Department of Homeland Security

Office of Inspector General 

Review of Department of Homeland Security's Expenditure 


Plan: Department Headquarters Consolidation 


(Letter Report)
 

American Recovery and Reinvestment Act of 2009
 

OIG-09-106 September 2009 
Offce of Inspector General

U.S. Department of Homeland Seciirity

Wa~hington, DC 20528

Homeland

Security

SEP 2 2 2009

MEMORANDUM FOR: The Honorable Elaine Duke ..~ot ~ Under Secretary for Managen)ent

FROM: -'ichard L. Skinner

Inspector General

SUBJECT' Letter Report: Review of Department of Homeland

Security's Expenditure Plan. Department Headquarters

Consolidation

We reviewed the expenditure plan for the Department of Homeland Security

headquarters consolidation as part of our oversight responsibilities to monitor the use of

funds provided to the department under the American Recovery andReinvestment Act of

2009 (Recovery Act). The Recovery Act provided $200 milion to the Department of

Homeland Security toward the ongoing consolidation ofthe department's heådquarters at

the St. Elizabeths site. The Recovery Act requires that the recipients of Recovery Act

funds develop an expenditure plan for the use of the funds.

We reviewed the department's expenditure plan to determine whether the plan was

practical, thorough, comprehensive, and designed to meet the Recovery Act's goals.

Further, we evaluated the plan according to prudent management principles, to determine

whether it contained measures to mitigate other factors that could pose challenges to the

headquarters consolidation project.

The department generally developed a practical and comprehensive plan to spend its

$200 milioíl in Recovery Act funds for the consolidation of its headquarters at the St.

Elizabeths site. The department also designed its plan to meet Recovery Act goals.

However, the department and the General Services Administration do not have a formal

interagenGY agreement to ensure oversight of the Recovery Act funds. In addition,

potential issues related to future funding, access, and litigation could delay the

implementation oftheheadquartersconsolidation project. Weare rnakingone

recommendation to the department to help ensure the effective use of the Recovery Act

funds. The department concurred with our recommendation. A copy of the department's

response is provided at Appendix B.

Should you have any questions, please call me, or your staff may contact Anne L.

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

 

Background 

The American Recovery and Reinvestment Act of 2009, Public Law 111-5, (Recovery 

Act) was enacted on February 17, 2009, injecting $787 billion of federal funds into the 

economy to preserve and stimulate economic growth in the United States. The Recovery 

Act made supplemental appropriations to federal departments and agencies for 

infrastructure investment, energy efficiency and science, assistance to the unemployed 

and disabled veterans, and state and local stabilization. 

Under provisions of the act, the Department of Homeland Security (DHS) received 

approximately $2.8 billion for equipment, construction, infrastructure improvement, and 

emergency management grants. Congress designated $200 million of this amount to 

continue the development of St. Elizabeths1

 as the new DHS Consolidated Headquarters. 

The General Services Administration (GSA) has custody and control of St. Elizabeths’ 

176-acre West Campus and has developed a master plan to revitalize it as a high security 

campus for DHS headquarters. 

GSA received $450 million in Recovery Act funds and $346.6 million in FY 2009 

appropriations to develop St. Elizabeths. GSA will combine this funding with DHS 

Recovery Act funds of $200 million and FY 2009 appropriations of $100.2 million to 

begin its construction on the first phase of the project, the U.S. Coast Guard 

Headquarters. The following graph shows the planned schedule of obligations 

(commitments to pay) and outlays (actual payments) for the project through FY 2013: 

Combined GSA and DHS Obligations and Outlays (in Thousands of Dollars) 

0 

100,000 

200,000 

300,000 

400,000 

500,000 

600,000 

Obligations 0 0 50,000 514,392 48,959 213,453 167,513 102,600 0 0 0 

Outlays 0 0 1,000 12,800 15,000 30,000 50,000 96,159 231,017 392,462 268,479 

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 

FY 2009 FY 2010 FY2011 FY2012 FY2013 

1

 St. Elizabeths is a national historic landmark in southeast Washington, DC. It was established by 

Congress in 1855 as the Government Hospital for the Insane to provide mental health facilities for the 

military and the District of Columbia. In 1916, Congress officially changed the name of the facility to St. 

