Department of Homeland Security 

Office of Inspector General 

The State of California’s Management of 
 

Urban Areas Security Initiative Grants 
 

Awarded During Fiscal Years 
 

2006 through 2008
 


OIG-11-46 February 2011 
Office (!f Inspector General 

U.S. Department of Homeland Security 

Washington, DC 20528 

Homeland 

Security 

FEB 2 3 lOll 

Preface 

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

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

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

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

efficiency, and effectiveness within the department. 

The attached report presents the results of the audit of the State of California's 

management of Urban Areas Security Initiative grants awarded during Fiscal Years 

2006 through 2008. We contracted with the independent public accounting firm Foxx & 

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

audit according to generally accepted government auditing standards. Foxx & 

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

grant funds could be improved, resulting in 19 recommendations addressed to the 

Assistant Administrator, Grant Programs Directorate, Federal Emergency Management 

Agency. Foxx & Company also identified two best practices that should be considered 

for use by other jurisdictions. Foxx & Company is responsible for the attached auditor's 

report dated February 1, 2011, and the conclusions expressed in the report. 

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

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

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

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

L /!jJL-R/ Anne L. Richards 

Assistant Inspect General for Audits 
February 1, 2011 

Ms. Anne L. Richards 

Assistant Inspector General for Audits 

Office of Inspector General 

U.S. Department of Homeland Security 

245 Murray Drive, S.W. Building 410 

Washington, D.C. 20528 

Dear Ms. Richards: 

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

Department of Homeland Security’s Urban Areas Security Initiative grants for Fiscal 

Years 2006 through 2008. The audit was performed in accordance with our Task Order 

No. TPD-FIG-BPA-07-0007-0005 dated September 29, 2009. This report presents the 

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

management of the Urban Areas Security Initiative grants. The scope of the audit did not 

include an audit of the State Homeland Security Program grants awarded to the State of 

California. Those awards were audited and reported in DHS Office of Inspector General 

audit report: The State of California’s Management of State Homeland Security Program 

Grants Awarded During Fiscal Years 2004 - 2006, OIG-09-33, February 2009. 

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

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

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

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

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

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

Reports submitted to the Department of Homeland Security. 

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

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

Sincerely, 

Foxx & Company 

Martin W. O’Neill 

Partner 
Table of Contents/Abbreviations 

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

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

Results of Audit ................................................................................................................ 5 
 

Improved Program Results Reporting .................................................................. 5 
 

Recommendation ...................................................................................................9 
 

Management Comments and Auditor’ Analysis ................................................. 10 
 

Increased Investment Oversight .......................................................................... 10 
 

Recommendations ............................................................................................... 14 
 

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

Delays in Awarding Grant Funds ....................................................................... 15 
 

Recommendations ............................................................................................... 17 
 

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

Sustaining Capabilities Without Federal Funding .............................................. 18 
 

Recommendations ............................................................................................... 22 
 

Management Comments and Auditors’ Analysis ............................................... 22 
 

Monitoring of Urban Areas Security Initiative Recipients ................................. 23 
 

Recommendations ............................................................................................... 25 
 

Management Comments and Auditors’ Analysis ............................................... 25 
 

Unreported and Unjustified Sole Source Procurements ..................................... 26 
 

Recommendations ............................................................................................... 31 
 

Management Comments and Auditors’ Analysis ............................................... 31 
 

Internal Controls Over Reimbursements ............................................................ 32 
 

Recommendation ................................................................................................ 34 
 

Management Comments and Auditors’ Analysis ............................................... 35 
 

Management of Cash Advances .......................................................................... 35 
 

Recommendations ............................................................................................... 37 
 

Management Comments and Auditors’ Analysis ............................................... 37 
 

Two California Urban Areas Security Initiatives Are Using Innovative 
 

Systems That May Be Best Practices ............................................................ 38 
 
Table of Contents/Abbreviations 
 

Appendices 

Appendix A: 

Appendix B: 

Appendix C: 

Appendix D: 

Appendix E: 

Abbreviations 

DHS 

FEMA 

FY 

OIG 

Purpose, Scope, and Methodology .............................................. 40 
 

FEMA Management Comments to the Draft Report................... 44 
 

State of California Management Comments to the Draft Report 54 
 

Organization Chart ...................................................................... 65 
 

Report Distribution ..................................................................... 66 
 

Department of Homeland Security 

Federal Emergency Management Agency 

Fiscal Year 

Office of Inspector General 
OIG
 
 Department of Homeland Security 

Office of Inspector General 

Executive Summary 

Foxx & Company completed an audit of the State of California’s 

Management of Urban Areas Security Initiative grants awarded 

during fiscal years 2006 through 2008. The audit objectives were 

to determine whether the State distributed and spent the grant 

funds strategically, effectively, and in compliance with laws, 

regulations, and guidance. The audit included a review of 

approximately $421 million in Urban Areas Security Initiative 

grants awarded by the Federal Emergency Management Agency to 

the State of California. 

Generally, the State did an efficient and effective job of 

administering the program requirements, distributing grant funds, 

and ensuring that all of the available funds were used. The State 

used reasonable methodologies for assessing threats, 

vulnerabilities, and prioritized needs, and measured response 

capabilities and performance using a variety of techniques 

including exercises and After Action Reports. 

Improvements are needed to enhance California’s management of 

the Urban Areas Security Initiative grants, including better 

reporting of program results, increasing investment oversight, 

avoiding delays in awarding grant funds, sustaining capabilities in 

the absence of federal funds, strengthening monitoring of 

recipients, promoting fair and open competition in procurement, 

providing greater oversight over reimbursements, and managing 

cash advances. We identified two best practices that should be 

considered for sharing with other jurisdictions. The 

19 recommendations call for the Federal Emergency Management 

Agency to initiate improvements which, if implemented, should 

help strengthen program management, performance, and oversight. 

Federal Emergency Management Agency officials concurred or 

partially concurred with all but one recommendation. State 

officials concurred or partially concurred with all but one 

recommendation. Written responses to the recommendations from 

Federal Emergency Management Agency and State officials are 

included as Appendices B and C. 

The State of California’s Management of Urban Areas Security Initiative Grants

 Awarded During Fiscal Years 2006 through 2008 
 

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Background 

The Homeland Security Grant Program is a federal assistance grant 

program administered by the U.S. Department of Homeland 

Security (DHS), Grant Programs Directorate within the Federal 

Emergency Management Agency (FEMA). The current Grant 

Programs Directorate, hereafter referred to as FEMA, began with 

the Office of Domestic Preparedness, which was transferred from 

the Department of Justice to DHS in March 2003. The Office of 

Domestic Preparedness was subsequently consolidated into the 

Office of State and Local Government Coordination and 

Preparedness which, in part, became the Office of Grants and 

Training, and which subsequently became part of FEMA. 

Although the grant program was transferred to DHS, applicable 

Department of Justice grant regulations and legacy systems were 

still used, as needed, to administer the program. For example, 

through fiscal year (FY) 2008 the Office of Justice Programs’ 

Grants Management System was used to receive grantee 

applications and to administer the award and reporting processes. 

Also, prior to the transfer, the State Administrative Agency entered 

payment data into the Office of Justice Programs’ Phone Activated 

Paperless Request System, which was a drawdown payment 

system for grant funds. That payment system was replaced in 

April 2007 by FEMA’s Payment and Reporting System, which 

allows grantees to make payment requests and complete and 

transmit their quarterly Financial Status Reports online. 

Homeland Security Grant Program 

The Homeland Security Grant Program provides federal funding to 

help state and local agencies enhance their capabilities to prevent, 

deter, respond to, and recover from terrorist attacks, major 

disasters, and other emergencies. The Homeland Security Grant 

Program encompasses several interrelated federal grant programs 

that together fund a range of preparedness activities, including 

planning, organization, equipment purchase, training, and 

exercises, as well as management and administration costs. 

Depending on the fiscal year, the program included some or all of 

the following programs: 

•	 State Homeland Security Program supports the 

implementation of State Homeland Security Strategies to 

address the identified planning, organization, equipment, 

training, and exercise needs to prevent, protect against, respond 

The State of California’s Management of Urban Areas Security Initiative Grants
 


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to, and recover from acts of terrorism and other catastrophic 

events. 

•	 Urban Areas Security Initiative program funds address the 

unique planning, organization, equipment, training, and 

exercise needs of high-threat, high-density urban areas, and 

assists them in building an enhanced and sustainable capacity 

to prevent, protect against, respond to, and recover from acts of 

terrorism. 

•	 Law Enforcement Terrorism Prevention Program provides 

resources to law enforcement and public safety communities 

(working with their private partners) to support critical 

terrorism prevention activities, including: establishing or 

enhancing fusion centers and collaborating with non-law 

enforcement partners, other government agencies, and the 

private sector. 

•	 Citizen Corps Program mission is to bring community and 

government leaders together to coordinate the involvement of 

community members and organizations in emergency 

preparedness, planning, mitigation, response, and recovery. 

•	 Metropolitan Medical Response System Program funds 

support designated jurisdictions to further enhance and sustain 

a regionally integrated, systematic mass casualty incident 

preparedness program that enables a response during the first 

crucial hours of an incident. The program prepares 

jurisdictions for response to all-hazards mass casualty 

incidents, including chemical, biological, radiological, nuclear, 

and explosive terrorism, epidemic disease outbreaks, natural 

disasters, and large-scale hazardous material incidents. 

State Administrative Agency 

The governors of each state appoint a State Administrative Agency 

to administer the Homeland Security Grant Program. The State 

Administrative Agency is responsible for managing the grant 

programs in accordance with established federal guidelines. The 

State Administrative Agency is also responsible for allocating 

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

In 2004, California’s Governor designated the Office of Homeland 

Security to be the State Administrative Agency for the Homeland 

Security Grant Program. In 2009, the California Office of 

Homeland Security and the Office of Emergency Services were 

The State of California’s Management of Urban Areas Security Initiative Grants
 

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merged to become the California Emergency Management 

Agency. The California Emergency Management Agency is 

responsible for administering all of the Homeland Security Grant 

Program grants included in our audit scope. The Agency’s 

organizational structure is depicted in Appendix C. 

For the FY 2006 through 2008 grant programs, California had six 

Urban Areas Security Initiatives: Anaheim-Santa Ana, Bay Area, 

Los Angeles-Long Beach, Riverside, Sacramento, and San Diego. 

Grant Funding 

The State of California received approximately $735 million in 

funds from the Homeland Security Grant Program during 

FYs 2006 through 2008. As part of this program, the State 

received $421 million in Urban Areas Security Initiative grants. 

Table 1 shows the Urban Areas Security Initiative grant funds 

awarded to each of California’s six Urban Areas Security 

Initiatives for the years covered by this audit. One of the urban 

areas (Riverside) did not receive grant funds during FYs 2006 and 

2007. 

Table 1 

California Homeland Security Grant Program 

Urban Areas Security Initiative Awards 

FYs 2006 through 2008 

Urban Areas FY 2006 FY 2007 FY 2008 Total 

Anaheim-Santa 

Ana $11,980,000 $13,840,000 $13,425,000 $39,245,000 

Bay Area $28,320,000 $34,130,000 $37,155,000 $99,605,000 

Los AngelesLong Beach $80,610,000 $72,580,000 $70,402,500 $223,592,500 

Riverside $0 $0 $3,251,500 $3,251,500 

Sacramento $7,390,000 $4,170,000 $4,045,000 $15,605,000 

San Diego $7,990,000 $15,990,000 $15,510,500 $39,490,500 

Total $136,290,000 $140,710,000 $143,789,500 $420,789,500 

Foxx & Company completed an audit of the State of California’s 

management of DHS’ Urban Areas Security Initiative grants 

awarded during FYs 2006 through FY 2008. The objectives of the 

audit were to determine whether the State distributed and spent 

Homeland Security Grant Program funds strategically, effectively, 

and in compliance with laws, regulations, and guidance. Nine 

researchable questions provided by the DHS Office of Inspector 

The State of California’s Management of Urban Areas Security Initiative Grants
 

Awarded During Fiscal Years 2006 through 2008 
 

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General established the framework for the audit. The researchable 

questions were related to the State Administrative Agency’s 

planning, management, and evaluations of grant activities. 

Appendix A provides additional details on the purpose, scope, and 

methodology of this audit, including the nine researchable 

questions. 

Results of Audit 

State Grants Management Practices Were Generally Effective, 

But Required Improvements 

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

program requirements, distributing grant funds, and ensuring that all of the 

available funds were used. The State used reasonable methodologies for 

assessing threats, vulnerabilities, and prioritized needs, and measured 

response capabilities and performance using a variety of techniques 

including exercises and After Action Reports. 

Improvements are needed to enhance California’s management of the 

Urban Areas Security Initiative grants, including: 

• Better reporting of program results 

• Increasing investment oversight 

• Avoiding delays in awarding grant funds 

• Sustaining capabilities in the absence of federal funds 

• Strengthening monitoring of recipients 

• Promoting fair and open competition in procurement 

• Providing greater oversight over reimbursements 

• Managing cash advances 

We identified two best practices that should be considered for sharing with 

other jurisdictions. We are making 19 recommendations which, if 

implemented, should help strengthen program management, performance, 

and oversight. 

Improved Program Results Reporting 

The State of California cannot demonstrate with sufficient precision that 

Urban Areas Security Initiative grant funds are being effectively used 

because the State does not have a system in place to measure the benefits 

produced by grant-funded programs. State officials have not completed a 

measurement system to track and report, in quantifiable and measurable 

terms, how well the Urban Areas Security Initiative grant funds were spent 

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on programs to improve the preparedness of first responders, address 

threats, or close capability gaps. As a result, decisions regarding ongoing 

programs and new programs similar to ongoing programs were made 

without adequate information on the programs’ demonstrated value. 

Federal agencies are required by the Government Performance and Results 

Act of 1993, to measure and report on the results of their programs. The 

Act provides a model of how federal agencies should measure the results 

of their programs. Code of Federal Regulations Title 44 § 13.40, 

Monitoring and reporting program performance, requires that grantees 

monitor grant and subgrant supported activities to assure that performance 

goals are being achieved. In addition, Department of Homeland Security 

State and Urban Area Homeland Security Strategy Guidance on Aligning 

Strategies with the National Preparedness Goal, dated July 22, 2005, states 

that an objective sets a tangible and measureable target level of 

performance over time against which actual achievement can be 

compared, including a goal expressed as a quantitative standard, value or 

rate. Therefore, an objective should be: 

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

what is to be achieved and accomplished; 

•	 Measurable — quantifiable, providing a standard for comparison, 

and identifying a specific achievable result; 

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

jurisdiction, or locality’s ability; 
 

•	 Results-oriented — identifies a specific outcome; and 

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

will be achieved. 

The Urban Areas Security Initiative subgrantees reported program results 

and outcomes in such general terms that an assessment of the program 

benefits was not possible. The California Emergency Management 

Agency managed grant-funded activities mainly on the basis of 

compliance with grant requirements and the timely expenditure of funds, 

not on specific program results. Information on program results is 

important because California received over $400 million in Urban Areas 

Security Initiative grants in the 3 years included in the scope of our audit. 

The intent of the grants was to improve first responder preparedness and 

response capability. Without clear performance measures, there was no 

assurance these funds were well spent. 

To illustrate how information on program results could be established, an 

urban area purchased an automatic license plate reader system for 

$6.2 million with FYs 2006 through 2008 Urban Areas Security Initiative 

grant funds. The license plate reader system included cameras that search 

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for and capture images of license plates. Information from the cameras, 

mounted on the roofs of police vehicles, was sent to a central processor 

that looked for license plate numbers of interest. An alert was transmitted 

back to the police vehicle when a target plate of interest was found. The 

system was used to locate stolen cars, to identify vehicles associated with 

criminal activity such as excessive parking tickets, and for other purposes. 

Measuring the contribution this program made toward first responder 

preparedness might include data on the number of stolen vehicles 

recovered or suspects apprehended, and how the system identified or 

contributed to the prevention or investigation of terrorist attacks. 

However, neither the State nor the urban area had established such 

indicators. 

The California Urban Areas Security Initiative grant program procedures 

created three main opportunities for reporting program results: 

(1) Investment Justifications, (2) the Urban Areas Security Initiative 

proposed expenditure plan, and (3) monitoring reviews of Urban Areas 

Security Initiative activities. Our review of each of the three areas noted 

the following: 

Investment Justifications: Investment Justifications prepared by the State 

are a principal part of the annual applications for grant funds. However, 

the Investment Justifications did not indicate how the success of the 

justified program would be measured. The standard format for Investment 

Justifications contained a section requiring applicants for grant funds to 

describe the impact of proposed programs. The Investment Justifications 

asked applicants to state what outcomes would indicate that the investment 

would be successful at the end of the grant performance period and how 

the outcomes would be measured. The Investment Justification 

instructions indicated, among other things, that proposed investments 

would be judged on specific outcomes that would determine the 

investment’s success. We reviewed 10 of the 16 application packages for 

Urban Areas Security Initiative funds during FYs 2006 through 2008. 

