Department of Homeland Security



Costs Claimed by Metropolitan Transportation 
 

Authority of New York Under 
 

Transit Security Grants
 


American Recovery and Reinvestment Act of 2009 

OIG-13-83 April 2013
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

	 

	 

	 

OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Federal Emergency Management Agency 

Anne L. Richards 

Assistant Inspector General for Audits 

Washington, DC 20528 / www.oig.dhs.gov 

APR 29 2013 

MEMORANDUM FOR:	 David J. Kaufman 

Acting Assistant Administrator 

Grant Programs Directorate 

FROM: 

SUBJECT:	 Costs Claimed by Metropolitan Transportation Authority of 

New York Under Transit Security Grants 

Attached for your information is our final letter report, Costs Claimed by Metropolitan 

Transportation Authority of New York Under Transit Security Grants. We incorporated 

the formal comments from the Associate Administrator for Policy, Program Analysis and 

International Affairs in the report. 

The report contains one recommendation to resolve the questioned costs. The 

Associate Administrator concurred with the recommendation. Based on information 

provided in your response to the draft report, we consider the recommendation 

resolved and closed. 

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

copies of our report to congressional committees with oversight and appropriation 

responsibility over the Department of Homeland Security. We will post the report on 

our website for public dissemination. 

Major contributors to this report are Roger LaRouche, Audit Director; Karl Gallagher, 

Audit Manager; Jerome Fiely, Auditor; and Stephen Doran, Report Referencer. 

Please call me with any questions, or your staff may contact John E. McCoy II, Deputy 

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

Attachment 
 

	 

	 

 

 

 OFFICE OF INSPECTOR GENERAL 

 Department of Homeland Security 

Background 

The AmericanfRecoveryfandfReinvestmentfActfoff2009, as amended (Recovery Act), 

appropriated $610 million to the Federal Emergency Management Agency (FEMA). Of 

that amount, the Recovery Act allocated $150 million for Public Transportation Security 

Assistance and Railroad Security Assistance (Transit Grants) under sections 1406 and 

1513 of the ImplementingfRecommendationsfoffthef9/11fCommissionfActfoff2007, as 

amended (hereinafter referred to as Transit Security Grants). 

In 2009, FEMA awarded two Transit Security Grants to the Metropolitan Transportation 

Authority of New York (Authority): 

•	 Grant No. 2009-RA-R1-0103 for $11,813,686 for installation of perimeter protection 

at railroad stations. As of June 30, 2012, the Authority had claimed project costs 

totaling $6,755,539 for the period from September 1, 2009, through June 30, 2012. 

•	 Grant No. 2009-RA-R1-0100 for $35,904,000 to enhance the Nation’s transit 

infrastructure. The Authority subgranted the funds to the New York City Police 

Department (NYPD) to finance antiterrorist teams. As of June 30, 2012, the 

Authority had claimed project costs totaling $17,787,925 for the period from 

August 1, 2009, through June 30, 2012. 

Reimbursement for eligible project costs is based on the grant agreement; Office of 

Management and Budget (OMB) Circular A-87, Revised, CostfPrinciplesfforfState,fLocalf

andfIndianfTribalfGovernments; and FEMA guidance.1

 The FEMA grant agreement also 

requires the Authority to comply with Recovery Act provisions to submit quarterly 

recipient reports to the Federal Government; pay prevailing wages as determined by the 

Secretary of Labor; and use American-made iron, steel, and manufactured goods. 

The objective of this audit was to determine whether costs claimed by the Authority 

were allowable, allocable, and reasonable according to the funding agreement and 

applicable Federal requirements. 

1

 FEMA guidance for the Transit Security Grants is contained in the Department of Homeland Security’s 

AmericanfRecoveryfandfReinvestmentfActfoff2009, TransitfSecurityfGrantfProgram, Guidancefandf

ApplicationfKit, May 2009. 

www.oig.dhs.gov 2	
 OIG-13-83 
 

 

 


 

 OFFICE OF INSPECTOR GENERAL 

 Department of Homeland Security 

Results of Audit 

We determined that costs of $6,755,539 claimed under Grant No. 2009-RA-R1-0103 

were allowable, allocable, and reasonable. The majority of the claimed costs consisted 

of construction costs for the installation of perimeter protection. Under Grant No. 

2009-RA-R1-0100, we questioned $6,284,342 of the total grant costs of $17,787,925. 

The questioned costs are payroll charges for recruits that NYPD hired to replace 

experienced officers who would be transferred to the antiterrorist teams. The approved 

grant budget included funds only to pay the antiterrorist teams. We also determined 

that the Authority fulfilled the requirements for submitting quarterly reports, paying 

prevailing wages, and complying with the requirement for buying goods manufactured 

in America. Furthermore, we obtained and reviewed the April 1–June 30, 2011, 

quarterly report and noted that it contained adequately supported jobs data. 