Elizabeths Hospital (without an apostrophe). 

1

In April 2009, DHS transferred $198.9 million of the $200 million designated for 

headquarters consolidation to GSA through a reimbursable work authorization. These 

funds will pay for tenant-specific construction requirements for the U.S. Coast Guard 

Headquarters building and shared use facilities, such as security and telecommunications 

infrastructure. The department plans to use the remaining $1.1 million by September 30, 

2009, for operational site security staffing and construction activity monitoring. 

Results of Review 

The department generally developed a practical and comprehensive plan to spend its 

$200 million in Recovery Act funds for the consolidation of its headquarters at the St. 

Elizabeths site. The department also designed its plan to meet Recovery Act goals. As 

planned, the department transferred $198.9 in Recovery Act funds to GSA and will use 

the remaining $1.1 million for site security and construction monitoring. However, the 

department and GSA do not have a formal interagency agreement to ensure oversight of 

the Recovery Act funds. In addition, potential issues related to future funding, access, 

and litigation could delay the implementation of the headquarters consolidation project. 

Recovery Act Goals 

We reviewed DHS’ expenditure plan for evidence that it met the goal of the Recovery 

Act’s “preference for quick-start activities” provision. The goal of the quick-start 

activities general provision (Title XVI, General Provision, section 1602 of the Recovery 

Act) was to use at least 50% of the funds for activities that could be initiated within 120 

days of the date the Act was signed, or by June 17, 2009. Since GSA controls the 

headquarters consolidation project, DHS appears to have met the “preference for quickstart activities” goal by obligating $198.9 million in Recovery Act funds to GSA in April 

2009. 

We also reviewed DHS’ expenditure plan for evidence that it met the goal of the “special 

contracting” provision. That provision (section 1554 of the Recovery Act) recommended 

that, to the maximum extent possible, recipients award fixed-price contracts through the 

use of competitive procedures. If the plan is implemented as designed, the department 

should meet this goal by obligating the remaining $1.1 million in DHS Recovery Act 

funds through fixed-price contracts for operational site security staffing and construction 

activity monitoring. 

Interagency Agreement 

DHS and GSA do not have a formal interagency agreement documenting the respective 

roles and responsibilities for the DHS headquarters consolidation project. DHS has a 

reimbursable work authorization with GSA to transfer $198.9 million in Recovery Act 

funds to GSA for phases I, II, and III of the headquarters consolidation project. 

However, this document does not address oversight of the Recovery Act funds or 

Recovery Act reporting, and does not define roles and responsibilities for DHS and GSA. 

2


According to department officials, DHS’ communication with GSA is good. GSA is 

responsible for activities such as issuing construction contracts, monitoring contractor 

activities, and submitting monthly reports to the Office of Management and Budget on 

Recovery Act obligations and outlays. DHS will participate in the source selection team 

and provide additional oversight, such as determining suitability for access by contract 

personnel, monitoring construction activities, and ensuring conformance with the contract 

documents. Nevertheless, since DHS and GSA did not document these roles and 

responsibilities through a formal interagency agreement, a breakdown of communication 

between the department and GSA could present a significant barrier to effective project 

oversight. 

An interagency agreement that defines roles and oversight responsibilities would also 

help ensure that Recovery Act funds are used as intended by Congress. For example, 

Title XVI, General Provision, section 1605 of the Recovery Act requires that, with 

certain exceptions, only iron, steel, and manufactured goods produced in the United 

States be used for the construction or alteration of public buildings. Without sufficient 

oversight, Recovery Act funds could inadvertently be used for foreign-produced 

construction materials. 

Other Issues 

DHS has identified funding, access, and potential litigation issues that could delay the 

headquarters consolidation project at the St. Elizabeths site. If these issues are not 

carefully monitored and resolved, the Recovery Act funds may not enter the economy as 

quickly as the legislation intended. 