None of the Investment Justifications in the 10 application packages 

contained performance standards (measures) that would facilitate 

judgments about whether programs had been successful or how well the 

programs were addressing first responder preparedness, capability gaps, or 

threats. Although responsible for approving the Investment Justifications, 

the State did not ensure that the Investment Justifications included 

performance standards for measuring accomplishments. 

Urban Areas Security Initiative Expenditure Plans: Urban Areas 

Security Initiative expenditure plans and reports did not describe the 

impact of program expenditures on preparedness or response capabilities. 

The California Emergency Management Agency approved program 

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spending plans proposed by Urban Areas Security Initiatives at the time 

grant funds were awarded and later approved reimbursement for approved 

spending through a review of electronic “workbooks” submitted by the 

urban areas. These workbooks did not call for or contain the kind of 

performance measures required by the Government Performance and 

Results Act and other federal requirements. The workbooks were 

designed to assure that the urban areas complied with grant requirements 

such as whether costs were allowable and purchased equipment was on the 

authorized equipment list. 

Monitoring Reviews: The State of California Emergency Management 

Agency is responsible for monitoring urban area grant-funded programs. 

However, it focused primarily on grant-related administrative and 

financial requirements and not on measuring improvements or the 

achievement of program goals. Also, no state-level monitoring of the 

FYs 2006 through 2008 Urban Areas Security Initiative grant funds had 

occurred at the conclusion of our audit fieldwork. 

Measuring ongoing results for some long term programs, such as a new 

interoperable communications system, may require interim measures until 

the system is fully operational. In the interim, measuring the success of 

spending for these programs could be focused on program planning, 

progress reports on cost control, adherence to completion schedules, and 

quality of work performed by contractors. However, we believe for many 

programs, measures of outcomes would be feasible soon after grant funds 

were used. 

The following table lists large programs (more than $1 million) funded by 

one or more of the California urban areas and the possible metrics that 

could be used to measure outcomes. The list is for illustration and is not 

meant to be comprehensive. 

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Table 2 

Urban Areas Security Initiative Programs 

and Possible Outcome Measures 

Program Function Possible Results Metric 

Video 

Surveillance 

Systems 

Monitor street or 

facility activities 

Decrease in criminal activity; 

suspicious activity observed and 

investigated 

Training 

programs Train first responders 

Student hours of training 

accomplished; proficiency levels 

attained 

Infrastructure 

protection 

Protect key community 

resources from attack Number of sites hardened 

Public alert 

systems 

Inform the public of 

emergencies through 

telephone messages 

Frequency of use; speed and 

capacity of systems in relation to 

costs 

Mass 

Evacuation 

Planning 

Prepare for mass 

evacuations of a 

jurisdiction 

Number of jurisdictions that 

prepared evacuation plans; number 

of training events 

State officials advised us of the difficulty encountered in developing the 

measures called for by federal requirements. According to State officials, 

the State is engaged in developing a detailed measurement system that 

could, when it is deployed, provide more detailed measures of 

preparedness improvements for specific areas. They told us that this effort 

is complex and the State has not received much guidance from FEMA. 

State officials acknowledged that the measurement system has been in 

development for several years. 

In the State’s comments on a similar finding in the February 2009 DHS 

Office of Inspector General audit report, State officials said that they were 

in the process of implementing a statewide metrics program for collecting 

data on emergency resources and capabilities. State officials said at that 

time that they expected to have most of the data collected by January 

2009. The State was still developing the metrics in calendar year 2010 

when we were conducting the current audit of the Urban Areas Security 

Initiative grants. 

Recommendation 

We recommend that the Assistant Administrator, Grant Programs 

Directorate, require the California Emergency Management 

Agency to: 

Recommendation #1: Develop meaningful metrics for measuring 

program results, collect results measurement data from 

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subrecipients, and include these metrics in Investment 

Justifications and program funding approval deliberations. 

Management Comments and Auditors’ Analysis 

FEMA partially concurred with this recommendation noting that 

California is in the process of developing a metrics system to help 

measure program results. FEMA has agreed to follow-up with the 

State within 6 months after the final report is published to request 

information on the progress being achieved with the metrics 

project. 

The California Emergency Management Agency agreed with this 

recommendation and stated it would work with FEMA to develop 

additional guidelines and/or performance measures to be used 

during the grant investment justification process. The State has 

also updated its Site Visit form used by State grant monitors to 

document progress made in achieving goals and objectives for 

each project. 

We believe the State’s metric system once deployed, together with 

specific efforts to assign performance measures to large investment 

projects and periodic monitoring of progress achieved, will 

positively respond to this recommendation. 

The Assistant Administrator, Grant Programs Directorate, needs to 

provide corrective actions for the recommendation and a plan to 

implement the recommendation within 90 days. 

Increased Investment Oversight 

The California Emergency Management Agency’s oversight of some of 

the Urban Areas Security Initiatives major investments did not result in 

effective and efficient stewardship of federal grant funds. Despite the 

State’s review of proposed grant-funded programs, at least 6 of the 50 

programs we examined did not provide the expected or intended benefits 

for first responders. This occurred primarily because the State’s review 

process did not consider whether the subgrantee adequately planned or 

documented that the equipment acquired for the programs provided the 

best value for the grant funds expended. As long as the program 

equipment met the minimum grant requirements of being listed on the 

Authorized Equipment List, the State approved the program. In some 

cases, local program planning was insufficient, untested, and failed to 

consider the real needs of the jurisdiction. As a result, program results 

were disappointing in some cases and left critical needs unmet, even 

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though the urban areas spent millions of dollars of grant funds on the 

programs. 

Appendix A to the Code of Federal Regulations Title 2 § 225, Grants and 

Agreements, states that the application of general principles for 

determining allowable costs is based on the fundamental premises that 

those Governmental units: 

•	 Are responsible for the efficient and effective administration of 

Federal awards through the application of sound management 

practices; and 

•	 Assume responsibility for administering Federal funds in a manner 

consistent with underlying agreements, program objectives, and 

the terms and conditions of the Federal award. 

Following are five examples where lack of major investment oversight 

resulted in inefficient or ineffective program results: 

Fusion Center Software: An urban area purchased a specialized software 

program for its Fusion Center to evaluate criminal incidents obtained from 

local law enforcement data files. The software cost more than $700,000, 

but did not perform as well as the supplier indicated it would. After about 

15 months of use the Fusion Center Director said the system did not 

provide all of the functionality needed by the Center. Subsequently, the 

Fusion Center replaced the software program with another software 

program costing $1,250,000. 

Reverse 911 System: Two urban areas bought reverse 911 systems that 

when implemented did not meet the urban areas’ needs. One of the urban 

areas purchased a reverse 911 system that was not capable of providing a 

timely warning message to citizens. It was only capable of reaching about 

5,000 home-based telephones per hour, even though there were more than 

32,000 homes with telephones in the area being tested that would have 

needed the warning in a more urgent, timely manner. A test conducted by 

the urban area of this small section of the city that contained the 32,000 

telephones showed that it would take over 6 hours to call the residents. 

Furthermore, alternatives already existed to serve this purpose. For 

example, if this system was needed to alert residents of a pending disaster 

(e.g., a bomb threat) in the 6 hours, it is very likely public news sources 

would have the news on the air via radio or television well before the 

residents were notified by the reverse 911 system. Even though a faster 

broadcast rate could have been purchased at an added cost, the system 

relied on home-based telephones when many people rely on cell phones 

The State of California’s Management of Urban Areas Security Initiative Grants
 

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for their primary telecommunications. Another urban area in California 

had previously bought a similar system, but was abandoning it to buy a 

different system following a local area test and determining that the results 

for the reverse 911 system were poor. The new system offered more 

capability, speed, and coverage. The investment in the original system 

was approximately $178,000. 

Office Space Lease: Another urban area spent approximately $4.4 million 

of FYs 2006 through 2008 grant funds to lease office space in a large, 

specially secured building (to accommodate the collocated Fusion Center), 

for the urban area’s administrative offices, Emergency Operations Center 

training, and several training classrooms. The urban area classified these 

expenditures as training, which was approved by the State. However, we 

found that the Emergency Operations Training Center accounted for more 

than half of the lease cost and was seldom used. The other classrooms 

were used only 2 or 3 days per week for training and the Urban Areas 

Security Initiative records did not always show how often the classrooms 

were used for FEMA approved training. Only FEMA approved training is 

eligible for grant funding. Because the grant awards for this urban area 

have declined significantly, the lease expense became the primary use of 

the Urban Areas Security Initiative grant funds in FYs 2007 and 2008, 

which is not the best use for the majority of the grant funding for FYs 

2007 and 2008. 

Personal Protective Equipment: Two urban areas used different 

strategies in acquiring a new version of a protective suit to shield first 

responders against chemical, biological, radiological, nuclear, and 

explosive hazards. The purchases were made to (1) replace existing stocks 

of protective suits with expiring shelf lives, and (2) provide first 

responders with suits meeting recently updated FEMA standards. 

The two urban areas used different strategies to determine how many suits 

to buy. One urban area bought more than 5,400 suits at a cost of 

approximately $2 million as soon as the new design became available. 

This single purchase was enough to equip most of the first responders in 

its jurisdictions, but did not fully consider the limited number of first 

responders that really required these suits. The second urban area 

purchased 400 suits at a cost of approximately $426,795 to outfit the 

region’s special teams of chemical, biological, radiological, nuclear, and 

explosive specialists. 

The costs of these two strategies are significantly different. Although each 

purchase was approved by the State, there was no documentation available 

to support the rationale for allowing one urban area to purchase suits for 

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all first responders versus only purchasing suits for a specified type of first 

responder at a significantly lesser cost. 

Our discussions with program managers revealed that urban areas need to 

assess the threat and likelihood of a chemical, biological, radiological, 

nuclear, and explosive event, determine how many suits are needed to 

address this threat, and prepare a regional response plan for strategically 

distributing and storing the suits for best response before acquiring the 

suits. The urban areas should also consider staggered purchases to avoid 

major replacement costs in a few years when the shelf life for these suits 

expires. 

Training Equipment: Another urban area acquired 55 large screen digital 

televisions costing $74,394 as part of a new training system for its Fusion 

Center to facilitate training of intelligence analysts and others working in 

the Center, which was justified to the State as a total training package. We 

visited this Fusion Center, discussed this system and other equipment with 

the Center Director, and examined the equipment. We learned that the 

Center had purchased the televisions, but had not purchased the planned 

training system. The Center Director told us the priority of the training 

system was being reviewed and it may not be purchased. On the day we 

visited, all of the televisions were being used to monitor the same 

television station. The Center Director told us televisions like these are a 

standard element in most Fusion Centers. However, without the training 

system, the original justification for purchasing the televisions was not 

valid. 

First responders in subgrantee organizations are called upon to make 

important decisions about new, sometimes untried, and expensive 

technologies. We believe that the examples above show that the 

subgrantees could benefit from the help of State experts in making these 

decisions. Program leaders are often skilled law enforcement officers, 

firefighters, or emergency managers skilled in something other than 

purchasing. These program leaders can struggle with detailed 

specifications, claimed benefits, warrantees, compatibility issues, prices, 

and a myriad of other product issues. With limited time to research 

product literature and independent test results, if any are available, 

program leaders are often forced to rely on manufacturers’ claims to guide 

their purchase decisions. If the product is a great success or falls short of 

expectations, there is no readily available way to get the word out to other 

jurisdictions. (See our Best Practice discussion regarding the San Diego 

Regional Technology Center and its Technology Clearinghouse.) 

While the State staff reviewed and approved each of these programs, the 

State’s staff was small and focused on compliance with grant rules and 

The State of California’s Management of Urban Areas Security Initiative Grants
 

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procedures, not the merit, value, or effectiveness of a particular program. 

Each year the staff reviewed and considered hundreds of programs from 

the six urban areas involving nearly $150 million. The same staff also 

managed other Homeland Security grants for many other California 

subgrantees. The State staff advised us that they do not have the resources 

to perform due diligence on each and every program proposed by the 

urban areas. Therefore, if a piece of equipment is on the authorized 

equipment list and the program paperwork is in order, the program is 

approved for funding. This was the case for the five examples described 

above. 

Poor investments waste resources and reduce the benefits first responders 

and the urban areas they protect can derive from grant funds. Together, 

the programs noted above cost millions of dollars and did not provide full 

value to first responder organizations. All of these investments could have 

been identified as poor investments when initially proposed or at the 

approval stage. The missing element was informed grantee oversight. 

Program outcomes would be improved if the subgrantees had better 

technical knowledge as they consider new and complex technology or 

evaluate the impact of proposed programs on first responder needs. 

Recommendations 

We recommend that the Assistant Administrator, Grant Programs 

Directorate, require the California Emergency Management 

Agency to: 

Recommendation #2: Establish and apply a meaningful review 

process designed to disclose the value and utility of proposed 

equipment and systems during the Investment Justification review 

and the expenditure plan approval processes. 

Recommendation #3: Develop and disseminate guidance to 

California Urban Areas Security Initiatives specifying the 

importance of efficient and cost effective use of grant funds to 

improve first responder preparedness. 

Management Comments and Auditors’ Analysis 

FEMA partially concurred with recommendation 2. FEMA 

suggested that California revise current grant monitoring policy to 

include the addition of quantifiable goals/criteria to determine the 

effectiveness of each grant. FEMA’s Region IX staff also 

reviewed the draft report and suggested that the report specifically 

identify the UASI responsible for the conditions reported. FEMA 

The State of California’s Management of Urban Areas Security Initiative Grants
 

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Page 14 
 
 

did not concur with recommendation 3. FEMA indicated in their 

written comments that current guidance and oversight provided by 

FEMA is sufficient to assure California’s use of grant funds is 

efficient and cost effective. 

The California Emergency Management Agency agreed with both 

recommendations and is considering adding performance measures 

like those discussed in this report to their grant management 

process. Also, the State will develop and disseminate guidance to 

the UASIs and all subgrantees specifying the importance of 

efficient and cost effective use of grant funds to improve first 

responder preparedness. 

The California Emergency Management Agency’s plan to expand 

its guidance and add performance measures to the grant proposal, 

management and monitoring processes will provide a positive 

response to these recommendations. 

The Assistant Administrator, Grant Programs Directorate, needs to 

provide corrective actions for the recommendations and a plan to 

implement the recommendations within 90 days. 

Delays in Awarding Grant Funds 

Although the California State Administrative Agency awarded Urban 

Areas Security Initiative grant funds to an urban area within the time limit 

specified by FEMA for the FYs 2006, 2007, and 2008 grants, the urban 

area did not make these grant funds available to subrecipients for 

15-18 months after the funds were received. As a result, expenditures for 

approved programs were delayed, the FYs 2006 and 2007 Urban Areas 

Security Initiative grant performance periods were extended, and 

administrative costs increased. Most importantly, these delays prevented 

timely delivery of needed plans, equipment, exercises, and training to first 

responders. 

FEMA Information Bulletin No. 257, dated July 17, 2007, states that it is 

important to ensure that funds are obligated and expended in a timely 

manner, within established periods for performance. In addition, FEMA’s 

Program Guidance for the FY 2008 Homeland Security Grant Program 

states that FEMA strongly encourages the timely obligation of funds from 

local units of government to other subgrantees. 

FEMA grant guidance specifies that only the California State 

Administrative Agency, as grantee, is eligible to apply for Homeland 

Security Grant Program funds, including Urban Areas Security Initiative 

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grants. FEMA requires the grantee to make approved funds available to 

local units of government and other designated recipients within either 

60 days (FYs 2006 and 2007 grants) or 45 days (FY 2008 grants) after 

receiving the award from DHS. FEMA grant guidance emphasized to the 

states that Homeland Security Grant Program funds need to be awarded 

promptly to Urban Areas Security Initiatives and subrecipients so that 

needed plans, equipment, exercises, and training can be acquired and 

provided expeditiously to first responders. 

As shown in Table 3, the subrecipients of one urban area waited 

17 months for FY 2006 grant funds to be made available after the grant 

award date. Funds were made available for the FY 2007 grant in about 

15 months. For FY 2008, grant funds were made available in April 2010 

or about 18 months after the FY 2008 grant performance period began. 

