Department of Homeland Security
 

Costs Incurred by Volunteer Fire and Rescue 

of Harrison Township, IN, Under Station 

Construction Grant Number EMW 2009 FC 06054R 

American Recovery and Reinvestment Act of 2009 

OIG-13-01 October 2012
 
aIt .. · OFFICE OF INSPECTOR GENERAL 

"" ,,t'-1 ... Department or Homeland Security 

Washington, DC 20528 1 www.oig.dhs.gov 

OCT 11 2012 

MEMORANDUM FOR: Elizabeth M. Harman 

Assistant Administrator 

Grant Programs Directorate 

Federal Emergency Majfag ment A?,Y 

FROM: Anne L. Richards ~r bt1f.:J 

Assistant Inspector Ge eral for Audits 

SUBJECT: Costs Incurred by Volunteer Fire and Rescue of Harrison 

Township, IN, Under Stat ion Construction Grant Number 

EMW-2009-FC-060S4R 

Attached for your information is our final letter report, Costs Incurred by Volunteer Fire 

and Rescue of Harrison Township, IN, Under Station Construction Grant Number EMW2009-FC-06054R. Since the report contains no recommendations to Federal Emergency 

Management Agency officials, we did not solicit formal comments. 

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

copies of our report to appropriate 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; Matthew Mongin, 

Audit Manager; and Robert Greene and Katrina Bynes, Report Referencers. 

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 Federal Emergency Management Agency (FEMA) requested that we audit the grant 

(EMW-2009-FC-06054R) to Volunteer Fire and Rescue of Harrison Township (Fire and 

Rescue). FEMA asked for the audit to help resolve concerns over delays by Fire and 

Rescue in initiating the project and allegations about the size and location of the 

project and the award of construction contracts. 

 

Fire and Rescue requested and received a grant of $1,149,490 for construction of a new 

fire station. The grant specified a period of performance from September 25, 2009, to 

September 24, 2012. As of January 23, 2012, Fire and Rescue had broken ground for 

the new station and had incurred costs of $76,591 for plans, building materials, and 

other initial project costs. Fire and Rescue has billed for and received from FEMA 

reimbursement of $10,000. 

Under the terms of the grant, Fire and Rescue agreed to use the grant funds according 

to FEMA’s American Reinvestment and Recovery Act, Assistance to Firefighters, Fire 

Station Construction Grants, Guidance and Application Kit (Guidance and Application 

Kit), and to comply with Office of Management and Budget (OMB) Circular A-87, 

Revised, Cost Principles for State, Local and Indian Tribal Governments (2 CFR Part 225), 

and the Uniform Administrative Requirements for Grants and Cooperative Agreements 

to State and Local Governments in the Code of Federal Regulations (44 CFR Part 13). 

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

States, Local Governments, and Nonprofit Organizations, and American Reinvestment 

and Recovery Act (Recovery Act) provisions for submitting quarterly recipient reports to 

the Federal Government 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 

incurred by Fire and Rescue were allowable, allocable, and reasonable according to the 

grant agreement and applicable Federal requirements. In doing so, we also examined 

information concerning the allegations. 

Fire and Rescue is located in a rural section of Morgan County, Indiana, about 20 miles 

south of Indianapolis. It has operated since the early 1960s, and provides mostly fire 

suppression and river rescue along the White River. It operates from an old (1850s) 

dairy barn that was converted into a fire station. One of its firemen gave the barn and 

surrounding land to Fire and Rescue in 1969. In 1987, the same fireman’s family gave 

Fire and Rescue an adjacent parcel of land, which is now the site of the new fire 

station. Access to the new station is through the land on which the old station was 

built. 

www.oig.dhs.gov 2 OIG-13-01 
 

 OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Results of Audit 

We determined that costs of $76,591 incurred for initial project activities were 

reasonable, allocable, and allowable for reimbursement. In addition, we found that 

issues concerning the size of the building have been resolved. Morgan County issued a 

building permit for the new station, and Fire and Rescue awarded contracts according 

to applicable construction requirements. We also verified that Fire and Rescue 

submitted quarterly status reports to the Federal Government and included provisions 

in its construction contracts for paying prevailing wages and for using American-made 

iron, steel, and manufactured goods in construction of the project. 

