of Transportation’s MARAD. These 

interviews included agency representatives on the National Review Board and 

Executive Review Board, which are responsible for reviewing grant applications 

at the headquarters level. We also interviewed an official at the Defense Threat 

Reduction Agency.

We visited ports in Maryland, Virginia, Texas, and California. As part of our 

site visits, we interviewed numerous people representing port authorities, 

private entities, USCG’s Marine Safety Units, and state and local emergency 

management/security offices. We also interviewed all five of MARAD’s Regional 

Directors and the Commander of the U.S. Army’s 842nd Transportation Battalion, 

14Interagency Commission on Crime and Security in U.S. Seaports, Fall 2000.
Review of the Port Security Grant Program Page 13

Surface Deployment and Distribution Command, who oversees military cargo 

transportation operations at the Port of Beaumont, TX.

We reviewed documentation pertinent to the design and implementation of 

both TSA’s and ODP’s Port Security Grant Programs including authorization 

and appropriation language, “Requests For Applications,” and guidance used 

by applicants and project evaluators. We analyzed the grant award information 

and project data for the second and third round of grants awarded between May 

and December 2003. We did not analyze data from the fourth round of grants 

awarded on September 13, 2004. We also reviewed the Report of the Interagency 

Commission on Crime and Security in U.S. Seaports, the National Strategy 

for Physical Protection of Critical Infrastructure and Key Assets, the National 

Strategy for Homeland Security, and other reports relating to port security and 

critical infrastructure protection.

We conducted our review between December 2003 and May 2004 under the 

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

Quality Standards for Inspections issued by the President’s Council on Integrity 

and Efficiency.

Findings

Port Security Grants and National Strategic Considerations

TSA, USCG, and MARAD created and implemented a Port Security Grant 

Program, as Congress intended. Congress intended for the program to help port 

authorities and private entities harden their ports, facilities, and vessels. Over 

$560 million has been awarded under the program for security improvements. 

However, the current design of the program compromises DHS’ ability to direct 

resources toward the nation’s highest priorities. The program needs to improve its 

use of national strategic data.

Balancing TSA’s Program with MTSA

The 2002 DOD Appropriations Law authorizing TSA’s program stipulated that 

TSA was to award competitive grants to critical national seaports to finance the 

costs of facility and operational security enhancements. On November 25, 2002, 

less than a year after the first appropriation to TSA and just five months after 
Page 14 Review of the Port Security Grant Program

the first round of grants, MTSA was enacted into law. MTSA is a nationwide 

security mandate that widely affects the maritime industry. MTSA created, but did 

not fund, a grant authority that differed in purpose from the TSA appropriation. 

Congress continued to fund the TSA program and did not require TSA to alter its 

program to adhere to the MTSA grant authority. The current program attempts 

to reconcile the competitive program set forth in TSA’s appropriation and the 

“equitable” program authorized by MTSA. The program is faced with the 

competing pressures of offsetting MTSA related costs while making competitive 

and risk based grant decisions to protect the nation’s most critical ports and port 

facilities.

Figure 3. Comparison of TSA Appropriation Authority 

and MTSA Grant Authority

Responsible 

Agency

Grant Award 

Process

Eligible

Entities Eligible Costs Cost Share

TSA 

Appropriation 

Authority

TSA in 

coordination 

with USCG 

and MARAD

Competitive Critical 

National 

Seaports 

• Facility and 

operational security 

enhancements 

• Security 

assessments

No cost share 

requirement

MTSA Grant 

Authority

(not funded)

MARAD Fair and 

equitable 

allocation

• Port 

Authorities 

• Facility 

operators

• State and 

local 

agencies 

required 

to provide 

security 

• Recurring costs for 

security personnel

• Acquisition, 

operation, and 

maintenance of 

security equipment

• Screening 

equipment for 

explosives and 

WMD

• Vulnerability 

assessments

• 75% federal 

funding

• No cost 

share for 

projects 

$25,000 or 

less

• Discretion 

to approve 

a lower 

non-federal 

cost-share

MTSA’s authority was intended to authorize the costs of implementing area 

maritime security plans and facility security plans. MTSA required a fair and 

equitable allocation of funds to port authorities, facility operators, and state 

and local agencies that are responsible for security services, while taking into 

account national economic and strategic defense considerations. In addition, 

MTSA limited federal funding to a 75% cost share for projects costing greater 
Review of the Port Security Grant Program Page 15

than $25,000. MTSA did not require a competitive program for funding grant 

proposals. As noted earlier, MTSA was not funded.

In a September 9, 2003, report, the Government Accountability Office (GAO) 

noted the differences in eligibility between TSA’s program and MTSA’s grant 

authority.15 TSA officials said that the appropriation language limited TSA’s 

ability to meet MTSA requirements. GAO asserted that continued deviation from 

MTSA’s cost share requirement would keep federal dollars from reaching as many 

projects as possible and that the current program does not take into account the 

applicant’s ability to participate in funding. Therefore, federal dollars were not 

leveraging as many projects as possible.

In response to GAO, rather than create a new grant program to accommodate 

MTSA, TSA adapted its existing program to meet MTSA requirements. TSA 

made an effort to observe MTSA provisions in rounds three and four. In the 

third round, TSA gave preference to MTSA regulated facilities and vessels 

located at eligible “critical national seaports/terminals.”16 TSA also required 

a security assessment as a prerequisite for enhanced facility and operational 

security projects. 17 In the fourth round, TSA limited eligibility to MTSA regulated 

facilities and vessels. However, TSA did not alter the program to reflect the 

MTSA mandate for cost sharing, nor did it allow for the funding of recurring 

costs such as salaries, benefits, and overtime of mandated security personnel and 

maintenance of security equipment. 

MTSA requirements increased the demand for grant funding. USCG determined 

that approximately 12,300 facilities and vessels will have to absorb the cost of 

implementing MTSA required security plans at an estimated cost of $7.3 billion 

over 10 years.18 TSA’s program assisted regulated entities in a limited way in 

defraying some MTSA related costs by funding facility and operational security 

projects.19 Program officials asserted that it is important to ensure first that the 

15 Testimony report dated September 9, 2003, to the Senate Committee on Commerce, Science, and Transportation on Maritime Security, 

Progress Made in Implementing Maritime Transportation Security Act, but Concerns Remain, (GAO-03-1155T). 16 USCG implemented MTSA security requirements for facilities and vessels through regulations located at 33 CFR Parts 101, 103, 104, 

105, and 106. 

17 On October 22, 2003, USCG published final MTSA regulations, requiring facility and vessel owners and operators to develop security 

plans and submit them to USCG by December 31, 2003. Facilities and vessels must comply with other MTSA security requirements and 

were to begin implementation of the approved security plans by July 1, 2004. 

18 GAO reported that the accuracy of this estimate is uncertain due to the complexity of the estimate, the variation due to assumptions, and 

the limited amount of time for USCG to complete the estimate. See GAO’s report, Substantial Work Remains to Translate New Planning 

Requirements into Effective Port Security, (GAO-04-838), dated June 2004. 19 In the first and second rounds of grants, security assessments and proof of concept projects also were eligible for funding.
Page 16 Review of the Port Security Grant Program

security infrastructure, e.g., fences, cameras, access controls, etc., is in place. 

Such grants meet MTSA goals as well as TSA’s. However, once these needs are 

met, TSA’s limited program with its governing provisions will not be suitable to 

meet the needs of regulated port facilities and vessels, especially when personnel 

and other recurring costs become the predominant cost for the maritime industry. 

Legislative guidance may be necessary to clarify the purpose of the funds. At 

issue is whether the program should continue to fund only regulated facilities 

and vessels for facility and operational security projects, or whether it should 

extend eligibility according to MTSA. The two mandates differ on other issues 

also, including the treatment of eligible costs, cost-share requirements, and 

participation by state and local entities that provide security at port facilities. 

Possibly the most significant issue is whether grants should be awarded through 

TSA’s competitive process, through an equitable process as mandated by MTSA, 

or through a risk based approach as discussed later (see page 41). 

Without clarification of these basic provisions, the direction of the program will 

remain disparate and unclear. 

Program Design Hinders Strategic Effectiveness

TSA designed a broad and flexible Port Security Grant Program to achieve its 

goal of hardening ports, facilities, and vessels. It developed eligibility criteria that 

required applicants to be or operate near militarily strategic ports, controlled ports, 

or ports of significant economic importance. Vessels carrying high volumes of 

passengers and vehicles or vessels and facilities that handle hazardous materials 

also were eligible.20 All applicants were required to link their proposals to a 

security assessment.21

While the program displays tendencies toward addressing national priorities, 

such as applying the above criteria and using the USCG’s Port Security Risk 

Assessment Tool (PSRAT), its design hinders it from consistently valuing projects 

that address national priorities: 22

20 The top 50 ports in the United States account for about 90% of all cargo tonnage. Cruise ships and ferries are eligible for funding due to 

the millions of passengers and vehicles they transport each year. 21 This requirement began in the second round of grants and only applied to enhanced facility and operational security projects. It did not 

apply to proof-of-concept projects.

22 USCG utilized the PSRAT during the field review of the applications. The PSRAT was used to assess the existing risk to the subject 

facility/vessel and to determine the reduction in risk that would result from the implementation of the measures proposed in each 

application. 
Review of the Port Security Grant Program Page 17

• TSA made grant award decisions based on the universe of applications 

received in each round. As a result, the criticality of an applicant’s 

facility or vessel and the risk reduction value of the proposed projects 

were of relative importance; they were compared only to the applications 

submitted in a given round. Therefore, TSA had no assurance that the 

program is protecting the nation’s most critical and vulnerable port 

infrastructure and assets. 

• The amount of available funds directly influenced the decision process 

behind the grant awards. TSA did not withhold funds in any round due to 

a shortage of viable projects, despite rankings that suggested otherwise 

(see page 23). 

• Τhe evaluation and selection process focused on awarding funds to as 

many applicants as possible. Selecting officials capped funding per entity 

and per award in the third round in order to reach more applicants and 

projects. TSA officials said that these considerations caused the program 

to move away from funding large and more expensive projects toward 

funding a multitude of smaller, less costly projects.

• The program led to competition between businesses and port authorities 

within the same port complexes. While preference is given to port-wide 

projects, the program does not reinforce the cooperative efforts that are 

required to develop an integrated approach to security. 

• Selected projects are not based on a national risk assessment because a 

mechanism to perform a national level risk reduction analysis does not 

yet exist within the department. The USCG uses its PSRAT analysis to 

assess risk, but the results of the risk reduction analysis are not shared 

with MARAD field reviewers or used extensively by headquarters level 

review boards that ultimately make the grant award decisions. 

• Threshold levels used to establish a project’s criticality are not fixed. 

What evaluators determine to be a significant level of criticality in one 

round may not be considered significant in another round.

• Applicants have increasingly turned to professional grant proposal 

writers. There is a perception among applicants that sound proposals with 

higher intrinsic value are passed over in favor of well-written proposals.
Page 18 Review of the Port Security Grant Program

Better Use of National Strategic Information Needed

Administrators designed and operated the Port Security Grant Program as a 

sector-specific grant program and conducted three rounds of grants without the 

aid of a government-produced list of national critical infrastructure and key 

assets. Such a list could have guided the evaluation of security enhancements 

and grant award decisions. However, TSA, MARAD, and USCG launched the 

program while DHS was just forming and the IAIP directorate was just beginning 

operations. IAIP did not complete the list until 2004.

In general, IAIP officials said they do not like the design and direction of the 

program because, as a sector-specific program operating independently of IAIP, 

its policies and funding are not integrated with other national security interests. 

They said that program officials did not seek their assistance in designing the 

program or subsequently discuss how the program would help support critical 

infrastructure protection goals. Meanwhile, IAIP was developing a prioritized list 

of critical infrastructure and assets to serve as a baseline for making decisions on 

which critical infrastructure and key assets to safeguard first.23 In May 2004, IAIP 

completed its initial Protective Measure Target List, a condensed list of assets that 

appear in the National Asset Database. Some assets on the list are located within 

port complexes.