Questionable Costs – $6,284,342 

The Authority claimed NYPD payroll costs totaling $17,787,925, which included 

$11,503,583 for antiterrorism teams and $6,284,342 for trainees. The trainees’ salary 

costs covered the 6-month period while they were at the training academy ($4,332,510) 

and a subsequent 3-month period when they were assigned to transit security before 

the antiterrorism teams were deployed in the New York Transit System ($1,951,832). 

According to NYPD officials, this backfill method was preferred because it avoided 

placing less experienced officers on the antiterrorism teams. However, the grant 

agreement did not include funds for training replacement officers.2

 The approved 

project provided funding for the straight-time salaries and fringe benefits of the officers 

assigned to the antiterrorism teams of $34,812,960 for a 36-month period, and support 

costs of $1,091,040. As a result, we questioned the salary costs of the replacement 

officers totaling $6,284,342 because the activity was not covered by the grant agreement. 

Recommendation 

We recommend that FEMA’s grant officer resolve the $6,284,342 of questioned grant 

costs. 

2

 The conditions of the approved grant agreement incorporate the grantee’s Application Kit and approved 

project budget. 

www.oig.dhs.gov 3 OIG-13-83 
 

 


 

 OFFICE OF INSPECTOR GENERAL 

 Department of Homeland Security 

Potential Monetary Benefits 

Classification of Monetary Benefits 

Finding Rec. No. 

Funds To Be 

Put to 

Better Use 

Questioned 

Costs – 

Unsupported 

Costs 

Questioned 

Costs – 

Other 

Total 

Questioned Salary Costs 1 $6,284,342 $6,284,342 

Total $6,284,342 $6,284,342 

Source: OIG. 

Management Comments and OIG Analysis 

Management Comments: FEMA concurs with the recommendation. FEMA stated that 

to resolve the questioned costs of $6,284,342 for new-hire salaries, NYPD supplied a 

revised Operational Proposal to delineate the costs for new-hire salaries. On September 

12, 2012, FEMA approved this amended Operational Proposal and decided to allow the 

reimbursement of costs for new-hire salaries. 

OIG Analysis: We consider FEMA’s actions responsive to the recommendation and 

consider the recommendation resolved and closed. 

www.oig.dhs.gov 4 OIG-13-83



 

 OFFICE OF INSPECTOR GENERAL 

 Department of Homeland Security 

Appendix A 

Objective, Scope, and Methodology 

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

established by the HomelandfSecurityfActfoff2002 (Public Law 107-296) by amendment 

to the InspectorfGeneralfActfoff1978. 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 objective of this audit was to determine whether costs claimed by the Authority 

were allowable, allocable, and reasonable according to the funding agreement and 

applicable Federal requirements. Our audit covered claimed costs of $24,543,464 for 

the reported period September 1, 2009, through June 30, 2012. 

The audit methodology included reviewing FEMA project files, original grant contract 

and modifications, the Recovery Act, and relevant FEMA and OMB guidelines; 

interviewing FEMA and Authority officials; examining the Authority accounting records 

supporting amounts claimed, and reviewing NYPD payroll and accounting procedures. 

Also, we reviewed the audit working papers of Deloitte and Touche LLP, the auditing 

firm that performed the Single Audit of the Authority for the fiscal year ending 

December 31, 2011, as well as the Single Audit working papers for the City of New York, 

as it relates to the NYPD subgrant, for the fiscal years ending June 30, 2010, and June 30, 

2011. We also tested the Authority records supporting costs claimed to determine 

compliance with OMB Circular A-87, Revised, and with other terms and conditions of the 

agreement. We considered the Authority’s internal controls over the administration of 

FEMA funds as well as the internal control work performed by the Single Audit in 

determining our audit procedures. 

We conducted this performance audit between June and September 2012, pursuant to 

the InspectorfGeneralfActfoff1978, as amended, and according to generally accepted 

government auditing standards. Those standards require that we plan and perform the 

audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our 

finding and conclusions based on our audit objectives. We believe that the evidence 

obtained provides a reasonable basis for our finding and conclusion based upon our 

audit objectives. 

