Department of Homeland Security

Office of Inspector General 

Improvements Needed in Federal 


Emergency Management Agency 


Monitoring of Grantees
 

OIG-09-38 March 2009 
 

Office of Inspector General 

U.S. Department of Homeland Security

Washington, DC 20528 

 March 5, 2009 

Preface 

The Department of Homeland Security Office of Inspector General 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. 

This report addresses the strengths and weaknesses of the Federal Emergency 

Management Agency’s grant management infrastructure to ensure effective monitoring 

of grantees. It is based on interviews with employees and officials of relevant agencies 

and institutions, direct observations, and a review of applicable documents. 

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

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

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

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

Richard L. Skinner 


Inspector General 

Table of Contents/Abbreviations 


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

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


Results of Audit ................................................................................................................. 4 


Financial and Program Monitoring .............................................................................. 4 


Unresolved Human Capital Issues ............................................................................... 8 


Policies and Procedures, Monitoring Plans, and Integrated Systems ........................ 11 


Need to Better Ensure Effective and Appropriate Use of Grants .............................. 14 


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


Management Comments and OIG Analysis .............................................................. 14 


Contractors Are Performing Inherently Governmental Functions ............................. 17 


Recommendations ...................................................................................................... 18 


Management Comments and OIG Analysis .............................................................. 18 


Appendices 

Appendix A: Purpose, Scope, and Methodology ..................................................... 21 


Appendix B: Management Comments to the Draft Report ..................................... 25 


Appendix C: Major Contributors to this Report ...................................................... 29 


Appendix D: Report Distribution ............................................................................ 30 


Abbreviations 

DHS Department of Homeland Security 


FEMA Federal Emergency Management Agency 


FY Fiscal Year 


OIG Office of Inspector General 

OIG
 

Department of Homeland Security 

Office of Inspector General 

Executive Summary 

Public Law 110-53, Implementing Recommendations of the 9/11 

Commission Act of 2007, directed the Department of Homeland 

Security Office of Inspector General to review and evaluate the 

grant management and oversight practices of the Federal 

Emergency Management Agency. We reviewed the grant 

management and oversight practices of 3 out of the 26 active and 

52 total grant programs administered by the Federal Emergency 

Management Agency: the State Homeland Security Program, the 

Staffing for Adequate Fire and Emergency Response Program, and 

the Emergency Food and Shelter Program. 

Improvements are needed in the Federal Emergency Management 

Agency’s grant management and oversight infrastructure to ensure 

effective monitoring of grantees. Specifically, the Federal 

Emergency Management Agency does not consistently and 

comprehensively execute its two major oversight activities, 

financial and program monitoring. This occurs because it has not 

conducted the analyses and developed the plan of action required 

by Public Law 109-295 Title VI, the Post-Katrina Emergency 

Management Reform Act of 2006 as part of its strategic human 

capital plan. In addition, financial and programmatic monitoring 

policies, procedures, and plans are not comprehensive. 

We also identified support contractors for the Federal Emergency 

Management Agency that are performing inherently governmental 

functions while carrying out duties associated with the oversight of 

the Staffing for Adequate Fire and Emergency Response Program. 

As a result, the Federal Emergency Management Agency does not 

have adequate assurance that federal grant funds are being used 

effectively and appropriately. 

We made recommendations to the Administrator, Federal 

Emergency Management Agency, to address the needed grant 

management infrastructure improvements as well as the actions of 

the support contractors performing inherently governmental 

functions. In response to our report, the Federal Emergency 

Management Agency generally concurred that grant management 

improvements were needed; however, it did not agree that 

contractors were performing inherently governmental functions. 

Improvements Needed in Federal Emergency Management Agency Monitoring of Grantees 

Page 1 
Background 

The Federal Emergency Management Agency (FEMA) was 

created by a Presidential Executive order in 1979 and became part 

of the U.S. Department of Homeland Security (DHS) in 2003. Its 

mission is to reduce the loss of life and property and to protect the 

Nation from all hazards, including natural disasters, acts of 

terrorism, and other man-made disasters. Through the 

appropriation for state and local programs, FEMA fulfills its role 

as the principal component within DHS responsible for preparing 

state and local governments to prevent, protect against, respond to, 

and recover from incidents of terrorism and other catastrophic 

events. The appropriation provides for grants, training, exercises, 

and other support to assist federal agencies, states, territories, 

tribal, and local jurisdictions. 

On October 4, 2006, the President signed Public Law 109-295, 

with Title VI entitled the Post-Katrina Emergency Management 

Reform Act. The Act provided a renewed focus on FEMA’s 

Regions and their relationship with state and local partners for 

emergency management and preparedness. The Act also 

established new leadership positions within DHS, transferred 

additional functions to FEMA, and created and reallocated 

functions to other components within the department. For 

example, the Act transferred the mission, functions, staff, and 

programs of the DHS Office of Grants and Training and other 

major preparedness programs to FEMA, effective April 1, 2007. 

As a result, FEMA directly oversees more than 80% of all grants 

awarded by DHS. 

At the time of the transfer, the Office of Grants and Training was 

renamed the Office of Grant Programs; shortly thereafter it was 

renamed the Grant Management and Operations Directorate. The 

Grant Management and Operations Directorate centralized 

FEMA’s grant management, analysis, and oversight capacity, and 

was to provide the controls to ensure that billions of dollars 

provided through grants and disaster assistance are appropriately 

awarded, tracked, and monitored. During Fiscal Year (FY) 2008, 

the Grants Management and Operations Directorate was renamed 

the Grant Programs Directorate, and the majority of the financial 

monitoring responsibility was transferred to the Regions. 

In addition to the Grant Programs Directorate, several other 

directorates have grant management and oversight responsibilities, 

including Disaster Operations, Disaster Assistance, the National 

Improvements Needed in Federal Emergency Management Agency Monitoring of Grantees 

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Preparedness Directorate, the Mitigation Directorate, and the U.S. 

