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TOP MANAGEMENT CHALLENGES: 

GRANT MANAGEMENT AT 

THE U.S. DEPARTMENT OF JUSTICE 

HEARING 

BEFORE THE

SUBCOMMITTEE ON CRIME, TERRORISM, 

HOMELAND SECURITY, AND INVESTIGATIONS 

OF THE

COMMITTEE ON THE JUDICIARY 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED THIRTEENTH CONGRESS 

SECOND SESSION 

JANUARY 28, 2014 

Serial No. 113–64 

Printed for the use of the Committee on the Judiciary 

( 

Available via the World Wide Web: http://judiciary.house.gov 
(II) 

COMMITTEE ON THE JUDICIARY 

BOB GOODLATTE, Virginia, Chairman 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

HOWARD COBLE, North Carolina 

LAMAR SMITH, Texas 

STEVE CHABOT, Ohio 

SPENCER BACHUS, Alabama 

DARRELL E. ISSA, California 

J. RANDY FORBES, Virginia 

STEVE KING, Iowa 

TRENT FRANKS, Arizona 

LOUIE GOHMERT, Texas 

JIM JORDAN, Ohio 

TED POE, Texas 

JASON CHAFFETZ, Utah 

TOM MARINO, Pennsylvania 

TREY GOWDY, South Carolina 

RAU ́ L LABRADOR, Idaho 

BLAKE FARENTHOLD, Texas 

GEORGE HOLDING, North Carolina 

DOUG COLLINS, Georgia 

RON DeSANTIS, Florida 

JASON T. SMITH, Missouri 

[Vacant] 

JOHN CONYERS, JR., Michigan 

JERROLD NADLER, New York 

ROBERT C. ‘‘BOBBY’’ SCOTT, Virginia 

ZOE LOFGREN, California 

SHEILA JACKSON LEE, Texas 

STEVE COHEN, Tennessee 

HENRY C. ‘‘HANK’’ JOHNSON, JR., 

Georgia 

PEDRO R. PIERLUISI, Puerto Rico 

JUDY CHU, California 

TED DEUTCH, Florida 

LUIS V. GUTIERREZ, Illinois 

KAREN BASS, California 

CEDRIC RICHMOND, Louisiana 

SUZAN DelBENE, Washington 

JOE GARCIA, Florida 

HAKEEM JEFFRIES, New York 

DAVID N. CICILLINE, Rhode Island 

SHELLEY HUSBAND, Chief of Staff & General Counsel 

PERRY APELBAUM, Minority Staff Director & Chief Counsel 

SUBCOMMITTEE ON CRIME, TERRORISM, HOMELAND SECURITY, AND INVESTIGATIONS

F. JAMES SENSENBRENNER, JR., Wisconsin, Chairman 

LOUIE GOHMERT, Texas, Vice-Chairman 

HOWARD COBLE, North Carolina 

SPENCER BACHUS, Alabama 

J. RANDY FORBES, Virginia 

TRENT FRANKS, Arizona 

JASON CHAFFETZ, Utah 

TREY GOWDY, South Carolina 

RAU ́ L LABRADOR, Idaho 

ROBERT C. ‘‘BOBBY’’ SCOTT, Virginia 

PEDRO R. PIERLUISI, Puerto Rico 

JUDY CHU, California 

LUIS V. GUTIERREZ, Illinois 

KAREN BASS, California 

CEDRIC RICHMOND, Louisiana 

CAROLINE LYNCH, Chief Counsel 
(III) 

C O N T E N T S 

JANUARY 28, 2014 

Page 

OPENING STATEMENTS 

The Honorable F. James Sensenbrenner, Jr., a Representative in Congress 

from the State of Wisconsin, and Chairman, Subcommittee on Crime, Terrorism, Homeland Security, and Investigations ................................................ 1 

The Honorable Robert C. ‘‘Bobby’’ Scott, a Representative in Congress from 

the State of Virginia, and Ranking Member, Subcommittee on Crime, Terrorism, Homeland Security, and Investigations ................................................ 3 

The Honorable Bob Goodlatte, a Representative in Congress from the State 

of Virginia, and Chairman, Committee on the Judiciary ................................. 4 

WITNESS 

The Honorable Michael E. Horowitz, Inspector General, U.S. Department 

of Justice 

Oral Testimony ..................................................................................................... 6 

Prepared Statement ............................................................................................. 8 

(1) 

TOP MANAGEMENT CHALLENGES: 

GRANT MANAGEMENT AT 

THE U.S. DEPARTMENT OF JUSTICE 

TUESDAY, JANUARY 28, 2014 

HOUSE OF REPRESENTATIVES

SUBCOMMITTEE ON CRIME, TERRORISM, HOMELAND SECURITY, AND INVESTIGATIONS

COMMITTEE ON THE JUDICIARY

Washington, DC. 

The Subcommittee met, pursuant to call, at 10 a.m., in room 

2141, Rayburn Office Building, the Honorable F. James Sensenbrenner, Jr. (Chairman of the Subcommittee) presiding. 

Present: Representatives Sensenbrenner, Goodlatte, Gohmert, 

Coble, Scott, and Richmond. 

Staff present: (Majority) Allison Halataei, Parliamentarian and 

General Counsel; Sarah Allen, Counsel; and (Minority) Ron Le 

Grand, Counsel. 

Mr. SENSENBRENNER. The Subcommittee will come to order. 

Without objection, the Chair is authorized to declare recesses of 

the Subcommittee at any time. 

Last year, the Subcommittee held a hearing on waste, duplicative spending and inefficient operations at the Department of Justice. At that hearing, we questioned why the Department had spent 

$165 million on a prison in Illinois despite opposition from Members of this Committee and the House Appropriations Committee, 

a prison which remains largely empty. 

We also questioned the Department’s exorbitant conference-re- lated expenses, including $600,000 for event planners. 

Unfortunately, these are only two examples of the Department’s 

inability to act as a responsible steward of taxpayer dollars. 

Today’s hearing continues the Subcommittee’s focus on wasteful 

and unnecessary spending at the Department by focusing on one 

important aspect of the problem, how the Department manages its 

grant programs. Since 1998, the Justice Department’s Inspector 

General has compiled an annual list of the top management and 

performance challenges facing the Department every year since 

1999. The issue of grant management has been included. The IG’s 

most recent list, released in December 2013, is no different. This 

means that for over a decade the Department has recognized that 

the effective grant oversight is a major challenge and, despite that, 
2 

has been unable to resolve the problems repeatedly outlined by the 

IG. 