In counterpoint, program officials believe that the current program is the most 

appropriate way to enhance port security and that they have the expertise to 

run it. Program officials insisted that they consulted IAIP on the design of the 

program, but IAIP did not provide any substantive feedback or guidance and 

would have added little value to the process because it lacked knowledge about 

port systems. They said that IAIP did not participate in the project evaluation 

process and asserted that it was unrealistic to expect IAIP to compare facilities 

and vessels from port to port and prioritize risk reduction proposals. One senior 

program official asserted that IAIP could not appropriately support the Port 

Security Grant Program, because IAIP was focusing on the “crown jewels” of 

critical infrastructure; whereas the grant program included assets that did not 

rise to an obvious level of criticality. Program officials also expressed skepticism 

concerning IAIP’s expertise in securing port assets. 

DHS plans to harmonize its infrastructure protection activities. It is pursuing 

a mechanism for identifying vulnerabilities, assessing risk, comparing critical 

23 IAIP analyzes and integrates terrorist threat information, mapping those threats against vulnerabilities to critical infrastructure and key 

assets.
Review of the Port Security Grant Program Page 19

infrastructure and key assets throughout the country, and is consolidating risk 

management activities and various grant programs. IAIP is overseeing the 

implementation of the National Infrastructure Protection Plan (NIPP), the key 

strategic plan for identifying and protecting key assets and critical infrastructure.24

IAIP delegated key responsibilities to agencies, including TSA and USCG, 

which have primary responsibility for implementing sector-specific plans in 

support of the NIPP. They are to identify assets, assess vulnerabilities, prioritize 

assets, develop sustainable programs, and use metrics to measure effectiveness. 

On behalf of IAIP, TSA and USCG are then to develop guidelines to identify 

unacceptable levels of risk to transportation assets and recommend strategies to 

manage those risks.25

To date, grant reviewers have relied on project information provided by the 

applicants, including the applicants’ own vulnerability assessments, the PSRAT 

analysis within the USCG, and the reviewers’ expertise to judge the merits of the 

projects and potential for risk reduction. Without national risk data, DHS cannot 

ensure that its grant resources are being directed toward the nation’s highest 

priorities. When IAIP data becomes available to program managers, they should 

work closely with IAIP to ensure that initiatives to protect the transportation 

sector are aligned with efforts to secure other critical infrastructure sectors.

We recommend that Executive Director, Office of State and Local Government 

Coordination and Preparedness: 

Recommendation #1: Determine to what extent the program should incorporate 

MTSA requirements.

Recommendation #2: Incorporate critical infrastructure and key asset data from 

IAIP into the evaluation of proposed port security projects. Among the changes to 

consider:

24 The Homeland Security Act of 2002 requires DHS to develop a comprehensive national plan for securing the key resources and critical 

infrastructure of the United States (P.L. 107-296, sec.201 (d)(5)). The National Infrastructure Protection Plan is to include among other 

things: (1) a strategy to identify, prioritize, and coordinate the protection of critical infrastructure and key resources, including how the 

department intends to work with federal departments and agencies, state and local governments, the private sector, and foreign countries 

and international organizations, and (2) a summary of activities to be undertaken in order to define and prioritize, reduce the vulnerability 

of, and coordinate the protection of critical infrastructure and key resources.

25 TSA has the Transportation Sector Specific responsibility for managing the risk of terrorist attacks to the transportation system, including 

maritime, aviation, highway, rail, pipelines, and mass transit. MTSA gives USCG primary responsibility for maritime security. Operational 

considerations for the maritime sub-sector fall within the scope of the comprehensive system of maritime security plans required by MTSA

and managed by USCG. As such, USCG is working with TSA to develop the maritime sub-sector section of the Transportation SSP. 
Page 20 Review of the Port Security Grant Program

• The addition of an IAIP official on the Executive Review Board;

• Use of the IAIP national asset database to identify critical facilities in 

need of mitigation with a view toward soliciting proposals from these 

facilities; and

• Collaborating with IAIP in an outreach program to improve the quality of 

vulnerability assessments and proposals.

Project Evaluation and Selection Process

Based on our analysis of the evaluation, selection, and award process, we 

determined that: (1) TSA’s program funded several hundred projects despite 

dubious marks by its evaluators against key criteria; (2) field and headquarters 

reviewers did not document their rationale for recommending or not 

recommending funding some projects sufficiently; (3) field reviewers claimed 

to be hindered by a lack of direction concerning how to evaluate eligibility 

requirements; and (4) reviewers were forced to meet short deadlines to evaluate, 

rate, and rank projects, which diminished the quality of the review process.

Overview of the Process

The Port Security Grant Program, including the application and award process, is 

carried out via an electronic, web-based system. Once applications are received, 

they are grouped corresponding to the USCG’s Captain of the Port (COTP) 

zones.26

USCG representatives from each COTP zone and MARAD regional officials 

jointly perform what is known as a “field review.” The teams attempt to visit each 

entity, conduct a site evaluation of each port, and prioritize the projects within 

that zone in the order that they would fund them. This is important because the 

application evaluation process relies heavily on the USCG’s and MARAD’s 

familiarity with the port’s surroundings and each entity’s location and security 

needs. The teams spend up to four weeks evaluating the applicants’ proposed 

projects, entering comments on each project in the system, and reaching a 

consensus ranking of them. Field reviewers arrive at a consensus ranking of all 

of the proposed projects in their respective COTP zones. The field review is also 

26 There are 45 COTP zones within USCG. A zone is a specific geographic area where the COTP has law enforcement responsibility for 

certain activities within the Coast Guard’s authority. The COTP enforces regulations for the protection and security of vessels, harbors, and 

waterfront facilities; anchorages; bridges; safety and security zones; and ports and waterways. 
Review of the Port Security Grant Program Page 21

significant because its rankings lay the foundation for the next level of review, the 

National Review Board (NRB).

The NRB consists of up to 12 representatives from TSA, USCG, and MARAD.27

The NRB relies on information provided by the applicant and the field review 

teams that explains how a project will reduce risk. The NRB spends two to 

three weeks reviewing the project applications and the corresponding comments 

and rankings provided by the field review. The NRB reviews all of the projects 

submitted into the web-based system and places them in one of three “priorities” 

based on the following guidelines:

Priority I Applications

• Meet the mandatory requirement of being a Critical National Seaport28

• Security assessments and measures have already been conducted/implemented

• Proposed approach addresses a critical security area 

• Proposed approach is comprehensive and detailed with a high degree of 

likelihood of successful implementation

Priority II Applications

• Meet the mandatory requirement of being a Critical National Seaport

• Although some security assessments and measures have been conducted/

implemented, further assessments/measures are needed to assess the level of 

potential improvement

• Proposed approach is acceptable, but further detail may be needed to assess the 

success of implementation

Priority III Applications

• Meet the mandatory requirement of being a Critical National Seaport

• Minimal security assessments and measures have been conducted/implemented, 

requiring more extensive future assessments

• Proposed approach is lacking in detail and the likelihood of success is not 

evident

After the NRB sorts the Priority II and III projects, from highest to lowest field 

ranking, it conducts a more meticulous review of the Priority I projects.29 The 

27 In round four, ODP and Customs and Border Patrol representatives were added to the NRB.

28 As described on page 11, the program defines a critical national seaport/terminal by one or more of the following attributes: (1) it is one 

of the 13 designated “strategic ports,” as designated by a MARAD port planning order; (2) it is a controlled port, which has access controls 

for vessels from certain countries due to national security issues; (3) it is a nationally important economic port responsible for a large 

volume of cargo movement or for movement of products vital to U.S. economic interests as required for national security; (4) it is a port or 

terminal responsible for movement of high volume of passengers; and (5) it is a port or terminal responsible for the movement of hazardous 

cargo.

29 As a precaution, the NRB also includes in the more detailed review a handful of the top-ranked Priority II projects. If there are not 

enough Priority I projects to exhaust the grant money, the NRB will elevate Priority II projects to Priority I until the grant money is 

depleted.
Page 22 Review of the Port Security Grant Program

NRB completes a scoring matrix for these projects and rates each project against 

six criteria: 

1. Proposed project falls in the highest risk category due to location, nature of 

operations, national need, type/volume of commodity or number of passengers

2. Proposed approach addresses a critical security need/vulnerability 

(complements state or national efforts to improve port security)

3. Mitigation approach provides high risk reduction of identified vulnerability

4. Extent of actions taken thus far by the local and state entities and 

appropriateness of federal government in the security partnership

5. Proposed approach is comprehensive and detailed (consider personnel 

qualifications, schedule realism, methodology realism, highest degree of 

success) 

6. Cost-effectiveness (consider partnering, cost sharing, innovative 

methodologies)

On behalf of the NRB, one evaluator reviews each application against one of the 

above selection criteria. Each application is rated excellent, good, satisfactory, 

marginal, or unsatisfactory, and given a score of one to five respectively (see 

figure 4) for each criterion. The NRB tallies the score for each criterion to produce 

an overall score for the project. The NRB then ranks all of the projects from 

highest to lowest based on the overall score for each project. 

Figure 4. Sample Scoring Matrix

Selection Criteria

Unsatisfactory

(1pt.)

Marginal

(2pts.)

Satisfactory

(3pts.)

Good

(4 pts.)

Excellent

(5 pts.)

Score

1. Highest risk category X 3

2. Addresses a critical security 

need X 3

3. Provides high risk reduction X 3

4. Extent of actions taken thus far X 3

5. Approach is comprehensive and 

detailed X 3

6. Cost effectiveness X 3

Total Score 18

An Executive Review Board (ERB) review follows the NRB review. The ERB is 

made up of three executives, one each from TSA, USCG, and MARAD. The ERB 

reviews the NRB rankings and recommendations and makes any adjustments it 
Review of the Port Security Grant Program Page 23

deems necessary. Finally, the Selection Review Board (SRB), consisting of a topranking official from TSA, USCG, and MARAD, conducts a final review of the 

rankings.30

Analysis of Grant Awards

We reviewed the NRB’s individual scores and overall rankings of 200 Priority I 

projects from both rounds two and three to confirm that the rankings accurately 

represented each project’s overall score. Our results were consistent with the 

NRB’s rankings. The NRB’s rankings generally corresponded with the criteria 

scores: the higher the combined score from the six categories, the higher the 

project ranked overall and vice versa. However, there were instances where a 

project’s overall score did not support its ranking.31

The NRB Gave Many Projects Poor Ratings

In rounds two and three, the program funded several hundred questionable 

projects. In rounds two and three combined, the NRB rated 258 out of 811 

projects (32%) below average or worse during its evaluation process and awarded 

grants totaling $67 million for the 258 below average projects.32 One official 

very knowledgeable about the deliberations remarked that one-third to perhaps 

two-thirds of the projects in each round did not meet the NRB’s expectations as 

meaningful projects. 

The NRB scored 29 out of 369 projects (8%) in round two below average or 

worse. In round three, the NRB scored 229 out of 442 projects (52%) below 

average or worse. In addition to these scores, many of the projects received 

marginal or unsatisfactory ratings in the first three selection criteria: (1) falls in 

the highest risk category; (2) addresses a critical security need/vulnerability; and 

(3) provides high-risk reduction. Of the 29 below average round two projects, 

20 were rated marginal or unsatisfactory in at least one of these three criteria. 

Of the 229 below average round three projects, 167 were rated marginal or 

unsatisfactory in at least one of the top three criteria. For all funded Priority I 

projects, including those with average or better ratings, 87 of 369 (24%) round 

30 In round four, a representative of SLGCP was added to the ERB and SRB.

31 Both the ERB and the SRB may alter the rankings of the board below it.

32 This analysis is based only on enhanced operational and facility security projects. We defined an “average” project as one that received 

a total score of 18 or the equivalent of satisfactory for all six evaluation criteria. Hence a “below average” project scored 17 or less. See 

Figure 4 for reference. 
Page 24 Review of the Port Security Grant Program

two projects and 216 of 442 (49%) round three projects were rated marginal or 

unsatisfactory in at least one of the first three criteria.