Fire Administration. FEMA’s many grant programs vary from 

enhancing capabilities that focus on counter-terrorism and 

catastrophic events, to specific first-responder disciplines that 

strengthen capabilities for addressing hazards of all types. 

During FY 2007, FEMA awarded more than $10.6 billion in grants 

to state and local governments; territories; tribal governments; 

private, public, profit, and nonprofit organizations; and sponsoring 

agencies. These grants are intended to enhance preparedness, 

protection, response, recovery, and mitigation capabilities 

throughout the Nation. A breakdown of the grants by award type 

is shown in Table 1. 

Table 1 

FY 2007 Grant Awards 

Type of Grants Number of 

Awards 

Amount Awarded 

Assistance to Firefighters 

Grants 

6,436 $672,280,341 

Preparedness Grants 788 $3,697,455,785 

Disaster Assistance Grants 129 $5,471,384,499 

Non-Disaster Grants 422 $785,490,791 

Total Awarded in 

FY 2007 

7,775 $10,626,611,416.00 

Public Law 110-53, Implementing Recommendations of the 9/11 

Commission Act of 2007, requires the DHS Office of Inspector 

General (OIG) to review and evaluate the grant management and 

oversight practices of FEMA, which has a total of 52 grant 

programs. Based on funding, number of grants, and type of 

program, we selected the following for review as representative of 

the active grants administered by FEMA: the State Homeland 

Security Program, Staffing for Adequate Fire and Emergency 

Response Program, and Emergency Food and Shelter Program. 

Improvements Needed in Federal Emergency Management Agency Monitoring of Grantees 

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Results of Audit 

Improvements are needed in FEMA’s grant management 

infrastructure to ensure effective monitoring of grantees. Our 

review determined that FEMA does not consistently and 

comprehensively execute its two major oversight activities, 

financial and program monitoring. This occurs because FEMA has 

not implemented required analyses and a plan of action associated 

with its strategic human capital plan. Also, FEMA’s financial and 

programmatic monitoring policies, procedures, and plans are not 

comprehensive. We also identified FEMA support contractors that 

are performing inherently governmental functions while carrying 

out duties associated with the oversight of the Staffing for 

Adequate Fire and Emergency Response Program. As a result, 

FEMA cannot adequately ensure that federal grant funds are being 

used effectively and appropriately. 

Financial and Program Monitoring 

FEMA staff monitors grant recipients, both financially and 

programmatically, to ensure that project goals, objectives, 

performance requirements, timelines, milestone completion, 

budgets, and other related grant requirements are being met. 

Monitoring involves (1) collecting financial and program status 

reports as well as performance and administrative information 

relative to each program; (2) analyzing the information; and 

(3) taking appropriate actions. Monitoring is accomplished 

through a combination of office-based reviews and on-site visits. 

Financial Monitoring 

The goal of FEMA’s financial monitoring is to ensure compliance 

with federal grant regulations and objectives, and to seek 

opportunities for organizational and operational improvements and 

innovations. FEMA’s financial monitoring efforts also aim to 

proactively educate grantees on how to make more informed 

decisions; link outcome to funding; and identify potential waste, 

fraud, abuse, and mismanagement. Financial monitoring includes 

office-based reviews and on-site reviews conducted at the 

grantee’s physical location. FEMA’s financial monitoring goal is 

to visit all grantees at least once during the life cycle of the grant, 

which, depending on the program, could last several years. 

FEMA did not meet its financial monitoring goals for the State 

Homeland Security Program, the Staffing for Adequate Fire and 

Improvements Needed in Federal Emergency Management Agency Monitoring of Grantees 

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Emergency Response Program, and the Emergency Food and 

Shelter Program for FY 2007. For the State Homeland Security 

Program, FEMA completed five of nine comprehensive reviews of 

State Administrative Agencies planned for FY 2007 and none of 

the 19 planned desk reviews of discretionary award recipients. In 

addition to the five comprehensive reviews completed during 

FY 2007, FEMA’s financial monitoring staff conducted two 

unplanned State Homeland Security Program site reviews of 

American Samoa and Puerto Rico. According to FEMA officials, 

these unplanned reviews were conducted because significant issues 

arose at these sites that took precedence over the remaining 

planned reviews. 

The Grant Programs Directorate conducted minimal financial 

monitoring of the Staffing for Adequate Fire and Emergency 

Response Program during FY 2007, and none was planned for 

FY 2008. The only financial-related oversight of the Staffing for 

Adequate Fire and Emergency Response program during FY 2007 

were reviews of payment requests and evaluations of performance 

reports performed by support staff under contract with the program 

monitoring staff. These reviews were much less comprehensive 

than the financial monitoring activities described in FEMA’s 

financial monitoring policies and procedures for other programs, 

which include both office-based reviews and site visits. 

A FEMA official told us that financial monitoring in compliance 

with the Emergency Food and Shelter Program Responsibilities 

and Requirements document has not occurred since 2003 because 

of FEMA’s focus on other priorities, such as disaster assistance 

programs. The Emergency Food and Shelter Program financial 

oversight efforts for FY 2007 were limited to desk reviews of 

financial statements for the one grant recipient receiving funds, and 

the FEMA Emergency Food and Shelter Program officer’s 

participation in four teleconferences with the National Board 

(representatives from FEMA and six charities), local board, and 

local recipient organizations. 

Program Monitoring 

Program monitoring allows DHS to verify that grant funds are 

being administered in accordance with the guidance issued to 

grantees. Monitoring also provides an opportunity to 

collaboratively determine areas of concern, needs, and priorities so 

that DHS can effectively provide services to better ensure national 

Improvements Needed in Federal Emergency Management Agency Monitoring of Grantees 

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preparedness. Effective monitoring consists of both administrative 

(office-based) and strategic (on-site) monitoring. 