We are honored to have Inspector General Horowitz here today 

to help us understand why an issue as important as grant oversight remains a challenge for the Department. From Fiscal Years 

2009 to 2013, the Department awarded approximately $17 billion 

of grant funding to state, local, and non-governmental recipients. 

In Fiscal Year 2014 alone, the Department’s three grant-making offices received $2.2 billion in funding, which is a $32 million increase over 2013 levels. 

No doubt, the large number of grant programs created by Congress and administered by the Department only exacerbates this 

problem. The Justice Department administers over 200 grant programs and other forms of direct Federal assistance through three 

separate offices: the Office of Justice Programs, OJP; the Office of 

Violence Against Women, OVW; and the COPS Office. As the IG 

and the Government Accountability Office have noted, there is a 

significant amount of overlap between these offices and their many 

grant programs. Most of these grants are used to support important law enforcement needs across the country, including assistance to states to develop more robust sex offender registry systems, 

improve the recidivism and rehabilitation of convicted felons, and 

address the crisis of the mentally ill in our criminal justice systems. 

These programs are all laudable and worthwhile. However, in 

light of the current economic environment in which our Nation 

faces a national debt of $17 trillion, it is critical that Congress and 

the Department closely scrutinize how every dollar is spent. 

A number of developments over the past year have given me 

great concern about how the Department is managing grant programs. For example, the Office on Violence Against Women recently announced that for its current grant solicitation period, only 

previous grant recipients will be allowed to apply for certain competitive grants, and some of these programs will not actually be 

competitive. This is in direct conflict of Congress’ intent when it 

created competitive grants, not to mention the Department’s stated 

commitment to promoting new and innovative programs. This sort 

of special treatment for those grantees already on the Department’s 

‘‘preferred list’’ also opens these programs up to potential corruption and malfeasance. 

I look forward to hearing Mr. Horowitz’s view on this and whether his office is looking into these changes. 

I am also greatly concerned by recent changes to the Public Safety Officer’s Benefit Program which provides a $330,000 lump sum 

payment to survivors of fallen law enforcement officers, fire fighters and other first responders, and disability benefits to officers 

catastrophically injured in the line of duty. 

Through the history of PSOB, the OJP General Counsel has always been required to review each case to ascertain whether the 

claimant is legally entitled to benefits. However, last summer the 

Department announced it would stop requiring the General Counsel’s Office to individually review all approvals or denials of PSOB 

claims. I sent a letter to the Department on June 4 of last year 

asking for clarification on these changes, including whether every 
3 

payment would continue to receive individual legal concurrence 

under the new system, and I have yet to receive a response. 

It is my understanding that the IG’s office is currently reviewing 

the PSOB program, and I look forward to hearing his views on this 

change. 

Finally, I hope to hear Mr. Horowitz’s suggestions for ways that 

the Department and Congress, if necessary, can help streamline 

the bureaucratic operations at the Justice Department. It goes 

without saying that every dollar that is wasted in Washington due 

to unnecessary waste and duplication of resources is a dollar that 

could be better spent in the field or returned to taxpayers. 

It is now my pleasure to recognize for his opening statement the 

gentleman from Virginia, Mr. Scott, the Ranking Member of the 

Subcommittee. 

Mr. SCOTT. Thank you, Mr. Chairman, and I welcome this hearing and discussion about spending at the Department of Justice 

and ways of ensuring that taxpayer dollars are being spent in a 

manner that is both efficient and effective. 

Each of us on this panel, regardless of party, is committed to 

eliminating wasteful spending and unnecessary duplication or overlapping funding. In the last 13 years, the Department of Justice Office of the Inspector General has issued its memorandum entitled, 

‘‘Top Management Challenges.’’ In 12 of those memos, grant management has consistently been cited as one of those challenges. The 

2013 memo cites protecting taxpayer funds from mismanagement 

and abuse as a challenge and addresses the risks for mismanagement of taxpayer funds that are distributed to grant recipients and 

contractors. 

Last year alone, the Department’s three major grant-awarding agencies mentioned by the Chairman awarded over $2.2 billion in 

grants to state, local, and tribal private organizations to conduct 

research, law enforcement activities, provide training and technical 

assistance, and implement criminal justice-related programs. To 

put it another way, the grants awarded by these three major grantmaking agencies within the Department constitute a very significant part of the budget of the Department of Justice. 

The distribution of such large sums of taxpayer dollars necessitates constant scrutiny in order to identify areas of waste, fraud 

and abuse, and unnecessary duplication. Then we have to take corrective action. It is only through such oversight that the Department of Justice will be assured that funds awarded to grantees are 

being managed appropriately and in compliance with established 

guidelines. 

That oversight reveals significant issues pertaining to grantees, 

one of which was Big Brothers Big Sisters had a significant portion 

of their grant questioned. But upon learning of these issues and 

while the audit was ongoing, it is my understanding that Big 

Brothers Big Sisters retained compliance counsel and a forensic accounting firm to begin bringing them back into accord with the 

grant requirements, and it has since submitted a corrective action 

plan to continue working with the Department of Justice to resolve 

the recommendations on questioned costs. 

We cannot turn a blind eye to the fact that despite these issues, 

Big Brothers Big Sisters actually exceeded their grant program 
4 

goals by engaging 16,000 at-risk and tribal youth in their mentoring program, significantly more than was their original goal. 

Since the goals were achieved, we need to consider the taxpayer 

dollars saved. If Big Brothers Big Sisters targets their money and 

prevents 10,000 children from potentially going to jail, we could 

save hundreds of millions of dollars in terms of avoided incarceration costs. 

If the program just saves 10 percent of the 16,000 newly- mentored youth from prison, that would save $50 million a year in 

incarceration costs. Remember, we are only talking about $20 million in expenditures. 

So as we consider the possible impropriety of millions of dollars 

as currently and technically unallowed, we also need to measure 

the grants in terms of goals achieved and long-term savings that 

result. So let’s include that as part of the discussion, the benefits 

of prevention that result from an organization such as Big Brothers 

Big Sisters using the money effectively and saving money. 