Table 3 

Urban Areas Security Initiative Grant Awards 

FYs 2006 through 2008 

Receipt of Grant Funds 

FY Grantee 

Urban 

Areas 

Security 

Initiative 

Subrecipient 

Months between Awards to 

Urban Areas Security 

Initiative and Subrecipients 

2006 06/30/06 08/15/06 01/25/08 17 months 

2007 08/13/07 10/16/07 01/14/09 15 months 

2008 09/08/08 10/23/08 04/06/10 18 months 

By contrast, other California Urban Areas Security Initiatives made grant 

funds available to subrecipients a few weeks after receiving the grant 

award. 

The urban area in question did not promptly make grant funds available to 

subrecipients for the following reasons: 

•	 The local unit of government for the urban area did not promptly 

approve the purpose, uses, and associated obligations of the grants, 

and 

•	 The grant manager’s office and the subrecipients did not timely 

sign a detailed contract specifying the terms and conditions of the 

grants and the obligations of the subrecipients. 

The State of California’s Management of Urban Areas Security Initiative Grants
 


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The Urban Areas Security Initiative officials said that obtaining approval 

of the local unit of government usually took about 4 months. For the 

FY 2006 grant, the local unit of government took nearly a year to approve 

the use of the grant funds. Negotiating and signing the required contract 

between the grant manager’s office and the subrecipients took longer, 

because of the length of the contract (currently contains 139 pages) to 

describe the grants and the respective obligations of the grant manager’s 

office and the subrecipients. The grant officials said that much of the 

delay caused by this process was unnecessary wrangling over word 

changes that had no impact on the conduct of the grant. The urban area 

grant officials said that the local unit of government and the subrecipient 

agencies receiving grant funds carefully negotiate the wording of the 

contract. As a result, there was much back and forth discussion before the 

contracts were signed. The Urban Areas Security Initiative managers said 

that this could be accomplished more quickly if the parties assigned the 

process a higher priority. 

Because of the long delays in making funds available, the subrecipients 

have not been able to spend the grant funds within the original 

performance period of the grants. As a result, the Urban Areas Security 

Initiative managers have requested and received multiple performance 

period extensions from FEMA. Specifically, the urban area has requested 

and received 13 project extensions for the FY 2006 grant. It had currently 

been extended until September 30, 2010, about 2 years longer than 

originally approved. The FY 2007 grant has been extended another year 

until April 2011. The urban area’s staff advised us that they expect to 

request additional extensions for both the FYs 2007 and 2008 grants to 

ensure subrecipients can spend approved funds effectively. 

Subrecipient program managers told us lengthy grant approval delays 

disrupt the procurement process, and delay timely delivery of grant-funded 

plans, equipment, and services. The delays also add to the cost of 

managing the programs. 

Recommendations 

We recommend that the Assistant Administrator, Grant Programs 

Directorate, require the California Emergency Management 

Agency to: 

Recommendation #4: In consultation with the Urban Areas 

Security Initiative managers, identify process changes to accelerate 

the grant award approval process to the Urban Areas Security 

Initiative subrecipients. 

The State of California’s Management of Urban Areas Security Initiative Grants
 

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Recommendation #5: Establish a timeframe for the urban area to 

make grant funds available to subrecipients for future Urban Areas 

Security Initiative grants, consistent with the experience of other 

California Urban Areas Security Initiatives. 

Recommendation #6: Improve the oversight process for assuring 

Urban Areas Security Initiative compliance with the timeframes. 

Management Comments and Auditors’ Analysis 

FEMA partially concurred with recommendations 4, 5, and 6, 

noting that timely distribution and dissemination of grant funds is 

critical to the success of the Homeland Security Grant Program. 

FEMA has also recommended California implement guidance, 

policies and processes to ensure timely distribution of grant funds. 

The California Emergency Management Agency agreed with 

recommendations 4, 5, and 6 and stated it will increase its 

oversight and collaboration with its Urban Areas Security 

Initiatives to assure that grant funds are distributed promptly. The 

State also plans to establish specific timelines to help monitor grant 

fund distribution so that timely intervention can occur. 

We believe the actions proposed by the California Emergency 

Management Agency address the intent of this recommendation, 

but further action will be needed to assure timely compliance. 

The Assistant Administrator, Grant Programs Directorate, needs to 

provide corrective actions for the recommendations and a plan to 

implement the recommendations within 90 days. 

Sustaining Capabilities Without Federal Funding 

The State of California did not prepare contingency plans addressing 

potential funding shortfalls if DHS funding was significantly reduced or 

eliminated. Funding shortfalls could put at risk critical programs intended 

to respond to terrorist acts and various catastrophes. According to Fusion 

Center Directors, the Centers would be closed if federal funds were not 

available because neither the State nor local communities could allocate 

the resources needed to operate the Centers. Similarly, three large 

regional communications systems would be at risk because the urban areas 

did not have an assured source of funds to complete and operate the 

systems. The California Emergency Management Agency has not 

identified funding sources to sustain Fusion Centers or to complete the 

The State of California’s Management of Urban Areas Security Initiative Grants
 


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regional communications projects if federal funds were diminished or 

discontinued. 

Department of Homeland Security Guidance and Application Kits for 

Homeland Security Grant Program FYs 2007 through 2008 grants 

required the states to identify their long term approach for sustaining the 

capabilities acquired through grant fund investments. The Homeland 

Security Grant Program receives funds through annual appropriations. 

The amount appropriated varies from year-to-year and is not guaranteed 

for any future year. Each grant program has specific appropriations and 

periods of performance within which the funds must be used. Grantees 

may only fund investments that were included in a specific year’s 

Investment Justifications that were submitted to DHS and evaluated 

through the agency’s peer review process. 

The DHS funding provided to grantees through the Homeland Security 

Grant Program over the past several years has created a perception that 

this funding will continue indefinitely as would be the case for entitlement 

programs, such as Medicare and Social Security. Unlike entitlement 

programs, the annual appropriations for the Homeland Security Grant 

Program are based on budget justifications provided to the Congress by 

DHS. Critical programs at risk during funding shortfalls include Fusion 

Centers and Regional Communication Systems. 

Fusion Centers: California has established intelligence collection and 

analysis Fusion Centers in Sacramento, San Francisco, Anaheim, 

Los Angeles, San Diego, and a State Center in Sacramento. These Centers 

are designed to bring together federal, State, and local law enforcement 

personnel and systems to help identify and prosecute organized drug, 

gang, and cross-border crime as well as to identify and prevent terrorist 

acts. Since 2005, California and its Urban Areas Security Initiatives have 

invested millions of dollars to furnish, equip, and operate these Centers, 

including the salaries, training, and associated overtime expenses of 

Intelligence Analysts. For example, one Fusion Center received 

$17.4 million from the Urban Areas Security Initiative’s FYs 2006 

through 2008 grants. 

According to the Fusion Center Directors, DHS and the California 

Emergency Management Agency strongly encouraged establishing the 

Fusion Centers. The Fusion Centers integrate criminal and terrorism 

threat intelligence and provide for intake, analysis, fusion, synthesis, and 

dissemination of that information. Each Center has a different mix of 

participating agencies that generally include the Federal Bureau of 

Investigation, Drug Enforcement Administration, Coast Guard, port 

authorities, County Sheriff, local police, and others. 

The State of California’s Management of Urban Areas Security Initiative Grants
 

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In addition to intelligence collection and analysis, each Center organizes 

the Terrorism Liaison Officer program for their region. This program 

trains law enforcement officers and other first responders to identify 

potential terrorist acts and properly report the information to Fusion 

Center staff. The California State Administrative Agency strongly 

promotes local participation in the Terrorism Liaison Officer program, and 

even required all local jurisdictions that apply for Homeland Security 

grant funds to be fully enrolled in the program as one of the conditions for 

receiving funds. 

Fusion Center Directors said their products are highly regarded by the 

State’s law enforcement community. In particular, they cited the benefits 

to law enforcement outcomes such as arrests and prosecutions provided by 

collocating representatives from cooperating agencies. We asked Fusion 

Center Directors and California Emergency Management Agency officials 

about the ability of the local regions to operate and maintain these Centers 

if federal grants were reduced or eliminated. The Directors said the 

Centers are costly and the local communities could not support the Centers 

without federal Homeland Security or similar grants. These officials 

noted that if these grants were significantly reduced or eliminated, the 

Centers would close and much of the investment to establish the Centers 

would be lost. However, Center Directors told us that there is an 

unwritten understanding with the Department of Homeland Security 

Office of Information that the Centers will be funded through the grant 

program indefinitely. 

Regional Communications Systems: Three California Urban Areas 

Security Initiatives have adopted comprehensive plans to replace or 

significantly upgrade existing public service communications systems. 

These communities are relying wholly or in large part on Homeland 

Security grant funds to develop the plans, conduct the design studies, and 

purchase initial infrastructure equipment. Two of the urban areas 

estimated that these systems were expected to cost more than $1 billion 

dollars. Neither one of these entities have a firm plan for obtaining 

funding from local sources for the hundreds of millions of dollars needed 

to complete acquisition of the systems and to operate the systems. 

California has invested nearly $350 million of the Homeland Security 

Grant Program funds received from FYs 2003 through 2009 replacing the 

State’s aging and disparate public safety communications systems with 

modern and interoperable systems. This is one of California top priorities. 

In addition, the Department of Homeland Security has strongly 

encouraged California and other states to modernize their communications 

systems. 

The State of California’s Management of Urban Areas Security Initiative Grants
 

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Three of California’s urban areas have adopted plans to build modern 

regional interoperable communication systems for voice and data. If 

completed, all of the first responders in each of these regions would be 

expected to have full communications interoperability. These Urban 

Areas report that the State and FEMA have approved their plans and 

strongly support these efforts. 

These projects involve several years of planning and design, hundreds of 

millions of dollars of equipment and associated costs, and millions of 

dollars of operating costs once the systems become operational. For 

example, one urban area had already invested more than $2 million in 

planning its regional interoperable communications system. In 

April 2010, this urban area planned to invest an estimated $100 million for 

a system design and engineering analysis. Over the next 3 years the urban 

area expects to spend about $1 billion to acquire, install, and test the 

required infrastructure for the system. The cost of portable and mobile 

radios for 34,000 first responders and the annual operating fees that will 

be required to sustain the radios have not yet been estimated. Although 

the urban area did not have firm financial commitments to pay for the 

acquisition of the system infrastructure, user equipment, or operations, the 

urban area’s officials planned to proceed with the design phase. The 

officials expect most of the remaining system costs to be funded by local 

and state resources. The system is expected to be operational by 2016. 

Similar projects are underway in two other urban areas. Although 

Homeland Security grants have been used to initiate these projects, to fund 

plans and design studies, and to make equipment purchases, the Urban 

Areas Security Initiative managers said they plan on obtaining the balance 

of the funds needed to finish the projects from local resources. However, 

none of the three urban areas have firm commitments from local 

jurisdictions to pay for and support these systems. Without firm financial 

commitments, the initial investment in the projects could be lost if funding 

to complete the project is not found. Also, if the project is not completed, 

the initial need for the project would not be fulfilled. 

Using federal grant funds to begin large and costly projects, for which 

funds are not identified or available to complete, can result in a significant 

waste of the initial investments. Costly design studies and equipment 

languish while waiting for unfunded components to be acquired to 

complete the system. Because of the budget shortfalls currently being 

experienced by the State of California and local jurisdictions, funding in 

the magnitude necessary to finish these projects is questionable, leaving 

these already large investments at risk. 

The State of California’s Management of Urban Areas Security Initiative Grants
 

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Page 21 
 
 

The Homeland Security Grant Program funds are not entitlement grants 

like Medicare or Social Security. These grants are part of the DHS annual 

appropriation that must be approved by Congress. Therefore, a possibility 

exists that the grant program funding could be reduced or eliminated in the 

future. Accordingly, grant agreements for Urban Areas Security Initiative 

grants should include state and local commitments to sustain such costly 

and important investments if federal funds were to diminish or not be 

available. The uncertainty surrounding future funding of California’s 

Fusion Centers and the interoperable communications systems should be 

resolved while there is ample time to consider and implement suitable 

options. 

Recommendations 

We recommend that the Assistant Administrator, Grant Programs 

Directorate, require the California Emergency Management 

Agency: 

Recommendation #7: Identify options for future funding plan for 

the State’s Fusion Centers that would provide for the continuance 

of the Centers without long term dependency on federal grant 

funding. 

Recommendation #8: Develop options identifying the long term 

funding requirements for the interoperable public safety 

communications systems being initiated to include: 

•	 Realistic assessments of state and local government resources 

available to complete and sustain these programs, 

•	 Identification of federal financial support that may be 

necessary to complete and operate these systems, and 

•	 Making the completion of this plan a condition of future 

grant funds approvals for the programs. 

Recommendation #9: Require the subgrantee to address longterm sustainability in their proposals and applications for grant 

funding. 

Management Comments and Auditors’ Analysis 

FEMA partially concurred with recommendations 7, 8 and 9, since 

according to FEMA the issue will need to be addressed at the 

Department level. FEMA noted that it is a sound business practice 

to develop options for potential reductions and or changes in 

priority for grant funded activities. Therefore, FEMA recommends 

that Urban Areas Security Initiatives develop a future funding plan 

The State of California’s Management of Urban Areas Security Initiative Grants
 

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for their fusion centers that would provide for continuance of 

operation without long term dependency on federal grant funds. 

Recognizing that this position may require updating of existing 

grant guidance, FEMA stated that it will initiate discussions to 

address this issue within the current fiscal year. 

The California Emergency Management Agency agreed with 

recommendations 7, 8 and 9. The State will identify options 

available for sustaining the Fusion Centers. The State noted that 

California is experiencing dire financial circumstances and is 

seeking continued federal assistance consistent with the 

importance of the national priority for information sharing. The 

State will also work with the Urban Areas Security Initiatives to 

develop long-term funding plans for the large scale 

communications systems now underway. Such plans will include 

milestone dates which will be monitored as requests for future 

grants are considered. 

We believe the California Emergency Management Agency’s 

proposed actions address the intent of these recommendations and 

will help the Urban Areas Security Initiatives manage and sustain 

these significant investments. 

The Administrator, Federal Emergency Management Agency, 

needs to provide corrective actions for the recommendations and a 

plan to implement the recommendations within 90 days. 

Monitoring of Urban Areas Security Initiative Recipients 

The State Administrative Agency had not conducted on-site monitoring 

visits to Urban Areas Security Initiative grant recipients for FYs 2006 

through 2008 grant awards. While on site monitoring of Urban Area use 

of grant funds is not mandated, it is necessary in California because 

documents such as receipts, delivery notices, and contracts supporting the 

use of these funds were maintained only at the Urban Area grants 

management offices. While the State monitoring unit proposed to visit 

Urban Areas Security Initiatives at least once every 3 years, this has yet to 

occur. In addition, we believe that a 3-year interval is not sufficient to 

fully evaluate whether grant funds were being used effectively and how 

the grants were being managed. 

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

Monitoring and Reporting Program Performance, grantees are required to 

provide day-to-day management of all grants and subgrant supported 

activities, and ensure that grant recipients comply with applicable federal 

The State of California’s Management of Urban Areas Security Initiative Grants
 


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Page 23 
 
 

requirements and achieve program performance goals. This regulation 

also specifies that grantee monitoring programs cover each program, 

function, or activity. The State Administrative Agency requires that grant 

recipients provide various documents to describe their activities and 

expenditures. 

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

grantee monitoring requirements. Part 3-M states that grantees are 

responsible for monitoring subgrantee use of federal awards through 

reporting, site visits, regular contact, or other means. Grantee monitoring 

should provide reasonable assurance that the subgrantee administers 

federal awards in compliance with laws and regulations, as well as the 

provisions of contracts or grant agreements. Monitoring should assure 

that performance goals are achieved. 

The DHS Office of Inspector General’s report on the audit of California’s 

State Homeland Security Program grant funds for FYs 2004 through 2006, 

noted that the State’s monitoring program was insufficient to comply with 

Federal regulations. Site visits were not always conducted and, when 

visits were conducted, the grant monitors focused primarily on grantrelated administrative requirements and not on the achievement of 

program goals. The scope of the DHS FYs 2004 through 2006 audit did 

not include Urban Areas Security Initiative funds. However, in 

commenting on the OIG draft report, State officials said they would begin 

instituting a program of on-site compliance visits to subgrantees in 

September 2008. The intended compliance visits have apparently not 

included Urban Areas. 

