Department of Homeland Security
 

Costs Claimed by the Northern Illinois Railroad 


Corporation Under Transit Security 


Grant Number 2009-RA-R1-0098
 

American Recovery and Reinvestment Act of 2009 

OIG-13-37 February 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 

FEB 5 2013 

MEMORANDUM FOR: 	 David J. Kaufman 

Acting Assistant Administrator 

Grant Programs Directorate 

FROM: 

SUBJECT: 	 Costs Claimed by the Northern Illinois Railroad Corporation 

Under Transit Security Grant Number 2009-RA-R1-0098 

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

Illinois Railroad Corporation Under Transit Security Grant Number 2009-RA-R1-0098. 

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. As prescribed by the 

Department of Homeland Security Directive 077-01, Follow-Up and Resolution for Office 

of Inspector General Report Recommendations, within 90 days of the date of this 

memorandum, please provide our office with a written response that includes your 

(1) agreement or disagreement, (2) corrective action plan, and (3) target completion 

date for each recommendation. Also, please include responsible parties and any other 

supporting documentation necessary to inform us about the current status of the 

recommendation. Until your response is received and evaluated, the recommendation 

will be considered open and unresolved. 

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, Director; Matthew Mongin, 

Senior 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 

ThefAmericanfRecoveryfandfReinvestmentfActfoff2009f(Recovery Act), as amended, 

appropriated $150 million to the Federal Emergency Management Agency (FEMA) for 

Public Transportation Security Assistance and Railroad Security Assistance under 

sections 1406 and 1513 of thefImplementingfRecommendationsfoffthef9/11fCommissionf

Actfoff2007, as amended. FEMA focused grants under this program on (1) operational 

packages for canine teams, mobile explosives detection screening teams, and 

antiterrorism teams, and (2) capital projects for activities such as infrastructure 

protection. On July 31, 2009, FEMA awarded a transit security grant of $1,670,988 to 

the Northeast Illinois Railroad Corporation (commonly referred to as METRA) for one 

antiterrorism team.1

 

With grant funds, METRA deployed the antiterrorism team on its trains and in its train 

stations from November 2009 until August 2012. METRA claimed and received FEMA 

reimbursements of $1,428,219 for salaries and benefits of team members, their 

uniforms and protective clothing, and two police vehicles. 

Reimbursement for eligible grant project costs is based on the Department of Homeland 

Security FiscalfYearf2009fRecoveryfActfTransitfSecurityfGrantfProgramfGuidancefandf

ApplicationfKit (GuidancefandfApplicationfKit), the Uniform Administrative Requirements 

for Grants and Cooperative Agreements to State and Local Governments contained in 

the (44 Code of Federal Regulations part 13), and CostfPrinciplesfforfState,fLocalfandf

IndianfTribalfGovernments contained in Office of Management and Budget (OMB) 

Circular A-87, Revised. 

The grant also includes requirements for complying with OMB Circular A-133, Revised, 

AuditsfoffStates,fLocalfGovernments,fandfNon-ProfitfOrganizations, and Recovery Act 

provisions for submitting quarterly recipient reports to the Department of Homeland 

Security on the use of Recovery Act funds; paying prevailing wages as determined by the 

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

The objective of this audit was to determine whether costs claimed by METRA were 

allowable, allocable, and reasonable according to the grant agreement and applicable 

Federal requirements. 

 
 1

 METRA provides commuter rail service to the six counties surrounding Chicago, Illinois. 


www.oig.dhs.gov 2 OIG-13-37
 

 

 OFFICE OF INSPECTOR GENERAL 

 Department of Homeland Security 

Results of Audit 

Of the $1,428,219 claimed for reimbursement, we questioned $113,032 representing 

overclaimed fringe benefits on overtime paid to antiterrorism team members. The 

GuidancefandfApplicationfKit limits fringe benefits on overtime as discussed below. 

Also, we determined that METRA properly prepared and submitted the required 

quarterly reports to the Federal Government. 

Overclaimed Fringe Benefits

The GuidancefandfApplicationfKit states that “Fringe benefits on overtime hours are 

limited to FICA [Federal Insurance Contributions Act], Workers Compensation and 

Unemployment Compensation.” Together, these total from 10 to 15 percent of base 

labor wages for the years of the grant. However, in these years METRA applied its 

approved fringe benefit rate of about 70 percent of base labor to both regular wages 

and overtime.2 The 70 percent rate includes employer contributions for such items as 

pension plans; health insurance; and vacation pay, holiday pay, and sick leave, in 

addition to fringe benefits allowed for overtime. Based on the difference between the 

allowable fringe benefits and the 70 percent rate benefits, we estimated that METRA 

overclaimed fringe benefits by approximately $113,032. 

Recommendation

We recommend that the Assistant Administrator, Grant Programs Directorate: 

1. Resolve the $113,032 of questioned fringe benefit costs. 

Management Comments and OIG Analysis

Management Comments

FEMA concurs with the recommendation. FEMA will initiate appropriate processes to 

recoup $113,032 in expended fringe benefit costs. In addition, within 90 days of receipt 

of the Office of Inspector General’s final report, FEMA will work with the Northeast 

2

 The Federal Transit Administration of the U.S. Department of Transportation approved indirect cost 

rates for METRA for fiscal years 2009, 2010, 2011, and 2012. The approved fringe benefit rates were 

approximately 70 percent of base labor wages with a minor variation for those periods. 

www.oig.dhs.gov 3 OIG-13-37 
 

 

 OFFICE OF INSPECTOR GENERAL 

 Department of Homeland Security 

Illinois Railroad Corporation to create a corrective action plan following established 

guidelines to ensure future adherence to cost guidelines. 