I am pleased to have the Department of Justice’s Inspector General here to shed light on these issues and look forward to see what 

progress has been made, and I hope that he will also recommend 

what Congress can do to help. 

So, thank you, Mr. Chairman. I look forward to his testimony. 

Mr. SENSENBRENNER. Thank you. 

The gentleman from Virginia, Mr. Goodlatte, the Chairman of 

the full Committee, is recognized for an opening statement. 

Mr. GOODLATTE. Thank you, Chairman Sensenbrenner. I am 

pleased to take part in this hearing on oversight of the Justice Department grant programs. The Judiciary Committee plays an important role in examining how the Department spends taxpayer 

dollars, and this hearing is part of those efforts. 

Starting in 1999, the Office of the Inspector General has included 

grant management in its annual list of the Department’s top management challenges. In 2013, grant management was again included in this list under ‘‘Protecting Taxpayer Funds from Mismanagement and Misuse.’’ The continued listing of grant management as a top management challenge reflects the size, scope, complexity, and associated risks of mismanagement of the numerous 

grant programs administered by the Department. 

A review of recent IG audits and reports reveals some of the 

challenges facing grant administrators at the Department. These 

include the identification and management of high-risk grantees, 

the implementation of appropriate training and testing methods for 

grantees, the establishment of procedures to verify information provided on grant applications, and improving coordination and thereby reducing duplication among the Department’s many grant programs. 

In a recent and particularly noteworthy matter, the Inspector 

General audit last year questioned more than $19 million of the 

$23 million in youth mentoring grants awarded to Big Brothers Big 

Sisters of America, and suggested that the remaining $4 million of 

unused funds should be put to better use. The Justice Department 

announced in response to this audit that it would freeze funds to 

Big Brothers Big Sisters, but I am concerned that a short-term 

freeze does not address the underlying problem. This is particularly 
5 

true given that just weeks later, the IG issued a second report 

questioning another grantee’s use of almost $1 million in youth 

mentoring grant money. 

I am greatly concerned that the problems with these grantees, 

and many others, went unnoticed by the Department for years, despite periodic audit reviews and oversight. I look forward to hearing today whether these IG reports are indicative of systemic 

issues within OJP’s grant management procedures and what Congress can do to help solve the problem. 

America continues to face difficult fiscal times. Law enforcement 

agencies are not immune from this. There is little doubt that the 

financial support the Federal Government provides to state and 

local law enforcement agencies through Byrne JAG and other 

grants is oftentimes critical. As with many other aspects of government, these grant programs are not always designed or administered as efficiently as they should be, which means that less money 

is actually spent to help the boots on the ground. 

I am committed to finding ways to streamline these programs to 

minimize waste to ensure that they run as efficiently as possible 

and with less of an administrative burden on law enforcement 

agencies. I look forward to hearing from the Inspector General on 

ways in which we can address these challenges while maintaining 

an efficient process to provide needed support to law enforcement 

agencies around the country. 

Thank you, Mr. Chairman. I yield back. 

Mr. SENSENBRENNER. Thank you very much. 

Without objection, all Members’ opening statements will be 

placed in the record at this point. 

Let me now introduce the Inspector General, Michael E. Horowitz. He was sworn in as the fourth confirmed Inspector General 

on April 16, 2012. In this capacity, he oversees a nationwide workforce of approximately 450 special agents, auditors, inspectors, attorneys and support staff whose mission is to detect and deter 

waste, fraud, abuse and misconduct in DOJ programs and personnel, and to promote efficiency in Department of Operations. 

Mr. Horowitz most recently worked as a partner at Cadwalader, 

Wickersham and Taft, LLP, where he focused his practice on whitecollar defense, internal investigations and regulatory compliance. 

He has also served as a commissioner on the U.S. Sentencing Commission, where he was instrumental in rewriting the guidelines for 

corporate compliance programs, and for fraud, anti-trust, intellectual property, and money laundering offenses. 

He previously worked for the DOJ in the Criminal Division of 

main Justice from 1999 to 2002, first as Deputy Assistant AG and 

then as Chief of Staff. Prior to joining the Criminal Division, he 

was an Assistant U.S. Attorney for the Southern District of New 

York from 1991 to 1999, and from 1997 to 1999 he was the Chief 

of the Public Corruption Unit; then from 1995 to 1997, Deputy 

Chief of the Criminal Division. 

He received a Bachelor of Arts degree from Brandeis and received his law degree from Harvard Law School. 

Without objection, your written statement will be entered into 

the record in its entirety, and I ask that you summarize your testi-
6 

mony within 5 minutes or less. I do have a canned script about red, 

yellow and green lights. I think you know all about them. 

So, Mr. Horowitz, proceed. 

TESTIMONY OF THE HONORABLE MICHAEL E. HOROWITZ, 

INSPECTOR GENERAL, U.S. DEPARTMENT OF JUSTICE 

Mr. HOROWITZ. Thank you, Mr. Chairman, Chairman Goodlatte, 

Ranking Member Scott, Members of the Subcommittee. Thank you 

for inviting me to testify today. 

Grant management is one of the top management challenges facing the Department of Justice. Over the past 5 fiscal years, my office has issued more than 200 grant-related audit reports making 

about 1,000 recommendations and nearly $100 million in dollar-related findings. During that same period we opened 109 grant-related investigations that resulted in 12 criminal convictions and 

over $1.6 million in recoveries. 

As noted in our recent Top Management Challenges report, the 

Department has reported taking important steps toward making 

improvements in its grant-management process, which are highlighted in my written statement. The Department needs to continue to aggressively identify high-risk grantees and place appropriate restrictions on their funds or halt their funding altogether. 

The Department’s grant-making components also must ensure 

that their own operations are streamlined to ensure maximum 

value for the taxpayer. Reports by both my office and the GAO 

have found that savings could be realized by reducing duplication 

and improving coordination among the Department’s three grantmaking components. 

Further, the Department should ensure that grantees have the 

capability to use grant funds in an effective manner, seek to improve data reporting by grantees so that the Department can 

evaluate a grant’s effectiveness, and enhance coordination between 

its grant-making components and those DOJ components whose operations could be affected by the grants. 

Our recent audit highlighting grants to local law enforcement to 

support the use of drones demonstrated the need for such efforts 

in each of these areas. 