The State Administrative Agency officials told us that they plan to 

conduct monitoring visits at 3 of the 6 urban areas that received Urban 

Areas Security Initiatives grants during FY 2010. However, there is no 

plan to visit the other three urban areas that received Urban Areas Security 

Initiative grant funds. The FY 2010 visits would not be timely for the 

FYs 2006 and 2007 grants since nearly all of these funds would have been 

spent and reimbursed by the State. In addition, a draft policy, currently 

under review, includes monitoring grant recipients at least once every 

3 years. More frequent visits were not included in the State’s plan. 

Monitoring of Urban Areas Security Initiatives on a 3-year cycle is too 

infrequent to make timely assessments of the use of the funds or the 

progress being achieved in attaining needed capabilities and does not 

allow the prompt correction of problems. California urban areas manage 

Urban Areas Security Initiative grants totaling $420 million, ranging from 

$3 million to $80 million each year (see Table 1). The urban areas 

oversee programs to acquire equipment, or to provide services, training, 

The State of California’s Management of Urban Areas Security Initiative Grants
 

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Page 24 
 
 

and exercises for multiple jurisdictions. Some purchases involve new and 

complex technology. Urban Areas Security Initiative management teams 

are small in size and are often overwhelmed with complying with the 

many State and federal regulations and grant guidance. Consequently, 

annual monitoring by the State is essential to assure that the grant goals 

are being achieved and that grant funds are being properly expended. In 

the absence of effective monitoring of California Urban Areas Security 

Initiatives, none of the findings discussed throughout this report were 

identified or corrected by the State and the urban areas. 

State officials said that the monitoring unit was transferred from the grant 

program area to the fiscal program area in May 2009. This move was 

made to consolidate monitoring of all grant activities into one unit. This 

unit was currently in the process of finalizing policies and procedures for 

the operation of the unit. Prior to the transfer, the unit was not adequately 

staffed, and had a high turnover of employees. As a result, the unit was 

unable to conduct timely monitoring of subrecipients. At the time of our 

audit, the monitoring unit had only four employees assigned to monitor all 

open Homeland Security Grant Program funds. In addition, workload 

backlogs may increase because the State of California requires employees 

to be furloughed on three Fridays each month. Therefore, unless sufficient 

resources are committed, the backlog of subrecipient monitoring will 

continue to grow. 

Recommendations 

We recommend that the Assistant Administrator, Grant Programs 

Directorate, require the California Emergency Management 

Agency to: 

Recommendation #10: Commit sufficient resources to establish 

and implement policies and procedures for annual on-site 

monitoring of Urban Areas Security Initiative grant recipients. 

Recommendation #11: Require that the on-site monitoring visits 

include evaluations of the recipients’ overall management of the 

grants, including the progress made toward achievement of 

program goals. 

Management Comments and Auditors’ Analysis 

FEMA concurred with recommendations 10 and 11. FEMA noted 

in its written comments that oversight management activities, 

including assessing compliance and progress toward program 

goals, is critical to the success of the grant programs. FEMA has 

The State of California’s Management of Urban Areas Security Initiative Grants
 

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Page 25 
 
 

pledged to follow up with California within 6 months of the 

published date of this report on the State’s progress. 

The California Emergency Management Agency also agreed with 

recommendations 10 and 11. In written comments the State said 

that despite limited resources allowed for management and 

administrative expenses (5%), the State has developed and 

implemented a subrecipient risk assessment program that allows 

for fiscal and administrative monitoring. California provided 

copies of its updated Monitoring Plan and Monitoring Guide. In 

addition, the California Emergency Management Agency pledged 

to develop a plan to ensure regular programmatic site visits to 

Urban Areas Security Initiatives. 

We believe monitoring of the Urban Areas Security Initiative fiscal 

and programmatic performance, including site visits, is critical to 

grant success. The California Emergency Management Agency’s 

written response shows that the State understands the importance 

of monitoring Urban Areas Security Initiative performance and has 

new plans and tools for monitoring performance. If these new 

plans and tools are put into practice, the State should meet the 

intent of this recommendation. 

The Assistant Administrator, Grant Programs Directorate, needs to 

provide corrective actions for the recommendations and a plan to 

implement the recommendations within 90 days. 

Unreported and Unjustified Sole Source Procurements 

California UASI agencies did not always report or justify sole source 

procurements. California Urban Areas Security Initiative agencies did not 

always adhere to procurement requirements for FYs 2006, 2007, and 2008 

grants. The urban areas and their subrecipients: 

•	 Were unfamiliar with procurement regulations required for federal 

awards; 

•	 Awarded multiple, large, sole source purchases of equipment and 

services which were either not reported to the State, or were 

reported and approved, but without adequate supporting 

documentation; and 

•	 Had not performed written cost and price analyses to show the 

prices obtained were fair and reasonable for sole source purchases. 

The State of California’s Management of Urban Areas Security Initiative Grants
 


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Accordingly, there was no assurance that the best price had been obtained 

for the sole source procurements, and the urban areas were in violation of 

federal grant requirements. 

The Code of Federal Regulations Title 44 § 13.36, Procurement, provides 

uniform administrative requirements for grants and cooperative 

agreements awarded to state and local governments. These regulations 

direct the state and local governments to use their own procurement 

procedures, which reflect applicable state and local laws and regulations, 

provided that the procedures conform at a minimum to applicable federal 

procurement regulations. Federal procurement requirements require that 

grantees and subgrantees: 

•	 Acquire equipment and services under full and open competition, 

•	 Obtain approval from the State Administrative Agency before 

proceeding with non-competitive procurements, 

•	 Conduct cost analyses to assure prices obtained through noncompetitive procurements are fair and reasonable, and 

•	 Maintain records sufficient to detail the significant history of the 

procurements. 

In particular, the regulations discourage noncompetitive procurements 

unless the item or service is only available from a single source. In such 

cases, regulations require that the awarding agency first authorize 

noncompetitive procurements in writing and that cost analyses be 

performed to assure the noncompetitive price is fair and reasonable. 

The DHS Office of Inspector General reported in February 2009 that 

California subgrantee managers and county procurement authorities were 

not familiar with and did not always comply with federal requirements 

when procuring equipment using Homeland Security Grant Program 

funds. Multiple sole source procurements were noted that were 

unreported, did not receive State approval, and did not include a written 

cost analysis documenting the price obtained was fair and reasonable. 

These problems were observed in FY 2007 as subgrantees spent grant 

funds approved in FYs 2004, 2005, and 2006. The Urban Areas Security 

Initiative funds were not included in the scope of the February 2009 audit. 

State officials said that during 2008 and 2009, discussions of competitive 

procurement requirements were included in meetings involving Urban 

Areas Security Initiative managers to improve subgrantee awareness of 

proper procurement procedures. However, when we asked Urban Areas 

Security Initiative managers about this training, they were not able to 

recall it or provide associated documents. 

The State of California’s Management of Urban Areas Security Initiative Grants
 

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Page 27 
 
 

Table 4 summarizes procurements made by Urban Areas Security 

Initiative subgrantees without following applicable procurement 

requirements. These procurements were made using grant funds awarded 

for FYs 2006, 2007, and 2008. 

Table 4 

Examples of Urban Areas Security Initiative Procurements 

Where Federal Regulations Were Not Followed 

Urban 

Areas Equipment Grant Year 

Purchase 

Amount 

Cost 

Analysis 

Performed 

State 

Approved 

1 Consulting 

Services 2006 $ 563,775 No No 

1 Public Safety 

Radios 2007 $ 527,343 No No 

2 Information 

Technology 2007 $ 515,284 No No 

3 

Intelligence 

Analysis 

Software 

2006 $ 700,000 No Yes 

3 

Intelligence 

Analysis 

Software 

2007 $1,250,000 No Yes 

3 

Communications 

System & 

Radios 

2006 $3,928,473 No No 

3 License Plate 

Reader 2007 $6,226,826 No No * 

* 	 A California Emergency Management Agency sole source approval was provided for 

one of seven systems 

The procurement examples in Table 4 were all procured under sole source 

procedures, two of which were approved by the State. In addition, cost 

analyses were not performed to ensure that the best value was received by 

the urban areas. For example, the consulting services contract was 

justified as sole source procurement by the local purchasing agency for 

urban area 1 because of the perceived competence of the chosen contractor 

and the limited time available to the Urban Areas Security Initiative to 

award the contract before the end of the grant performance period. The 

State’s approval was not requested for this award. Subsequent to the 

award of the contract by the urban area, the contract was extended for 

5 years and increased in value to almost $3 million. 

Another example is the public safety radios procured by urban area 1. The 

radios were all bought as purchase orders against a “Master Contract” with 

a single manufacturer that was originally awarded non-competitively in 

The State of California’s Management of Urban Areas Security Initiative Grants
 

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Page 28 
 
 

1990. Since then, tens of millions of dollars of communications 

equipment were purchased under this Master Contract. We asked the 

Urban Areas Security Initiative grant manager whether they had provided 

training to the purchasing department officials regarding applicable 

procurement requirements. The manager said they had not done so. We 

confirmed this during discussions with the purchasing department 

officials. In 2008, the Urban Areas Security Initiative manager requested 

and received from the local purchasing department a blanket wavier for 

sole source procurement of any goods or services to be purchased with 

Homeland Security grant funds until 2025. With this waiver in hand, no 

efforts were made to seek State approval of sole source procurements. 

This waiver and the sole source procurements were in complete disregard 

of federal grant requirements and immediate action should be taken by the 

State to freeze all procurement actions until the urban area complies with 

federal requirements. 

For the License Plate Reader purchased by urban area 3, we observed that 

several jurisdictions were buying automated license plate recognition 

equipment costing more than $6 million from a single manufacturer as 

sole source procurements. The program manager told us that the license 

plate recognition equipment was not purchased through advertised 

procurement but from a sole source because it incorporated proprietary 

software within the database that stored and compared the collected 

license plate numbers and associated information. To be compatible with 

and share this information with neighboring jurisdictions, all users had to 

buy from the same manufacturer. The urban area could not provide 

documentation that showed it attempted to require that a non propriety 

data structure be used to enable all jurisdictions to use license plate readers 

from any manufacturer. As a result, all new purchases of license plate 

readers will be made using sole source procurements without competition, 

even though there are other providers of license plate readers. 

Urban Areas Security Initiative grant managers and subrecipients told us 

that in many cases specific brand preferences for the equipment to be 

acquired with grant funds have been made. These officials often already 

had purchased specific types of equipment or were familiar with specific 

brands of equipment and were concerned about maintaining compatibility 

with existing equipment. In other cases, equipment and service providers 

were known, trusted, and past experience indicated the sources provided 

high quality service. Purchasing officials told us conducting a full and 

open competition was time consuming and required significant 

investments of staff resources. The officials said they preferred to issue a 

purchase order against an existing contract. 

The State of California’s Management of Urban Areas Security Initiative Grants
 

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State Administrative Agency officials told us that they require urban areas 

to identify and seek approval for any purchase not acquired competitively. 

The State officials acknowledged that if the Urban Areas Security 

Initiative did not identify sole source procurements, the State officials 

assume all purchases were competitive. Also, State officials said that if 

the urban areas seek sole source approval and complete the State’s form 

properly, the sole source procurements were generally approved. The 

State officials do not generally investigate whether competition was 

possible. The officials rely on local jurisdiction judgment and preference. 

We observed some sole source procurements were approved by the State, 

but the accompanying justifications were often brief, not specific, and did 

not persuade us that a full and open competition was not possible. 

Sole source procurements, particularly of high cost equipment and 

services, deny the purchasing jurisdiction the full economic value of a 

competitive marketplace and the opportunity to explore innovative 

approaches to satisfy a need. Non-competitive procurements often cost 

more and may not provide all available features and services. Sole source 

procurements often lead to a long series of vendors obtaining a negotiating 

advantage in subsequent sole source procurements as local jurisdictions 

and cooperating neighboring jurisdictions acquire items from the same 

source to maintain compatibility. This condition occurred numerous times 

in California jurisdictions that were acquiring communications equipment. 

The acquisition of automated license plate recognition systems by 

numerous jurisdictions is another example. 

Although DHS-OIG reported in February 2009 problems with sole source 

procurement among Homeland Security grant purchases in California, 

these practices continued without remediation. Multiple, large 

procurements were made without competition and, in some cases, without 

the State being notified. Other sole source procurements were approved 

by the State but with insufficient documentation. No sole source 

procurement that we observed was substantiated with a cost analysis to 

show that the price obtained was fair and reasonable. While State officials 

acknowledge this problem and have made some effort to correct it, we 

found little progress since the condition was originally reported. 

The amount of grant funds expended as sole source procurements was not 

identified to the State or to us during the audit. Nevertheless, the grant 

funds expended in noncompliance with federal regulations should be 

questioned and disallowed if a review by the State shows that the best 

value was not obtained. 

The State of California’s Management of Urban Areas Security Initiative Grants
 


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Recommendations: 

We recommend that the Assistant Administrator, Grant Programs 

Directorate, require the Director, California Emergency 

Management Agency to: 

Recommendation #12: Develop and provide to all Urban Areas 

Security Initiatives grant subgrantee managers, within 6 months of 

this report date, a comprehensive training program on State and 

federal regulations pertaining to competitive procurement. 

Recommendation #13: Prepare, publish, and disseminate a guide 

detailing procurement regulations for FEMA awards to all 

California municipal and county purchasing departments that are 

acquiring equipment or services with Homeland Security grant 

funds. 

Recommendation #14: Complete a review of all grant funded 

purchases exceeding $100,000 to identify those made as sole 

source procurements and: 

•	 Verify that State approval was obtained, sole source 

procurement was justified, and the price was documented as 

fair and reasonable, 

•	 Disallow all procurements that fail to meet these 

requirements, and 

•	 Freeze all procurements for the urban area that has granted a 

waiver from using advertised procurements until it agrees to 

adhere to federal grant procurement requirements. 

Recommendation #15: For future grant years, disallow any 

procurement actions that are not in compliance with federal 

procurement regulations. 

Management Comments and Auditors’ Analysis 

FEMA concurred with recommendations 12, 13, 14, and 15. In 

written comments FEMA pledged to provide California and its 

Urban Areas Security Initiatives specific training in December 

2010 on procurement standards and competition. FEMA also will 

encourage California to review purchases exceeding $100,000 

under sole source procedures as detailed in recommendation 14. 

FEMA will also request California to provide documentation of 

disallowed procurement actions that are not in compliance with 

federal procurement regulations. 

The State of California’s Management of Urban Areas Security Initiative Grants
 

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The California Emergency Management Agency also agreed with 

recommendations 12, 13, and 15, and partially agreed with 

recommendation 14. The State agreed in written comments to 

issue a Grant Management Memorandum by December 31, 2010 

outlining state and federal regulations regarding competitive 

procurements. Further, the California Emergency Management 

Agency will include training on competitive procurements in 

training workshops to be conducted during December 2010. This 

guidance will also be added to the State’s grant management 

website. As a part of this training, the State will prepare and 

provide a procurement guide for Urban Areas Security Initiatives 

to disseminate to their local procurement agencies. The State has 

also agreed to revise its sole source procurement request form and 

to review all such requests. The State will establish a policy 

allowing grants management staff to disallow sole source 

procurements not pre-approved by the State. 

Regarding recommendation 14, the California Emergency 

Management Agency said that the State does not have the staff 

resources to accomplish the recommended review of all funded 

purchases exceeding $100,000 to assure federal procurement 

competition requirements were met. The State plans to meet the 

intent of this recommendation with the actions detailed above. 

In two successive audits of California we have documented 

problems with unapproved and inappropriate sole source 

procurements. The corrective actions proposed by FEMA and the 

California Emergency Management Agency, if implemented and 

periodically reinforced, can address the intent of these 

recommendations. However, the California Emergency 

Management Agency’s response for recommendations 12, 13, and 

15 is not sufficient to address recommendation 14. 

Disallowing the noncompliant procurements would send a clear 

message to Urban Areas Security Initiatives that failure to fully 

comply with federal competition requirements has undesirable 

consequences. 

The Assistant Administrator, Grant Programs Directorate, needs to 

provide corrective actions for the recommendations and a plan to 

implement the recommendations within 90 days. 

Internal Controls Over Reimbursements 

California’s State Administrative Agency did not require Urban Areas 
 

Security Initiative grant fund recipients to provide copies of purchase 
 

The State of California’s Management of Urban Areas Security Initiative Grants
 


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Page 32 
 
 

orders, delivery receipts, and other documentation with their requests for 

reimbursement of approved grant fund expenditures. As a result, the 

State’s internal controls over grant expenditures did not provide assurance 

that expenditures reimbursed to Urban Areas Security Initiative recipients 

were eligible, allowable, and supportable in accordance with federal 

requirements. 