Funding 

DHS’ and GSA’s ability to maintain the project delivery schedule is dependent on the 

effective management of the funding provided in the FY 2009 appropriation, the 

Recovery Act, and future congressional appropriations. To achieve the FY 2013 delivery 

of phase I, Congress must appropriate funds for equipment, outfitting and moving costs 

in future fiscal years. Likewise, for phases II and III, GSA and DHS will need additional 

appropriations to achieve the planned deliveries in FYs 2014 and 2016. 

Access 

Access to the new DHS headquarters is dependent upon the construction of a new road 

through an area currently under the jurisdiction of the National Park Service. The 

Federal Highway Administration is conducting an evaluation to determine whether there 

is a feasible and prudent alternative to the proposed access road that would not adversely 

affect parkland. However, according to DHS officials, it is unlikely that the evaluation 

will reveal an acceptable alternative. Once the Federal Highway Administration 

completes its evaluation, DHS, GSA, and the National Park Service will discuss the 

transfer of the affected parkland to GSA and possible measures to mitigate the 

environmental impact of the new road. 

3

Potential Litigation 

GSA and the Federal Highway Administration must make sure they are compliant with 

National Environmental Policy Act2

 and National Historic Preservation Act3 processes to 

avoid litigation surrounding the development of the St. Elizabeths site. Although a 

National Historic Preservation Act Programmatic Agreement4

 to preserve the national 

historic landmark was executed, the agreement did not satisfy all of the nonsignatory 

consulting parties. In its agency recovery plan, the department recognized the potential 

for subsequent litigation. However, according to DHS officials, recent meetings with the 

consulting parties have gone very well and GSA is taking steps to ensure its compliance 

with all regulations and requirements throughout the planning process. 

Conclusion 

To achieve its goal of relocating the DHS headquarters to the St. Elizabeths site, the 

department needs to ensure that outstanding issues, including funding, access, and 

potential litigation, have been resolved. The department should also consider entering 

into an interagency agreement, such as a memorandum of understanding, with GSA 

regarding the roles and responsibilities of both agencies concerning the Recovery Act 

funds and project oversight. 

Recommendations 

We recommended that the Department of Homeland Security develop, in coordination 

with the General Services Administration, an interagency agreement that defines the roles 

and responsibilities of both agencies for project oversight, reporting, and tracking of 

Recovery Act funds. 

Management Comments and OIG Analysis 

DHS concurred with our facts, conclusions, and recommendations. DHS stated the 

agency and GSA will enter into a formal interagency agreement for the DHS 

Headquarters Consolidation Project. DHS and GSA will jointly develop and sign a 

memorandum of understanding that defines roles and responsibilities for oversight of the 

Recovery Act funds and Recovery Act reporting between DHS and GSA. We consider 

the recommendation resolved, but it will remain open pending receipt and review of 

documentation indicating that DHS and GSA have signed the memorandum of 

understanding. 

2

 Public Law 91-190; 42 U.S.C. 4321-4347. 
 3

 Public Law 89-665; 16 U.S.C. 470. 
 

4 A programmatic agreement is a legally binding agreement among state or federal agencies that establishes 
 

a process for consultation, review, and compliance with federal historic preservation laws. 
 

4

	 

	 

	 

	 

	 

	 

Appendix A 

Purpose, Scope, and Methodology 

The objective of our review was to determine whether the Department of Homeland 

Security has developed a practical and comprehensive plan to spend the funds provided 

by the Recovery Act to design and construct a headquarters facility. 

To accomplish our objective, we: 

•	 Reviewed laws, regulations, and guidance related to the American Recovery and 

Reinvestment Act of 2009; 

•	 Obtained information on the processes and controls in place for budgetary
 


resources management and financial and contract management; 
 

•	 Examined prior audit reports issued by GSA’s Office of Inspector General and by 

the Government Accountability Office; 

•	 Reviewed the DHS Consolidated Headquarters Expenditure Plan, dated April 17, 

2009; 

•	 Reviewed documentation in support of the project expenditure plan, such as the 

program specific draft Recovery Act plan and other department and GSA records 

pertinent to the project; and 

•	 Interviewed key personnel responsible for the expenditure plan and programspecific agency recovery plan from DHS and GSA, including the GSA’s Office of 

Inspector General. 