While audits and investigations are vital to our oversight of 

grant management, the OIG has taken other substantial steps to 

help prevent and deter misconduct in this area. For example, we 

have conducted training sessions for grant managers and recipients 

regarding fraud prevention and deterrence. We published a report 

summarizing the ideas and best practices derived from the OIG’s 

experiences in grant oversight, and we examined the Department’s 

own efforts to monitor and oversee grants through the Office of 

Justice Programs, which we found had significantly improved. 

Additionally, I chair the Grant Fraud Committee of the Financial 

Fraud Enforcement Task Force. The committee played a key role 

in developing grant fraud training for special agents and auditors 

across the inspector general community. 

The committee also provided comments to the Office of Management and Budget on drafts of its proposed grant circular, which 

was issued this past December. One important and positive change 

in the new grant circular is the requirement mandating that grant-
7 

ees disclose to the awarding agency or pass-through entity any violations of Federal criminal law involving fraud, bribery, or gratuities. 

Finally, a recurring concern in the inspector general community 

is the lack of visibility absent in OIG audit or investigation as to 

how grant funds are used by recipients. While existing grant management processes involve detailed pre-award review, and grantees 

are required to maintain detailed accounting records regarding 

their use of grant funds, the financial reports they file with the 

grant-making agencies do not include details on individual transactions that would provide transparency. 

Two audit reports we recently issued illustrate this point. Earlier 

this month, we issued an audit report on $800,000 in grants awarded to the Philadelphia Safety Net. We questioned nearly $480,000 

of the awarded funds as being unallowable, unsupported or unreasonably spent, including $276,000 related to the executive director’s 

salary. Last year we issued an audit report questioning more than 

$19 million awarded to Big Brothers Big Sisters of America. That 

recipient was in material non-compliance with the majority of the 

grant requirements and its management practices were inadequate 

to safeguard grant funds. 

Had my office not conducted these two audits, this misuse of 

grant funds likely would never have come to light because the reports they submitted to the Department did not, on their face, reveal the improper uses of grant funds that we later uncovered. This 

is an area where greater transparency is a necessity. 

The OIG will continue its efforts to prevent and detect the misuse of Department grant funds, and we appreciate the support of 

this Committee for our work. 

Thank you, and I would be pleased to answer any questions the 

Committee may have. 

[The prepared statement of Mr. Horowitz follows:] 
8 

OlIice of the Inspector General 

United States Derartment of Justice 

Statement of Michael E. Horowitz 

Inspector General, U.S. Department of Justice 

before lile 

u.s. House of Representatives 

Committee on the Judicial)' 

Subcommittee on Crime, Terrorism, 

Homeland Security, and Investigations 

conceming 

The Department of Justice's Management of Grant Programs 

.January 28, 2014 
9 

Mr. Chairman, Congressman Scott, and Members of the Subcommittee; 

Thank you for inviting me to testi.(v al today's hearing. The Office of the 

l.nspeCtor General (O[GI has long considered grant management 10 be olle of 

the top management challenges facing the Department of Justice lDOJ or 

Department) in light of the amount of ta-:payer funds that it distributes to third 

partics. For example, ovcr the prior 5 fiscal years, the Department has 

awarded approximately S 17 blllion in grants to thousands of governmental and 

non-governmental recipien ts. During th is same time period, the ora issued 

more than 200 grant·related audit reports containing about 1,000 

recommendations and nearly $100 million of "dollar-related" findings, which 

have induded both qu estioned costs and funds that we found could have been 

put to better use. In addition. from Fiscal Year (FY) 2009 through FY 20 13. the 

OIG opened 109 grant-relntcd investigations that. resulted in 12 convictions, 

and S 1,620,608.84 in recoveries. The Department and its grant-making 

components generally have been supportive of and resp~msive to the 

recommendations we have made, although corrective actions are nOl yet 

complete with respect to about 360 of these recommendations. We will 

continue to monitor the Department's progress toward implementing these 

recommendations. 

As noted in our most rccent Top Managemcnt Challcnges report, which 

was released in December, the Department has reported taking important 

steps toward improving management of its grant making effort. For example, 

the AssociateAtiorney General's Office established a Grants Management 

Challenges Workgroup responsible for developing consistent practices and 

procedures in a wide variety uf grant administration ami management 

areas. [n 2012, the Depaltment issued policy and procedures developed by the 

workgroup to implement the Department-wide high -risk grantee designation 

program, which allows the Department to place adciitionai restrictions un the 

usc of funds it pHlVides to grantees who 8re deemed financially unstable or 

haye failed to confonn to the tenns and conditions of previous awards. 

In assessing the top management and performance challenges, we also 

reported that the Department should continue aggressively identifying highrisk grantees and placing appropriate restrictions on their funds, or halting 

their funding altogether. Other tools availa.ble to mitigate risk include robust 

suhrecipient monitoring systems fo r pass-through grant recipients; adequate 

accounting procedures in place for grantees to track use of Department funds; 

case-specific special conditions for grantees Ihat have difficulty complying with 

Department grant requirements; suspension or dCbanJlcnt of grantees in 

appropriate cases to prevent them from recc.iving additional federal grant 

funds; and using laws designed to deter smaller-dollar fraud, such as the 

Program Fraud Cil/il Remedies Aer, which can be used for false claims where the 

alleged liability is less than $150,000. [n light of the significan t doUar amounts 

distributed through grants each year and the large number of grant recipients, 
10 

we believe the Department should actively employ each of these strategies to 

ensure that its gran t-making effort!> are as efficient and effective as possible. 

The Departmeni's gran t-making compom:nts also must ensure their (}wu 

operations are streamlined to ensure maximum value for the taxpayer. Recent 

reports by botJl the OIG and the Government Accountability Office (GAO) have 

found that improvements cou.ld be realized by reducing duplication and 

improving coordination among the Department's three gran t-making 

(;omponents, the Office of Community Oriented Policing Services (COPS), the 

Office on Violence Against Women (OVW), and the Office of Justice Programs 

(OJ Pl . The Depar1Jllent should continue its efforts to consolidate the common 

function of these three grant-making components. For example, both lhe DIG 

and the GAO have noted that COPS continues to maintain a gran ts 

management system thaI OJP and OVW cannot access dire(;tly. We agree with 

the GAO's conclusion thaI each of the grant-making components needs direct 

access to a common grant management system so that they can fully and 

immediately share information regarding grant recipients. We note Ihat the 

Department recently compleled an inll:.mal assessment regarding the extent of 

ol'erlap in grant progTa.rns, which we are closely reviewing. 