It is troubling that there was a pattern of funding lower ranked projects with 

poor scores among the first three criteria. We consider these criteria key to the 

viability of the project, and interpret the presence of single or multiple marginal

or unsatisfactory scores in these categories to mean the evaluators viewed 

the project as flawed. In our opinion, if the NRB does not view a project as at 

least satisfactory in each of these areas, then it should not fund the project. For 

example, a rating of excellent in ‘high-risk category’ but marginal in ‘addresses a 

critical need’ suggests the applicant may not be targeting the right vulnerability.

The program gives equal weight to the six selection criteria. This means that 

projects with insignificant, low risk reduction outcomes could be rated well 

enough, based on the last three criteria, to receive funding over projects with 

greater risk reduction potential.

Projects Funded Despite Low Rankings by the Field Review

Field reviewers ranked all of the applications received in their respective COTP

zones. Based on our analysis of guidance for field reviewers as well as their 

comments on hundreds of applications, we deduced that field reviewer rankings 

reflected their highest priorities down to their lowest priorities in terms of the 

projects’ importance and risk reduction potential. Both the NRB and ERB 

recommended funding for projects despite low rankings by the field reviewers. In 

total, in round two, 112 of the 369 (30%) projects funded were ranked in the 50th

percentile or lower by the field review.33 In round three, 180 out of the 442 (41%) 

projects funded were ranked in the 50th percentile or lower by the field review. 

Program administrators should review this process, i.e., the process that permitted 

the use of federal funds for projects found by subject matter experts with firsthand knowledge of the criticality and vulnerability of the facilities and vessels to 

be low priorities. 

Projects Not Funded Despite Strong Support by the Field Review

In round three, the NRB did not recommend funding for 54 projects that were 

ranked highly, i.e., in the top five of their respective COTP zones, by field 

reviewers. We examined comments by the field, NRB, and ERB for all unfunded 

33 This analysis was based on enhanced operational and facility security Priority I projects. It does not include assessments or proof of 

concept projects.
Review of the Port Security Grant Program Page 25

projects ranked by the field review as one of the top three projects in each COTP 

zone. Our objective was to obtain a better understanding of why these projects 

were not funded despite strong support from the field reviewers. Generally, the 

NRB was thorough in justifying and documenting why it did not recommend 

funding certain projects. The NRB denied projects for several reasons, namely 

that they: (1) appeared to benefit a federal agency; (2) duplicated a national level 

initiative, such as the Automatic Identification System; (3) were considered to be 

in a relatively low risk category from a national perspective; (4) did not address 

a vulnerability identified in the prerequisite security assessment; or (5) were 

response focused, rather than prevention and detection oriented.

Threshold Needed to Identify Worthy Projects

The NRB did not apply a minimum score threshold that would separate worthy 

from unworthy projects. The absence of such a threshold meant that the universe 

of Priority I projects was defined not by the merits of the projects, but rather by 

the amount of available funding for that round. Program officials did not dispute 

that a number of projects originally categorized as Priority II projects by the NRB 

were later re-categorized as Priority I projects and funded only because money 

was available and there was pressure to spend it. 

Insufficient Justifications for Funded Projects

The records did not always contain adequate explanations to support funding 

decisions. Specifically, the records contained: (1) insufficient justification for the 

NRB’s ratings and funding recommendations; (2) inconsistent evaluations by the 

field review teams, NRB, and ERB; (3) inconsistency between the field review 

comments and rankings; and, (4) insufficient justification for inclusion of grants 

for applicants that are not located at strategic or controlled ports.

TSA grant policies did not require reviewers to document the results of their 

evaluations beyond what is shown in the comment boxes. TSA officials said that 

the NRB’s rankings of the projects were based on the NRB selection criteria 

ratings, but that final award decisions need not adhere to the rankings. The NRB, 

ERB, and SRB can deviate from the rankings to elevate a project or move a 

project down. For this reason, scoring and ranking may be inconsistent.

To maintain system integrity, reviewers at all levels should be required to explain 

and document their rationale for deviations from recommendations and rankings. 
Page 26 Review of the Port Security Grant Program

Grant Recipient A, control gate/fencing/cameras/lighting, grant exceeds $250,000

The entity handles non-hazardous, bulk cargo. It is adjacent to a sulfuric acid plant with access 

to six other chemical plants. Field reviewers noted, “Strongly recommend approval. Second 

highest priority in the port.” Conversely, the NRB gave it five unsatisfactory ratings and one 

satisfactory rating, and ranked the project 450 of 452 overall. The NRB comments do not 

indicate how the NRB rationalized its unsatisfactory ratings and its decision to fund the project.

Grant Recipient B, fencing/lighting, grant exceeds $575,000

The field review team “strongly recommended” the project and ranked it 26 out of 90. However, 

the NRB rated the project as only marginal in each of the first three selection criteria. The NRB 

did not explain its ratings or its recommendation to fund the project.

Grant Recipient C, communications, grant exceeds $10,000 

The field review team said that encrypted radios were not needed for effective communications 

and were not necessarily compatible with federal and state radios. The field ranked the project 

34 out of 35. The NRB rated the project satisfactory in the first three criteria and ranked it 180 

of 452 overall. The NRB did not explain its ratings or recommendation to fund the project.

Grant Recipient D, mobile maritime security enhancement, grant exceeds $750,000

The field review team had positive comments for this project. However, the NRB rated this 

project unsatisfactory in all six selection criteria. The NRB did not reject any of the field 

comments or provide their own explanations for awarding funds despite such poor ratings.

Grant Recipient E, closed circuit television (CCTV), grant exceeds $130,000

The field review team ranked the project 27 out of 29, stating, “...these initiatives would be 

redundant to what the port authority has in place.” The NRB determined that it marginally 

addressed a critical need, yet ranked the project 81 out of 452 overall. The NRB did not explain 

why the project should be funded despite the field review team comments and its own marginal

rating. It stated only that the applicant should provide a more detailed cost breakdown and scope 

of work. The project was funded. 

- Continued on next page -

Examples of the records that did not contain adequate explanations to support 

funding decisions follow. 

1) Insufficient justification for project ratings and funding recommendations by 

the NRB.
Review of the Port Security Grant Program Page 27

2) Inconsistent evaluations by the field review teams, NRB, and ERB.

While the evaluation process is subjective based on the evaluators’ knowledge of 

the program’s requirements and eligibility criteria, there appear to be significant 

differences in how each level interprets eligibility and what types of projects 

should be funded, as demonstrated below: 

Grant Recipient F, gate/cameras/lighting, etc., grant exceeds $150,000

The field review team strongly recommended approval of this project. The NRB rated the 

project marginal in the first and third evaluation categories and unsatisfactory in the rest. The 

project was ranked 451 out of 452 Priority I projects. The NRB comments do not explain why 

this project received such low ratings and yet was recommended for full funding.

Grant Recipient G, security vessel, grant exceeds $115,000

The field review team ranked this project 59 out of 61, with the comment, “This project will not 

significantly enhance the physical security measures or reduce the risk for the port area.” The 

NRB rating of marginal in the first two criteria suggests that the NRB did not support the project 

either. The NRB comments did not explain the rationale for recommending funding despite a 

very low field review ranking, unsupportive field review team comments, and marginal NRB 

ratings.

Grant Recipient H, lighting, grant exceeds $180,000

The field reviewers noted that this was a “small, remote facility that receives less than twenty 

ships per year. Consequently, security improvements here would have minimal impact.” The 

NRB gave the project four marginal ratings and two unsatisfactory ratings and ranked it 449 

out of 452 overall. NRB comments do not indicate how the NRB rationalized the unsatisfactory 

ratings or its decision to fund the project.

Grant Recipient I, hazardous chemical project site, grant exceeds $495,000 

The field reviewers rated the project 61 out of 90 and noted, “Additions would improve soft 

security, but are nice to haves rather than critical needs.” The application identifies needs, but 

does not offer a detailed description of the project. The NRB rated the project unsatisfactory

in providing high-risk reduction. Again, the project received funding without the NRB’s 

explanation of the ratings or why the project is worthy of funding in light of the field review 

team comments. 

Grant Recipient J, command and control center, grant exceeds $175,000 

The field reviewers rated the project 49 of 61, noting, “While this is a critical port area and 

increased security measures are vital, this project will not significantly enhance the physical 

security measures or reduce the risk for the port area.” The NRB did not address this conclusion 

in its comments. Instead, it called for a more detailed cost breakdown and scope of work. The 

NRB ranked the project 114 out of 452 overall and the project was funded.
Page 28 Review of the Port Security Grant Program

Grant Applicant K, gate improvements, $0

The field review team did not recommend funding for this project and ranked it 12 out of 

12 projects. The NRB rated it unsatisfactory in addressing a critical security need, but still 

recommended full funding while ranking it 312 of 452. Again, there was no explanation for the 

ratings, but the ERB agreed with the field review team in this case and ranked the project 443 of 

452. The project was not funded.

Grant Applicant L, fencing, lighting, cameras, etc. $0

The field reviewers said the port is “not in high target area...” and a “low priority for fencing 

and lighting,” but the NRB, without adding documentation, recommended the project for 

funding in the full amount. The ERB cited the field review team comments and a lack of detail 

in the application and denied funding for the project. The NRB ranked the project 383 of 452 

while the ERB ranked the project down to 445 of 452.

Grant Applicant M, harbor police vessel transponders, $0

According to the field review, “this project addresses concerns identified in the USCG Security 

Assessment.” The field reviewers ranked it 2 out of 37 projects. The NRB recommended full 

funding. The ERB said it “concur(red) with National Review Team,” but also stated “AIS like 

funding is not being funded at this time.” AIS is a USCG initiative, which explains why this 

type of project was not eligible. However, this was apparently unknown to the field review team. 

The NRB ranked the project 385 and the ERB ranked it 446 out of 452 overall. 

Grant Recipient N, joint enforcement, grant exceeds $245,000

The field reviewers highly recommended the project based on its deterrence value and ranked 

it 1 out of 4 projects. However, the NRB made strong negative comments questioning the 

likelihood of success. The ERB recommended partial funding to “prove the feasibility.” This 

project raises additional questions as to who will monitor the project’s feasibility and who will 

provide future funding if it is successful. 

Grant Recipient O, cameras, grant exceeds $20,000

The field reviewers did not offer a strong endorsement of the project, but ranked it 1 out of 

3 projects. The NRB rejected the project since it was to repair/replace cameras. The ERB 

recommended funding new cameras, which was not in the scope of work.

Grant Applicant P, security fencing, $0 

The field reviewers did not recommend funding, because “existing security fencing is already 

in place.” Despite this, the NRB rated this project good in addressing a critical security need 

and satisfactory in providing high-risk reduction. The NRB ranked it 328 out of 452 and 

recommended full funding. The ERB agreed with the field reviewers and did not recommend 

funding. 

- Continued on next page -
Review of the Port Security Grant Program Page 29

3) Inconsistency between the field review comments and rankings

The field review comments were not consistent with the field rankings. This is 

critical, because the local USCG and MARAD representatives have the greatest 

understanding of how well the proposed project addresses local vulnerabilities 

and reduces risk. Without a clear field assessment, it is much more difficult for 

the NRB and ERB to evaluate projects. The level of detail in the field comments 

varied considerably across the COTP zones. Some field review teams included 

detailed explanations of the relative importance of the projects and the extent 

to which the projects reduced risk. By contrast, others provided only a brief 

statement, such as “recommend approval.” In several cases, it was unclear 

whether the field review team was recommending the project for funding. 

All applications were to be forwarded from the field review team to the NRB 

regardless of whether funding was recommended.

4) Better justification needed for inclusion of applicants not located at strategic or 

controlled ports.

An applicant must qualify as a “National Critical Seaport/Terminal” to be eligible 

to participate in the program. Strategic and controlled ports are identified and 

meet this criterion. However, the program does not clearly identify “National 

Critical Seaport/Terminals” in the other three categories:

• Nationally important economic port or terminal;

Grant Recipient Q, access control and monitoring, grant exceeds $1,995,000

The field reviewers strongly supported the application, ranking it 1 out of 38 and described it 

as a “well written proposal.” The NRB did not recommend any funding saying the statement 

of work did not provide sufficient detail for evaluation. The ERB funded the project despite the 

NRB’s comments. The ERB capped funding for any project at $3 million in round three, but 

how it arrived at the funding amount was not documented.