We conducted our review between April 2009 and June 2009 under the authority of the 

Inspector General Act of 1978. 

We would like to thank the Department of Homeland Security and the General Services 

Administration for their cooperation and courtesies extended to our staff during this 

review. 

5


Appendix Appendix BB 

Management Management Comments to the Draft Letter Report Comments to the Draft Letter Report 

MEMORANDUM FOR: Anne L. Richards 

AssistlUlllnspectol" General fl)r Audits 

FROM: Elu.ine C. Duke ~ IJ 1 0 

Under Secretaryfo~ 

SUBJECT: SUBJECT: Response to tho Draft Letter Report: Revielv of Department of 

Homeland Secllrity 's Expenditure Plan.: Depanment Headquarters 

Consolidation 

In response to your August 13, 2009 memomndum, Draft ~tler Report: Review of Departmellt of 

Homelalld Security IS Expem/i(ure 'PlaTI: Department Headquarters COl/so/idallon, the Department 

of Homeland Secl!rity (DHS)lUndcr Secretary for Management (USM) agrees with Utl.l 

rccomm,endation in the Draft Letter Report: We recommend thai the i)eparhllent of Home/arid 

Security deve.lop, In coordination with the (lel/eral Services Administration, an /nlerage,llcy 

agreement, $lIch as a memQrandum ofunderslanditlg, 'ha~ defines the roles(IIul respotlslbililies of 

bOlh agencies forprojec,f QVers/gllt, illc/r4Ciirrg reporafiK. oversight, and trackillg of Recovery Act 

fullds. 

The,DRS aud ,Gen\."1'81 Services Administration (GSA) will enter into 1\ formal interagency 

agreement ror the DRS h~dquarters consolid"tiQn project. We,will jointly develop and sign II 

memorandum ofullderstanding thatdennes roles and responsibilities for oversight of Ute Rt:COvery 

Act funds and Recovery Act reporting between DHS and GSA, 

We do I)ot h(lve comments on the Draft Le!terReport. We al~o do not have any conecl'lIs for 

publicly releasing any of the information contained in the repOrt an<! do not believe any specific 

clements should be excluded. 

If thero are My questions, please contact Mr. Riehard K. McGmder, in the Office of the Chief 

Administrative Officer, at (202) 447-5028. 

U.s.. DI,'!J'.,trul\,IH ttl UomU:'!ild ccutiU' 

W .. hlnVtOD;'OC 2Ol28 

6 
 

Appendix C 

Major Contributors to This Report 

Paul Wood, Director 

Linda Howard, Director 

Virginia Feliciano, Auditor - Project Lead 

Marisa Martinez, Program Analyst 

Jeffrey Balsewicz, Program Analyst 

 Andrea Rambow, Desk Officer 

Barry Cleveland, Program Analyst 

Lisa Vonder Haar, Desk Officer 

Brad Mosher, Referencer 

7


Appendix D 

Report Distribution 

Department of Homeland Security 

Secretary 

Deputy Secretary 

Chief of Staff for Operations 

Chief of Staff for Policy 

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 

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) 254-4100, 

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

OIG HOTLINE 

To report alleged fraud, waste, abuse or mismanagement, or any other kind of criminal or noncriminal 

misconduct relative to department programs or operations: 

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

• Fax the complaint directly to us at (202) 254-4292; 

• Email us at DHSOIGHOTLINE@dhs.gov; or 

• Write to us at: 

DHS Office of Inspector General/MAIL STOP 2600, 

Attention: Office of Investigations - Hotline, 

245 Murray Drive, SW, Building 410, 

Washington, DC 20528. 

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