Further, the Department should ensure that entities awarded grants 

have the capability 10 use the funds in an effective man ncr, seek to improve thc 

accuracy and sufficiency of data reported by grant recipients tn enable the 

Department to evaluate the effectiveness of a grant, and enhance coordination 

between its grant-making components, grant award recipients, and DOJ 

components whose operations could be affected by a grant. A report we 

recently issued on the Department's use and support of unmanned aircraft 

systems {VAS), commonly known as ' drones,' demonstrates the need for these 

efforts. Specifically, neither OJP nor COPS required that VAS award recipients 

demonstrate that they could receive Federal Aviation Administration WAA) 

approval to operate UAS or that VAS use was legal in their jurisdiction. In 

addition, they did not require award recipients \0 report specific data necessary 

to measure the success ofUAS testing, or to use or share the results of their 

programs with DOJ. We noted in that report examples of grants to two loeB! 

law enforcement agencies in 2007, one for $150,000 was for the sole pu rpose of 

purchasing a VAS 10 test how local law enforcement agencies could use UAS to 

address high-risk situ&tions in heavily populated areas, and the ot.her award 

for anti-methamphetamine initiatives spent $150,000 on UAS-related costs. 

Although the first grant recipient received approval from the FAA to operate 

within a testing environment, the other grant recipient never received any type 

of FAA approval. As of 2013, neither law enforcement agency had used their 

VAS successfu lly in operations. Moreover, although UAS supported by DOJ 

award funds have the potential to be deployed in ways that rnay overlap or 

in terfere with ongoing DOJ law enforcement operations. we found no eviden~ 

that either OJ? or COPS coordinated with or notified DOJ law enforcement 

2 
11 

components about their UAS awards. either before or after the awards were 

made. 

While our grant-related audits and investigations that uncover waste. 

fraud. and misconduct are vital to aUf oversight of grant management, the OIG 

also has made substantial efforts to help pre'l'ent and deter such conduct. For 

example, during the past 5 years, we have conducted 76 tra.ining sessions for 

about 6,000 grant managers and recipients regarding the prevention and 

deterrence of fraud. In 2009, we published a report titled lmprollillg the Gmllt 

MatlogcmclU Process summarizing ideas and best practices derived from the 

OIG's experience in grant oversight. In 20 11, we issued a report examining the 

Department's efforts for monitoring and overseeing grants through OJP. We 

found that OJP had made significant improvements in its monitoring and 

oversight of grants, 

Adtliti9nally, the OIG participates actively in broader efforts to improl,t 

grant management and reduce fraud across the federal government. I chair 

the Grant Fraud Committee of the Financial Fraud Enforcement Task Force, 

which consists ofa diverse coalition from across the OIG commu nity that 

works to improve investigation and prosecution of grant-fraud matters. The 

Committee has playcd a key role in developing grant-fraud training for special 

agents and auditors, and in 2012 we released.a framework for grant-fraud 

training that included suggested infomlation souJ'(:elS, training content. and 

test questions for grant managers. The framework has broad application 10 a 

variety of grant programs and can be tailored to the particular needs of each 

agency's grant-making processes. 

During the pasl2 years, Graut F'raud Commiltce members also worked 

closely with members ora Council of Inspectors General on Integrity and 

Efficiency (CIGIE) working group to review and comment on new grant 

guidance from the Office of Management and Budget. (OM B). This guidance, 

issued in December 2013, significantly rrJomls federal grant management and 

consolidates eight regulations into a single policy guide. While we are 

concerned that the new gu idance raises the expenditure threshold triggering an 

audit under the Single Audit Act, one important and positive change in the view 

of the Grant Fraud Committee is a new require.ment mandating that grant 

recipients disclose to the a,warding agency or pass-through entity any violations 

of federal criminal law involving fraud, bribery, or graluity prohibitions. This 

rule, modeled on the successful 2008 mandatory disclosure rule In the Federal 

AcquiSition Regulation, strengthens oversight by requiring both grantees and 

grant-making entities to be more aggressive regarding the prevention of fraud 

and misuse. 

In considering the new guidance from OMB overhau ling the gran ts 

process, one recurring theme has been a topic of discussion within the 

oversight community: by default, t.here is virtually no visibility on how grant 

3 
12 

funds are actually used by recipients. Unless there is an OIG audit or 

investigation, or the granting agency dedicates resources to collect and analyze 

accounting information from a recipient, the governmenl and ta"payers are 

virtually in the dark regarding how grant funds were actually used. Existing 

grant managemem processes involve detailed pre-award review by grantmaking agencies of budget line items provided by grant applicants. However, 

afte r the grant is awarded, recipients typic.'llly draw down grant funds as 

neeOed and file financial reports on aggregate expenditures. Although grantees 

are. required to main tain and keep in their possession detailed accounting 

records regarding t.he use of all grant funds, the financial reports they file with 

the grant-making agencieR. do not include details on individual transactions. 

Consequently, the government cannot evaluate based on these reports how a 

recipient actuall).' used the grant funds. 

Two recently issued audit reports illustrate the government's lack of realtime knt;lwledge regarding recipients' use of grant funds. Earlier this month my 

office issued an audit report all $800,000 in grams awarded to the Philadelphia 

Safety Net to support a gun exchange program. We questioned nearly 

$500,000 of the awarded funds as being unallowable, unsupp011.ed, or 

unreasonably spent. This included about $276,000 in grant funds related to 

the Executive Director's salary. We also issued an audit report last year that 

questioned more than $19 million in grant funds that the Depru.1.ment awarded 

to Big Brothers Big Sisters of America from FY 2009 through FV 2011 to fund 

mentoring services. That Rocil>ient was in material non·compliance with the 

majority of grant requirements and its management practices were inadequate 

to safeguard grant funds. However, had my office not conducted audits of 

these two organizations, the misuse of grant funds likely would never have 

come lO light because the reports that were submitted to the Department's 

grant-making agency, on thc!r face , did lJot reveal any of the improper uses of 

the g1"8.nt funds that we uncovered. 

The OlG intends to continue its efforts to deler and identify misuse of 

Department grant funds through our audits, investigations, and other 

preventative methods. ihis concludes my prepared statement, and I would be 

pleased to answer any questions that you may have. 