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

Financial Management Systems, and the Department of Homeland 

Security Financial Guide, require that grantees maintain an accounting 

system together with adequate internal controls to assure grant 

expenditures are allowable, allocable, authorized, and consistent with 

federal, State, and grant requirements. For source documentation, 

accounting records must be supported by such documentation as cancelled 

checks, paid bills, payrolls, time and attendance records, and contract and 

subgrantee award documents. Review and verification of supporting 

documentation is needed to satisfy federal regulations and the DHS 

financial guide. 

The DHS Office of Inspector General audit report issued in February 2009 

on the Homeland Security Grant Program grants awarded to California for 

FYs 2004 through 2006, reported that the California State Administrative 

Agency did not review supporting documentation for grant expenditures 

before reimbursing subgrantees. The audit report concluded that the State 

had no assurance that reimbursements made to subgrantees were valid and 

eligible, or were appropriately supported by purchase orders, receipts, 

delivery notices, and similar documents. 

A subsequent review by FEMA of California Homeland Security Grant 

payments made in FY 2008 showed that more than $24 million (about 

19%) of expenditures were not proper. Most of the improper payments 

identified were caused by insufficient supporting documents. In most 

cases, this situation was due to the subgrantee not being able to provide 

the relevant invoices, receipts, or summary level reports. FEMA 

recommended that documentation compliance metrics be incorporated 

throughout the grant process to minimize future improper payments. Also, 

to help overcome lost and missing documents, FEMA recommended a 

standardized document retention protocol and corresponding training. 

Our audit of the FYs 2006 through 2008 grants confirmed that the 

California State Administrative Agency did not require Urban Areas 

Security Initiatives to provide documents such as receipts, invoices, and 

delivery notices with their requests for reimbursement of expenditures. 

Instead, the State told us they relied on the following four mechanisms to 

The State of California’s Management of Urban Areas Security Initiative Grants
 

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Page 33 
 
 

ensure that expenditures were proper before reimbursements were 

approved: 

1.	 Urban Areas Security Initiatives’ certifications that requests for 

reimbursement of expenditures were correct, 

2.	 An electronic workbook of program and associated expenditures 

which detailed intended purchases, 

3.	 Close working relationships with Urban Areas Security Initiatives 

grant specialists, and 

4.	 Periodic monitoring of Urban Areas Security Initiative grants 

management, including on-site inspection of expenditure 

documents. 

While these internal controls are helpful, the controls were not sufficient 

to provide the necessary level of assurance that reimbursements were 

proper. In addition, the State had not yet monitored the California Urban 

Areas Security Initiatives for the FYs 2006 through 2008 grant periods at 

the time of our review. Moreover, the State’s monitoring unit did not plan 

to perform comprehensive annual on-site visits, nor did it have plans to 

monitor three of the six urban areas in the near future. Review and 

verification of supporting documentation was needed to satisfy federal 

regulations and the DHS Financial Guide. 

During our visit to one urban area, the Urban Areas Security Initiative 

grant management team demonstrated a new automated tool developed to 

track programs managed by their subrecipients. The Urban Areas Security 

Initiative’s Invoice Tracking System included the capability to 

electronically view key expenditure documents. This tool, which might be 

a solution to this issue, is more fully described in the Best Practices 

section of this report. 

Recommendation 

We recommend that the Assistant Administrator, Grant Programs 

Directorate, require the California Emergency Management 

Agency to: 

Recommendation #16: Strengthen internal controls over Urban 

Areas Security Initiative grant expenditure reimbursements, for 

example, through reviews of purchase orders, invoices, and 

delivery receipts. 

The State of California’s Management of Urban Areas Security Initiative Grants
 

Awarded During Fiscal Years 2006 through 2008 
 

Page 34 
 
 

Management Comments and Auditors’ Analysis 

FEMA concurred with recommendation 16. FEMA agreed in 

written comments to encourage California to strengthen internal 

controls over grant expenditure reimbursements. 

The California Emergency Management Agency also agreed with 

this recommendation, and stated it would initiate a sampling 

procedure to review source documentation prior to reimbursing 

Urban Areas Security Initiatives for their grant funded purchases. 

The California Emergency Management Agency’s plan to sample 

and review some reimbursement documentation falls short of what 

we believe is needed to assure grant funds are being expended 

properly. We remind the State that one of the California Urban 

Areas Security Initiatives has developed an electronic system that 

could facilitate documentation review without the burden of 

handling, transporting and storing paper documents. We believe a 

pilot program to try this option, together with the sampling of 

documents proposed by the State, would more closely meet the 

intent of this recommendation. 

The Assistant Administrator, Grant Programs Directorate, needs to 

provide corrective actions for the recommendation and a plan to 

implement the recommendation within 90 days. 

Management of Cash Advances 

The State Administrative Agency did not maintain a system for 

monitoring cash advances and accrued interest for Urban Areas Security 

Initiative agencies. The State provided cash advances to one of 

California’s Urban Areas Security Initiatives for the FYs 2006 through 

2008 grants, which were held by the urban area beyond the time permitted 

by regulation. Accrued interest was not reported or paid as required. 

Moreover, the State was not aware of the situation because the State did 

not have a system to account for the advanced funds or interest due. 

According to the Code of Federal Regulations Title 44 §13.21 (c), 

Advances, grantees and subgrantees can be paid in advance, if they 

demonstrate the willingness and ability to maintain procedures to 

minimize the time elapsing between the transfer of the funds and their 

expenditure. OMB Circular A-133 Compliance Supplement, Part 4, 

Section (III) (C), states that grantees are permitted to draw down funds up 

to 120 days prior to expenditure or disbursement, but must place those 

funds in an interest-bearing account, with the interest submitted to the U.S. 

The State of California’s Management of Urban Areas Security Initiative Grants
 


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Treasury. California grant guidance also states that subgrantees may 

request grant funds up to 120 days prior to expenditure/reimbursement. 

In addition, the Code of Federal Regulations Title 44 § 13.21(i) Interest 

Earned on Advances, states that grantees and subgrantees shall promptly, 

but at least quarterly, remit interest earned on advances to the federal 

agency. FEMA officials advised us that interest accrued from cash 

advances should be reported on the quarterly Financial Status Report. 

Interest earned also should be remitted quarterly by the State 

Administrative Agency to FEMA. 

While most California Urban Areas Security Initiatives paid for approved 

expenditures with local funds and then requested reimbursement from the 

State with grant funds, one urban area requested and received more than 

$29.9 million of cash advances from the State for the FYs 2006 through 

2008 grants. For various reasons, the urban area did not promptly spend 

these funds and a portion of the funds were not spent within the 120-day 

limit specified in the cash management regulations. Also, accrued interest 

on these cash advances was not remitted promptly or reported as required. 

Table 5 shows cash advances, disbursements, and interest accrued for this 

urban area from the FYs 2006 through 2008 Urban Areas Security 

Initiative grants. 

Table 5 

Urban Areas Security Initiative 

Cash Advances, Disbursements, and Accrued Interest 

As of December 31, 2009 

FYs 2006 through 2008 Grant Awards 

Grant Year Advances Amount 

Disbursed Balance Accrued Interest 

2006 $ 21,132,084 $ 20,727,665 $ 404,419 $ 271,783 

2007 $ 8,792,495 $ 5,156,562 $ 3,635,933 $ 69,618 

2008 $ 15,798 $ 15,324 $ 474 $ 0 

$ 29,940,377 $ 25,899,551 $ 4,040,826 $ 341,401 

Of the $21,132,084 cash advances for the FY 2006 grant, $3,059,221 was 

not spent within the 120 day limit. The records provided by urban area 

officials were not detailed enough to allow us to determine the total 

amount of cash advances that were expended within 120 days for the 

FY 2007 grant. However, we did determine that there was an unexpended 

balance of $3,635,933 retained for more than 120 days. 

The State of California’s Management of Urban Areas Security Initiative Grants
 


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Interest of $341,401 earned on the cash advanced to this urban area had 

not been remitted quarterly to the Federal Government. A lump sum 

payment of $341,401 of the total accrued interest was made to the federal 

government at the time of our audit visit to the urban area. 

The State Administrative Agency did not adequately monitor cash 

advanced to this urban area. Therefore, it was not aware of the urban 

area’s noncompliance with reporting and payment of interest 

requirements. As a result, accrued interest due was not reported by the 

State on the quarterly financial status report as required. 

Recommendations 

We recommend that the Assistant Administrator, Grant Programs 

Directorate, require the California Emergency Management 

Agency to: 

Recommendation #17: Establish policies and procedures to 

ensure that cash advances to subgrantees are only provided based 

on immediate disbursement requirements and that procedures are 

in place to minimize the time needed to expend these funds. 

Recommendation #18: Require subgrantees to return funds 

advanced if not expended within 120 days of the advance being 

provided. 

Recommendation #19: Require subgrantees to track accrued 

interest on cash advances, remit the interest earned in accordance 

with requirements to FEMA, and report the interest earned on the 

Financial Status Reports. 

Management Comments and Auditors’ Analysis 

FEMA concurred with recommendations 17, 18, and 19. FEMA 

noted in written comments that grant funds must be expended in 

accordance with 44 CFR Part 13. 

The California Emergency Management Agency also agreed with 

these recommendations. The State in written comments advised of 

new procedures established to manage and account for cash 

advances, accrued interest, and associated reporting. 

We believe these procedures can significantly improve the control 

and accounting for cash advances and meet the intent of this 

recommendation. 

The State of California’s Management of Urban Areas Security Initiative Grants
 

Awarded During Fiscal Years 2006 through 2008 
 

Page 37 
 
 

The Assistant Administrator, Grant Programs Directorate, needs to 

provide corrective actions for the recommendations and a plan to 

implement the recommendations within 90 days. 

Two California Urban Areas Security Initiatives Are Using 

Innovative Systems That May Be Best Practices 

The San Diego and Los Angeles-Long Beach urban areas were using 

innovative systems to better invest and manage Urban Areas Security 

Initiative grant funds. 

•	 San Diego’s Technology Clearinghouse helps subrecipients make 

more informed purchasing decisions, and 

•	 The Invoice Tracking System developed by Los Angeles-Long 

Beach provides an on-line tool for managing subrecipient programs. 

These systems merit broader use in California and should be considered 

for evaluation and use in other jurisdictions. 

San Diego’s Technology Clearinghouse 

San Diego Urban Areas Security Initiative managers said that 

when technical experts assist first responders in selecting 

equipment and other products these programs tend to be more 

successful. Were such efforts more broadly coordinated, program 

success could increase throughout California, 

California first responders are inundated with new and improved 

products designed to help them prevent and respond to terrorist 

acts and natural disasters. Program Leaders are often highly 

trained law enforcement officers, firefighters, or emergency 

managers skilled in something other than purchasing. The 

Program Leaders can struggle with detailed specification, claimed 

benefits, warrantees, compatibility issues, prices, and a myriad of 

other product issues. With limited time to research product 

literature and independent test results, if any are available, 

Program Leaders are often forced to rely on manufacturer’s claims 

to guide purchase decisions. If the product meets, exceeds, or falls 

short of expectations, there is no readily available way to get the 

word out to other jurisdictions. 

The San Diego urban area is helping first responders be better 

buyers by investing in a Regional Technology Center and its 

Technology Clearinghouse initiative. This initiative is designed to 

The State of California’s Management of Urban Areas Security Initiative Grants
 


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Page 38 
 
 

evaluate new technologies and provide local jurisdictions detailed, 

independent assessments of equipment and systems being 

considered by first responders. The evaluations feature both 

technical assessments and testing under realistic conditions by first 

responders. The evaluations also include assessments by other first 

responders who have purchased and used the prospective 

equipment or system. The Center’s reports are clearly presented, 

objective, and readily available electronically. As a result, San 

Diego first responders have timely sources of available product 

evaluations to help them make better investment decisions. 

Los Angeles-Long Beach Invoice Tracking System 

The Los Angeles-Long Beach urban area received more than 

$70 million of Urban Areas Security Initiative grant funds each 

year for the 3 year period. Tracking the documentation associated 

with hundreds of programs supported with the grant funds posed a 

significant problem. The Urban Areas Security Initiative 

managers, accountants, and subrecipients were all frustrated with a 

paper-based system that too often was associated with 

reimbursement delays, misunderstandings, and inefficiency. The 

Urban Areas Security Initiative managers resolved these problems 

with an innovative, on-line Invoice Tracking System. The System 

allows the program teams to digitally record and store all essential 

program documentation. The documentation is then available for 

use by Urban Areas Security Initiative managers and the urban 

area’s accounting department. The urban area staff said this tool 

has eliminated much of the uncertainty surrounding the status of 

programs during the purchasing and approval process. They 

emphasized the value of being able to electronically view key 

purchase documents 

The Los Angeles-Long Beach System allows any approved system 

user to sign on and determine the program status in real time, view 

essential documents, review expenditures, and determine the status 

of reimbursement requests without any need for paper documents, 

specialized software, or storage. The Los Angeles-Long Beach 

Invoice Tracking System could offer similar benefits to other 

Urban Areas Security Initiatives management teams. The System 

could also be beneficial to the California Emergency Management 

Agency in its response to the DHS Office of Inspector General’s 

and FEMA’s reported concerns that the State does not review 

purchase orders, sales invoices, or delivery notices before 

reimbursing urban areas and other subgrantees for incurred 

expenses. 

The State of California’s Management of Urban Areas Security Initiative Grants
 

Awarded During Fiscal Years 2006 through 2008 
 

Page 39 
 
 

Appendix A 

Purpose, Scope, and Methodology 

The purpose of the audit was to determine whether the State of 

California distributed and spent Urban Areas Security Initiative 

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

regulations, and guidance. The goal of the audit was to identify 

problems and solutions that can help the State of California better 

prepare for and respond to threats, acts of terrorism, and other 

hazards. The audit further enabled us to answer the following nine 

researchable questions: 

• Were measurable goals developed from plans? 

• Do funded plans link all hazards response capabilities to goals? 

• Were funds and resources distributed based on goals? 

• Does the State accurately measure risk? 

• Does the State measure response capabilities? 

• Can the State demonstrate improved performance? 

• Were grants administered compliantly? 

• Did the State monitor grant programs? 

• What innovative practices can be used by other states? 

The scope of the audit included the Urban Areas Security Initiative 

grant awards for FYs 2006, 2007, and 2008 as described in the 

Background section of this report and summarized in Table 1. 

The audit methodology included work at FEMA Headquarters, 

State of California offices, each of the six urban areas that received 

grants, and various subrecipient locations. To achieve our audit 

objectives, we analyzed data, reviewed documentation, and 

interviewed key state, Urban Areas Security Initiative, and local 

officials directly involved in the management and administration of 

the State of California’s Homeland Security Grant Programs. 

We conducted six site visits and held discussions with appropriate 

officials from all six of the urban areas receiving Urban Areas 

Security Initiative grants. The visits and discussions were 

performed in order to determine if program grant funds were 

expended according to grant requirements and State-established 

priorities. During each of these visits we conducted a general 

meeting with subrecipients to discuss their use of Urban Areas 

Security Initiative grants, the impact these grants had on first 

responder preparedness, and the management of the grants by the 

Urban Areas Security Initiative teams. During these visits we met 

with approximately 400 subrecipients. 

The State of California’s Management of Urban Areas Security Initiative Grants
 


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Appendix A 

Purpose, Scope, and Methodology 

We conducted site visits to the six California Urban Areas Security 

Initiatives representing all three State emergency management 

regions, and to 35 subrecipient organizations. We visited: 

• Coastal Region 

o	 Bay Area Urban Area (San Francisco) 

 Alameda County Sheriff 

 Contra Costa County Emergency Management 

 Northern California Regional Intelligence 

Center 

 Oakland Office of Emergency Services 

 San Francisco Bay Area Rapid Transit 

Authority 

 San Francisco Bomb Squad 

 San Francisco Department of Public Works 

 San Francisco Emergency Operations Center 

 San Jose Police Department 

 San Mateo County Sheriff 

 Santa Clara Public Health Department 

• Inland Region 

o	 Sacramento Urban Area 

 City of Sacramento Government Center 

 Sacramento Police Department 

 Sacramento Regional Office of Homeland 

Security 

• Southern Region 

o	 Anaheim-Santa Ana Urban Area 

 Anaheim Angles Stadium 

 Anaheim Fire Department 

 City of Santa Ana Civic Center 

 Garden Grove Police Department 

 Orange County Fire Authority 

 Santa Ana Police Department 

The State of California’s Management of Urban Areas Security Initiative Grants
 


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Appendix A 

Purpose, Scope, and Methodology 

o	 Los Angeles-Long Beach Urban Area 

 City of Los Angeles Communications 

Department 

 Long Beach Fire Department 

 Long Beach Police Department 

 Los Angeles County Fire Department 

 Los Angeles County Sheriff 

 Los Angeles Police Department 

o Riverside Urban Area 

o	 San Diego Urban Area 

 City of San Diego Communications Department 

 City of San Diego Purchasing Department 

 San Diego County Sheriff’s Office 

 San Diego Fire Department 

 San Diego Fusion Center 

 San Diego State University Research 

Foundation 

 San Miguel Fire Department 

 Vista Fire Department 

At each location, we interviewed responsible officials, reviewed 

documentation supporting State and subgrantee management of the 

awarded grant funds (including expenditures for equipment, 

training, and exercises), and physically inspected some of the 

equipment procured with the grant funds. 