Incurred Costs 

As of January 23, 2012, Fire and Rescue had incurred costs of $76,591 for architect and 

engineering fees, soil and site surveys, permits, and building materials. We determined 

that these purchases were approved by Fire and Rescue, supported by invoices and 

other documents, separately recorded in the accounting records,1

 and incurred for 

eligible project activities. 

Size and Status of the New Fire Station

We examined the concerns over the size and status of the new station and obtained 

the following information: 

•	 Fire and Rescue’s grant application states that the new fire station will be 

7,100 square feet, but the plans submitted to FEMA show a structure of 

23,600 square feet. The Chief said that he misread the question in the grant 

application and thought that it referred to the size of the existing fire station. He 

advised that FEMA has all of the building plans and fully understands the planned 

size of the new building. A FEMA representative agreed. 

•	 Construction of the new fire station is a controversial issue in Harrison Township, 

according to Morgan County officials. The Planning Commission Director told us 

that some residents want the new station and others are concerned that a new 

1 Fire and Rescue maintains its own accounting records and relies on a local audit committee composed 

of Harrison Township residents and Fire and Rescue volunteers to oversee the accuracy of this process. 

None of the participants are accounting professionals. We advised the Chief of Fire and Rescue to 

consider the services of a Certified Public Accountant to ensure that its accounting procedures and 

records are maintained in conformance with Indiana regulations for not-for-profit organizations. We 

also explained to the Chief the audit requirements specified in OMB Circular A-133.

www.oig.dhs.gov 3	 OIG-13-01 
 

 

 OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

station will lead to development and a change of lifestyle in this section of the 

county. He advised us that the Morgan County Planning Commission held three 

public meetings on the building permit for the new fire station through December 

2011, without issuing a permit.

•	 The Planning Commission Director also told us that three issues needed to be 

resolved before the Planning Commission would issue a building permit for the new 

station. First, title to the land was in question because of the different fire 

department names on the records of title for the two adjacent parcels. The parcel 

where the old station is located was given to the Waverly Volunteer Fire 

Department, and the parcel where the new station is being built is owned by Fire 

and Rescue. The Fire Chief provided Morgan County a recorded Warranty Deed 

showing that Fire and Rescue owns both parcels of land free and clear. Second, a 

variance was needed to allow the new station to be built within the 25-feet lot line 

setback. The Planning Commission approved the variance on January 25, 2012. 

Finally, Fire and Rescue needed to pay a permit fee. The Director told us that the 

Planning Commission waived the permit fee on January 25, 2012. With these issues 

resolved, the Planning Commission issued a building permit on January 25, 2012. 

•	 The Fire Chief told us that the State construction design release approval, which is 

needed before public buildings can be constructed in Indiana, lapsed while building 

permit issues were being resolved. The State Plan Review Division reissued the 

construction design release on January 23, 2012, and the Morgan County Building 

Department accepted it. 

Contracts for the New Fire Station 

Fire and Rescue acted as the general contractor on the project, solicited bids, and 

awarded 12 contracts for a total of $910,984. We reviewed procurement documents 

for the bid process and the award of the 12 fire station construction contracts listed in 

table 1, and determined that Fire and Rescue competitively awarded the contracts 

according to Fire and Rescue Purchasing Policies and Federal requirements. 

www.oig.dhs.gov 4	 OIG-13-01 
 

 OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Table 1: Contracts Awarded by Fire and Rescue for Construction of the New Fire 

Station 

No. Company

Award 

Amount Activity

1 Spiker Construction Inc $506,566 Excavation and concrete footers, slabs, and forms 

2 Martin Marietta Inc. 12,500 Gravel 

3 General Shale Inc. 22,128 Block retaining walls, brick 

4 Beaver Material Inc. 170,000 Concrete 

5 Majestic Block 2,800 Type N mortar 

6 Johnson Construction 34,300 Lay brick and install ceiling, lockers, cabinets

7 Marteen Masonary 17,500 Apply brick and limestone

8 Menards 20,517 Metal studs, drywall, tape, compound

9 John Johnson 14,000 Install doors 

10 Premier Fab 32,000 Build and install stairs 

11 Franklin Engineering 4,000 Range hood 

12 HoldFast 74,673 Insulated Concrete Form and removal 

Total $910,984

Compliance With Requirements for Reporting, Buying American, and Paying 

Prevailing Wages 

The Recovery Act requires grant recipients to submit quarterly reports on project 

activities to the Federal Government. The Recovery Act also stipulates that grantees 

use American-made iron, steel, and manufactured goods, and that workers be paid 

prevailing wages as determined by the Secretary of Labor. We verified that Fire and