Our audit was conducted without the benefit of a technical evaluation by FEMA; 

therefore, our conclusion is qualified to the extent that a technical evaluation may affect 

the allowability of claimed costs. 

www.oig.dhs.gov 5 OIG-13-83 
 

 

t..s. I)~partment HI' Ilflmda~d SetUI1(Y 

Wa:,hilll1\OIl. IK21)i72 

MEMORA.NDIJM FOR: Anne L. Richards 

Assistant Inspector General for Audits 

Office oflnspectnr (Jeneral 

FROM, David J. Kaufman :IC', 

Associate Administrator tor 

Policy, Program Analysis and international Affairs 

SUBJECT: Response to OIG Dt8.ft Report: COSIS Clairned by 

Metropolitan Transit Arlfhoriiy afNelv l'rlrk under 

Transit Secu.p"ity Grants Funded by the Recovery .'lei 

(iob code 12-146-AUD-FEMA) 

The Federal Emergency Management Agency (FEMA) apprec-iates the opportunity to review and 

respond to the Department of Homeland Security (DHS) Oflke ofTnspecrOf General (010) DrafT 

Report, (~()SrS Claimed by Jlelropoiiran Yhm'iif Authoril}' O{.VC1V YO/'I{ under n'm1sit Security Gran!s 

FlImir!d hy the RecoveryAc{ As noted in our response to your recommendation beJo'\v, FE'vlA has 

been working to resolve the issues idclltiftcd in this audit. 

Recommendation: Wc recommend that FEMA's grant officer resolve the $6284.342 of questioned 

costs 

FEMA Response: FEMA cone-tors 'Nith OIC;"s recommendation. To resolve the question Dfth", 

$(:284,342 costs (If ilcw~hire saIzries, the NY?V ~uppj;cc it revised Opccatiolwl Pw!)osal (erKlosed) 

wn:ch d':JT'Y deiineah~s thc')sc costs h:lt ,,{'W bin: salaries, lhe f'\;-\vTitc new stHt:s th2ot: 

;;lx·montaNes. Y Ol'kP{}lic2 

; ;cc.,"n,,'," },;)l::,~e AC'Jd:.'my bureau_ 

%'nJ." rcim1:mrscrnCT\1: 

tlJSCbCTS'. 

{)n '~f:;'I:~~~:::nf~':I; 120 2FTJvL,\ approved thi;; ;)rm~nded OW'I',1'''''', ]>mpo:,,,-:,1, and decided ;,;l!fhY 

tiF: n uf cost:; Fiji _ce\\' hin' ~Alw.i;;:s ;;;; Pag,,- 24 of FI' 2009 .ilnu:,! lum 

(,,~,",'(Jd " aNd Ap/'1!icaii'!?! i</t, which 

OFFICE OF INSPECTOR GENERAL 

 Department of Homeland Security 

Appendix B 

Management Comments 

www.oig.dhs.gov 6 OIG-13-83 
 

"1. Operatior:.al Packages. Three OPacks have been developed to support 

operational activities. These OPacks arc available Cor h.mding to eligible 

transit systems listed in Table 2. Certain law ent"iJrccment agencies are also 

eligible as subrecipients of eligible tTimsit systems. 'fransit systems that meet 

the eligibility requirements can apply for funding to support one or morc or 

the three available OPacks through the hiring of new officers. DHS considers 

OPacks to be effective tactics for supporting the FY 2009 funding priorities of 

the ARR/\. TSGP .. · 

FEMA believes that these actions meet the intent of the recommendation and requests that the 

recommendation be considered resolved and closed. Again, we thank you for the opportunity to 

review and comment on the recommendation conceming your 11nal report. Please do not hesitate 10 

contact our Audit Liaison OHice point of contact. Gary McKeon at 202~646~1308 with any questions 

or concerns regarding our response, 

1 Enclosure 

As slated 

OFFICE OF INSPECTOR GENERAL 

 Department of Homeland Security 

www.oig.dhs.gov 7 OIG-13-83 
 

A"H:r i(~; m Recovery nnd Reinvestment Act of 2009 

Trllnsif Sccllril,Y Grant r"rog .. arn 

NYII)) OI'£'}'(IIional P/'('iposais 

L nder this gum!, whi( h is a lhrcC' I)) year pro"rmn. the N \:' jJD seeks $35.904.000 to establish and opcrDte 

twenty six (26 ) Anti -Terrorism Tellm" in the:"' YC TI ,,n~it Sub\vay system ~ we ll as (J11 NYC Transit' us~s . ... 

,"'loll:. While {hi:} program/unds Operallfllfl'll ami 0'11' /10/ J.WofI!ClS. tllis SII" JnWI) \"I!!"\"I!$ ol1ly Jo ilddr i!SS rhe 

ATPDs Operationu} proposal. 

One oflhe urP(}~" nfthe Ame ric.m Recovery and Reinvestment Aet <0 1' 2009 (ARRA) is the cre<.ltion ofj()bs. 