We conducted the audit between December 2009 and May 2010, in 

accordance with Government Auditing Standards as prescribed by 

the Comptroller General of the United States (Yellow Book-2007 

Revision). Those standards require that we plan and perform the 

audit to obtain sufficient, appropriate evidence to provide a 

reasonable basis for our findings and conclusions based on our 

audit objectives. We believe that the evidence obtained provides a 

reasonable basis for our findings and conclusions based on our 

audit objectives. 

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

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

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

review and report of program activities with a compliance element. 

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

financial statement audit, the objective of which would be to 

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

The State of California’s Management of Urban Areas Security Initiative Grants
 


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Appendix A 

Purpose, Scope, and Methodology 

Accordingly, we were neither required to review, nor express an 

opinion on, the costs claimed for the grant programs included in 

the scope of the audit. Had we been required to perform additional 

procedures, or conducted an audit of the financial statements in 

accordance with generally accepted auditing standards, other 

matters might have come to our attention that would have been 

reported. This report relates only to the programs specified and 

does not extend to any financial statements of the State of 

California. 

While the audit was being performed and the report prepared under 

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

Inspector General to appropriate FEMA and State of California 

officials. 

The State of California’s Management of Urban Areas Security Initiative Grants
 


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Appendix B 

FEMA Management Comments on the Draft Report 

December 6, 2010 

MEMORANDUM FOR: Michael Siviy 

 Director 

Grants Management Division, DHS OIG 

FROM: Elizabeth M. Harman 

 Assistant Administrator 

SUBJECT:	 Response to Draft OIG: The State of California’s 

Management of Urban Areas Security Initiatives Awarded 

During Fiscal Years 2006 through 2008 

Thank you for the opportunity to comment on the subject draft report entitled, “The State 

of California’s Management of Urban Areas Security Initiatives Awarded During Fiscal 

Years 2006 through 2008”. The findings in the report will be used to strengthen the 

effectiveness and efficiency of how we execute and measure the program. We recognize 

the need to continue to improve the process, including addressing the recommendations 

raised in this report. 

Thank you for the opportunity to respond to the report and to work with the Office of the 

Inspector General during this engagement. 

Attachment 

cc: 	 Annette Hampton, RMBA 

Mildred Lloyd, GPD Audit Liaison 

The State of California’s Management of Urban Areas Security Initiative Grants
 


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Appendix B 

FEMA Management Comments on the Draft Report 

Response to Draft Report
 The State of California’s Management of Urban Areas Security Initiative Grants Awarded
 

during Fiscal Years 2006 through 2008
 

December 6, 2010 

The State of California’s Management of Urban Areas Security Initiative Grants
 


Awarded During Fiscal Years 2006 through 2008 
 

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Appendix B 

FEMA Management Comments on the Draft Report 

I. Introduction 

During the formal exit conference held Oct 25, 2010 many issues relating to the finding 

of this draft report were discussed amongst all Federal parties. The findings and 

recommendations within the Draft Report focused on improvements needed to enhance 

California’s management of UASI grants. FEMA’s Grant Programs Directorate (GPD) 

and FEMA Region IX Grants Management Division provided their concurrence, partial 

concurrence, or non-concurrence on each of the 19 recommendations. 

The State is ultimately responsible for all programmatic and fiduciary actions that are 

connected directly or indirectly with the Homeland Security Grants examined under this 

review. Many of the findings are historic, systemic and permeate the State and UASI 

programs throughout the FY04-FY08 timeframe. FEMA recommends the corrective 

recommendations be adopted and implemented by the State and the UASI 

program/financial managers. The use of “concur” throughout the report means that GPD 

and Region IX agrees with the recommendations as a way forward to improvement and 

provides a path for remediation under a corrective action plan, but is not intended to infer 

that the recommendations that are not clearly codified by federal regulations, laws, statute 

or guidance can be fully enforced as mandates. Therefore, we will be prescriptive in the 

creation of the corrective action plan and on the cooperation and coordination of the Sate 

Administrative Agency (SAA) to reform, adopt, and implement these recommendations. 

OIG Recommendation #1: We recommend that the Assistant Administrator, Grants 

Program Directorate, require the California Emergency Management Agency to develop 

meaningful metrics for measuring program results, collect results measurement data from 

subrecipients, and include these metrics in Investment Justifications and program funding 

approval deliberations. 

FEMA Response: FEMA partially concurs with this recommendation. GPD discussed 

how the issues within the finding have come up in other audits. GPD indicated that the 

SAA is in the process of developing a metrics system as indicated in the 2008 State OIG 

Corrective Action Plan. However, it appears that at this point the metrics is more of a 

state inventory and resource typing database. It is unclear to FEMA at this point if this 

will evolve into a program that captures results measurement, such as preparedness 

capabilities. FEMA will follow-up with the State within six months of the final report 

and request additional information on its progress in developing a metrics system. 

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

Program Directorate, require the California Emergency Management Agency to establish 

and apply a meaningful review process designed to disclose the value and utility of 

proposed equipment and systems during the Investment Justification review and the 

expenditure plan approval processes. 

FEMA Response: FEMA partially concurs with this recommendation. In addition, 

FEMA suggests revising current State Homeland Security Grant monitoring program 

policy to include quantifiable goals or criteria to determine the effectiveness of each grant 

The State of California’s Management of Urban Areas Security Initiative Grants
 


Awarded During Fiscal Years 2006 through 2008 
 

Page 46 
 
 

Appendix B 

FEMA Management Comments on the Draft Report 

specific to each grant year. The policy should indicate the method for selecting sub 

grantees to be visited, and the number or frequency of monitoring visits each year for 

both State Homeland Security Program grants and Urban Area Security Initiative grants. 

In addition, FEMA Region IX suggested that the names of the UASI that corresponds to 

the specific findings in the OIG report be listed to increase ownership and accountability. 

The Grant Development and Administration Division (GPD) within the Federal 

Emergency Management Agency’s (FEMA) Grant Programs Directorate (GPD) requests 

that the State Office of Homeland Security submit a revised Homeland Security Grant 

Program monitoring policy to their GPD Program Analyst within 90 days to include more 

quantifiable goals and criteria for determining the effectiveness of each grant. The 

updated policy should include: 

a.) A clear method for selecting sub grantees to be visited, 

b.) The number or frequency of monitoring visits each year for both SHSP (State 

Homeland Security Program) grants and UASI (Urban Area Security 

Initiative) grants, and 

c.) The protocols to be followed during the monitoring visits. 

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

Program Directorate, require the California Emergency Management Agency to develop 

and disseminate guidance to California Urban Areas Security Initiatives specifying the 

importance of efficient and cost effective use of grant funds to improve first responder 

preparedness. 

FEMA Response: FEMA non-concurs with the recommendation. 

The grant guidance states that “Grant recipients will be monitored periodically by DHS 

staff, both programmatically and financially, to ensure that the project goals, objectives, 

performance requirements, timelines, milestone completion, budgets, and other related 

program criteria are being met. Monitoring will be accomplished through a combination 

of office-based reviews and on-site monitoring visits. Monitoring will involve the review 

and analysis of the financial, programmatic, performance and administrative issues 

relative to each project and will identify areas where technical assistance and other 

support may be needed.” 

On-site monitoring visits and office-based reviews assist the program office in 

identifying recurring problems that grantees may have that can be addressed through 

additional clarification on the website, incorporation into the training modules, and 

modifications to the grant guidance. The program office will continue to stress its 

importance in training and as part of monitoring. The program office carries out actions 

to ensure that all grantees are aware of the requirements of the program and their 

The State of California’s Management of Urban Areas Security Initiative Grants
 


Awarded During Fiscal Years 2006 through 2008 
 

Page 47 
 
 

 

Appendix B 

FEMA Management Comments on the Draft Report 

individual grant award. FEMA diligently works to ensure that all grantees are complying 

with the requirements set forth in the grant award. 

Additionally, grant guidance under “Grantee Responsibilities” clearly states that the 

grantee must agree to “Retain grant files and supporting documentation for 3 years, after 

the conclusion and closeout of the grant or any audit subsequent to closeout.” FEMA is 

taking necessary actions to ensure that grantees comply with federal documentation 

requirements and will not take any additional action on this recommendation. 

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

Programs Directorate, require the California Emergency Management Agency to, in 

consultation with the Urban Areas Security Initiative managers, identify process changes 

to accelerate the grant award approval process to the Urban Areas Security Initiative 

subrecipients. 

FEMA Response: FEMA partially concurs with this recommendation. FEMA agrees 

with the findings in that the timely distribution and dissemination of grant funds is critical 

to the success of our programs. Therefore, we recommend that the California EMA 

implement guidance, policies and processes including milestones and timelines to ensure 

the timely distribution of grant funds to achieve and implement program goals and 

objectives. FEMA will follow-up with the State within six months of the final report and 

request additional information on its progress updating guidance, policies and processes 

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

Programs Directorate, require the California Emergency Management Agency to 

establish a timeframe for the Urban Area to make grant funds available to subrecipients 

for future Urban Areas Security Initiative grants, consistent with the experience of other 

California Urban Areas Security Initiatives. 

FEMA Response: FEMA partially concurs with this recommendation. FEMA agrees 

with the findings in that the timely distribution and dissemination of grant funds is critical 

to the success of our programs. Therefore, we recommend that the California EMA 

implement guidance, policies and processes including milestones and timelines to ensure 

the timely distribution of grant funds to achieve and implement program goals and 

objectives. FEMA will follow-up with the State within six months of the final report and 

request additional information on its progress updating guidance, policies and processes 

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

Programs Directorate, require the California Emergency Management Agency to 

establish an oversight process for assuring Urban Areas Security Initiative compliance 

with the timeframes. 

FEMA Response: FEMA partially concurs with this recommendation. FEMA agrees 

with the findings in that oversight management activities including assessing compliance 

and progress toward program goals is critical to the success of our programs. Therefore, 

The State of California’s Management of Urban Areas Security Initiative Grants
 


Awarded During Fiscal Years 2006 through 2008 
 

Page 48 
 
 

 

Appendix B 

FEMA Management Comments on the Draft Report 

we recommend that the California EMA implement guidance, policies and processes to 

ensure the achievement of Federal goals and initiatives through monitoring. The state is 

the only entity charged with passing down funds to the Urban Area in HSGP grants. 

GPD can make a suggestion to the grantee regarding the recommendation but cannot 

promulgate requirements related to such timeframes. FEMA will follow-up with the 

State within six months of the final report and request additional information on its 

progress updating guidance, policies and processes. 

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

Programs Directorate, require the California Emergency Management Agency identify 

options for future funding plan for the State’s Fusion Centers that would provide for the 

continuance of the Centers without long term dependency on federal grant funding. 

FEMA Response: FEMA partially concurs with this recommendation. It is a sound and 

proactive business practice to develop options for the potential reduction and or change in 

priority for grant funded activities, therefore it is recommended that UASIs develop a 

future funding plan for the State’s Fusions Centers that would provide for the 

continuance of the Centers without long term dependency on federal grant funding. 

FEMA will follow-up with the State within six months of the final report and request 

additional information on its future funding plan. For additional rationale regarding 

partial concurrence, please refer to FEMA’s response to recommendation #9. 

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

Programs Directorate, require the California Emergency Management Agency to develop 

options identifying the long term funding requirements for the interoperable public safety 

communications systems being initiated to include: 

- Realistic assessments of state and local government resources available to complete and 

sustain these programs, 

- Identification of federal financial support that may be necessary to complete and operate 

these systems, and 

- Making the completion of this plan a condition of future grant funds approvals for the 

programs 

FEMA Response: FEMA partially concurs with this recommendation. For additional 

rationale regarding partial concurrence, please refer to FEMA’s response to 

recommendation #9. 

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

Programs Directorate, require the California Emergency Management Agency subgrantee 

to address long-term sustainability in their proposals and applications for grant funding . 

FEMA Response: FEMA partially concurs with this recommendation. Given that GPD 

partially concurs with recommendations 7 through 9, this issue will have to be addressed 

at a higher level within the Department or Administration. The corrective action plan 

The State of California’s Management of Urban Areas Security Initiative Grants
 


Awarded During Fiscal Years 2006 through 2008 
 

Page 49 
 
 

Appendix B 

FEMA Management Comments on the Draft Report 

should be developed in a way that addresses the recommendation and can provide a 

meaningful outcome but is not in violation of program guidance regarding the State’s 

responsibility for the development of sub-recipient policies and procedures. FEMA will 

initiate the discussion to address this issue within the current fiscal year. 

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

Programs Directorate, require the California Emergency Management Agency to commit 

sufficient resources to establish and implement policies and procedures for annual on-site 

monitoring of Urban Areas Security Initiative grant recipients 

FEMA Response: FEMA concurs with this recommendation. FEMA agrees with the 

findings in that oversight management activities including assessing compliance and 

progress toward program goals is critical to the success of our programs. Therefore, we 

recommend that within the current fiscal year the California EMA implement guidance, 

policies and processes to ensure the achievement of Federal goals and initiatives through 

monitoring. FEMA will follow-up with the State within six months of the final report 

and request additional information on its progress updating guidance, policies and 

processes. 

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

Programs Directorate, require the California Emergency Management Agency to require 

that the on-site monitoring visits include evaluations of the recipients’ overall 

management of the grants, including the progress made toward achievement of program 

goals. 

FEMA Response: FEMA concurs with this recommendation and will encourage the 

State to begin developing ways to incorporate evaluations of the recipients’ overall 

management of grants into on-site monitoring within six months of the final report. GPD 

has already begun implementing the corrective action for recommendation 10. Region 9 

requested that OIG add language to recommendation 11 to include implementing past 

corrective actions regarding monitoring. As stated in FEMA’s response to 

recommendation 10, FEMA agrees with the findings in that oversight management 

activities including assessing compliance and progress toward program goals is critical to 

the success of our programs. Therefore, we recommend that the California EMA 

implement guidance, policies and processes to ensure the achievement of Federal goals 

and initiatives through monitoring. 

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

Programs Directorate, require the Director, California Emergency Management Agency 

to develop and provide to all Urban Areas Security Initiatives grant sub-grantee 

managers, within 6 months of this report date, a comprehensive training program on State 

and federal regulations pertaining to competitive procurement. 

FEMA Response: FEMA concurs with this recommendation. On December 7 and 8, 

2010 the Grant Programs Directorate, via the Homeland Security Preparedness Technical 

The State of California’s Management of Urban Areas Security Initiative Grants
 


Awarded During Fiscal Years 2006 through 2008 
 

Page 50 
 
 

Appendix B 

FEMA Management Comments on the Draft Report 

Assistance Program, will provide a Direct Technical Assistance (TA) Delivery to the 

California State Administrative Agency (SAA) and California Urban Areas including 

Bay Area (Super UASI), Los Angeles/Long Beach, San Diego, Sacramento, Bakersfield, 

Anaheim/Santa Ana, Ventura, and Riverside. This intensive workshop will provide 

rigorous, customized solutions and successful grants management principles tailored to 

the needs of the California SAA and Urban Area subrecipients, with emphasis on 

procurement standards and competition. We will encourage the SAA to develop and 

provide Urban Areas a comprehensive training program on State and federal regulations 

pertaining to competitive procurement. FEMA will follow up and request additional 

information on the State’s progress towards providing comprehensive training within six 

months of the final report. 

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

Programs Directorate, require the Director, California Emergency Management Agency 

to prepare, publish, and disseminate a guide detailing procurement regulations for FEMA 

awards to all California municipal and county purchasing departments that are acquiring 

equipment or services with Homeland Security grant funds. 

FEMA Response: FEMA concurs with this recommendation. FEMA agrees with the 

findings in that grant funds must be expended in accordance with 44 CFR Part 13, OMB 

cost principles, and program guidance is critical to the success of our programs. 

Therefore, we recommend that the California EMA implement guidance, policies and 

processes to ensure the integrity of Federal assistance funds within the current fiscal year. 