For the State Homeland Security Program, administrative 

monitoring includes an overall review and analysis of the grantee’s 

status on submission of quarterly and biannual reports, status of 

drawdown funding amounts, recent activities with drawdowns, and 

expiration and extension history of open grants. One office-based 

administrative monitoring review must be completed for each 

grantee. Strategic monitoring focuses on progress made toward 

investments, achieving state or urban area goals and objectives, 

and accomplishing national priorities. For FEMA preparedness 

programs, strategic monitoring was required for each State 

Administrative Agency (grant recipient) in FY 2007. 

The Grant Development and Administration Division, within the 

Grant Programs Directorate, completed its FY 2007 programmatic 

monitoring plan for the State Homeland Security Program, 

including site visits to all 56 states and territories. The Grant 

Development and Administration Division used its branch chiefs 

and preparedness officers to conduct administrative (office-based) 

and strategic (on-site) monitoring, despite having 11 vacant 

positions in the Division. 

The draft Staffing for Adequate Fire and Emergency Response 

Programmatic Monitoring Plan lists the types of monitoring 

activities to be performed by program staff. The monitoring 

activities include quarterly performance reviews, annual desk 

reviews, report submission compliance reviews, and site visits. 

The monitoring plan categorizes site visits as either reactive or 

proactive. Reactive site visits are conducted as concerns arise 

about a grantee’s performance. Proactive site visits are conducted 

on 1% to 5% of Staffing for Adequate Fire and Emergency 

Response grants, to include activities such as examining receipts 

for expenditures, procurement records, and policies and procedures 

governing awarded grant activities. 

During FY 2007, program monitoring of Staffing for Adequate 

Fire and Emergency Response grant recipients was limited to 

quarterly reviews of payment requests and evaluations of 

performance status reports. As of July 2008, only one reactive site 

visit had been conducted since the program was established in 

2005. No annual reviews or compliance reviews were conducted 

during FY 2007. 

Improvements Needed in Federal Emergency Management Agency Monitoring of Grantees 

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Approximately 12,000 subrecipients received Emergency Food 

and Shelter Program funds from one grant recipient during 

FY 2006. According to a former Emergency Food and Shelter 

Program officer, program monitoring of the one grant recipient 

ceased in 2003 because staff were reassigned to other FEMA 

priorities, such as disaster assistance programs. 

Monitoring Documentation 

FEMA monitoring staff did not consistently maintain financial 

monitoring documentation. The FEMA FY 2007 financial 

monitoring plan lists specific documentation to be maintained in 

the monitoring files, including audit histories, monitoring histories, 

state strategy and application reviews, and financial reporting 

analyses. Supporting documentation maintained by the financial 

monitoring staff was voluminous but not well organized, making it 

difficult to ensure that all required documentation was maintained 

and analyses were performed. 

Likewise, program monitoring files for the State Homeland 

Security Program did not contain consistent documentation. For 

example, of the nine files reviewed, three did not include copies of 

the Application for Federal Assistance (Standard Form 424) or any 

accompanying documentation submitted by the grantee. Six files 

contained copies of the application, but three of those six did not 

contain the accompanying documentation, which includes items 

such as investment justifications and budget information. 

In addition, monitoring procedures for the State Homeland 

Security Program dictate that a “continuously robust and 

interactive relationship” should exist between grantees and fellow 

federal homeland security partners, but the procedures do not 

specify how this relationship should be documented or what 

evidence would validate such a relationship. Of the nine files 

reviewed, five files contained very little documentation—such as 

e-mails, correspondence, or documented telephone 

conversations—to demonstrate contact with the grant recipients. 

The remaining four files contained some documents showing a 

pattern of communication between the program staff and grant 

recipient. 

Without consistent and organized documentation, FEMA has little 

assurance that documentary evidence maintained was adequate to 

support the conclusions made in the monitoring and site visit 

reports. The existing condition of files did not readily allow for an 

Improvements Needed in Federal Emergency Management Agency Monitoring of Grantees 

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independent reviewer to assess the degree of compliance with 

monitoring policies and procedures. 

Unresolved Human Capital Issues 

Human capital issues have significantly affected FEMA’s ability to 

monitor grantees. Congress has recognized these issues and 

addressed them in the Post-Katrina Emergency Management 

Reform Act (the Act) dated October 4, 2006. The Act transferred 

functions such as the DHS Office of Grants and Training to 

FEMA, and also required FEMA to develop and submit to the 

Congress a Strategic Human Capital Plan (the Plan) to Congress by 

April 2007. 

Congress required that this agency-level Plan include a workforce 

gap analysis, including an assessment of present and future critical 

skills and competencies needed to support the mission and 

responsibilities, and effectively manage FEMA. The Plan was to 

cover the entire FEMA workforce and was intended to address 

staffing levels, including actual and projected gaps in the 

workforce, and include specific strategies for developing, training, 

deploying, compensating, motivating, and retaining the workforce. 

The Act also required the Plan to include a plan of action for 

developing and reshaping the FEMA workforce that would address 

the identified gaps in critical skills and competencies. 

FEMA submitted the Plan to Congress in June 2008. However, the 

Plan does not provide either the detailed human capital analyses or 

plan of action for resolving the human capital issues called for in 

the Act. Instead, the Plan describes a number of strategies and 

initiatives planned or under way in FEMA, and states that it 

“provides a map of how the Agency will create an environment 

and culture that supports, nurtures, and sustains a workforce that 

will be up to any challenge.” 

The Plan states that FEMA is engaged in determining the proper 

size of its workforce, and that over the next year FEMA will 

perform a detailed requirements analysis to establish future staffing 

needs for each Directorate, Region, and critical support function. 

Specifically, FEMA intends to conduct the right-sizing analysis on 

a “bottom-up” basis, as each Directorate is to examine its own role 

in support of the FEMA Vision. Further, the Plan states that 

FEMA will undertake a comprehensive “Business Process 

Re-Engineering” exercise to evaluate proposed staffing structures. 