, 
13 

Mr. SENSENBRENNER. Thank you very much. 

I recognize myself for 5 minutes. 

Mr. Horowitz, I am very concerned about the change in policy by 

the Justice Department relative to public safety officers’ benefits 

programs. Obviously, somebody who is killed or disabled in the line 

of duty should be given benefits. I think everybody around here 

supports that, and everybody around here following 9/11 has supported an expansion of those programs. 

But there is a change in how applications have been processed, 

and instead of an independent legal review, which is what people 

who apply for Social Security Disability end up having, there is 

kind of a blanket program that the DOJ has done. I sent a letter 

over 6 months ago to the DOJ asking for answers to some questions. They have not responded. 

Are you looking into this, and can you tell me how far you have 

gotten and if you have made any at least tentative conclusions? 

Mr. HOROWITZ. We are looking into it, Mr. Chairman. We have 

had an audit ongoing of the PSOB when this change occurred, and 

so this change has now become part of our review as well, and we 

hope in the coming months we will be finalizing and issuing our 

report. I do not have any preliminary conclusions to provide the 

Committee at this point, but I will certainly keep the Committee 

updated as we finalize our review. 

Mr. SENSENBRENNER. Now, the second question I would like to 

ask you is we have heard instances from you and from Members 

of this Committee and others that people who have been nicked for 

misusing government grant programs seem to be able to go back 

to the government trough without any type of penalty. 

Have you looked into this, and have you any recommendations 

on whether we should raise the bar a little bit or raise the bar so 

high that they can not get any more government grants or have a 

moratorium, some kind of penalty for people who have been found 

misusing the government grants so that they can not keep on doing 

business as usual? 

Mr. HOROWITZ. I think there are a couple of things that are important to do in that regard. One is we are trying to make greater 

efforts to use the suspension and debarment tools that we have 

been given by the Congress. But I think one of the things that both 

the agencies need to do and IGs need to do is share information 

more effectively across agencies and across IGs, and that is perhaps one area where some ability needs to be given to the IGs, for 

example, in order to share data about grant recipients so that 

when we make a finding in our agency, that a grant recipient is 

not able to go to other agencies and not have them be aware of 

what we have done. 

Mr. SENSENBRENNER. Finally, relative to the Office of Violence 

Against Women, I have always been a big supporter of the competitive grant program. When I was the Chair of the Science Committee, then Ranking Member George Brown and I really imposed 

competitive grants on the scientific agencies that help finance basic 

research. The Office of Violence Against Women, Congress created 

competitive grants, and the DOJ has been kind of going back on 

that. They said that new organizations that had not received competitive grants really can not apply for, I think, up to six of the pro-
14 

grams, which I think stifles innovation and new ways to deal with 

this problem. 

What have you been able to find on that, and what can we do 

as a Congress to continue to urge the competitive grant program 

to stay in place? 

Mr. HOROWITZ. We are aware of that change and we are looking 

at that change for the reasons you indicate. There is an importance 

to making sure that grant giving is like contract giving, considered 

competitively, considered for a variety of reasons, done fairly, and 

that is something we are looking at. Again, I do not have anything 

immediately to report to the Committee, but I will certainly keep 

you and the Committee updated. 

Mr. SENSENBRENNER. Thank you very much. 

I yield back. 

The gentleman from Virginia, Mr. Scott. 

Mr. SCOTT. Thank you, Mr. Chairman. 

Mr. Horowitz, you mentioned drones. What was the problem 

there? 

Mr. HOROWITZ. Well, among many issues that we found in the 

grant area, we identified two grants the Department had given to 

local law enforcement agencies, each for $150,000. The grant recipients did as they were expected to when they bought the drones, so 

there was no misuse of funds. But what we found was 6 years 

later, the drones had not been used. So our concern was that the 

Department never followed up, never determined whether the use 

of the money was, in fact, effective. 

Mr. SCOTT. So what should happen to those grant funds? 

Mr. HOROWITZ. Well, in situations like that, the Department 

should not in the first instance be awarding grant funds to recipients who can not put them to good use. But it should certainly 

learn from its mistakes and go forward and understand what 

grants can be effective, what grants perhaps are not effective. 

Mr. SCOTT. Is there any evaluation of the programs for effect, 

whether or not the programs, say a mentoring program, actually 

addresses the problem it is seeking to solve? 

Mr. HOROWITZ. From my experience in the 20 months I have 

been here, I have seen inconsistent efforts at that, and generally 

when it is done it is at a higher level, not at a more detailed level, 

to determine whether there is truly a good return on investment. 

Mr. SCOTT. Well, you know that there are some prevention programs that can save three, four, five, even ten times the money 

spent. Other prevention programs do not work. Do you evaluate 

which is which? 

Mr. HOROWITZ. When we do audits, what we do is go to the 

grant-making agency to see what data they have. So if they have 

collected the data, we can review that. We do not go out in our audits generally to the grant recipient and try to drill down on their 

documentation because in that instance we are primarily looking at 

the financial issues when we get to the grant. 

Mr. SCOTT. Do you audit whether or not they are targeting the 

most at-risk potential clients? 

Mr. HOROWITZ. We look, again, to what the Department has done 

in our audit and whether they have done what we think they 
15 

should do, and then we report on, if the Department has failed to 

do it, where we think they have failed to do that. 

Mr. SCOTT. Do you calculate the cost savings generated by the 

program? 

Mr. HOROWITZ. Again, we do not undertake to calculate the cost 

savings. We are not getting that kind of data and getting that information primarily because the Department grant-making agency 

generally is not getting that kind of data. 

Mr. SCOTT. Should there be a requirement that we do significant 

evaluations of programs to see if they are effective and see if they 

are saving money? 

Mr. HOROWITZ. I personally think that is of value and importance, that when the government or, frankly, any organization 

gives out money, it understands not just was the money spent pursuant to rules but what was the value obtained, received from the 

program. 

Mr. SCOTT. And where should that take place? How do we ensure 

that happens? 

Mr. HOROWITZ. Well, I think it has to occur at the grant-making 

agency or, if there is a component involved, say, at the Department 

of Justice, the component should be undertaking that effort. 

Mr. SCOTT. Now, with Big Brothers Big Sisters, are you aware 

that there was a private independent audit done over the years 

that found no difficulties? 