Grant Recipient R, harbor patrol boat, grant exceeds $150,000

The field reviewers highly recommended the project and ranked it 1 out of 5 projects. The 

NRB stated that the project did not address a need described in the applicant’s vulnerability 

assessment and provides low risk reduction. Conversely, the ERB recommended funding for the 

boat.

Grant Recipient S, security equipment program, grant exceeds $195,000

The field reviewers recommended funding for a patrol boat and ranked the project 1 out of 29. 

The NRB said the project provided low risk reduction of the identified vulnerability and did not 

recommend funding for the boat. The ERB concurred with the field review, but funded a smaller 

boat than requested.
Page 30 Review of the Port Security Grant Program

• Facility or vessel responsible for high passenger volume; or

• Facility or vessel responsible for the movement of hazardous cargo. 

Some entities that received funding were not located at strategic or controlled 

ports, and yet application reviewers did not document how the applicant met 

eligibility requirements under the economic, passenger, and hazardous cargo 

criteria. Program guidelines do not stipulate when an entity is eligible under these 

criteria. 

Reviewer comments did not reveal how funded projects in the following ports met 

the three criteria: 

Examples of funded ports not on the list of strategic or 

controlled ports:

Port Fourchon, LA 

Port of Port Lavaca/Point Comfort, TX

BASF Hannibal Site Barge Terminal, 

Hannibal, MO

Port of Stockton, CA

Martinsville, WV

Global Revere, MA

Sewaren, NJ

Perth Amboy, NJ

Carteret, NJ

Port of Everett, MA

Christiansted, St. Croix, VI

Krum Bay, St. Thomas, VI

Woods Hole, Nantucket, Hyannis, and 

Martha’s Vineyard, MA

Anacortes, WA

Port of Skagway, AK

Bridgeport, CT

Rochester, NY

Port of Ketchikan, AK

Destrehan, LA

Port of Victoria, TX

Ludington, MI 

Manitoc, WI

Bellingham, WA

Venice, LA

Port of Brunswick, GA

Whittier, AK

Homer, AK

Haines, AK

Port of Seward, AK

Argo, IL

Tulsa Port of Catoosa, OK

These ports may have been nationally/economically important, responsible for 

high passenger volume, or responsible for the movement of hazardous cargo, but 

they were not established as such in the reviewer comments.

Interpreting Eligibility Criteria 

While we anticipated some ranking adjustments by the NRB and ERB, the 

volume of changes that occurred demonstrated to us that after three rounds of 

grants, field reviewers and headquarters are not yet operating under commonly 

understood goals and evaluation criteria. Some of this can be attributed to 
Review of the Port Security Grant Program Page 31

differing philosophies among program officials and evaluators. In particular, field 

reviewers had many different opinions on what they considered important when 

evaluating projects. It appeared that some reviewers preferred a purely risk based 

approach, whereas others preferred distributing funds as widely as possible to help 

applicants cover the cost of complying with MTSA. Some reviewers preferred 

to fund entities with fewer resources over those with greater means. Others did 

not take an entity’s revenue or profits into consideration. In terms of the types 

of projects, some reviewers favored waterside security measures to maximize 

risk reduction, whereas others favored perimeter security and access control or 

communications equipment. Several COTPs expressed concerns that DHS was 

not funding projects that offered the most benefit in vulnerability reduction. 

In addition to these varying perceptions and preferences, differences in reviewer 

comments and their recommendations often occurred due to the interpretation 

of broad eligibility criteria. For example, a program official said that the 

NRB’s interpretation of the “nationally important economic,” “high passenger 

volume,” and “hazardous cargo” criteria varied from round to round, based on 

the applications submitted in each round. In an after action review following the 

second round of grants, program officials identified the need to tighten up the 

grant requirements: “While it is nice to let everyone feel like they could receive 

the grant money, using an all-encompassing approach wound up in resulting in 

significant amounts of applicant (and reviewer) time for projects that had no 

realistic chance of approval.”34

Field reviewers claimed that program guidance was inadequate and unclear. 

They were slowed by the lack of direction concerning how to interpret eligibility 

criteria, evaluate proposed projects, identify eligible projects, and prioritize them. 

Some reviewers argued that more guidance was needed to identify and rank 

projects if the system is to improve. The inconsistencies in ratings and funding 

decisions seem to support their claims. 

Program officials contended that they have provided, and will continue to provide, 

sufficient guidance to field reviewers. They cited their after action review of 

the first two rounds of grants that they said led to improvements in the grant 

announcement, applications, eligibility requirements, the review process, the 

PSRAT, and the web-based grant system. They also cited teleconferences to 

discuss lessons learned during the evaluation process, and asserted that the written 

guidance to field reviewers improved in each round. 

34 From document titled, “Lessons Learned,” and generated by TSA’s Office of Maritime and Land Security following round two.
Page 32 Review of the Port Security Grant Program

Program officials should be concerned that some confusion still exists among field 

reviewers over evaluating grant proposals. The program has matured significantly, 

but the lack of guidance for taking a systematic approach toward security within 

the port areas needs attention. In general, the program would benefit by clarifying 

eligibility criteria and describing the types of projects that best mitigate the 

greatest risks.

Reviewers Pressured by Program’s Timeframes

Throughout the application review process, reviewers were forced to meet short 

deadlines to evaluate, rate, and rank projects. Public and private entities submitted 

more than 1,000 applications in both rounds two and three. Field reviewers in 

each COTP zone, who could have up to 100 applications or more to review, had 

four weeks to visit the project sites, interview applicants, and review related 

documents. Following the field review, the NRB had three weeks to review 

proposals. These tight timeframes contributed to the insufficient documentation 

needed to support reviewer recommendations and decisions, particularly at the 

NRB level, and placed an extra burden on the ERB to maintain the integrity of 

the process. The ERB had two days to consider the NRB’s recommendations. 

We question whether the ERB also had enough time to: (1) become familiar 

with 452 round three Priority I projects given inconsistent explanations of 

reviewer decisions; (2) thoughtfully consider increases or decreases in award 

amounts; (3) add or remove projects from consideration, and (4) compile its final 

recommendations to the Selection Review Board.35

Program officials said that they were under pressure to award the grants quickly, 

driving them to expedite the review process. Both field reviewers and NRB 

participants complained to us that these timeframes were too compressed to 

adequately review applications, particularly for round three. While the USCG had 

sufficient resources to conduct field reviews, it appeared that MARAD did not. 

Each round of grants taxed its regional operations by taking staff away from their 

normal jobs to work full time on reviewing grant applications. MARAD reviewers 

were not able to visit every applicant as intended.

We recommend that the Executive Director, Office of State and Local 

Government Coordination and Preparedness: 

35 In round three, the ERB reduced funding for 127 of the 442 funded projects.
Review of the Port Security Grant Program Page 33

Recommendation #3: Consider changing the weighting of the evaluation criteria, 

with greater emphasis placed on the criteria that reduce critical vulnerabilities.

Recommendation #4: Cease the practice of funding projects that do not meet the 

definition of a Priority I project. Consider implementing a scoring threshold that 

ensures that projects not meeting that threshold are not funded. Consider seeking 

a change in appropriations language to have these grant funds designated as “noyear monies” to reduce the impetus to fund doubtful projects.

Recommendation #5: Require reviewers to document their decisions in 

the grants management system, particularly when they are inconsistent with 

recommendations from a lower level of review. 

Recommendation #6: Develop parameters that define applicant eligibility under 

the “nationally important economic port or terminal,” “responsible for movement 

of a high number of passengers,” and “responsible for the movement of hazardous 

cargo” criteria.

Recommendation #7: Communicate information to field reviewers to educate 

them on eligibility. Improve dissemination of “lessons learned” at all levels of 

review.

Recommendation #8: Evaluate timeframes for reviewing applications with an 

emphasis on providing more time for review in the field and by the ERB.

Funding Private Sector Projects

The question of where the local responsibility for preventing terrorism ends and 

where the federal government’s responsibility begins poses a dilemma for the 

Port Security Grant Program. DHS has not formulated a strategy or policy to set 

forth circumstances under which it will or will not award grants to private entities. 

The program does not: (1) apply an income test to applicants, (2) judge whether 

the expenditure under consideration is a normal cost of doing business, and (3) 

require a cost-share in order to receive a grant award. 

Private entities have applied for, and received, substantial funding under the Port 

Security Grant Program. Some of these funds went to projects that reviewers 

rated overall as below average or worse during the evaluation process, calling into 

question the merits of these projects. In rounds two and three, the NRB ranked 8 
Page 34 Review of the Port Security Grant Program

36 By comparison, in rounds two and three the NRB ranked 21 ($6.4 million in awards) and 82 ($28.2 million in awards) public projects, 

respectively, below average or worse. In total, over two rounds, $67 million went to projects rated below average or worse.

($1.3 million in awards) and 147 ($31 million in awards) private sector projects, 

respectively, as below average or worse, totaling 155 projects that were funded at 

a cost of $32.4 million.36

Awards to private entities increased in rounds two and three (see Figure 5). In 

the first round, the public sector received $83.1 million for 109 projects, while 

the private sector received $9.2 million for 35 projects. In round two, the public 

sector received $111.6 million for 206 projects, while the private sector received 

$57.5 million for 189 projects. By round three, the public sector received less 

funding than the private sector: $80.5 million for 154 public sector projects, 

compared with $98.4 million for 288 private sector projects. In round four, the 

public sector received $43.2 million for 94 projects, while the private sector 

received $6.3 million for 60 projects. 

Figure 5. Allocation of Funds

The government’s responsibility to protect the homeland, weighed against the 

realization that it cannot assume the burden of the costs to protect the nation’s 

entire critical infrastructure, of which 85% is estimated to be privately owned or 

controlled, presents a major policy issue for the department. Further complicating 

the matter is the question of the extent to which the government should pay for 

the costs to comply with MTSA, a federal mandate to improve port security that 

Congress has thus far not funded directly. 
Review of the Port Security Grant Program Page 35

National strategic policies suggest that the government and industry share this 

burden. According to the National Strategy for Homeland Security, “The private 

sector should conduct risk assessments on their holdings and invest in systems 

to protect key assets. The internalization of these costs is not only a matter of 

sound corporate governance and good corporate citizenship but also an essential 

safeguard of economic assets for shareholders, employees, and the Nation.” The 

Physical Protection of Critical Infrastructures and Key Assets identifies planning 

and resource allocation as one of its five objectives and stresses the importance 

of incentives for private organizations, and market solutions where appropriate. 

According to the National Infrastructure Protection Plan, private owners and 

operators are expected to bear the preponderance of protection and mitigation 

costs for surface and maritime modes of transportation.

DHS officials have said publicly that the private sector has a financial 

responsibility in the protection of its assets. In April 2004, referring to meeting 

MTSA requirements, Secretary Ridge remarked that, “Private companies will 

have to help foot the bill for the additional security measures needed to protect the 

nation’s ports from terrorists.” He further noted that, “We can’t go around using 

public money for every private sector need.” In June 2004, DHS’s Undersecretary 

for Border and Transportation said, “I believe that if you’re going to enhance 

security, you have to have investment by the private sector. I think the federal role 

is that leadership role, that partnership role and helping to invest in technology.” 

Thus, while these positions described above might seem clear, DHS made awards 

to private sector projects that: (1) appeared to be for a purpose other than security 

against an act of terrorism; (2) were required as a normal course of business; (3) 

replaced existing security measures; or (4) were very low in cost and affordable. 

These grants raise concerns that not all of the grant award decisions best 

leveraged the government’s limited resources. To illustrate:
Page 36 Review of the Port Security Grant Program

Private Sector Projects 

Grant Recipient T, additional video surveillance/alarm equipment, grant exceeds $25,000

Field reviewers rated this project 61 out of 61. The NRB elevated it to Priority I status, ranking 

it 44 out of 452 projects, despite concluding that it marginally provided high-risk reduction. The 

ERB concurred.