Improvements Needed in Federal Emergency Management Agency Monitoring of Grantees 

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However, the Plan does not provide timeframes for completing 

these analyses and implementing corrective actions. 

Separate Strategic Human Capital Plan of Action for Grant 

Management and Oversight 

The Grant Programs Directorate has initiated its own actions to 

begin addressing grant management and oversight workforce 

issues, unrelated to the Post-Katrina Emergency Management 

Reform Act. However, the actions were initiated without the 

benefit of a comprehensive strategic human capital plan at either 

the Agency or Directorate level for grant management and 

oversight functions. 

The Grant Programs Directorate contracted for a study to analyze 

its workforce and address the number of personnel needed to 

perform specific grant functions such as pre-award, post-award, 

and closeout for active Headquarters-awarded grant programs. 

However, since this study was unrelated to the requirements of the 

Post-Katrina Emergency Management Reform Act, the study did 

not fully address the Act requirements, such as an analysis of 

workforce skill mix and capabilities and identification of required 

competencies and associated training to perform specific grant 

management and oversight responsibilities. The study was 

completed in January 2009. 

According to a FEMA official, the Grant Development and 

Administration Division also performed a workload analysis that 

defined clear delineations of responsibilities between supervisors 

and staff. The study determined necessary changes in work 

assignments and primary responsibilities across role levels, 

regions, and field-based staff. The study also revised role 

descriptions for director, manager, and staff positions; established 

standards for roles and responsibilities throughout the entire 

division and across its programs; and recommended process and 

program changes to ensure integration. This additional study did 

not address the Post-Katrina Emergency Management Reform Act 

requirements, as it was performed prior to the Act. 

Since a majority of grant management and oversight functions are 

conducted independent of critical disaster recovery activities, 

FEMA should take the approach of conducting the analyses 

required by the Act and developing a separate plan of action for all 

staff tasked with grant management and oversight responsibilities 

rather than follow the current plan to analyze each directorate 

Improvements Needed in Federal Emergency Management Agency Monitoring of Grantees 

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separately. Future workforce actions for grant management and 

oversight should be limited until a comprehensive human capital 

plan for grant management and oversight is implemented that fully 

responds to the requirements of the Act. 

Grant Monitoring Staffing Issues 

Staffing issues have affected the amount of financial and 

programmatic grant monitoring work being conducted both at 

Headquarters and in the Regions. 

During the second half of FY 2007, FEMA concentrated on 

establishing a new Grant Programs Directorate and implementing a 

new payment system. To accomplish these tasks, eight of nine 

staff members were transferred from financial management to 

these activities. As a result, the State Homeland Security Program 

financial monitoring activities were conducted only during the first 

half of the fiscal year. 

FEMA’s Grant Development and Administration Division within 

the Grant Programs Directorate completed its FY 2007 

programmatic monitoring plan despite having 11 vacant positions 

in the Division. The Grant Development and Administration 

Division accomplished this task, including site visits to all 

56 states and territories, by using branch chiefs and preparedness 

officers to conduct administrative (office-based) and strategic (onsite) monitoring. For example, two of the three branch chiefs, who 

are responsible for overseeing between 15 and 24 states and 

territories, individually performed program monitoring of one or 

two states in addition to their normal oversight and supervisory 

duties. As of August 2008, only 2 of the 11 vacancies were filled. 

Staff within the Emergency Food and Shelter Program declined 

from six in 1997 to one in 2008. According to FEMA program 

officials, this decline led to a significant decrease in financial and 

program monitoring. Having one staff member responsible for 

both monitoring activities reduces FEMA’s ability to ensure the 

appropriate use of grant funds. Regarding the Staffing for 

Adequate Fire and Emergency Response program, Grant Programs 

Directorate personnel explained that while staff was available to 

process Staffing for Adequate Fire and Emergency Response grant 

awards, no staff was available to conduct financial monitoring 

because the unit has five vacant positions. 

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Staffing issues have also affected the Regions. In an effort to 

implement the requirements of the Post-Katrina Emergency 

Management Reform Act, FEMA regionalized specific business 

functions such as cash analysis and closeout for certain grant 

programs, audit resolution, and financial monitoring. 

Implementing these actions, which began to take effect in 

FY 2008, included hiring two grant management specialists for 

each Region. Shortly after implementation, one of the two 

positions in each Region was reassigned as a branch chief for a 

newly created grant branch, reducing the number of staff dedicated 

to grant monitoring and oversight. A FEMA Headquarters 

manager said that creating the Grant Branch Chief was necessary 

to ensure that adequate oversight and direction were available in 

the Regions. Regional personnel, however, generally agreed that 

one person fully dedicated to supplement the already existing 

regional oversight personnel was not adequate to conduct their 

current oversight responsibilities. 

Organizational Stability and Changes in Leadership 

The Grant Programs Directorate went through two reorganizations 

after the Office of Grants and Training was transferred to FEMA in 

April 2007. Several key positions, such as the Deputy Assistant 

Administrator, and the Director and Deputy Director of Grant 

Development and Administration have been vacant for much of 

2008. The Deputy Assistant Administrator position was filled in 

June 2008, but the top two leadership positions within the Grant 

Development and Administration Division were not filled until the 

end of calendar year 2008. These two positions represent the 

programmatic subject matter expertise for the Grant Programs 

Directorate’s preparedness programs and are critical positions to be 

filled. 

Policies and Procedures, Monitoring Plans, and Integrated 

Systems 

Financial and programmatic monitoring policies, procedures, and 

plans describe the monitoring activities required of FEMA grant 

oversight staff. Monitoring activities generally include desk 

reviews and site visits. 

