GAO-04-577R Air Marshal Reprogramming 

United States General Accounting Office

Washington, DC 20548 

March 31, 2004 

The Honorable Martin Olav Sabo 

Ranking Minority Member 

Subcommittee on Homeland Security

Committee on Appropriations 

House of Representatives 

Subject: Budget Issues: Reprogramming of Federal Air Marshal Service Funds in 

 Fiscal Year 2003

Dear Mr. Sabo: 

On May 15, 2003, and again on July 25, 2003, the Department of Homeland Security 

(DHS) notified the House and Senate Committees on Appropriations, Subcommittees on 

Homeland Security, of its intention to reprogram a large amount of funds appropriated to 

the Transportation Security Administration (TSA) for fiscal year 2003. In an August 2003 

letter, you requested that we review the key events leading up to the reprogramming and 

subsequent revisions as they related to the Federal Air Marshal Service (FAMS). In 

particular, you asked that we determine (1) whether senior TSA, DHS, and Office of 

Management and Budget (OMB) officials were informed of the implications of the FAMS 

funding reductions prior to submission of the reprogramming notices; (2) the 

programmatic implications of the funding reductions on the FAMS program; (3) whether 

it was legally necessary to send an impoundment message to the Congress; and whether 

the Secretary of Homeland Security had delegated to the Under Secretary for 

Management the authority to transmit reprogramming notifications to the cognizant 

Appropriations Subcommittees. Finally, you asked us to identify, as appropriate, 

improvements in budget execution for future consideration. As agreed with your office, 

we briefed your subcommittee staff on February 27, 2004, and the majority staff on 

March 3, 2004, on the results of our work.1

 This report transmits the information we 

provided in those briefings. 

To address these objectives, we reviewed relevant documentation on the proposed 

reprogramming and other documentation on the FAMS program and budget. We 

interviewed senior DHS, TSA and FAMS officials and their staffs and staff at OMB to 

discuss the reprogramming process and the reductions in funding for FAMS. We also 

interviewed DHS and TSA General Counsel staff to obtain their perspectives on 

questions regarding impoundments and delegation. We conducted our work from 

 

1

 The summary slides used during these briefings are reprinted in enc. III. 
Page 2 GAO-04-577R Air Marshal Reprogramming 

August 2003 through February 2004 in accordance with generally accepted government 

auditing standards. Our scope and methodology is described in more detail at the end of 

this report. 

Background 

Reprogramming actions allow agencies to shift funds within an account to fund other 

requirements within an existing appropriation that were not planned when the 

appropriation was made.2 Unless limited by some provision of law, agencies are 

implicitly authorized to reprogram funds as part of their general responsibility to manage 

funds. However, appropriations laws often set limits on reprogramming or require 

notification of reprogramming under certain conditions or over certain thresholds. The 

TSA fiscal year 2003 reprogramming met the notification thresholds established by 

Section 1601 of the Emergency Wartime Supplemental Appropriations Act.3

 For the 

specific reprogramming notification requirements, see enclosure II. 

The fiscal year 2003 TSA reprogramming was developed against a backdrop of both rapid 

program expansion and a changing organizational environment. Among the program 

expansions affecting TSA were the federalization of passenger and baggage screening 

functions at airports, establishment of federal airport security directors, deployment of 

explosives detection equipment for checked baggage, mandatory criminal history checks 

for employees working in secure airport areas, and working with airlines to strengthen 

cockpit doors on all passenger aircraft. Further, after the terrorist attacks of September 

11, 2001, the President and the Congress decided to rapidly expand FAMS. Within 10 

months of the terrorist attacks on the United States, the number of federal air marshals 

grew from fewer than 50 to thousands.4 Beyond these program expansions, two major 

organizational transitions occurred in a 16-month period. First, in November 2001, TSA 

was created within the Department of Transportation to centralize federal aviation and 

other transportation security efforts. Aviation security activities that were formerly the 

responsibility of the Federal Aviation Administration (FAA), including FAMS, were 

moved to the newly created TSA. Second, FAMS moved with the rest of TSA to DHS 

when the department was established on March 1, 2003.5 

The budget and appropriations environment in fiscal year 2003 and changing mission 

needs added to the uncertainty of the situation. Like all federal civilian agencies, TSA 

faced the challenges inherent in operating under a series of continuing resolutions until 