The project appears to support a normal course of business that should have been addressed in 

this luxurious entertainment pavilion featuring gaming facilities, restaurants, a hotel, and spa. 

The application stated that “regular access points” need monitoring, although it has existing 

measures: “Video surveillance monitoring equipment along with alarm and telephone systems 

have been installed.” But “present means are inadequate to protect and conduct effective 

surveillance and monitoring of facility areas around the passenger vessel and within vulnerable 

parts of the complex to prevent access [including the lack of] an immediate intruder alarm 

system to security personnel.” 

Grant Recipient U, security improvements, grant exceeds $935,000

The project scope is unclear from the summary. The applicant states, “The goal of this 

application is to implement necessary security improvements while striving to maintain and 

increase local industry.” The field reviewers commented, “A new industrial park is being built at 

the port, causing some concern to the field review team that some of the proposed fencing would 

really be economic development in nature.” The NRB rated the project marginal in addressing a 

critical security need.

Grant Recipient V, CCTV monitor, grant exceeds $5,000 

This builds on a grant provided in round one for the CCTV system. However, a project for an 

additional surveillance monitor to a private terminal company is questionable, especially in 

light of its existing security measures and the fact that a SWAT team and armed Coast Guard 

presence is in place during transfer of cargo operations. The NRB rated this project marginal in 

addressing a critical security need.

Grant Recipient W, access control, grant exceeds $2,000 

The applicant justified the project by commenting on its application, “The facility is unable to 

systematically and reliably account for and verify the identity of personnel entering the facility, 

particularly at locations other than the main gate.” This appeared to be a security measure well 

within the company’s financial reach. The field review ranked the project 54 out of 57, yet 

recommended approval. The NRB rated this project unsatisfactory in the high-risk category and 

ranked it 423 out of 452 overall. The ERB ranked it 414th overall, and funded the project.

- Continued on next page -
Review of the Port Security Grant Program Page 37

The department needs to assess the goals of this program and reexamine 

whether and, if so, to what extent, it will award grants to private companies. At a 

minimum, it needs to develop guidelines that link awards to national interests.

DHS is learning that many private companies are unwilling to share security 

information and collaborate on security projects with port authorities. Port 

officials discussed the reluctance of private sector entities to share information 

about their vulnerabilities for fear of reducing their competitive advantage. Port 

authorities, while cognizant of this concern, want to establish integrated and portwide security plans and security systems. This requires greater cooperation and 

increased information sharing on the part of private entities. While there were 

occasional references to the program’s goal of giving preference to port-wide 

projects, neither guidance nor reviewer comments indicated this was occurring. 

The program does not adequately reinforce the cooperative efforts between public 

and private entities that are required to develop an integrated approach to security. 

Grant Recipient X, fencing with gates, grant exceeds $10,000 

The terminal handles solvents. The application noted that the result of an event would be release 

of solvents, which would present an environmental issue, not a security event. It is not clear why 

the company has not taken these precautions already to prevent this from occurring. The NRB 

rated the project marginal on critical security need/vulnerability and the extent of actions taken 

thus far. The NRB asked for a more detailed scope of work, but recommended funding.

Grant Recipient Y, badging, lighting, and cameras, grant exceeds $55,000 

This project is to improve security for a liquefied petroleum gas storage facility. The NRB 

thought the project “marginally” addressed a critical security need.

The company was for sale at the time of award. The parent company of grant recipient Y entered 

into a definitive agreement to sell its gas division in December 2002 for $115 million and sold it 

August 2003 for $119 million in cash. The company’s natural gas segment accounted for $216.5 

million, or 8% of total company revenues in 2002. Round two began in January 2003, after the 

definitive agreement that the gas division would be sold. The government’s award essentially 

enhanced the financial position of the company. 

In addition, considering the ramifications of a terrorist act described in the application, we 

question why the company had no lighting around the facility. 

Finally, there is a badging system in place and TSA refrains from funding “replacement” 

projects, but funded it in this case.
Page 38 Review of the Port Security Grant Program

We recommend that the Executive Director, Office of State and Local 

Government Coordination and Preparedness:

Recommendation #9: Clarify department policy on funding private sector 

projects. In the absence of such policy, and if funding private sector projects is 

continued: (1) examine private sector projects to preclude the funding of cost of 

business expenses; (2) develop financial eligibility criteria, including an income 

test or cost-benefit analysis; and (3) consider giving greater preference to projects 

that are submitted jointly by private and public entities.

Status of Funds and Project Monitoring

After the first three rounds of grants under the Port Security Grant Program, 

recipients have spent only a small portion of the entire amount awarded. Of the 

$515 million awarded in the first three rounds since June 21, 2003, including $75 

million provided under ODP’s Urban Area Security Initiative, grant recipients 

have expended $106.9 million or 21% of total program funding. As a result, 

the majority of projects have not been completed, and the program has not yet 

achieved its intended results in the form of actual improvements to port security. 

Most of the expended funds are from the first round. 

The time available to obligate funds varied, depending on when DHS announced 

the availability of funds. In round one, the appropriation language stated that the 

funds should be expended no later than September 30, 2003. DHS had slightly 

more than a year and a half to exhaust the funds. As of April 19, 2004, recipients 

had not drawn down more than 40% of those funds. 

DHS allowed 12 months to complete projects. Grant recipients said that one year 

is inadequate because the period begins on the award date, and precedes the date 

when the program office finally defines the scope of, and approves, the project. 

The kind of project and the local entity’s acquisition processes also affect the 

amount of time required to spend the grant funds.37 Program officials said that 

37 We recently reported on similar problems confronting ODP in report #OIG-04-15, An Audit of Distributing and Spending “First 

Responder” Grant Funds, March 2004. 
Review of the Port Security Grant Program Page 39

they granted extensions to the majority of grant recipients in round one.38 They 

also confronted this issue in later rounds.

The table below summarizes the status of TSA funds as of September 22, 2004 

and ODP funds as of September 30, 2004. 39

Figure 6. Status of Funds 

Round

Date

Announced

Total 

Available 

(Authorized)

Date 

Funds 

Awarded

Total 

Awarded

Total

Obligated Expended Balance

1 02/28/02 $92,022,239 06/17/02 $92,033,239 $92,022,239 $56,012,075 $36,010,164

2 01/14/03 169,142,815 06/03/03 169,142,815 167,163,470 29,824,262 137,339,208

ODP 05/14/03 75,000,000 9/18-

12/10/03 75,000,000 16,646,150 13,843,476 2,802,674

3 06/21/03 178,925,255 12/10/03 178,860,070 178,489,664 7,239,342 171,250,322

4 05/05/04 49,500,000 09/13/04 49,429,867

Totals $564,645,212 564,465,991 $454,321,523 $106,919,155 $347,402,368

We attributed the large amount of unspent funds to incomplete applications, the 

award of hundreds of grants before the full scope and details of the projects were 

known, and delays in performing work and executing contracts. Projects were 

rarely ready to be initiated at the time of award. We counted numerous projects 

where the NRB or ERB stipulated during its review that the applicant needed 

to clarify the project. This in turn led to a lengthy negotiation process.40 During 

this process, the applicant and program office further negotiated the scope of the 

project and the applicant subsequently submitted additional information. 

Another matter relating to the status of funds is the program office’s ability 

to monitor these projects properly to ensure, among other things, their timely 

completion. MARAD had oversight responsibility for round one. TSA, which had 

primary grant administration responsibilities for rounds two and three, dedicated 

one full-time person to the operational oversight of port security grant projects. 

Rounds two and three produced a total of 811 enhanced facility and operational 

38 We did not assess the frequency of extensions granted to date. Barring a change in policy, the increasing complexity of projects and the 

time needed to review them likely means that extensions will be necessary. 39 Round one information is accurate as of April 19, 2004. We requested, but did not receive, updated information for round one.

40 Negotiations are exchanges between the government and applicants that are undertaken with the intent of allowing the applicant to revise 

its proposal. A warranted Contracting Officer or Grants Officer conducts negotiations. Recommendations by the evaluation teams to the 

Grants Officer for negotiation may include items related to the technical scope, price, schedule, or any conditions the applicant may have 

placed on the proposed approach.
Page 40 Review of the Port Security Grant Program

security projects. One person cannot provide adequate oversight for a program 

of this size. DHS needs to take steps to ensure that it has adequate resources to 

oversee program implementation effectively and to accommodate the increasing 

workload of the program. 

We recommend that the Executive Director, Office of State and Local 

Government Coordination and Preparedness: 

Recommendation #10: Accelerate the acquisition of more information from 

applicants about the scope of their projects. 

Recommendation #11: Ensure that the program has sufficient operational 

expertise to administer the program after the award is made.

Dichotomy Between TSA and ODP Approaches

ODP is responsible for preparing the nation for acts of terrorism. Its mission is to 

provide training, funds for the purchase of equipment, support for the planning 

and execution of exercises, technical assistance, and other support to help states 

and local jurisdictions prevent, plan for, and respond to acts of terrorism. 

The 2003 Emergency Wartime Supplemental Appropriations Act41 made $700 

million available to ODP’s UASI program. It provided funds for discretionary 

grants for use in high-density urban areas, high-threat areas, and for protection 

of critical infrastructure. UASI grants typically address the equipment, training, 

planning, and exercise needs of high threat urban areas. Following TSA’s second 

round of grants, ODP announced a $75 million port security grant program 

separate from the basic UASI. 

ODP’s approach differed substantially from TSA’s process. It was discretionary 

and more risk based in determining the port areas that were eligible for funding. 

The dichotomy between the two approaches has implications for the future 

design and administration of the program. The department recently consolidated 

both programs under a new office, the Office of State and Local Government 

Coordination and Preparedness (SLGCP). SLGCP faces a challenge in integrating 

TSA’s competitive program with DHS’ other grant programs, including the UASI, 

which have varied statutory foundations and program requirements. 

41 P.L. 108-11.
Review of the Port Security Grant Program Page 41

ODP Approach is Discretionary and More Risk Based

ODP, in coordination with TSA and the Office of State and Local Government 

Coordination, used a risk based approach which determined, even before 

applications were received, which port areas would be eligible and how much 

funding each would receive. ODP reported that it obtained threat and criticality 

information from the Federal Bureau of Investigation, the Central Intelligence 

Agency, and IAIP for port areas. However, ODP said that TSA ultimately 

identified five passenger, container, liquid bulk, and cargo tonnage ports (in 

volume) as the high threat areas that should be considered for grant funding. 

Twelve port areas were selected and two others were added bringing the total to 

14 port areas.42 Some port areas were in the top five in more than one category.

ODP said that once TSA selected the eligible port areas and determined the 

funding amounts for each, TSA provided ODP with project applications from the 

selected ports that TSA, USCG, and MARAD had already reviewed and ranked. 

ODP requested that the applicants for those projects re-apply to ODP. Since TSA 

had already awarded its second round of grants, it selected project proposals 

from among those that it did not fund. From among those projects, TSA provided 

applications with funding requests that added up to the pre-determined funding 

amount for each port area selected. Because of the requirement that the project 

amounts total the pre-determined award amount for each port area, TSA had to 

select some projects ranked lower by the field over more highly ranked projects. 

ODP awarded 49 grants encompassing 86 projects. We noted that 39 (45%) of the 

86 selected projects were in the bottom 25% of the field review rankings. 

TSA officials expressed frustration over this process. One official asserted that 

ODP considered the evaluation process to be secondary to the need to fund 

projects. Furthermore, it ran counter to ODP’s own risk based approach by 

funding a number of questionable projects, many of which both field reviewers 

and the NRB previously determined did not substantially reduce risk and did not 

merit funding. Specifically, 82 of the 86 projects that TSA passed on to ODP were 

projects the NRB categorized as Priority II. Only four were Priority I projects. To 

illustrate, below are a few of the projects:

42 Two port areas were added by ODP based on Operation Liberty Shield activities at those locations.
Page 42 Review of the Port Security Grant Program

ODP Projects

Grant Recipient Z, fireboat, grant exceeds $595,000

The NRB categorized the project as Priority II and the field review ranking is 31 of 38. This 

project was selected over eighteen Priority II projects within the COTP zone with a higher 

field ranking. The project does not refer to a vulnerability or security assessment. The COTP/

MARAD review comments state, “Although a fire boat within the port would be nice it does not 

reduce the physical threat of the port to a terrorist attack.” 