Policies and Procedures for FEMA Monitoring Activities 

Policies and procedures of the State Homeland Security Program 

are implemented through its FY 2007 Administrative and Strategic 

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Monitoring Protocols for Eastern, Central, and Western Division 

Preparedness Officers. The protocol requires that a post-site visit 

letter be sent as soon as the final monitoring report has been fully 

approved, and the subsequent monitoring report to be issued within 

30 days. Our review of nine monitoring files determined that 

monitoring reports were not issued within the required timeframes. 

Program officials said that the protocol indicated that the reports 

were to be submitted to the first line supervisor within 30 days. 

However, the protocol did not specify to whom the reports were to 

be submitted. 

No financial monitoring policies or procedures exist for the 

Staffing for Adequate Fire and Emergency Response program. 

The draft Staffing for Adequate Fire and Emergency Response 

Programmatic Monitoring Plan contains policies and procedures 

for program monitoring. This document includes information on 

types of programmatic monitoring; the duties and responsibilities 

of subject matter experts; and the frequency of performance 

reviews, including annual desk reviews, report submission 

compliance reviews, and site visits. However, since the program’s 

inception in FY 2005, the document has remained in draft. 

No monitoring policies or procedures exist for the Emergency 

Food and Shelter Program. The cooperative agreement between 

FEMA and the grant recipient is being used for the Emergency 

Food and Shelter Program in place of formal monitoring policies 

or procedures. While the cooperative agreement includes financial 

and program reporting requirements for the grantee, it does not 

contain any specific monitoring requirements for FEMA. 

Monitoring Plans 

The State Homeland Security Program financial monitoring plan 

for FY 2007 did not include enough site visits to represent the 

grant universe. This plan indicated that staff would visit nine 

states for the Homeland Security Grant Program/State Homeland 

Security Program and cover FY 2006 Homeland Security Grant 

Program/ State Homeland Security Program funding. All 56 states 

and territories were awarded Homeland Security Grant 

Program/State Homeland Security Program funds, totaling 

$528,165,000. The nine states planned for review represented only 

16% of the universe; only five states and two territories were 

ultimately completed. The FY 2008 plan included site visits to 

34 states and territories, a far more representative sample. 

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Site visits included in the Staffing for Adequate Fire and 

Emergency Response program monitoring plans also were not 

representative given the number of active grantees. The Staffing 

for Adequate Fire and Emergency Response program staff 

followed a draft Programmatic Monitoring Plan, which required 

that site visits be performed on either a reactive or proactive basis. 

Reactive site visits may be conducted at any time as dictated by a 

grantee’s performance issues or program office concerns. To 

monitor grants proactively, approximately 1% to 5% of Staffing 

for Adequate Fire and Emergency Response grants (hiring of 

career firefighters and the recruitment and retention of volunteer 

firefighters) will be selected for a grantee site visit during each 

calendar year. The plan further states that grantees should not 

receive more than one site visit over the life cycle of the grant 

without identified cause. This sample is far less than the site visits 

conducted for other program monitoring activities. 

Integrated Grant Management Systems 

While FEMA intends to implement two grant management 

systems—the Emergency Management Mission Integrated 

Environment for disaster grants and the Non-Disaster system for 

non-disaster grants—grant programs are being phased into these 

systems beginning in October 2008, with final implementation 

years away. 

Development of comprehensive systems has been extremely slow 

to materialize, partly because of a lack of staff tasked to create and 

build them. The FEMA Information Technology Division cited a 

lack of adequate funding as a major challenge. Also, the FEMA 

Information Technology Division has a large number of customers 

to serve, but the scope of the systems and the potential requirement 

for the systems to handle all DHS grant programs (and the 

resulting increased workloads) have not been determined. 

Gathering data from FEMA’s grant processes is extremely timeconsuming. Data analysis is cumbersome because the systems do 

not interface and some manual systems still exist. Integrated 

systems and advanced technology would make grant processes run 

more efficiently, from grant application to closeout. In addition, 

standardization would increase FEMA’s efficiency and improve its 

ability to monitor and analyze grant programs. 

Improvements Needed in Federal Emergency Management Agency Monitoring of Grantees 

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Need to Better Ensure Effective and Appropriate Use of 

Grants 

FEMA’s financial and programmatic monitoring activities are 

critical parts of an effective grant oversight program. FEMA needs 

an appropriate oversight infrastructure to ensure that all financial 

and programmatic monitoring activities can be accomplished, as 

specified in its monitoring plans. Key components of this 

infrastructure include implementation of a strategic human capital 

plan and associated workforce analysis, adequate staffing, formal 

training, comprehensive policies and procedures, realistic and 

representative monitoring plans, consistent documentation of 

monitoring activities, and integrated grant management systems. 

Effective oversight will ensure that grantees have adequate internal 

controls, grant funds are being used as intended, grant programs 

are carried out as prescribed, and grantees are complying with the 

terms and condition of their grant award agreements. 

Recommendations 

We recommend that the Administrator, Federal Emergency 

Management Agency, direct the Assistant Administrator for Grant 

Programs Directorate to: 

Recommendation 1: For all grant management and oversight 

personnel, conduct the analyses mandated in the Post-Katrina 

Emergency Management Reform Act of 2006 and develop a plan of 

action with milestones for resolving identified human capital 

issues. 

Recommendation 2: Develop comprehensive grant management 

and monitoring policies and procedures, including details on 

conducting financial and programmatic monitoring activities, the 

number and frequency of site visits, and the need to adequately 

document the results. 

Management Comments and OIG Analysis 

We obtained written comments on a draft of this report from 

FEMA’s Assistant Administrator, Grant Programs Directorate. 

We have included a copy of FEMA’s response in its entirety as 

Appendix B. 