Mr. HOROWITZ. I am aware of that. 

Mr. SCOTT. Is there any suggestion that money was stolen? 

Mr. HOROWITZ. I do not believe we reported on anything like 

that. 

Mr. SCOTT. And you are aware that they are fixing whatever 

problems there are? 

Mr. HOROWITZ. They are in the remediation process is our understanding, and we will be doing a follow-up review. 

Mr. SCOTT. Okay, thank you. 

I yield back. 

Mr. SENSENBRENNER. The gentleman from Virginia, Mr. Goodlatte. 

Mr. GOODLATTE. Thank you, Mr. Chairman. 

Mr. Horowitz, welcome. We are glad to have you back. We value 

your work. 

Mr. HOROWITZ. Happy to be here. 

Mr. GOODLATTE. Approximately what percentage of grant audits 

each year involve some finding that grant funds were used for unallowable expenses? 

Mr. HOROWITZ. I do not know off the top of my head in terms 

of the numbers, but just anecdotally from my 20 months on the job, 

many of the grants that we issue have some findings associated 

with them either with non-compliance of a serious nature or not 

keeping the records as required, which may or may not be serious. 

Mr. GOODLATTE. My understanding is your office puts out dozens 

of audits each year in which the Department is entirely unaware 

that a grantee is misspending money, sometimes for years until 

your office discovers it. What else needs to be done by these various 

Department of Justice agencies to identify the problem sooner, and 

what additional review can Congress mandate to deal with this? 
16 

Mr. HOROWITZ. I think a very important part of this is transparency around the expenditures that are going on with grantmaking agencies, and we are not talking about additional burdens 

on the grant recipient because they are already required to keep 

those kinds of records internally. 

The reports to the Department—and I think if you had my colleagues up here in the IG community they would be saying the 

same thing for their agencies. Have the same kind of reporting that 

they are doing internally, not adding burdens to them because it 

is already being done, have that information going to the agencies, 

and I think consider whether it should be public on websites such 

as USSpending.gov. 

Mr. GOODLATTE. And it is also my understanding that the Department of Justice does not always automatically cut off existing 

or future funding to grantees like they did freeze those funds for 

Big Brothers and Big Sisters, which is, of course, a very important 

organization and we welcome their good work. But that seems to 

be because it was highlighted an exception rather than a rule. I 

think most of our constituents would be surprised that an entity 

can be subject to a negative Inspector General’s report and still be 

eligible for more taxpayer money. 

Can you speak to that? How do we address that problem? 

Mr. HOROWITZ. That is a significant concern again across the IG 

community. I think I can speak for my other Inspector General colleagues in this, which is the importance of making sure that, first 

of all, as we do, we put out our reports transparently, but also as 

we are doing our work, as agencies are learning of problems within 

their own grants, that other agencies also become aware of the 

issue so that there is the awareness of problems across the Federal 

Government, not just within, say, the Department of Justice. 

Mr. GOODLATTE. This problem has been on the Department of 

Justice’s list of management challenges for at least a dozen years, 

and it implies to me that the Department has not been taking the 

issue very seriously. What steps does the Department need to take 

to get this challenge under control so the issue can come off the 

list? 

Mr. HOROWITZ. Well, I think there are a number of issues. One 

is if those reports could go—the grant agencies, the grant recipients are keeping about their individual expenditures would come to 

the Department, that would help immeasurably with oversight by 

the agency. The Justice Department and the Office of Justice Programs has made important steps, and Congress authorized in 2005 

the Office of Audit Assessment and Management that has made a 

number of improvements that have occurred within the Office of 

Justice Programs. 

Having more rigorous oversight within the grant-making agency 

itself, were they obviously to do these audits, to do the independent 

reviews, but the agencies themselves need to police the grant recipients to make sure they are using the money wisely and, as Congressman Scott indicated, doing a better job evaluating what is the 

taxpayer benefit for the funds being given out so that they know 

going forward what is the best use of the money, particularly as 

the limits are coming now. 
17 

Mr. GOODLATTE. Let me get in one more question before my time 

expires to follow up on that. Have you made those recommendations to the Department in the past? And if so, how have they reacted to those recommendations? 

Mr. HOROWITZ. We have made certainly some of those, usually 

in the context of the individual grants. The Department has generally been responsive to our requests, but larger changes such as 

having information about individual expenditures going to the Department, that really cuts across. It is not just a Justice Department issue. So I think that is a bigger change that the IG community needs to think about, Congress needs to think about, and I 

think that is an important issue to consider. It is not just an OJP 

or an OVW or a COPS issue. 

Mr. GOODLATTE. Thank you very much. 

Thank you, Mr. Chairman. 

Mr. SENSENBRENNER. The gentleman’s time has expired. 

The gentleman from Louisiana. 

Mr. RICHMOND. Thank you, Mr. Chairman. 

I guess I will start where Congressman Scott left off, and that 

is we do not do a return-on-investment, a cost/benefit analysis of 

grant performance at the end? 

Mr. HOROWITZ. There is a very high-level, in some instances, 

evaluation of that, but not what I think you probably have in mind. 

Mr. RICHMOND. So that does not happen in the beginning? I 

would assume it happens in the awarding process to make sure 

that we are giving them out to, at least on paper, the most effective 

and efficient of the applicants. 

Mr. HOROWITZ. Right. In the pre-award processes, we have generally found very rigorous. 

Mr. RICHMOND. But we do not have a back-end process, or you 

are not sure of that? 

Mr. HOROWITZ. We do not have what I would consider a rigorous 

back-end process. There is a general review of the performance 

metrics that have come in, but nothing much beyond that, beyond 

what the grant recipient sends in. 

Mr. RICHMOND. Now, if we had that performance metric on the 

back end, would you suggest that that should come from an independent office, or should it come from within the Justice Department to see if those metrics were met satisfactorily? 

Mr. HOROWITZ. I think probably every department is going to be 

different here. Given the Department gives out a lot of small-dollar 

grants, it probably is something that should be done within the 

grant-making agency itself, subject to our independent oversight, 

GAO’s independent oversight at this point. Institutions with bigdollar grants, perhaps it is a different story. But the Department 

gives out so many grants, it is probably hard to have it done entirely outside and independently. 

Mr. RICHMOND. And I guess if my information is correct, it says 

that grant management has been a challenge, an articulated challenge within the Department for at least the last 12 years. 