Grant Recipient A1, mobile command center, grant exceeds $315,000

This is a NRB Priority II project and the field review ranking was 51 of 57. This project was 

selected over 26 Priority II projects within the COTP zone ranked higher by the field review 

team. Field reviewers comments state, “Project is response based vice prevention based. 

Proposed mobile command post would be used if primary fixed EOC (Emergency Operations 

Center) were destroyed/compromised, yet there is no assurance that the mobile command post 

wouldn’t be destroyed or would be able to be moved to the needed location. Port authority 

facilities are pretty good – this appears to be a luxury item.”

Grant Recipient B1, trucker ID system, grant exceeds $1,000,000

This is another NRB Priority II project with a field review ranking of 39 of 57. This project 

was selected over nineteen Priority II projects in the COTP zone with higher field rankings. 

This privately owned terminal was awarded over $1 million for a project that the field review 

team determined, “does not present any tangible port security value other than helping to instill 

some integrity in the container movement business.” In addition, the application does not cite a 

vulnerability or security assessment. 

Grant Recipient C1, automotive patrol vehicles, grant exceeds $110,000 

This is a Priority II project with the lowest possible field review ranking of 31 of 31. The 

application for this project states that, “... facilities need to be improved to deter theft of goods 

and property, and to protect against undetected human intrusion and machinery invasion.” It 

appears this is an anti-theft project and this project was not a priority according to the field 

review team.

Grant Recipient D1, fortified crash beams, grant exceeds $1,060,000 

This is a Priority II project and the field review team ranked this 54 of 57. It was selected over 

20 Priority II projects in the COTP zone with higher field rankings. The field reviewers believed 

that this project was primarily anti-theft, not anti-terrorism, insofar as the port deals solely with 

automobiles. 

- Continued on next page - 
Review of the Port Security Grant Program Page 43

In general, ODP required all of these applicants to adhere to their previously 

submitted project proposals. However, construction and renovation of facilities 

was a statutorily prohibited use of ODP funds. This prohibition, which does not 

exist under TSA’s program, required eight ODP applicants to change their project 

descriptions and submit new proposals that met UASI eligibility criteria. In effect, 

TSA, USCG, and MARAD never had the opportunity to review these projects. 

The additional time required to negotiate new projects has further delayed their 

approval and completion. One applicant with whom we spoke found ODP’s 

application process, which required re-submission through a different website and 

grant negotiation with another agency, to be burdensome and confusing. They did 

not understand why DHS had two separate Port Security Grant Programs, with 

two separate application processes, and different eligibility and selection criteria. 

Grant Recipient E1, enhanced video surveillance of ferry passengers, grant exceeds $5,000 

The NRB ranked this a Priority II project and the field review team ranked it 18 of 26. It was 

selected over seven Priority II projects in the COTP zone with higher field rankings. This private 

company received a grant although the field reviewers said, “The proposed installation of CCTV 

is not supported in their assessment and will not significantly decrease vulnerability of their 

operations.” 

Grant Recipient F1, terminal security enhancements, grant exceeds $210,000

The NRB categorized this project as a Priority II project and the field review team ranked it 16 

of 18. The field reviewers concluded that, “proposed security enhancements do not yield any 

great risk reductions when compared to the existing security. Organic security creates multiple 

barriers that are difficult to defeat, coupled with the port’s contracted patrols makes (the) 

proposal largely an inefficient use of PS (Port Security) Grant funds.” Despite these comments, 

the company’s project still received a grant.

Grant Recipient G1, access control, grant exceeds $100,000

Ten unfunded Priority II projects in the COTP zone were higher ranked than this one that 

received funding. The field review team ranked the project 21 of 26 and funding was not 

recommended. Field reviewers noted, “The proposed implementation of physical access 

controls, smart cards for employees, does not significantly reduce vulnerability at the terminal.”

Grant Recipient H1, CCTV/lighting/ID badges, etc. grant exceeds $565,000

This is a Priority II project with a field review ranking of 12 of 18. The portion of the terminal in 

question deals with asphalt, which does not appear to be at risk of a terrorist threat.
Page 44 Review of the Port Security Grant Program

SLGCP to Administer Program

On January 23, 2004, Secretary Ridge announced the department’s intention to 

consolidate ODP with the Office of State and Local Government Coordination 

to create SLGCP. He said that this consolidation was “...not to shift or change 

the use or purpose of any of the available funding, but rather to enhance overall 

coordination between all programs.” On May 17, 2004, a number of DHS 

grant programs were moved into SLGCP, including TSA’s Port Security Grant 

Program.43 According to SLGCP officials, the department’s grant programs will 

follow national strategic and infrastructure protection policies.

The department’s FY 2005 appropriation includes $150 million for port security 

grants to be administered by SLGCP. A senior program official in SLGCP 

explained that SLGCP intends to maintain the “beneficial” qualities of TSA’s 

program, but also add more strategic and risk based elements to the program. 

In his letter, the Secretary also stated, “While responsibility for crafting policy 

and guidelines for the Port Security Grant Program would reside within 

SLGCP, program development will still have significant input from and access 

to operational subject matter experts within the Border and Transportation 

Security Directorate, including TSA, as well as other agencies such as 

USCG, and MARAD. Moreover, the department will maintain those program 

mechanisms that have proven beneficial, such as determination of eligibility and 

evaluation criteria, solicitation and application review procedures, and selection 

recommendations.” However, as SLGCP assumes ownership of the program, the 

sector specific nature of the program, and the shared decision making authority 

that currently exists among TSA, USCG, and MARAD are no longer ensured. 

Moving the program to SLGCP has created other anxieties for stakeholders:

• It is not clear how SGLCP’s intention to create a more risk based model 

will affect the administration of the program. While we support a greater 

emphasis on risk based decision-making, attempts to more narrowly 

direct funds to higher risk facilities may not be readily accepted by the 

broader port/maritime industry that is faced with the cost of MTSA

compliance. Opponents to a more risk based approach may argue that it 

43 SLGCP is now the single point of contact for facilitation and coordination of departmental programs that impact state, local, territorial, 

and tribal governments. The office is charged with facilitating the coordination of DHS-wide programs that affect state, local, territorial, 

and tribal governments; serving as the primary point-of-contact within DHS for exchanging information with state, local, territorial, and 

tribal homeland security personnel; identifying homeland security-related activities, best practices, and processes that are most efficiently 

accomplished at the federal, state, local or regional levels; and utilizing this information to ensure that opportunities for improvement are 

provided to state, territorial, tribal and local counterparts.
Review of the Port Security Grant Program Page 45

runs counter to the intent of MTSA by assisting the “critical” facilities 

and vessels that are more likely to have the resources or the incentive to 

absorb MTSA related costs. 

• All MTSA regulated facilities and vessels are faced with new security 

requirements, including recurring costs. MTSA’s grant authority, which 

was unfunded, was intended to defray these costs and included a cost 

share requirement. TSA’s program did not fund recurring costs or require 

cost sharing. How SLGCP’s authority and appropriation will address 

MTSA requirements is unclear. 

• Port authorities and port entities are concerned that states may contribute 

to delays and reductions in funding. Currently, port security grants flow 

directly to the applicants. However, in other ODP grant programs, the 

funds flow to the states and then to the applicants and the states may use 

up to 20% of the grant before allocating funds to local applicants. Port 

authorities and port entities are also concerned that they will be forced to 

compete for grant funds against other local entities, such as firefighters 

and police, and other infrastructure protection priorities. SLGCP said that 

it intends to award FY 2005 grants directly to the applicants. 

• SLGCP faces a challenge in consolidating and analyzing infrastructure 

vulnerability information to ensure that funds will be spent on projects 

that maximize risk reduction at both the local and national levels. 

We recommend that the Executive Director, Office of State and Local 

Government Coordination and Preparedness:

Recommendation #12: Seek clarification on the legislative intent for the program 

(sector-specific vs. larger infrastructure protection initiatives) and construct a 

unified program (policy, purpose, process, and eligibility) to comply with that 

intent.
Page 46 Review of the Port Security Grant Program

44 Information provided by TSA on December 19, 2003. Total projects and funding amounts may differ from amounts in award 

announcements due to negotiation of grants. Aggregated amounts are based on the “not-to-exceed” amount for individual projects at the 

time of the award. Assessment and Proof of Concept Projects were ineligible in round three.

Appendix A

Summary Tables of TSA Port Security Grants

Summary of Port Security Grant Projects 

by Number of Projects and Proportion of 

Funding44

Round 1

Projects Funding*

Project Type No. % $ %

Assessment 25 17.36% $6,515,000 6.94%

Proof of Concept 17 11.81% $10,024,757 10.68%

Access Controls 21 14.58% $21,867,672 23.29%

Communications 2 1.39% $390,000 0.42%

Physical Enhancements 43 29.86% $21,602,983 23.01%

Surveillance 29 20.14% $29,129,389 31.03%

Vessel/Vehicle 7 4.86% $4,343,947 4.63%

Totals: 144 100.00% $93,873,748 100.00%

Round 2

Projects Funding

Project Type No. % $ %

Assessment 21 5.36% $1,243,483 0.74%

Proof of Concept 2 0.51% $1,469,294 0.87%

Access Controls 103 26.28% $36,234,437 21.45%

Communications 8 2.04% $10,711,330 6.34%

Physical Enhancements 127 32.40% $80,144,671 47.44%

Surveillance 113 28.83% $34,832,149 20.62%

Vessel/Vehicle 18 4.59% $4,288,772 2.54%

Totals: 392 100.00% $168,924,136 100.00%

Round 3

Projects Funding

Project Type No. % Funding %

Assessment 0 0.00% $0 0.00%

Proof of Concept 0 0.00% $0 0.00%

Access Controls 84 19.00% $46,229,529 25.82%

Communications 20 4.52% $11,166,836 6.24%

Physical Enhancements 170 38.46% $70,493,696 39.38%

Surveillance 151 34.16% $47,238,899 26.39%

Vessel/Vehicle 17 3.85% $3,896,940 2.18%

Totals: 442 100.00% $179,025,900 100.00%
Review of the Port Security Grant Program Page 47

Project Type Descriptions:

• An Assessment ascertains vulnerabilities of physical or operational 

security of a port, multiple terminals, terminal or vessel (commuter or 

ferry service), and identifies mitigation strategies.

• Proof of Concept projects are pilot security enhancement projects whose 

feasibility or implementation has potential applicability across the 

broadest possible range of facilities or operations. 

• Access Controls include, but are not limited to, identification systems and 

access gates.

• Communications include, but are not limited to, communication systems, 

command and control systems, and computer systems.

• Physical Enhancements include, but are not limited to, fencing, physical 

barriers, and screening and detection equipment.

• Surveillance includes, but is not limited to, cameras, closed circuit 

television (CCTV), and lighting.

• Vessel/Vehicle funding was awarded for patrol-related activities. Funding 

for vehicles was awarded in round one only.

Appendix A

Summary Tables of TSA Port Security Grants

Rounds 1, 2 & 3 Combined

Project Type No. of Proj. Percentage of 

Proj. Funding Percentage of 

Funding

Assessment 46 4.70% $7,758,483 1.76%

Proof of Concept 19 1.94% $11,494,051 2.60%

Access Controls 208 21.27% $104,331,638 23.61%

Communications 30 3.07% $22,268,166 5.04%

Physical Enhancements 340 34.76% $172,241,350 38.98%

Surveillance 293 29.96% $111,200,437 25.17%

Vessel/Vehicle 42 4.29% $12,529,659 2.84%

Totals: 978 100.00% $441,823,784 100.00%
Page 48 Review of the Port Security Grant Program

Appendix B

Management Comments
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Appendix B

Management Comments
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Appendix B

Management Comments
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Appendix B

Management Comments
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Appendix B

Management Comments
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Appendix B

Management Comments
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Appendix B

Management Comments
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Appendix B

Management Comments
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Appendix B

Management Comments
Review of the Port Security Grant Program Page 57

Appendix C

OIG Evaluation of Management Comments

In its initial response, dated November 19, 2004, DHS agreed that opportunities exist to further improve 

the program and said that it already is taking aggressive action to address many of the issues identified 

by the OIG. However, it did not address each recommendation and we requested that DHS revise and 

resubmit a more responsive document. In its second response, dated December 30, 2004, DHS concurred 

with 11 of the 12 recommendations and did not concur with one recommendation. We consider 11 of the 

12 recommendations resolved and one recommendation unresolved. All recommendations remain open.