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FEMA Response to Recommendation #1 

FEMA’s comments indicate concurrence in part with our 

recommendation regarding developing a plan of action with 

milestones for resolving identified human capital issues. FEMA’s 

response does not address human capital issues for offices other 

than the Grant Programs Directorate. The Grant Programs 

Directorate is progressing with recruiting and retaining the 

workforce needed to fulfill FEMA’s mission and responsibilities as 

mandated in the Post-Katrina Emergency Management Reform Act 

of 2006. According to FEMA, since the beginning of the audit, a 

significant number of vacancies have been filled while other 

positions are being advertised on a regular basis. The Grant 

Development and Administration Division is performing a 

workload analysis that includes the following: 

(1) Defining clear delineations of responsibilities between 

supervisory and staff roles; 

(2) Determining necessary changes in work assignments and/or 

primary responsibilities across role levels, regions, and 

field-based staff; 

(3) Revising position descriptions for director, manager and 

staff positions; 

(4) Establishing standards for roles and responsibilities across 

all Grant Development and Administration Divisions and 

programs; and 

(5) Recommending process and/or program changes to ensure 

successful integration. 

The Grants Management Division was recently reorganized in an 

effort to maximize use of its human capital resources. 

Administrative and financial staff are now assigned to work with 

states in a way that more effectively supports and complements the 

work of program staff in the Grant Development and 

Administration Division. 

FEMA Response to Recommendation #2 

FEMA’s comments indicate concurrence with our recommendation 

regarding developing comprehensive grant management and 

monitoring policies and procedures. The Grants Management 

Division has developed comprehensive and standardized financial 

monitoring protocols for both desk reviews and on-site monitoring. 

These tools also provide instructions regarding official 

documentation required for the files. 

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The FEMA Monitoring Plan identifies the required financial 

monitoring activities in FEMA. To complement the headquarters 

plan, the ten FEMA Regions will prepare a plan which will include 

the grants to be monitored, the type of monitoring, and the 

monitoring schedule. 

The Grant Development and Administration Division recently 

updated its monitoring tools and policy directives for the 

Homeland Security Grant Program, the Transit Security Grant 

Program, and the Emergency Management Performance Grant 

Program. The policy directives clearly outline the purpose and 

need for programmatic monitoring and on-site visits. 

The Grant Development and Administration Division has 

developed a Microsoft Access database to facilitate program 

monitoring of the Homeland Security Grant Program. This 

database includes a comprehensive review of each grantee’s 

investments for all current grants and requires a score to be 

assigned to demonstrate progress achieved for each objective in the 

approved State and/or Urban Area Homeland Security Strategy. 

For FY 2009, the database will include the FY 2006, FY 2007, and 

FY 2008 investments. This updated database also includes a 

section on programmatic requirements to ensure that all grant 

program requirements are being met timely. A standard on-site 

monitoring toolkit, developed by the Grant Development and 

Administration Division for the Transit Security Grant Program 

and Emergency Management Performance Grant Program, 

includes a section on program requirements specific to each 

program. 

OIG Analysis of FEMA’s Responses to Recommendations #1 

and #2 

We consider FEMA’s proposed actions responsive to the 

recommendations for the Grant Program Directorate. However, 

FEMA’s response does not address the human capital issues or 

comprehensive grant management and monitoring policies and 

procedures for other offices within FEMA tasked with grant 

management and oversight responsibilities, such as the Individual 

Assistance Division within the Disaster Assistance Directorate. In 

this regard, recommendations #1 and #2 are considered resolved 

but will remain open pending receipt of documentation and target 

dates that address implementation of actions to resolve human 

Improvements Needed in Federal Emergency Management Agency Monitoring of Grantees 

Page 16 
capital issues, and development of comprehensive grant 

management and monitoring policies and procedures, for other 

offices within FEMA tasked with grant management and oversight 

responsibilities. 

Contractors Are Performing Inherently Governmental 

Functions 

Office of Management and Budget (OMB) Circular No. A-76 

Revised, Performance of Commercial Activities, May 29, 2003, 

establishes federal policy for the competition of commercial 

activities, and also defines activities performed by government 

personnel as either inherently governmental or commercial. An 

inherently governmental activity is one so intimately related to the 

public interest as to mandate performance by government 

personnel. These activities require the exercise of substantial 

discretion in applying government authority and in making 

decisions for the government, including procedures and processes 

related to the oversight of monetary transactions or entitlements. 

The circular further states that for contracted activities, the 

contractor does not have the authority to decide on courses of 

action. However, the contractor may be tasked with developing 

options or implementing courses of action decided upon by the 

agency, with agency oversight. 

Despite these requirements, contract staff are approving Staffing 

for Adequate Fire and Emergency Response grant payments 

without FEMA program personnel review and approval. Contract 

staff are also evaluating quarterly status reports submitted by 

Staffing for Adequate Fire and Emergency Response grant 

recipients. Our discussions with program and contractor personnel 

disclosed that Staffing for Adequate Fire and Emergency Response 

contractors have the authority to make decisions on payment 

requests and program status, which are prohibited activities 

according to OMB Circular No. A-76. As such, contractors are 

performing work that constitutes inherently governmental 

functions. 

FEMA has been using contract staff for these inherently 

governmental functions since 2006 due to lack of FEMA staff. 

The Staffing for Adequate Fire and Emergency Response program 

manager said that he does not have the time to “look over the 

shoulder” of the contract staff while they are reviewing quarterly 

reports and requests for funds. According to the program manager, 

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he has articulated specific review requirements to the contract 

staff, and matters outside of those review requirements are vetted 

and discussed with him. Staffing for Adequate Fire and 

Emergency Response program officials told us that they have been 

requesting staff since the program started, but their requests have 

not been approved. They said that they had recently submitted 

another request and additional staff were approved. 

Recommendations 

We recommend that the Administrator, Federal Emergency 

Management Agency: 

Recommendation 3: Immediately stop the practice of contractor 

personnel approving Staffing for Adequate Fire and Emergency 

Response payments and making program decisions resulting from 

quarterly performance report evaluations. 

Recommendation 4: Establish and implement monitoring 

procedures to ensure that approval and program decision-making 

activities are performed by FEMA employees, and clarify the roles 

and responsibilities of Staffing for Adequate Fire and Emergency 

Response support contractors, limiting the contractors to 

developing options or implementing courses of action, but not 

making decisions on the courses of action. 