OIG Recommendation #14: We recommend that the Assistant Administrator, Grant 

Programs Directorate, require the Director, California Emergency Management Agency 

to complete a review of all grant funded purchases exceeding $100,000 to identify those 

made as sole source procurements and: 

- Verify that State approval was obtained, sole source procurement was justified, and the 

price was documented as fair and reasonable, 

- Disallow all procurements that fail to meet these requirements, and 

- Freeze all procurements for the Urban Area that has granted a waiver from using 

advertised procurements until it agrees to adhere to federal grant procurement 

requirements. 

FEMA Response: FEMA concurs with the recommendation and will encourage the 

State to initiate this review within six months of the final report. As stated in FEMA’s 

response to recommendation #13, FEMA agrees with the findings in that grant funds 

must be expended in accordance with 44 CFR Part 13, OMB cost principles, and program 

guidance is critical to the success of our programs. Therefore, we recommend that the 

California EMA implement guidance, policies and processes to ensure the integrity of 

Federal assistance funds. 

OIG Recommendation #15: We recommend that the Assistant Administrator, Grant 

Programs Directorate, require the Director, California Emergency Management Agency 

The State of California’s Management of Urban Areas Security Initiative Grants
 


Awarded During Fiscal Years 2006 through 2008 
 

Page 51 
 
 

Appendix B 

FEMA Management Comments on the Draft Report 

to for future grant years, disallow any procurement actions that are not in compliance 

with federal procurement regulations. 

FEMA Response: FEMA concurs with this recommendation. Within the current fiscal 

year, FEMA will request the State to provide documentation of disallowed procurement 

actions that are not in compliance with federal procurement regulations. 

OIG Recommendation #16: We recommend that the Assistant Administrator, Grant 

Programs Directorate, require the California Emergency Management Agency to 

strengthen internal controls over Urban Areas Security Initiative grant expenditure 

reimbursements, for example, through reviews of purchase orders, invoices, and delivery 

receipts. 

FEMA Response: FEMA concurs with this recommendation and will encourage the 

State to provide an update on its progress in strengthening internal controls within six 

months of the final report. As stated in FEMA’s response to recommendation #13, 

FEMA agrees with the findings in that grant funds must be expended in accordance with 

44 CFR Part 13, OMB cost principles, and program guidance is critical to the success of 

our programs. Therefore, we recommend that the California EMA implement guidance, 

policies and processes to ensure the integrity of Federal assistance funds. 

OIG Recommendation #17: We recommend that the Assistant Administrator, Grant 

Programs Directorate, require the California Emergency Management Agency to 

establish policies and procedures to ensure that cash advances to sub grantees are only 

provided based on immediate disbursement requirements and that procedures are in place 

to minimize the time needed to expend these funds. 

FEMA Response: FEMA concurs with this recommendation. As stated in FEMA’s 

response to recommendation #13, FEMA agrees with the findings in that grant funds 

must be expended in accordance with 44 CFR Part 13, OMB cost principles, and program 

guidance is critical to the success of our programs. Therefore, we recommend that the 

California EMA implement guidance, policies and processes to ensure the integrity of 

Federal assistance funds. FEMA will follow-up with the State within six months of the 

final report and request additional information on its progress updating guidance, policies 

and processes 

OIG Recommendation #18: We recommend that the Assistant Administrator, Grant 

Programs Directorate, require the California Emergency Management Agency to require 

sub grantees to return funds advanced if not expended within 120 days of the advance 

being provided. 

FEMA Response: FEMA concurs with this recommendation. As stated in FEMA’s 

response to recommendation #13, FEMA agrees with the findings in that grant funds 

must be expended in accordance with 44 CFR Part 13, OMB cost principles, and program 

guidance is critical to the success of our programs. Therefore, we recommend that the 

The State of California’s Management of Urban Areas Security Initiative Grants
 


Awarded During Fiscal Years 2006 through 2008 
 

Page 52 
 
 

Appendix B 

FEMA Management Comments on the Draft Report 

California EMA implement guidance, policies and processes to ensure the integrity of 

Federal assistance funds. FEMA will follow-up with the State within six months of the 

final report and request additional information on its progress updating guidance, policies 

and processes. 

OIG Recommendation #19: We recommend that the Assistant Administrator, Grant 

Programs Directorate, require the California Emergency Management Agency require 

subgrantees to track accrued interest on cash advances, remit the interest earned in 

accordance with requirements to FEMA, and report the interest earned on the Financial 

Status Reports. 

FEMA Response: FEMA concurs with this recommendation. As stated in FEMA’s 

response to recommendation #13, FEMA agrees with the findings in that grant funds 

must be expended in accordance with 44 CFR Part 13, OMB cost principles, and program 

guidance is critical to the success of our programs. Therefore, we recommend that the 

California EMA implement guidance, policies and processes to ensure the integrity of 

Federal assistance funds. FEMA will follow-up with the State within six months of the 

final report and request additional information on its progress updating guidance, policies 

and processes. 

Additionally, GPD requested that OIG remove the example on page 33 of the draft report 

as the grantee was in compliance. At the time, language in FEMA’s letter to the grantee 

indicated that interest payments should be made to the HHS instead of FEMA, as is now 

required. 

The State of California’s Management of Urban Areas Security Initiative Grants
 


Awarded During Fiscal Years 2006 through 2008 
 

Page 53 
 
 

ARNOI,.O SCHWAJ<.Z~NEOGER MAlTHEW R, BE'IT~NH,WSEN

GOVERNOR

CalE·MA S~l;."'liTAAY~)~ w-=.. .- CALIFOAIHA EMEIlGENCY

IotANAOflotfNT AGfNCY

December 1,2010

Martin W. O'Neill

Foxx and Company

700 Goodall Complex

324 We:tIl Ninth Sireel

Cincinnati, Ohio 45202

Dear Mr. O'Neill:

The California Emef(~encyManagement Agency (Cal EMA) has reccivcd and reviewed Ihe draft

audit report concerning Cal EMA's administration ofthe UrblUl Areas SecuriTy Initiative (VASI)

grants awarded during fiscal yearS 2006 through 2008.

At Cal EMA, we strive for excellence in all that we do IUld appreciate your independent review

ofthe administration ofthe UASI funds awarded by the Federal Emergency Managcment

Agency to the Stale ofCalifomia. Your review Is of the utm<;>st importance to us, our granl

recipients, and other agencies tasked with enhancing the state and local agencies capabilities 10

prevent, detcr, respond to, and recover from terrorist attacks, major disasters and othcr

emergencies. Wc apprcciatc the opportunity to provide the status ofour corrective action plan to

the specific area.~ identified in the report and do 50 3..'1 follows:

Improved Program Resulll Rcponing

Recommemlatloll #1

Develop meaningfullnetries for measuring program re5ults, collect results measurement data

from subrecipicnts, and include these melncs in Investmcnt Justifications and program funding

approval deliberations.

Cal EMA Response

We concur with this recommcndation. Wc will work with thc U.S. DHSfFEMA as nceded 10

develop additional guidelines and/or perfonnance mcasures regarding lhc VASI Investment

Justification review process.

The ?Y 2006 Homeland SecuriTy Grant Program Guidallce lUld ApplicatiOn Kit, does not State

the Stllte AdminiSlrative Agency (SAA) is responsible for scoring the Urban Areas Se<:~ity

Initia.live Invcstmcnt Justifications (Us) during the funding approval dcliberations. According to

page 60 ofthe above referenced guidance, "An Investment Justification template will be

provided to the States to facilitate the application submission process. Sta!es and Urban Areas

36~0 SCltRIlVER AVENUR • MATHER, CA 95655

(916)3-45-8506 • (916)845-3511 FAX

Appendix C 

State of California Management Comments on the Draft Report 

The State of California’s Management of Urban Areas Security Initiative Grants
 


Awarded During Fiscal Years 2006 through 2008 
 

Page 54 
 
 

Martin W. O'Neill

December 1,2010

Page 2

will develop lheirown investments.lhe Urban Area investments must be included as part ofthe

overall Stotllllpplication." These malerials were provided to the State by U.S. DlISlFEMA.

To ensure that perfonnance goals are met and achicved for each project identified in the

Fino.ncio.l Management Fonns Workbook, we have updated our Site Visit !"ann to include II

section for documenting progress made in llchieving goals and objectives for each project. The

Site Visit Fornlls referenced in our response to Recommendation #11 IUld provided as

Attachment F. Additionally, the Homeland Security Grants Section (HSGS) is inlhe process of

developing a plan to ensure regular programmatic site visits will occur in the future. The plan

shall allow Branch and Section Chiefs 10 manage visils and tmck completion of all reports.

Increased Invutmcnl'Ovcrsigbl

Establish and apply a meaningful review process designed to disclose lhe value and utility or

proposed equipment and syslclIUI' during the Investment Justification review and the expenditure

plan approval processes.

Cal nMA Response

We concur with this recommendation. As indicated in response MI, we will move forward with

any meaningful review process orthe Investment JustifK:ations as directed by U.S. DHSlFEMA.

Based on the outcome of a working group convened by the former Governor's Office of

Homeland Security (OIlS) and eompri3Cd of a replUCnlative CJ'MS section of our 5ubgmnteu,

wherein the resulting product was the Financial Management Forms Workbook (FMFW)

currently in use today, we believe the FMFW is the appropriate means of authorizing and

approving our subgrantee expenditures. This workbook is the basis of our sUbgrantee

application, request for grdllt modification, equipment inventory, subgl'llntee budget, governing

body approval, and the lluthorized agent verifications. We will consider incorporating into the

FMFW, the kind of performance measures outlined in thc Government Pcrfonnance and Rcsulls

Act liS discussed on page 8 ofthe audit report.

RC«IlIImegd!ltlon IIJ

Devdop and disseminate guidance to California Urban Areos Seeurily Initiatives specifying the

importance of efficient and cost effective use of grant funds to improve first responder

preparedness.

~SatR£VUAv£I'IUE· MATKEIt,CA9j655

(916)14$·1506 • (916)I4H511 FAX

Appendix C 

State of California Management Comments on the Draft Report 

The State of California’s Management of Urban Areas Security Initiative Grants
 


Awarded During Fiscal Years 2006 through 2008 
 

Page 55 
 
 

Martin W. O'Neill

December 1,2010

Page 3

Cal EMA Response

We concur with this recommendation. We will develop and disseminatc guidance to the

California UASIs and all subgrantecs specifying the importancc of cfficient and cost effective

use of grant funds to improve first responder preparedness.

We also conducl miscellaneous grtUlt training workshops throughout the year, including grant

application lind fiscal management. and we will eontinue 10 instNet our subgrantees on the

importnncc ofthOI1OOve. By the end of201 0, we will have conducted approximately 73 training

workshops. (Attachment A) We will also plaec the training materials on our websitc whcre it

will be easily accessible to our subgrantees and will distribute the materials during the December

2010 training workshops. Finally, we will utitil.e the: UASI Quarterly MeetinGs as an additional

rcsouree for disseminating this infonnation.

Ruommendallon #4

In consultation with lhe Urban Areas security Initiative managers, identify process changes 10

ac<:elerllte the grant lIward lIpprovai process to the Urban Areas Seeurity Initiative .ubreeipients.

Cal EMA Rnoons

We ooncur with this recommendation. We are in agreemem with FEMA's Program Guidance

for the FY 2008 Homeland Security Grant Program (HSGP), wherein FEMA strongly

encourages the timely obligation of funds from local units of government to Q(hcr s\lbgrantees. It

should be noted that Cal EMA consistently meets its 45.day (previously 6O.day) timcline of

passing through Homeland Security funds to the locals; however, we shall continue to work

closely with Out stakeholders to accelerate the award process as needed. We willlliso continue

to emphasize the importnnee of expcl"lding funds in a timely f3shion during our llpplielltion

workshops and fiseal managementlraining sessions.

A majority ofthe UASls are currently obligAting funds from loeal governments to other

subgranlees in a timely fllShion. Unfortunlltely, the Slate ofCalifomi a's largest Urban Area,

whieh also receives the Inrgesl UASI allocation, hM regular difficulty in meetinG this criteria.

There is often a 12 - 16 month delay in reeeiving Board of SupelVisors and Mayor's Office

approval to move fOl'Wflrd.

In an attempt to expedile this process, the Los Angeles/Long Beach (LAlLB) UASI has

developed a monthly ''Grant Sial" meetillg wherein decision makers meet on. regular basis to

ensure all funds arc awarded and expended in a timely fashion. While this new focus ofthe

LNLB UASlls geared towards allocating the funds to local projects in a reasonable amount of

time. the LAlLB UASI is still requesting grant elttC1lsions on a regular basi, which prolongs the

federal performance period for ailtbe state', subiflUltCCS.

36SOS<:m.lliVEItA'>'ENUIi·MATHEa.,CA9)6"

(916)""-150(;' (916)"".1'11 P,o,x

Appendix C 

State of California Management Comments on the Draft Report 

The State of California’s Management of Urban Areas Security Initiative Grants
 


Awarded During Fiscal Years 2006 through 2008 
 

Page 56 
 
 

Martin W. O'Neill

December 1, 2010

Page 4

Reson1Dlendatlon US

Establish II timeframe for the Urban Area to make grant funds available to subrecipients for

future Urban Areas Security Initiative grants, cOllsis(ent with the experience of other Califomill

Urbnn Arens Security Initiatives.

Clll EMA Response

We concur with this recommendation. As noted above. a majority of the ClIlifomia UASls

obligtlte funds from local governments tu uther subgrlll1tces in 0 timely fashion. In coordination

with Cal EMA, the VASls shall work together to develop Il reasonable timeframe and to share

"be.~t practices" during Ihe UASI Quanerly Meetings in lUI attempt to strcamline the allocation

approval process (lOrn the local govenmlent entity.

Recommendation U6

Improve the oversight process for assuring Urban Areas Security Initiative compliance with the

timeframes.

Clll EMA Response

We conem with this recommendation. Our program staffshall continue to improve the oversight

process and will Wl:/l'k wilh the UASI managers to ensure all timclint:s IUld deadlines are met by

the UASI jurisdictions. Program staffis in dllily contact with thcir respective subgrantecs, Rnd

this constallt CQnunUIlication between UASI managers and Cal EMA program slaff can ensure

that {imelines arc met or if an extension ofthe timcline is needed.

Sustaining Cllpllbllitle! Withoul}'ederal Funding

Recommendation 1/7

Identify options for futlU"C funding plf\fl for the State's Fusion Centers that would provide for the

COlltinuance ofthe Centers without long-term dependency on federal gra.nt funding.

Cal EMA ReSPOnse

We concur wilh Ihis recommendation. We will identify options available for sllstairuncnt

f\lIIding for Fusion Centers. 'llIe State ofCalifomia, like many states across the nation, is in dire

financial circumstances. Unfonunatcly, unless geneml or othcr funds IHe appropriated by thl:

State Legislature, there is no active contingency plan in place to continue the Fusion Centers

should homeland security ftmding be eliminated. We fully understand that the Homeland

S«:urity grants are not "entitlement" funding; however, we IIlso acknowledge that the state will

most likely be unable to sustain the Fusion Centers in the event funding be eliminated during

fnlllllal federal appropriations. The sharing and dissemination of infonnation is II state and

3650 SCllall!V~R AV~NU~ • M"'TlIER, CA 95655

(916)145·8506' (916)845·R5111'"X

Appendix C 

State of California Management Comments on the Draft Report 

The State of California’s Management of Urban Areas Security Initiative Grants
 


Awarded During Fiscal Years 2006 through 2008 
 

Page 57 
 
 

MlU1in W_O'Neill

I.><:i.:ember 1,2010

PageS

natioMl priority And the establishment of the Fusion Centers was a priority of U.S. DHS/FEMA

as well.

Presently. sustainment costs arc not allowed for Fusion Centers. This issue needs to be

addressed at the nationallcvcl, as the U,S, DHSIFEMA needs to gauge the importoJlce ofthe

Fusion Centers and the Homeland Security program as a wholc. The state's limited re.'IOur~s are

currently strelchcd to the breaking point. SO IlIly assistance from the fedcrellevel would be

greatly appreciated.

R«ommendlllllon #8

Develop options identifying the long-lenn funding requirements for the interoperable public

safely commwticalions systems being initiated 10 include:

• RcalifiK: aneumenls ofstate and local govemment resources available 10 complete IIlld

sustain thele prognms.

• Identification offedcral financial support that may be necessary to complete and operate

these systems, and

• Malting the completion ofthis plan a condition of future grant funds approval for the

programs.