Rescue submitted the required quarterly reports, although some were submitted late. 

In addition, we confirmed that Fire and Rescue included the prevailing wage 

requirement in its public solicitation for construction bids, and the Fire Chief told us 

that he explained to bidders the requirement to use American-made materials. Both 

requirements were included in all construction contracts. 

www.oig.dhs.gov 5 OIG-13-01 
 

 

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

to the Inspector General Act of 1978. This is one of a series of audit, inspection, and 

special reports prepared 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 incurred were allowable, 

allocable, and reasonable according to the grant and applicable Federal requirements. 

We also examined information concerning the allegations about the size and status of 

the new station and the award of contracts. 

This audit covered costs of $76,591 incurred by Fire and Rescue from January 2010 

through December 2011. In conducting our audit, we— 

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

Guidance and Application Kit, and Federal cost principles and grant administrative 

requirements; 

•	 Interviewed Fire and Rescue personnel to gain an understanding of their accounting 

system, applicable internal controls, and project status and issues; 

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

•	 Examined vendor invoices and other evidence supporting 100 percent of costs 

incurred and claimed for FEMA reimbursement; 

•	 Reviewed accounting transactions related to purchases, payments, and receipt of 

FEMA reimbursements; 

•	 Used the grant provisions and applicable Federal requirements to determine 

whether amounts claimed were eligible for reimbursement; 

•	 Performed fraud detection procedures; 

•	 Spoke with Morgan County officials to obtain information on planning and 

permitting related to new fire station construction; and 

www.oig.dhs.gov	 6 OIG-13-01 
 

 OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

•	 Interviewed owners of property adjacent to the new fire station to discuss and 

evaluate their allegations about the construction project. 

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

Inspector General Act of 1978, 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

findings and conclusions based upon our audit objectives. We believe that the evidence 

obtained provides a reasonable basis for our findings and conclusions based upon our 

audit objectives. 

www.oig.dhs.gov 7	 OIG-13-01 
 

 

 

 OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Appendix B 

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 

Acting Chief Privacy Officer 

Departmental Recovery Act Coordinator 

Federal Emergency Management Agency

Administrator 

Assistant Administrator, Grant Programs Directorate 

Audit Liaison Official 

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 8 OIG-13-01 
 

ADDITIONAL INFORMATION AND COPIES 

To obtain additional copies of this document, please call us at (202) 254-4100, fax your 

request to (202) 254-4305, or e-mail your request to our Office of Inspector General 

(OIG) Office of Public Affairs at: DHS-OIG.OfficePublicAffairs@oig.dhs.gov. 

For additional information, visit our website at: www.oig.dhs.gov, or follow us on Twitter 

at: @dhsoig. 

OIG HOTLINE 

To expedite the reporting of alleged fraud, waste, abuse or mismanagement, or any 

other kinds of criminal or noncriminal misconduct relative to Department of Homeland 

Security (DHS) programs and operations, please visit our website at www.oig.dhs.gov 

and click on the red tab titled "Hotline" to report. You will be directed to complete and 

submit an automated DHS OIG Investigative Referral Submission Form. Submission 

through our website ensures that your complaint will be promptly received and 

reviewed by DHS OIG. 

Should you be unable to access our website, you may submit your complaint in writing 

to: DHS Office of Inspector General, Attention: Office of Investigations Hotline, 245 

Murray Drive, SW, Building 410/Mail Stop 2600, Washington, DC, 20528; or you may 

call 1 (800) 323-8603; or fax it directly to us at (202) 254-4297. 

The OIG seeks to protect the identity of each writer and caller.