Management Comments and OIG Analysis 

We obtained written comments on a draft of this report from 

FEMA’s Assistant Administrator, Grant Programs Directorate. 

We have included a copy of FEMA’s response in its entirety as 

Appendix B. 

FEMA’s Response to Recommendation #3 

FEMA’s comments indicate non-concurrence with our 

recommendation on stopping the practice of allowing contractor 

personnel to approve Staffing for Adequate Fire and Emergency 

Response payments and make program decisions. According to 

FEMA, in processing funds requests, the ultimate decision to 

disburse funds to a grantee is made by federal staff in the FEMA 

Chief Financial Officer’s organization, which requests that 

Treasury issue funds to the grantee. Prior to that decision, there is 

a range of reviews which evaluate the appropriateness of the 

grantees’ request for funds. 

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Specifically, once a request is submitted by a grantee, the program 

office decides whether the request: (1) conforms with the original 

statement of work; (2) is within the formulaic paradigm that 

determines how much money is available to the grantee; and (3) 

has any aspects which are contrary to prior approvals of similar 

requests. These procedures are established by federal staff and are 

merely followed by the contractor staff. Therefore, FEMA 

contends that it is the federal employees of the program office who 

make the determination that a request should proceed to processing 

in the Chief Financial Officer’s Office. 

Quarterly reports which do not include requests for funds are 

processed under a similar set of review steps. That is, a reviewer 

of the report, whether it is a federal employee or a contractor, must 

adhere to procedure and precedent in performing the review. In no 

instance does contractor staff make decisions on their own that 

constitute inherently governmental actions as defined in the 

Federal Acquisition Regulation. 

FEMA has obtained approval to hire additional staff in the 

Assistance to Firefighter Grant Program office, and human 

resource actions to implement this resolution have been initiated. 

Nevertheless, until those actions have been completed, FEMA will 

continue to use contractors in its Assistance to Firefighter Grant 

Program office to process routine grant management actions–funds 

requests, quarterly reports, and amendment requests–under the 

tightly controlled process briefly outlined above. 

FEMA’s Response to Recommendation #4 

FEMA’s comments indicate non-concurrence with our 

recommendation on establishing monitoring procedures to ensure 

that only FEMA employees make approvals and program 

decisions. According to FEMA, it does not allow contractors to 

make program decisions. Contractors work under governmental 

supervision, and decisions that contract staff may communicate to 

grantees are either those that have been vetted through precedent, 

or have been specifically approved by governmental oversight. 

OIG Analysis of FEMA’s Responses to Recommendations #3 

and #4 

We acknowledge that federal staff within the Chief Financial 

Officer’s office process requests for payments. However, it is 

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contract staff that are approving Staffing for Adequate Fire and 

Emergency Response grant requests for payment without FEMA 

program personnel review and approval, regardless of whether the 

contract staff are following procedures established by federal staff. 

Therefore, FEMA should reevaluate its approval process to ensure 

that approval and program decision-making activities are 

performed by FEMA employees, and clarify the roles and 

responsibilities of Staffing for Adequate Fire and Emergency 

Response support contractors, limiting the contractors to 

developing options or implementing courses of action but not 

making decisions on the courses of action. Recommendations #3 

and #4 are considered unresolved until FEMA reevaluates and 

modifies its program approval process, or until federal employees 

assume the responsibilities currently performed by contract support 

staff. 

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Appendix A 

Purpose, Scope, and Methodology 

The purpose of our audit was to determine the extent to which 

FEMA effectively manages grant resources to provide sufficient 

financial and programmatic monitoring of grantees. Specifically, 

our objectives were to assess whether FEMA (1) instituted 

appropriate organizational structures and a workforce skill mix to 

achieve its grant management responsibilities; (2) identified gaps 

or deficiencies in its skill mix; (3) implemented processes and 

procedures to monitor grantees; and (4) identified a means to 

improve grant management operations. 

We initially met with FEMA officials responsible for grant 

management and oversight, including program and financial 

monitoring for each directorate: Grant Programs, U.S. Fire 

Administration, Mitigation, Disaster Operations, Disaster 

Assistance, and National Preparedness. We interviewed staff 

tasked with financial and programmatic monitoring of specific 

grant programs, including the State Homeland Security Program, 

the Staffing for Adequate Fire and Emergency Response Program, 

and the Emergency Food and Shelter Program. 

We also interviewed FEMA regional staff regarding financial 

monitoring and Office of the Chief Financial Officer staff 

responsible for processing Staffing for Adequate Fire and 

Emergency Response payments, as well as the contractors 

responsible for reviewing payment requests and evaluating 

quarterly status reports for the Staffing for Adequate Fire and 

Emergency Response Program. We met with FEMA’s Human 

Capital and Information Technology Divisions to discuss 

processes, functions, and activities related to grant management 

and oversight. In addition, we met with DHS and FEMA officials 

to obtain their views and opinions on effectively managing grant 

resources. We obtained written responses regarding the PostKatrina Emergency Management Reform Act and the Strategic 

Human Capital Plan from the Strategic Planning Office, 

Transformation Office, and the Human Capital Office. Our audit 

coverage included program and financial information and statistics 

for FY 2007 through FY 2008, although other periods were 

included as deemed necessary to satisfy the audit objectives. 

We conducted our fieldwork at FEMA Headquarters, and at the 

Grant Programs, Mitigation, Disaster Assistance, Disaster 

Operations, and National Preparedness Directorates, all located in 

the Washington, DC, metropolitan area. 

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Appendix A 

Purpose, Scope, and Methodology 

Our audit also consisted of: 

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A review of FEMA’s organizational structure and workforce. 

A review of the current skills mix and capabilities included in 

position descriptions for the grant management and oversight 

workforce, including Headquarters and regional staff. 