To summarize our report, several practices hinder the program from achieving national strategic 

priorities and, in fact, conflict with this goal. Program administrators and reviewers (1) attempted to 

spread the grant funds to as many recipients as possible, (2) changed the definition of a ‘national critical 

seaport’ from round to round to widen eligibility, and (3) funded projects that lacked clear securityrelated merit. Although the department response claimed that reviewers applied national security and 

risk information, we did not find evidence to support the assertion. Moreover, there were numerous 

instances of grants to ports/facilities not on the national strategic or controlled port list where the 

grantee’s eligibility under the criteria could not be ascertained from the application documents. These 

facts weaken the premise that the program is risk-based and cloud the meaning of “highest priorities.” 

DHS did not agree that the program in its current state compromises DHS’ ability to direct resources 

toward the nation’s highest priorities.

The department objected to our statement that ODP undermined TSA’s evaluation process, replying that 

ODP and TSA coordinated closely on how to allocate the $75 million and it was TSA that recommended 

the 82 projects that ODP funded. Our concern is not with how well TSA and ODP worked together, 

which they did, but whether the department funded 82 projects that it should not have awarded. SLGCP

believes that the problems noted with the FY 2003 process will not be repeated.

We obtained different views of how TSA represented and transferred the 82 projects to ODP. Regardless 

of whether the projects were the “next best” projects available that met UASI criteria, TSA was not 

going to fund them. ODP’s faith in the evaluation and selection process and belief that TSA, USCG, and 

MARAD sufficiently evaluated those projects allows for the possibility that it did not know the quality 

of the projects it received. As our report discusses, we took exception to funding many of these projects 

based on their overall rankings and our analysis of reviewer comments. 

SLGCP asserted that the funding allocation decisions for the 12 eligible urban areas, under which the 

82 projects were selected, were not based on the same formulas used for basic UASI grants. We looked 

only at port grants and did not examine the formulas used for basic UASI grants. We did not intend to 

imply otherwise, and we modified our report accordingly. 

We witnessed widespread support and enthusiasm for the port security grant. We observed good, 

respectful, working relationships among all of the participating agencies, i.e., TSA, ODP, USCG, 

and MARAD, that collaborated to stand up a competitive grant program and leverage their expertise 
Page 58 Review of the Port Security Grant Program

Appendix C

OIG Evaluation of Management Comments

throughout multiple rounds of grant awards. Evaluators at all levels of review worked hard to reach 

consensus on grant decisions. Program officials clearly desire to improve the program and the increasing 

quality of applications and program administration is evident. 

However, DHS’ response to our recommendations revealed little about specific corrective actions 

that will be taken. One of our most serious concerns is that our review revealed conflicting goals for 

the program. The program should be more risk based, but we found statutory direction and actual 

implementation that effects a distributive approach to the grants. DHS’ comments did not acknowledge 

the incompatibility of the approaches, and did not convincingly commit to establishing a clear goal 

toward which grant funds can be directed. The Executive Director, SLGCP, or a more senior official 

responsible for the program, did not sign either the first or second response to our draft report. Who will 

oversee the corrective actions and redesign the program remains unclear. 

DHS has now spent $560 million on port security grants and has been allocated $150 million for 

fiscal year 2005. Because several of our recommendations are fundamental to the effectiveness of the 

program, i.e., recommendations 1, 3-4, 6, and 9, we strongly encourage the DHS to fully implement our 

recommendations before proceeding with the next round of port security grants.

Below are management comments and OIG analysis of management comments for each 

recommendation.

Recommendation #1: Determine to what extent the program should incorporate MTSA requirements.

DHS Response: DHS concurred with this recommendation and will review the MTSA issue with the 

goal of including updated guidance on this subject in the forthcoming FY 2005 Port Security Grant 

Program. DHS said it has developed and implemented a strategy for the identification and protection 

of the nation’s critical port infrastructure resulting from MTSA and subsequent regulations. This 

has enhanced security through the completion of vulnerability assessments, security plans, and the 

mitigation of security vulnerabilities for certain “high priority” facilities and vessels. DHS noted that 

these “high priority” facilities and vessels were eligible to receive funds in the most recent round of 

grants. 

OIG Evaluation: The OIG agrees that DHS has made substantial progress in identifying and protecting 

vulnerable port facilities and vessels, and these actions have, in turn, enhanced the grant application 

review process. However, DHS failed to articulate how the department will resolve the discrepancies 

that exist between TSA’s grant program, MTSA’s grant authority, and SLGCP’s intention to create 

a more risk-based model. These represent three competing philosophies that not only relate to port 

security, but also reflect the broader debate on how homeland security funds, in general, should be spent. 

That debate consists of the extent DHS should broadly disperse funds to assist with nationwide security 
Review of the Port Security Grant Program Page 59

Appendix C

OIG Evaluation of Management Comments

needs and mandates such as MTSA, versus focusing funds on the nation’s most critical and vulnerable 

infrastructure. 

We concur with DHS’ intent to examine MTSA requirements and consider the recommendation 

resolved, but open, until DHS resolves the discrepancies between the intent and authority of MTSA and 

the existing grant program.

Recommendation #2: Incorporate critical infrastructure and key asset data from IAIP into the 

evaluation of proposed port security projects. Among the changes to consider:

• The addition of an IAIP official on the Executive Review Board;

• Use of the IAIP national asset database to identify critical facilities in need of mitigation with a 

view toward soliciting proposals from these facilities; and

• Collaborating with IAIP in an outreach program to improve the quality of vulnerability 

assessments and proposals.

DHS Response: DHS concurred with the recommendation. DHS agreed that the participation of 

members from IAIP would be beneficial. SLGCP will work with IAIP to include critical infrastructure 

and key asset data into the evaluation process for the next round of port security grants. 

DHS pointed out that IAIP did not exist during the first round of grants and that detailed critical 

infrastructure/key asset (CI/KA) lists had not been developed fully during the second and third rounds. 

DHS asserted that our report implies national CI/KA information was available that the review boards 

had not been aware of during the grant review process. In addition, DHS asserted that the Coast Guard 

works very closely with the IAIP staff and is very aware of IAIP efforts, including the development of 

CI/KA lists and strategies for protecting the nation’s CI/KA. It also asserted that some of the CI/KA 

information developed by IAIP has been shared with Coast Guard, as well as with members of the 

national review boards from other participating agencies.

DHS said that MTSA regulations require Coast Guard Federal Maritime Security Coordinators (FMSCs) 

to conduct port assessments, identify critical infrastructure, and develop Area Maritime Security 

Plans with established Area Maritime Security Committees. The knowledge acquired through these 

activities is then applied during the local grant review process. Furthermore, the FMSCs have prioritized 

critical infrastructure within their ports, and this information has been compiled into a classified 

maritime critical infrastructure list for the nation and was available during the national review of grant 

applications.

OIG Evaluation: DHS asserted that USCG, through MTSA implementation, was able to apply its 

knowledge of maritime vulnerabilities to the field review and that this information was compiled into 

a classified national list that was shared with national level review boards. We are aware of the USCG 
Page 60 Review of the Port Security Grant Program

Appendix C

OIG Evaluation of Management Comments

efforts to compile maritime vulnerability information at the local and national levels, but it was not clear 

that this information was vetted by IAIP or integrated with IAIP’s national CI/KA information. We did 

not find any evidence that this information was provided to the personnel that participated in the national 

level evaluation process. This may be the current practice, but this was not evident in our review of the 

first three rounds of grants. 

However, we concur with DHS’ plans to work with IAIP and consider the recommendation resolved, 

but open, until it explains how additional information will be incorporated into the evaluation process. 

Specifically, DHS has not described what process, methodologies, or guidance that it will use in the 

future to ensure that field and national level grant reviewers not only are knowledgeable of IAIP’s CI/

KA information, but also understand how it is to be applied in the context of the grant program.

Recommendation #3: Consider changing the weighting of the evaluation criteria, with greater 

emphasis placed on the criteria that reduce critical vulnerabilities.

DHS Response: DHS concurred with the recommendation and will incorporate a weighted approach to 

evaluating projects that places an increased emphasis on risk reduction as part of the forthcoming round 

of port security grants.

DHS stated that the field level ranking is an important decision factor for the national review boards. 

The field review evaluation leads to a risk-based recommendation only. The national review boards then 

evaluate the application against other RFA published criteria, e.g., cost, schedule and qualification of key 

personnel that are not considered at the field level review. Disqualifying factors during this review will 

sometimes result in a national review board recommendation to fund a project in lieu of one that may 

have been ranked higher during the risk-based field level review. DHS stated that the national review 

board will not recommend funding for a project that does not have a high likelihood of successful 

implementation within a reasonable timeframe. 

OIG Evaluation: We concur with DHS’ intention to incorporate a new weighted approach and consider 

the recommendation resolved, but open, pending the development of this approach. DHS should explain 

how the reviewing bodies will use criteria and weights to evaluate projects. 

We did not underestimate the importance of the field review process; it lays the foundation for 

the national level reviews. While the program guidance requires that the field review rankings be 

based solely on risk, some field reviewers told us that other factors sometimes were considered. The 

Coast Guard utilizes the PSRAT tool in the field review process to assist them in making risk-based 

recommendations and rankings. The MARAD field reviewers, however, do not use the PSRAT tool. 

Although the Coast Guard and MARAD frequently agreed on rankings, they were required to come to a 

consensus and this process did not always lead to a purely risk-based recommendation. 
Review of the Port Security Grant Program Page 61

Appendix C

OIG Evaluation of Management Comments

Our concern has been that DHS funded a large number of projects that received unsatisfactory or 

marginal scores in the three risk and criticality criteria. First and foremost, the goal of the program must 

be to reduce risk and protect critical facilities. To award grants that do not receive favorable evaluations 

in these criteria does not appear to support these goals or the goal of good stewardship of federal funds. 

Recommendation #4: Cease the practice of funding projects that do not meet the definition of a 

Priority I project. Consider implementing a scoring threshold that ensures that projects not meeting that 

threshold are not funded. Consider seeking a change in appropriations language to have these grant 

funds designated as “no-year monies” to reduce the impetus to fund doubtful projects.

DHS Response: DHS did not concur with this recommendation, but only cited the collaborative TSA 

and ODP process that resulted in grant awards for 82 Priority II projects in FY 2003 under the UASI port 

security grants. DHS suggests that this problem will not recur since SLGCP is now administering the 

program.

OIG Evaluation: We consider the recommendation unresolved. This issue extends beyond the process 

that led to the funding of 82 Priority II projects cited in the management comments. DHS did not 

address whether it will retain the Priority I, II, and III designations during the evaluation process or 

whether it will implement a scoring threshold. DHS funded a number of projects that received marginal 

or unsatisfactory rankings in the risk reduction and criticality evaluation criteria. Program officials told 

us that there was pressure to expend available funds and to spread those funds to as many applicants as 

possible. This suggests that risk reduction was not the primary consideration in awarding grants. 

The NRB also elevated a limited number of projects in each round from their initial Priority II status to 

Priority I. In the end, the program funded numerous projects that received below average scores overall.

Finally, DHS did not address our suggestion to seek a change in appropriations language to have these 

grant funds designated as “no-year monies” as part of an effort to improve the quality of the grant 

application, grant process, and overall mitigation of vulnerability. We continue to believe that a threshold 

is required and that the “no-year monies” issue needs to be considered. 

Recommendation #5: Require reviewers to document their decisions in the grants management system, 

particularly when they are inconsistent with recommendations from a lower level of review. 