OIG Analysis

FEMA’s actions are responsive to the recommendation. However, the recommendation 

will remain open and unresolved until final implementation of the corrective actions. 

www.oig.dhs.gov 4 OIG-13-37 
 

 OFFICE OF INSPECTOR GENERAL 

 Department of Homeland Security 

Appendix A 

Objectives, 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 METRA were 

allowable, allocable, and reasonable according to the grant and applicable Federal 

regulations. To accomplish our objective, we examined costs of $1,428,219 claimed by 

METRA from November 2009 to April 2012. In conducting our audit, we did the 

following: 

•	 Obtained and reviewed the Recovery Act, the grant application and award, the 

GuidancefandfApplicationfKit, and Federal cost principles and grant administrative 

requirements. 

•	 Interviewed METRA personnel to gain an understanding of their accounting system 

and the applicable internal controls. 

•	 Reviewed the fiscal year 2010 Single Audit report to identify issues and other 

conditions that could affect our examination. 

•	 Reviewed the recipient’s internal controls specifically related to our objectives. 

•	 Examined payroll records, vendor invoices, and other evidence supporting costs 

claimed of $1,428,219. 

•	 Reviewed contract files and supporting documentation for the vendors selected to 

provide uniforms, protective clothing, and police vehicles. 

•	 Reviewed accounting transactions related to wages, overtime and fringe benefit 

payments, and related claims for FEMA reimbursements. 

•	 Performed fraud detection procedures. 

www.oig.dhs.gov 5 	 OIG-13-37 
 

 

 OFFICE OF INSPECTOR GENERAL 

 Department of Homeland Security 

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 conclusion based upon our audit objective. We believe that the evidence 

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

audit objective. 

www.oig.dhs.gov 6 OIG-13-37 
 OFFICE OF INSPECTOR GENERAL 

 Department of Homeland Security 

Appendix B 

Management Comments to the Draft Letter Report 

I·.S. neputm~'flt of !li,melun;! ~cc!lri!~ 

'Iv:d,i"l'W11_ 1)('20,172 

\Il.EMORANDt.!\l FOR: /\.n'lC L. Richards 

Assistant In;;.pec:or General for AmLts 

Office of !nspeewr Gencrf!l 

FROM: David J. K,Ltfrnan I("~' /\ssociate Adninistra or !<:Jr 

Poli,:)', Program /\nal\'sl.'. ind :ntemationa' Affaits 

SUBJECT: JZcsponsc to OIG Dm/i !?I..'pm,/' R<'1'/ew oleos!s ('!afmed br !he 

'VOJ'lhCflYf Illinois i?oiIr(}(u/ Corporation [Inrier r"'wlsil Seenril)' Ciran! 

,\'umber ]()O,:)RAR j(j(j()S 

The Federa! Emcrgcncyl'Vlat1<lgemcnt Agcncy (FE\,fA) appreciates. the opportunity to le,'lC-W and 

respond w the Departmen1 of Homeland Security (Dl-IS) Olliee of Inspedor (jenera! (OlG) Draft 

Report: Review olCosts ('!aimed hy the North,'u)'! f!IillOis Rarlruud C'OIporalioll ljnd('r Transir 

Seeuri!y Gron! ,vumber 20()9-RA-l(J~()098, ,As noted in otlr response to your recommendation 

bdow, FE!v1A is continuing to work to resolve (he issu.::s idc:1tifi.cd in the audit and \\/c arc putting in 

place u process to ,,"oid similar problems in the finure. 

01G Recommendation: We reco;]lmcnd 6,,\t til;: Assistant Administrator. Grant Prognuns 

Dircc\OrHlt', re:.;oivc the q1.k''>'.ioncd fring(' benefit c>:)sts ofS: ! 3,032 

FEMA Response~ FEMA C()neurs \vith the 01(1';> recommendation. FFMA win initime <lpprorwintt~ 

processes to recoup 5113,032 .in unallow'Ib,(> costsln additi(!l], wi6in 90 days of :·eceipt 

of the 0IG'So final rC[)()lt, \vil! \ymk 'Altll the NonlKTlst Winois Railroad Curporation 

to create a c()rre':ti~/(; llction p!an tnllmvi:1g established gltideiint'B to i;.'lJ.sure future 

cdhclcncctc U.Ht guidditH~:;. 

LMA requests tl:i:~ rcccmrn;;:m.ll1tion be considered rc,;olv-;:,j ,md ope') pending dSVl",op'"n,,"l 

rnrlC11\~n,ittio'l o( tb.: corrt:ctive action ",;'11) :';sllnln!.al (.\ll\\C)\c:(iujJ ;:)Gtc ; 

your "':PiFt. dn not hcsiu;te tc ~>mtaU /\ lUll Liilison om :c 

l'ikKr:';:fi ejl 202Ai46·j 3)fLwitj; (i'JY qx.;sdm> u.mcen;\ rcgardinf! response, 

www.oig.dhs.gov 7 OIG-13-37 
 

 

 OFFICE OF INSPECTOR GENERAL 

 Department of Homeland Security 

Appendix C 

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

Overclaimed fringe benefits 1 $113,032 $113,032 

Total $113,032 $113,032 

www.oig.dhs.gov 8 OIG-13-37 
 

 

 

 

 OFFICE OF INSPECTOR GENERAL 

 Department of Homeland Security 

Appendix D 

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

Administrator 

Audit Liaison 

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-13-37 
 

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