An assessment of training and development requirements for 

the grant management workforce. 

A review of contracts to identify staff tasked with grant 

functions and activities for the selected grant programs. 

A review of policies, procedures, protocols, and plans for 

monitoring the selected grant programs. 

A review of supporting documentation regarding financial and 

programmatic monitoring activities for the selected grant 

programs. 

Our review covered financial and programmatic monitoring 

conducted during FY 2007, which consisted of funds awarded in 

FY 2006. We judgmentally selected a sample of grant programs 

for review based on funding, number of grants, and type of 

program. Therefore, our test results represent the characteristics of 

our judgmental sample and were not projected to the population 

from which the sample was selected. We selected our sample from 

active disaster, non-disaster, and preparedness grants administered 

by FEMA as of January 2008. This included 26 active grant 

programs, with approximately 6,061 grant awards totaling 

$3,178,677,987. FEMA currently has 52 grant programs. 

For financial monitoring, we selected programs monitored by the 

Financial Accountability and Oversight Division within the Grant 

Programs Directorate, since this division oversees non-disaster and 

preparedness grants, along with the Assistance to Firefighters 

Grant Program. We reviewed support documentation for five 

states and two territories included in the FY 2007 Financial 

Monitoring Plan for the Homeland Security Grant Program/ State 

Homeland Security Program. 

For program monitoring, we selected grant programs based on 

funding, number of grants, type of program, type of award cycle, 

information obtained through interviews, and current and planned 

DHS OIG audit work. The three grant programs we chose for 

review were (1) State Homeland Security Program, (2) Staffing for 

Adequate Fire and Emergency Response, and (3) Emergency Food 

and Shelter Program. 

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Appendix A 

Purpose, Scope, and Methodology 

For the State Homeland Security Program, a formula grant included 

as part of the Homeland Security Grant Program, the total universe 

consisted of 56 states and territories including the District of 

Columbia. The Grant Development and Administration Division 

within the Grant Programs Directorate was responsible for program 

monitoring, and the former Office of Grant Operations was 

responsible for financial monitoring. The State Homeland Security 

Program funds allocated for FY 2006 totaled $528,165,000. Our 

sample included nine geographically dispersed states and territories 

awarded $76,050,000, which represents 16% of the grantees and 

14% of the FY 2006 funds awarded. 

For the Staffing for Adequate Fire and Emergency Response 

Program, approximately 265 project grants were awarded from the 

FY 2006 appropriation, for a total of $105,142,102. The Grant 

Development and Administration Division within the Grant 

Programs Directorate was responsible for program monitoring, and 

the former Office of Grant Operations was responsible for 

financial monitoring. We judgmentally selected a 10% sample to 

review a variety of grantees, based on regions, program types, 

state, department type, award amount, and service area. The 

selection resulted in a review of 27 grant recipients, totaling 

$11,584,857. In addition, we reviewed the only site visit 

conducted for the program, which covered $283,759 from FY 2005 

grant awards. DHS awarded 162 Staffing for Adequate Fire and 

Emergency Response grants from the FY 2005 appropriation, 

totaling $64,370,976. 

For the Emergency Food and Shelter Program, our review covered 

financial and programmatic monitoring of these formula grants 

conducted during FY 2007. The Individual Assistance Division 

within the Disaster Assistance Directorate was responsible for both 

program and financial monitoring. During FY 2007, the 

monitoring plan covered one recipient. However, funds are 

distributed to more than 12,000 social service agencies, both 

private nonprofit and public organizations, as subrecipients. The 

funding allocated for FY 2006 was $151,470,000. 

We conducted our audit from February 2008 through August 2008 

under the authority of the Inspector General Act of 1978, as 

amended, and in accordance with 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 

on our audit objectives. We believe that the evidence obtained 

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Appendix A 

Purpose, Scope, and Methodology 

provides a reasonable basis for our findings and conclusions based 

on our audit objectives. 

Improvements Needed in Federal Emergency Management Agency Monitoring of Grantees 

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Appendix B 

Management Comments to the Draft Report 

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Appendix B 

Management Comments to the Draft Report 

Improvements Needed in Federal Emergency Management Agency Monitoring of Grantees 


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Appendix B 

Management Comments to the Draft Report 

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Appendix B 

Management Comments to the Draft Report 

Improvements Needed in Federal Emergency Management Agency Monitoring of Grantees 


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Appendix C 

Major Contributors to this Report 

Michael Siviy, Director, Grants Management Division 

Inez Jordan, Audit Manager 

Patricia Plummer, Program Analyst (Team Leader) 

Mark S. Phillips, Auditor (Team Leader) 

Tierney Davis, Program Analyst 

Hortencia Francis, Program Analyst 

Brandon Landry, Program Analyst 

Andre Marseille, Program Analyst 

Amy Nase, Auditor 

Improvements Needed in Federal Emergency Management Agency Monitoring of Grantees 

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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 

Federal Emergency Management Agency 

Administrator 

Assistant Administrator, Grant Programs Directorate 

Assistant Administrator, Disaster Assistance Directorate 

Director, Office of Policy and Program Analysis 

Director, Office of Management 

Federal Emergency Management Agency Audit Liaison 

Grant Programs Directorate Audit Liaison 

Office of Management and Budget 

Chief Homeland Security Branch 

DHS OIG Budget Examiner 

Congress 

Congressional Oversight and Appropriations Committees, as 

appropriate 

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ADDITIONAL INFORMATION AND COPIES 

To obtain additional copies of this report, please call the Office of Inspector General (OIG) at (202) 254-4199, 

fax your request to (202) 254-4305, or visit the OIG web site at www.dhs.gov/oig. 

OIG HOTLINE 

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misconduct relative to department programs or operations: 

• Call our Hotline at 1-800-323-8603; 

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DHS Office of Inspector General/MAIL STOP 2600, 

Attention: Office of Investigations - Hotline, 

245 Murray Drive, SW, Building 410, 

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