DHS Response: DHS generally concurred that comments should be mandatory when there is 

inconsistency between any of the review levels, and will implement this change by requiring reviewers 

to document their decisions in the grants management system as part of the next round of grants. DHS 

said that national review boards also utilized knowledge gained from working in the national policy 

development arena and this may result in ranking projects differently from the field review. DHS said 

that documentation for the rationale for recommending or not recommending funding has improved 
Page 62 Review of the Port Security Grant Program

Appendix C

OIG Evaluation of Management Comments

during each subsequent round. During the most recent rounds, extensive efforts were made to document 

thoroughly the decisions of the national review boards. 

OIG Evaluation: We determined that the documentation to support decisions generally improved from 

round to round. In general, when a project or a portion of the scope of a project was deemed ineligible 

for funding, the documentation supported this decision. However, in round three, we found that 

decisions that were inconsistent with a lower level of review generally were not documented sufficiently. 

Contrary to DHS’ view that “extensive efforts were made to thoroughly document the national review 

board’s decisions,” national and executive reviewers did not sufficiently justify their changes. We 

maintain that improvement in documenting funding decisions is necessary at all levels of review. 

We concur with DHS’ plans to add the mandatory requirement and consider the recommendation 

resolved, but open. DHS should include in its action plan evidence that it has provided the above 

instructions to evaluators through written guidance.

Recommendation #6: Develop parameters that define applicant eligibility under the “nationally 

important economic port or terminal,” “responsible for movement of a high number of passengers,” and 

“responsible for the movement of hazardous cargo” criteria.

DHS Response: DHS concurred that parameters need to be developed that focus on defining eligibility 

based on asset criticality. DHS said that SLGCP will work with IAIP, the USCG, TSA, and MARAD to 

develop and include these asset criticality criteria in the FY 2005 program. DHS also said that, although 

the definition of “critical national seaport” was intentionally broad in an effort to encourage submittal of 

applications, the Request For Applications criteria listed to meet the “critical national seaport” threshold 

proved DHS has focused on addressing the highest priorities in the nation’s most critical ports and 

critical activities within ports. DHS said merely providing a list of ports or list of port activities, e.g., 

passenger and hazardous cargo operations, that would have been eligible for grant funds is a simplistic 

approach to a complex maritime environment and would have resulted in fewer grant applications of 

merit and exclusion of projects that were worthy of funding. 

OIG Evaluation: We concur with DHS’ commitment and consider the recommendation resolved, but 

open. DHS should include in its action plan the parameters that define applicant eligibility based on asset 

criticality.

DHS’ acknowledgement that it used a broad definition to encourage the submittal of applications, and 

the lack of parameters for qualifying under the three above referenced criteria, brings into question DHS’ 

position that it is focused on the nation’s most critical ports and activities within ports. The program’s 

interpretation of these criteria varied from round to round based on the universe of applications 

submitted and we did not find any information to support how an entity would meet one or more of these 

criteria for eligibility. We concur that the port/maritime environment is complex and that the program 
Review of the Port Security Grant Program Page 63

Appendix C

OIG Evaluation of Management Comments

requires flexibility to address the broad range of port/facility/vessel characteristics, vulnerabilities, 

etc. However, not defining applicant eligibility effectively makes all entities eligible for funding and 

limits the value of having any eligibility requirements at all. This, in turn, makes the evaluator’s job 

of discerning which facilities or vessels rise to a level of criticality that merits federal funding more 

difficult. 

Recommendation #7: Communicate information to field reviewers to educate them on eligibility. 

Improve dissemination of “lessons learned” at all levels of review.

DHS Response: DHS concurred with the recommendation. Program administrators will (1) continue 

to share lessons learned with all levels of review, (2) seek ways to improve dissemination of useful 

information to potential grant applicants and government reviewers, and (3) will ensure clear and 

appropriate guidance and other relevant information is provided to those responsible for reviewing 

applications as part of the next round of port security grants.

OIG Evaluation: We concur with DHS’ response and consider the recommendation resolved, but 

open. DHS should attach to its action plan additional documentation supporting the steps noted above. 

We believe that program guidance and communication has improved. However, field reviewers, in 

particular, expressed to us their concern that guidance was unclear. This is especially important in light 

of the fact that the field review teams, specifically those in the Coast Guard, experience significant 

turnover due to personnel rotation.

Recommendation #8: Evaluate timeframes for reviewing applications with an emphasis on providing 

more time for review in the field and by the ERB.

DHS Response: DHS concurred with the recommendation and will explore ways to improve grant 

procedures with a commitment to ensuring that future port security projects have been thoroughly 

vetted. DHS also stated that it is sensitive to the OIG’s concerns regarding insufficient time for thorough 

project reviews. DHS believes that its efforts to redesign the process in coordination with IAIP, the 

Coast Guard, MARAD, and TSA will achieve timesavings through a more efficient process.

OIG Evaluation: We concur with DHS’ commitment to improve grant procedures and consider the 

recommendation resolved, but open. DHS should provide more information regarding the redesign of 

the process as it becomes available.

Recommendation #9: Clarify department policy on funding private sector projects. In the absence of 

such policy, and if funding private sector projects is continued: (1) examine private sector projects to 

preclude the funding of cost of business expenses; (2) develop financial eligibility criteria, including 

an income test or cost-benefit analysis; and (3) consider giving greater preference to projects that are 

submitted jointly by private and public entities.
Page 64 Review of the Port Security Grant Program

Appendix C

OIG Evaluation of Management Comments

DHS Response: DHS concurred that the department’s policy on funding private sector projects needs 

to be clarified. In round four, departmental policy was not to fund any private sector entities that were 

Fortune 500 companies. The department committed to develop a formal policy on funding for private 

sector entities as part of the forthcoming FY 2005 program. 

OIG Evaluation: We concur with DHS’ response and consider the recommendation resolved, but open. 

The private sector will continue to seek funding and the department must rigorously examine those 

applications. To close the recommendation, DHS should provide a copy of the policy for funding private 

sector projects when it becomes available. The policy should address cost of business criteria, financial 

eligibility criteria issues, and how much preference should be given to joint private and public sector 

projects.

Recommendation #10: Accelerate the acquisition of more information from applicants about the scope 

of their projects. 

DHS Response: DHS concurred with this recommendation and will ensure that appropriate guidance 

on the submission of relevant information within specified timeframes is included in the application kit 

for the next round of grants.

OIG Evaluation: We concur with DHS’ response and consider the recommendation resolved, but open. 

DHS should provide a copy of the application kit for the FY 2005 program. 

Recommendation #11: Ensure that the program has sufficient operational expertise to administer the 

program after the award is made.

DHS Response: DHS concurred with the recommendation. It has established the Transportation 

Infrastructure Security Division within SLGCP to administer the FY 2005 grants. Six TSA personnel 

have also been transferred to SLGCP to form the new division. They will be supplemented over the 

coming months with additional experienced staff as the remaining vacancies in the new division are 

filled. 

OIG Evaluation: We concur with DHS’ response and consider the recommendation resolved, but open. 

To close the recommendation, DHS should provide an organization chart and information on the status 

of current and planned full-time personnel for the new division.

Recommendation #12: Seek clarification on the legislative intent for the program (sector-specific vs. 

larger infrastructure protection initiatives) and construct a unified program (policy, purpose, process, and 

eligibility) to comply with that intent. 
Review of the Port Security Grant Program Page 65

DHS Response: DHS concurred with the recommendation and stated that it will reach out to the 

appropriate congressional committees for clarification. In the interim, SLGCP is already working with 

IAIP and the USCG to examine what national critical infrastructure lies within key seaports, and will 

incorporate this information into the next round of the Port Security Grant Program.

OIG Evaluation: We concur with DHS’ response and consider the recommendation resolved, but open. 

DHS should include in its action plan the status of efforts to obtain congressional input, as well as any 

related correspondence with congressional committees. This also is discussed in our analysis of the 

department’s comments on Recommendation #1.

Appendix C

OIG Evaluation of Management Comments
Page 66 Review of the Port Security Grant Program

Appendix D

Recommendations

Recommendations

We recommend that the Executive Director, Office of State and Local 

Government Coordination and Preparedness:

Recommendation #1: Determine to what extent the program should incorporate 

MTSA requirements.

Recommendation #2: Incorporate critical infrastructure and key asset data from 

IAIP into the evaluation of proposed port security projects. Among the changes to 

consider:

• The addition of an IAIP official on the Executive Review Board;

• Use of the IAIP national asset database to identify critical facilities in 

need of mitigation with a view toward soliciting proposals from these 

facilities; and

• Collaborating with IAIP in an outreach program to improve the quality of 

vulnerability assessments and proposals.

Recommendation #3: Consider changing the weighting of the evaluation criteria, 

with greater emphasis placed on the criteria that reduce critical vulnerabilities.

Recommendation #4: Cease the practice of funding projects that do not meet the 

definition of a Priority I project. Consider implementing a scoring threshold that 

ensures that projects not meeting that threshold are not funded. Consider seeking 

a change in appropriations language to have these grant funds designated as “noyear monies” to reduce the impetus to fund doubtful projects.

Recommendation #5: Require reviewers to document their decisions in 

the grants management system, particularly when they are inconsistent with 

recommendations from a lower level of review. 

Recommendation #6: Develop parameters that define applicant eligibility under 

the “nationally important economic port or terminal,” “responsible for movement 

of a high number of passengers,” and “responsible for the movement of hazardous 

cargo” criteria.

Recommendation #7: Communicate information to field reviewers to educate 

them on eligibility. Improve dissemination of lessons learned at all levels of 

review.
Review of the Port Security Grant Program Page 67

Appendix D

Recommendations

Recommendation #8: Evaluate timeframes for reviewing applications with an 

emphasis on providing more time for review in the field and by the ERB.

Recommendation #9: Clarify department policy on funding private sector 

projects. In the absence of such policy, and if funding private sector projects is 

continued: (1) examine private sector projects to preclude the funding of cost of 

business expenses; (2) develop financial eligibility criteria, including an income 

test or cost-benefit analysis; and (3) consider giving greater preference to projects 

that are submitted jointly by private and public entities.

Recommendation #10: Accelerate the acquisition of more information from 

applicants about the scope of their projects. 

Recommendation #11: Ensure that the program has sufficient operational 

expertise to administer the program after the award is made.

Recommendation #12: Seek clarification on the legislative intent for the program 

(sector-specific vs. larger infrastructure protection initiatives) and construct a 

unified program (policy, purpose, process, and eligibility) to comply with that 

intent.
Page 68 Review of the Port Security Grant Program

Appendix E

Major Contributors to this Report

Melissa M. Howard, Ph.D., Chief Inspector 

William J. McCarron, Senior Inspector 

Howard Stronach, Inspector

Melissa Keaster, Inspector
Review of the Port Security Grant Program Page 69

Appendix F

Report Distribution

Department of Homeland Security

Secretary

Deputy Secretary

General Counsel 

Chief of Staff

Under Secretary, Border and Transportation Security

Under Secretary, Information Analysis and Infrastructure Protection

Audit Liaison, Information Analysis and Infrastructure Protection

Executive Director, Office of State and Local Government Coordination and 

 Preparedness

DHS OIG Liaison

DHS Public Affairs

Deputy Security Officer, Office of Security

Transportation Security Administration

Assistant Secretary of Homeland Security for the Transportation Security 

Administration

Audit Liaison, Transportation Security Administration

United States Coast Guard

Commandant, United States Coast Guard

Department of Transportation 

Administrator, Maritime Administration

Inspector General, Department of Transportation

Office of Management and Budget

Chief, Homeland Security Branch

DHS OIG Program Examiner

Congress

Congressional Oversight and Appropriations Committees, as appropriate

Government Accountability Office

Western Regional Director
Page 70 Review of the Port Security Grant Program

Additional Information and Copies

To obtain additional copies of this report, call the Office of Inspector General (OIG) 

at (202) 254-4100, fax your request to (202) 254-4285, 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 the OIG 

Hotline at 1-800-323-8603; write to Department of Homeland Security, Washington, DC 

20528, Attn: Office of Inspector General, Investigations Division – Hotline. The OIG 

seeks to protect the identity of each writer and caller.