Mr. HOROWITZ. Correct. 

Mr. RICHMOND. How do we get it off there? It is easy to give 

those recommendations and say that the agency is following them. 

What are they not doing? Why can not we get this off of center? 
18 

I just do not understand why, if it is a focus, we can not get past 

this being one of our top 10 management challenges. 

Mr. HOROWITZ. Well, again, the recent examples we have on the 

drone report, the example I cited there, the Big Brothers Big Sisters of America, the Philadelphia Safety Net, a couple of others 

that I have referenced, you still see the problems where given the 

high-level reporting that comes back, for example, it is simply not 

possible for the grant-making agencies, without our audits, to know 

in detail how the money is being spent, and that is a primary problem. 

A secondary problem is—we have commented on this before and 

I think it needs to be done—merging back-office operations of the 

three grant-making agencies at the Justice Department. There are 

three grant-making agencies that were statutorily created by Congress, but that does not mean that they need different systems or 

different operations. 

Two examples. COPS has a different financial management reporting system than does OVW and OJP, which have one together. 

We do not see a reason why there would need to be two different 

systems. They have three different financial guides for grant recipients. So if you are a grant recipient from the Justice Department 

from the three agencies, you have three different guides to follow. 

Mr. RICHMOND. Now, you mentioned Congress played a part in 

that, at least setting up making sure that it is three different—— 

Mr. HOROWITZ. Correct. And, in fact, within OJP, they have 

seven sub-entities that give out grants. 

Mr. RICHMOND. Now, have you issued to us in the same way— 

and maybe you did and I just missed it—actions that Congress can 

take to help Justice Department simplify, streamline, and become 

more efficient and get closer to real-time monitoring so that we 

catch things a little bit earlier than we are doing it now? 

Mr. HOROWITZ. I would have to go back and look at my predecessor’s testimony, but I believe it has been part of our prior reports to Congress. 

Mr. RICHMOND. Okay, and I would just quickly say can you give 

us a report specifically about what we can do in Congress to help? 

And with that, I would yield whatever I have left to Congressman 

Scott. 

Mr. SCOTT. You made, apparently, 1,000 recommendations? 

Mr. HOROWITZ. I’m sorry. 

Mr. SCOTT. You made about 1,000 recommendations? 

Mr. HOROWITZ. Yes. 

Mr. SCOTT. Could you inform us as to the status of those recommendations? 

Mr. HOROWITZ. Yes. About 700 or so have been met. We have 

about 300-plus still open, and what I have started doing is having 

every 6 months us compile our open reports and provide them to 

the Attorney General and the Deputy Attorney General so that 

they are aware and their staffs are aware—this is now across the 

Justice Department—of open recommendations so that they can be 

involved because, frankly, we in the past have sent them to components, but leadership would not necessarily see them, and that is 

what I am trying to do now and more centralize it. 

Mr. SCOTT. Can we get that report? 
19 

Mr. HOROWITZ. Let me—I believe they are all public, so I do not 

think there is an issue with that, but let me just make sure. Some 

of them could be in classified or other contexts. I just need to double-check that. 

Mr. SENSENBRENNER. The gentleman’s time has expired. 

The gentleman from Texas, Mr. Gohmert. 

Mr. GOHMERT. Thank you, Mr. Chairman. 

We sure appreciate your being here and even more appreciate 

your work, Mr. Horowitz. 

We do have—and I understand this has been mentioned earlier— 

different grant programs that do not necessarily communicate or 

communicate effectively. Do you have any recommendations for 

how we could go about making sure that there was better communication between the grant programs so that we do not overly fund 

something that needed one grant and got three, and then not fund 

something adequately that really needed more help? 

Mr. HOROWITZ. I think one of the key issues is transparency. The 

more there is public about the grants, what they are awarded for 

and how they are being spent, it gives multiple eyes on the grants. 

We are more likely to get whistleblower concerns or other concerns 

where there is misconduct going on. So I think that is an important 

part of it, and making sure that agencies are aware of what other 

agencies are awarding grants for, because that is another place for 

potential overlap, not just within our three components in the Justice Department. 

Mr. GOHMERT. I understand, but it has been one of my concerns 

about other areas of grant programs, not just grant programs but 

actually where the government makes payments and then turns 

around later and says wait a minute, we did our review after we 

gave you the payment and it turns out we gave too much. 

It seems like it is better to know before a payment is made 

whether or not it is a good idea, and if all the agencies are doing 

is examining what another agency did after the fact, then that 

money is gone. You are not going to get it back because it has been 

received, it has been spent, and I am not a fan of going back and 

demanding communities give back after they have already spent. 

So I was looking for a way that we could foster better communications between grant programs so that they could see who had 

applied, or if there were a requirement on the forms or on applications to say what all else they had applied for, what they had received in the past so that they would not be penalized for applying 

to more than one, but if there were indications that they were likely to get another grant, then they would not have it tripled up. 

Mr. HOROWITZ. Yes, and I agree, Congressman. I think on grant 

applications, reporting where else you have gotten grants from 

across the Federal Government, whether you are under suspension 

or disbarment, whether you are under active investigation, whether 

criminal or otherwise. That kind of information—if one grant recipient is under investigation by the Justice Department, the components should know that that is occurring. So requiring that information up front under penalty of perjury I think is an important 

part of the process. 
20 

Mr. GOHMERT. So, yes, I would say that if law enforcement is 

after them, the other law enforcement ought to know that they are 

investigating the people they are about to give money to. 

But do you know, are there any requirements like that in the application process? Did you specifically look at the application process? 

Mr. HOROWITZ. I am not aware of any. We are actually looking 

at that question now. 

Mr. GOHMERT. And would you agree, as you say you are looking 

at it, if you find it is not there, would you agree to make that part 

of your recommendations that they should make that part of the 

application process, to identify what grants they have received in 

the past and what others they have applied for? 

Mr. HOROWITZ. Yes. 

Mr. GOHMERT. Okay. Thank you so much. I really appreciate it. 

Mr. SENSENBRENNER. The gentleman’s time has expired. 

Mr. Horowitz, when you come here, you always give us all kinds 

of good ideas on how to help you out. Please keep on doing it, and 

you will be back. 

Without objection, the Subcommittee is adjourned. 

[Whereupon, at 10:44 a.m., the Subcommittee was adjourned.] 

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