Funding 3\'3ilabl e in the Transit Sccurily Gram ProgruOl unde r {he ARRA. will accomplish :.illS ami a[ lhe sam!! 

lime allow Ihe TSOP \{I continue HlCllsi ng on rhe liSt': o f \'isi b1c, un diclabl~ deterrence through thc '.lSC of 

Operation Package.s (OPlIch): I.:::.minr:: Ic::uns. rnobilE' explosive dc(cction :,;cr-ccning Icmns. and Anti-Te rro rism 

Teams. 

-me NYPD's Opcf"a tionall)ro)'yJ:iul support·s the purposes of the ARRA as fo llows: 

The NYPD would hire 104 additional p()lice officers te b:: a:;signcd to the Traasit Bun;au upon 

l~um lc iun or Academy train t!lB s nd hmelw nnentMion 

The gnllll would fWld newly hin::u ollk<.:r costs of luil six-month NYPD Police: Academy T raining, and 

;it 90-day oriciltation pe riod in the hilt Cat,;, including reimbursement of straight-time sui cry and fringe 

costs of the 104 nc\\'ly hired member!-! 

• Upon assignment of these new oriiccrs to operating: d istricts (post training and ori Ht ati(}li) 104 

experienced officer,. from thMe dis!rkl~ w f)\1 1d IhI~ l je deployed to twenty six (26) newly established 

--Ami-TcrmrisJl1 TCam s" withil-, :'l1c NYPD's Trlm:'lit Hurcau 011 il fuI! bne basi!!. Thi!' backfill method is 

prcfclred since it avoid.:; plal.:ing new. k~£ expt:=ri(!llccd OnkeN illtO the "n ti -T~ rn ri g,m Te<lms, 

• The grant would then fund llw tOlal Pelsl)l1l1d Scr vir.;c cosL'i of the memhers of the fully constituted 

Anti-Terrorism Teams (cxperiem:.:-..:I, rea:o>sigl1 cd oflkcrs), :'or the remaining period,.at cos:s c~ imaled :0 

be S5&,85 1.564. nlC grant would fund 534,812,960 Of lhi5 amounL 

• &ch Anti·Tcn:onsm team wou:d cunsist {)ffotlr un iformed members ofthc ?olicc Department di vided 

inlu , .... '0 ekments: ()VC" and coven. 

• E<1ch :-nember of the Anti-Terrorism Tc.a:n WI)uld reC'::ivc th~ appropriatt: training, I.e. Plajl1¢lothell, 

Bd-,[w{{:r:1l l;rlicalor. iU";d SurvciUal1ce !J(:t;::;.:tion training Com~e .swdcs will be prillleri :it an e1llcnded 

':'.)Si ufSI.OI6. 

FVI1(iing in the anmunl uJ" $1,090.024 'W(}lJd hl~ IJ:\cd i() purchase ecpipmcm ~JJr ~ildl memi;IL't of all 26 

l:eams, At :l C('c;t of :j;4! .924 per 1'I~ .. ml. dw ~quip!1lcnt w(tu!c in<:iu{k- Ix;uvy fl mS,k~ vests, t.ac1.icai 

hdmcL , [" dj ;;:alllQbtl.~r~. C(w(..~rt ~lolhi!1g, and slIfv.;;:,il!ancc cqu pl )l\~nr 

reams: ,yoll;,;l b,~ assigm:d to the NYC Tmnsit Uh 1~Y ."i :y:>kw d:-; 'Ad! i:b (HI NYC Tram:f Bilse,,," s("'Tvlng 

:.igh-vokme, I1Uill tlnrouV)J-ihn."s :~tyw dc_ 

 

OFFICE OF INSPECTOR GENERAL 

 Department of Homeland Security 

www.oig.dhs.gov 8 OIG-13-83 
 OFFICE OF INSPECTOR GENERAL 

 Department of Homeland Security 

Appendix C 

Report Distribution 

Department of Homeland Security 

Secretary 

Deputy Secretary 

Chief of Staff 

Deputy Chief of Staff 

General Counsel 

Executive Secretary 

Director, GAO/OIG Liaison Office 

Assistant Secretary for Office of Policy 

Assistant Secretary for Office of Public Affairs 

Assistant Secretary for Office of Legislative Affairs 

Departmental Recovery Act Coordinator 

Acting Chief Privacy Officer 

Federal Emergency Management Agency 

Branch Chief, Transportation Infrastructure Security 

Chief, Audit Branch, Grants Program Directorate 

Office of Management and Budget 

Chief, Homeland Security Branch 

DHS OIG Budget Examiner 

Congress 

Congressional Oversight and Appropriations Committees, as appropriate 

www.oig.dhs.gov 9 OIG-13-83 
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For additional information, visit our website at: www.oig.dhs.gov, or follow us on Twitter 

at: @dhsoig. 

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