Cal EMA Resooose

We concur with this recommendation. We will work with the UASls to identify otncroptions

available for sustahunent funding. We have also discussed with Urban Areas, who have adopted

comprchcl\lIive pllllllltu replace or signilicanlly upgrade existing public service communication

systems the importance of identifying Ihe long-term funding requirements for the interoper8ble

comrnwtication projects within their respective jurisdiclion. At a minimum, these plans should

include state and lOCal commitments to s\lstain such cosUy and important investments if federal

fUlids were to diminish or not be available.

Our program staff will continue 10 maintain OO)'-to-<la)' contact with the VASI managers to stay

informed on such large-scale projeclll. We have requested milestolle dates be established and

met (as part ofthe original grant award leller), and the UASI is required to submit a milestone

extension request should an)' ofthcir goals not be mel.

We will require the identification oflong-Icnn funding requiremenlll be mel tM:(ore fuillre grants

lire awarded; however, for those systems nol expected to be operationll1 until 2016 this may

result in delayed funding to certainjunsdietions.

Reeommendation I!!

Require the subgrantcc 10 address Iong-lerm sUSlalnabllil)' in their proposals aOO llpplialions ror

grant funding.

36SOSCHaEvtltAVEHUE'MATlIElt,CA9S6SS

(916) &.is-ISQ6 • (916) &.is·as II FAX

Appendix C 

State of California Management Comments on the Draft Report 

The State of California’s Management of Urban Areas Security Initiative Grants
 


Awarded During Fiscal Years 2006 through 2008 
 

Page 58 
 
 

Martin W. O'Neill

[)oc«mber 1,2010

Pagc6

Col EMA Response

We concur with lhls recommendation. We will require subgrantec:s submit, along with Iheir

Financial Managemetlt Form.s Workbook (FMFW), II narrative description outlining Ihar longtenn sustainabilit)' requirements for projecl(S) anticipakd to extend past the federal perfonnance

period ofthat particular gram year. We williiso review lhese plans and ensure lhey are

rc:asonable long-tctm options for the proposed projc:c:l

Monitoring or VASI Redpl,mls

RtrommtndatioD /#10

Commit sufficient resources to establish and implement policies and procedures for annual 00-

site monitoring of Urban Areas Security Initiative grant recipients.

Cal EMA Response

We co'ICur with this recommendation. Despite limited resoUJ'CC5, and the fact that live percent

(5"'.) management and administrative portion ofthc homeland security funding does not allow

us to efficiently administer the federal grant progmms, we have developed Md implemented a

subreceipicnt risk llS:iCSSment program that allows for the liscalllIId administrative monitoring of

all grllIIts during the grant award period through either limited or extended.seope field andIor

desk rcviews. All extendcd scope reviews are predicated upon" reimbursement made to lhe

subrceipicnl. In addition, throughout the year the agency supplements its annual monitoring

plan with a random selection ofsubrecipients to receive limited-scope payment reviews. This

program ensures that we meet subrccipient monitoring requirements for all federal awards.

We have attllehed our agency's FY2010/11 Monitoring Plan (Allaelunent B), QUI' Grants

Monitoring Guide (Attachment C), am.I Chapler 7 ofOur GrMts Manual on Assessing,

Monitoring. and Mitigating Subrcceipient Risk. (AltllChment D)

Uecommendlliion 1#11

Require: thaL the on-site monitoring visits include evaluations oflhe recipients' overall

management ofthe granb, including the progress made toward achIevement of program gOllls.

Cal EMA Re~PQ!\~e

We concur with this recommendation. As noted above, the flve percent (5%) mllllllgt:nx,:nl Wld

adminiiwation allotment makes it difficult for us to efficiently administer the Homeland Security

grants awarded to the State ofCalifornia. Per the Office of MMllgement lind Budget (OMB)

Circular A-133, Part 3·M, states that grantees are responsible for monitoring subgranlce use of

federal awards through reporting, site visiu, regular contact Or other means. As mentioned

arove,lhe agency's on-sile monitoring requirements are one way to meel this requirement.

36S(l SCliRIEVU AVEHUI! • MATllI!Il, CA 9St155

(916)145-8506 • (916)84S-'511 P.uAppendix C 

State of California Management Comments on the Draft Report 

The State of California’s Management of Urban Areas Security Initiative Grants
 


Awarded During Fiscal Years 2006 through 2008 
 

Page 59 
 
 

Martin W. O'Neill

December 1,2010

Page 7

Although the stale's limited resources make on-site visits difficult for program staff, we will

continue to meet the OMD Circular requirement as indicated above by successfully submitting

the Biannual Strategy Implementation Report (BSIR) in the Grants Repor1ing Tool (ORT), as

well as regular contact with OUf subgrl\l'Jtees. Our Homeland Security Grant Seclion staff also

submits a weekly status update to their superviror describing the weekly activities ofthc

subgrantees. (Attachment E)

Ollr Homeland Security GrWlts Section is in the process of developing a plan to ensure rllgular

progmmmatic sitc visits occur. Program staff will conduct sile visits with our subgrantees to

meet, discuss, and doeumcnt progress made lowards achieving progranl objectives and gonls.

We have also updatcd the Site Visit Form to include the following: "For cllch projccl identified

in the Financial Management Forms Workbook, how is your agency achieving the goals and

objectives for this projcct." (Attachment F) We arc implementing an Excel Spreadsheet Site

Visit Schedule, which, as mentioned above, shaH allow agency Branch Chiefs and Section Chiefs

to manage visits and track completion of all reports.

The GrlUlts Rep<.>rting Tool (OR1), FEMA 's on_line reporting system for homeland security

funding, previously tracked subgmntee progress by asking what percentage the subgramee is

completing projects. Por example, had a project rcaehed a twenty percent (20%) completion of

projcct goals, forty percent (40%) completion ofprojcet goals, ete. The possibility of having

FEMA reinstate this Module within the GRT may assist SAA's in detennining whether

subgranlees have achieved specified program goals.

Unreported and Unjustified Sole Source Procurements

Rel;ommemlallon /#12

Develop and provide to all Urban Areas Security Initiatives grant subgrantee managers, within 6

months ofthi! report date, a comprehensive training program on Slate and federal regulations

pertaining to competitive procurements.

Cal EMA Response

We concur with this recommendation. We will issue R Grant Management Memorandum

(GMM) by December 31, 2010, outlining state, and federal regulations regarding competitive

proeurements. The GMM also offers another excellent oppor1unity to specify the importance of

efficient and cost effective usc of grant funds to improve first responder preparedness.

Additionally, we will offer tllis training program during the Biannual Stmtegy Implementlltion

Report (DSIR)/Finll.neial Management Workshops scheduled for December 2010. Finally, we

will include this information on our agency'S website for futurc reference.

3650 SCllRlI!VER AVENU/i • MATl!OR, CA 95655

(916)845·8306' (916)843-8511 FAX

Appendix C 

State of California Management Comments on the Draft Report 

The State of California’s Management of Urban Areas Security Initiative Grants
 


Awarded During Fiscal Years 2006 through 2008 
 

Page 60 
 
 

Martin W. O'Neill

[)e(:cmber I, 2010

PageR

Recommendation Hl3

Prepare, publish and disseminate Il guide dctlliling procurement n:gulutions for FEMA IIwards to

all California municipal and county purehaslng dcpanmcllls that are acquiring equipment or

services with Homeland Security gmnt flUIds.

Cal SMA ResPollse

Wc concur with this recommcndation. The Code of Federal Regulations (CFR) Title 44 §13.36,

provides unifOnll administrative requircmcnlS for grams and cooperative agreements awarded to

state and local govenunents. These regulations dircclll\c slate and local governments 10 use

their own procurement procedures, which rencet applicable state and local laws and regulations,

provided lhe procedwes confOnll at a minimum to applicable federal procurement regulations.

We will provide to lhe UASI managcn.1I.S part oflhe Grants Management Memorandum

mentioned in Rccommcn<lIulon Nllllbove, a guide detailing procurement reeuilltions for FEMA

awards for distribution to their respective municipal or county pun::hasing department.

We will address the subgrantce procurement requirements by requiring subgrantces to complete

and submit. cost benefit analysis with the sole source request form. We have also developed

proccdwes to cnsure the HSGS program representatives review all sole SOt.ll'CC request f'ofrm for

content and completeness. We will also follow-up with subgrantees for additional clarifICation

when needed to ensure adequate justification is provided.

Additionally, we will continue to require the subg.rantec 10 self-cenify that all grant related

purchases were competitive. The Mooitoring Division, during desk reviews and on-site visits,

will review the subreccipicnt procurement procedures to cn~ure they meet the minimum

requirements as set forth in CFR 44.

Recomml,il\l.la!ion #14

Complete a review of all grant fundcd pun::hases exceeding $1 00,000 to identify those made as

solo lIO\lrCO procurements and:

• Vcrify that State approval was obtained, sole source procurement was justified, and lhe price

....'lI:S documented as fair and reasonable,

• DIsallow all procurements that fail to meet these requirements, and

• Freuc all procurements for Urban Area that has granted a waiver from using advertised

procurements until it agrees to adhere to federal grant procurement requirements.

Cal EMA Response

We partially concur with this rcconunendation. Due to the level oftime commitment and staff

hoUl'l needed to handle this recommendation, we life unable 10 complete a review of.lI 8rantfunded purehase.s exceeding SIOO,OOO to identify those made as soie SOt.ll'CC procurements. Cal

3650 SOfIlEVElt AV'£NUf: • MArnEll, CA 956SS

(916) 10-U06 • (916) I4S-I3I 1 1"..0:

Appendix C 

State of California Management Comments on the Draft Report 

The State of California’s Management of Urban Areas Security Initiative Grants
 


Awarded During Fiscal Years 2006 through 2008 
 

Page 61 
 
 

Martin W. O'Neill

December 1,2010

Page 9

EMA divisions and branches arc currently understllffed, and the present stlltewide "hiring freeze"

pr¢v<:nls Ollr agcncy from lidding personnel 10 our IIgeney. We will addrcss the inuc by revising

Qur Requcst fQr Sole Source Pmcuremcnt AuthoriZlllion Form (Attochmenl 0) 10 require II

cosl!bcnefit analysis be attached to the fonn.

Reeommemlallon HIS

For future grtlllt yel:lIS, disallow any procurementllclions lhailire not in compliance Wilh federal

regulll.tiolls.

Cal EMA Rnooosc

We concur with this recommendation. We will revise our Financial Management Fonn,

Workbook (FMFW) reimbursement Jtqucst to include the following, "Old thIs purchase eJ(ceed

$100,000 and did it involve a sole sowce procurement?" Additionally, we will develop II policy

that enables program Itaffto disallow sole lIOI.IlCC requests not pre.approved by Cal EMA. It

shook! be noted that tbc discussion ofSole Source Requests is included in ..Section V:

Procurement" oftile Site Visit Form.

The Monitoring Division will also perfonn a random sampling ofthesc reponed purchllSC$ to

ensure federal procurement guidelines were followed and the costs reimbutse<l W'Cre properly

supponed. Any costs identified by the Monitoring Division and!Qr program staffto be ineligible

will be disallowed.

Internal Controls over Reimbursemeots

Resommembtinn #16

Strengthen internal controls over Urban NeIlS Security Initilltive grant expendit\lTe

reimbursements for example, through reviews of purchase orders, Invoices, and delivery receipts.

Cal BMA RcsPOnsc

We concur with this recommendation. To strengthen intcrnlll controls over grant expenditures,

we Me considering a sampling ofsource documentation prior to reimbursing subgrantecs. A

review and verification of a sampling ofsource doewnentation would provide adequate

tlssurance thai grant expenditures are allowable. allocable, authorized IIIld consistent with federal.

Stale and gltUlt ccquirements.

36.50 5a«EVEAA VDIUI! • MAntER, CA 9S6~~

(916) "'~".506 .(916) "'S-'~ll FAX

Appendix C 

State of California Management Comments on the Draft Report 

The State of California’s Management of Urban Areas Security Initiative Grants
 


Awarded During Fiscal Years 2006 through 2008 
 

Page 62 
 
 

Martin W. O'Neill

December 1,2010

Page 10

Management of Cuh Advances

Rccommsnd!tllon IH7

Establish policies lind procedures to ensure that ellSh advances 10 subgrantees are only provided

based on inuncdillte disbursement requiremenls and that procCdurcslIfe in place to minimize the

lime needed 10 expend these funds.

Cal EMA Response

Please see response 10 Recommendlltioll 11'19 below.

Recommendation #18

Require sub&rantees to return fwxls adVMllCed if not cxpended mthin 120 days orthc adVllDCC

being provided.

Cal EMA RcSDQllK

Plea."c see response to Recommendation 119 below.

RefO'ommendal!on #19

Require subgranteell 10 track accrued interest on eash advances, remit the interest earned in

accordance with requirements to FEMA, lind report the interest earned on the FinlUleial Status

Reports.

Cal EMA Response 19 Recommendation 11'17, #18@ndNI9

We concur with these rccommendations. In April 2010, the Cal SMA Homeland Security Grants

Proce~~ing (HSGP) Branch established the following procedures to ensure that all cflsh advances

follow federal rey;ulalions:

• All subgrantecs are notified via email when Cal EMA approves their cash adv/UlCC

request.

• Subgrantccs are instructed to deposit cash advances into an interest bearing account.

• Cash advances must be expended within 120 days ofreceipt or the advance must be

returned to Cal EMA.

• SubgrlUlteelil must track the interest eamed on the cash advance.

• Any intere:lt in excess 0($100 per year must be remitted at least quarterly (0 Cal EMA.

• Cal EMA will report the interest camed on the quarterly Financial Status Reports and

remit to FEMA.

3650 SOiaEV£~ AvaflJ£ • MAnlEfl.. CA 9S6S5

{911S}14S·&S06· (911S)&U·&5II fAX

Appendix C 

State of California Management Comments on the Draft Report 

The State of California’s Management of Urban Areas Security Initiative Grants
 


Awarded During Fiscal Years 2006 through 2008 
 

Page 63 
 
 

Martin W. O'Neill

December 1,2010

Page II

Whcn a subgrantee requests a cash advance. the amount and date ofthe cash advance is recorded

in a log. A calendar reminder is set for 90 days from that date. At the 90-day reminder date, an

e-mail is forwarded to the program specinlist to contact the subgrantee to confirm that the cash

advance was deposited into an interest bearing account and that the interest is being tracked. The

progmm spechtlist also confinns that the cash advance will be expended prior to the 120-day

time limit or be returned to elll EMA. The subgrantee is responsible for remilling to Cal EMA

any interest earned over $100 per year, This procedure is verified during the site nndior

monitoring process.

On behalf ofCal EMA, and our dedicated team, we thank you and the Department ofHomcland

Security, Office ofInspcctor General, for the review of the Urban Areas Security Initiative grant

funds. Wc look forward to reviewing your final report and continuing our efforts to strive for the

most effective, efficient Ilnd economical operations. If yOll hltve any questions, please feel free

to contnct my Chief ofStalT, Helen Lopez at (916) 323-761 S.

Sincerely,

MATIHEW R.

Secretary

Enclosures

3650 SCIIRmvER AVP.NUR • MATlIER, CA ~56SS

(916) 84~-8S06 • (916) 845-8511 FAX

Appendix C 

State of California Management Comments on the Draft Report 

The State of California’s Management of Urban Areas Security Initiative Grants
 


Awarded During Fiscal Years 2006 through 2008 
 

Page 64 
 
 

Appendix D 

Organization Chart 

The State of California’s Management of Urban Areas Security Initiative Grants
 


Awarded During Fiscal Years 2006 through 2008 
 

Page 65 
 
 

Appendix E 

Report Distribution 

Department of Homeland Security 

Secretary 

Deputy Secretary 

Chief of Staff 

Deputy Chief of Staff 

General Counsel 

Executive Secretariat 

Director, GAO/OIG Liaison Office 

Assistant Secretary for Office of Policy 

Assistant Secretary for Office of Public Affairs 

Assistant Secretary for Office of Legislative Affairs 

Federal Emergency Management Agency 

Administrator 

Assistant Administrator, Grant Programs Directorate 

Federal Emergency Management Agency Audit Liaison 

Grant Programs Directorate Audit Liaison 

Office of Management and Budget 

Chief, Homeland Security Branch 

DHS OIG Budget Examiner 

Congress 

Congressional Oversight and Appropriations Committees, as 

appropriate (Not Draft Report) 

The State of California’s Management of Urban Areas Security Initiative Grants
 


Awarded During Fiscal Years 2006 through 2008 
 

Page 66 
 
ADDITIONAL INFORMATION AND COPIES 

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fax your request to (202) 254-4305, or visit the OIG web site at www.dhs.gov/oig. 

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