February 2003—nearly half of the fiscal year. As a new agency with a newly expanded 

federal role and mission, TSA faced an additional challenge. It had no historical 

information to assist in estimating costs for efforts such as federalized checkpoints, 

baggage screening, and the full growth of the FAMS program. Additionally, initial budget 

estimates for TSA were created before its mission and organizational structure were 

established. All of this contributed to a situation described by TSA Chief Financial 

Officer (CFO) staff as a “misalignment” between fiscal year 2003 appropriations and 

 

2

 In contrast, a “transfer” is when an agency moves funds between appropriation accounts. 3

 Pub. L. No. 108-11 § 1601 117 Stat. 559, 584 (2003). 

4

 The exact number of federal air marshals is classified. 

5

 FAMS has since moved from TSA to the Bureau of Immigration and Customs Enforcement within DHS, 

but this occurred after the period covered in this study. 
Page 3 GAO-04-577R Air Marshal Reprogramming 

mission needs at the time appropriations were enacted. TSA CFO staff told us that the 

need for a reprogramming was clear at that time. 

Reprogramming Process 

On May 15, 2003, DHS formally notified the homeland security appropriations 

subcommittees of its intention to reprogram $763.3 million (reducing FAMS funding by 

$104 million) among several of its programs within the TSA budget account and to 

transfer $150 million from other DHS appropriation accounts. DHS told us that both the 

Senate and House subcommittees advised DHS that the proposed reprogramming was 

denied. DHS budget and TSA CFO staff told us that in order to ease the subcommittees’ 

concerns with the May reprogramming, they engaged in discussions with congressional 

staff. A revised reprogramming was submitted on July 25, 2003, which was then 

modified again on July 31, 2003. Both subcommittees eventually concurred with this 

reprogramming, but with caveats. According to the letter sent by the Chairman of the 

Subcommittee on Homeland Security, Senate Committee on Appropriations, “approval of 

[the reprogramming] is based on the understanding that this reallocation of appropriated 

funds will not decrease the number of air marshals currently assigned to domestic and 

international flights.” The Subcommittee on Homeland Security, House Committee on 

Appropriations, approved of the revised reprogramming, but “denied the proposed 

reduction of $95 million from the FAMS program.” The May 15 and July 25 

reprogramming plans would have reduced fiscal year 2003 funding for FAMS from 

$545 million to $441 million (a difference of $104 million); the revised July 31 proposal 

reduced fiscal year 2003 funding to approximately $450 million (a difference of 

$95 million). 

The timeline in figure 1 highlights key events in this process. 
Page 4 GAO-04-577R Air Marshal Reprogramming 

Figure 1: TSA Reprogramming Timeline for Fiscal Year 2003 

TSA and FAMS disagree on when and what FAMS was told about the reprogramming, 

about whether FAMS agreed to a cut, about the ability of FAMS to absorb a cut, about 

the likely programmatic impact of the proposed cuts, and even about the nature of the 

hiring freeze imposed on FAMS. Although evidence provided by DHS reflects some of 

the communication between TSA and FAMS, the documents and data provided to GAO 

permit us to opine on neither the accuracy of assertions by either TSA or FAMS nor the 

reasonableness of TSA’s analysis and conclusions and the FAMS counterarguments. 

What follows is a description derived from interviews, documents, and other testimonial 

evidence of key points in the process. In cases in which TSA and FAMS disagreed on 

what happened, both views are given. A more detailed sequence of the reprogramming 

process is included in enclosure I. 
Page 5 GAO-04-577R Air Marshal Reprogramming 

Soon after the enactment of the appropriation act for fiscal year 20036

 in February, the 

TSA CFO informed the DHS CFO that there was a “shortfall” of nearly $2 billion within 

TSA and that a reprogramming would be necessary to realign TSA programs and funds. 

FAMS was only one part of a very large reprogramming and transfer package,7 and 

funding levels for multiple accounts and activities were reviewed during this 

reprogramming. TSA CFO staff said that during the months leading up to the submission 

of the reprogramming they were in communication with FAMS and other program 

offices, requesting spending plans detailing budget activities, funding needs, and 

explanations of how the offices arrived at their assumptions. TSA CFO staff also noted 

that they had difficulty obtaining timely information from FAMS; that the budget data 

supplied by FAMS did not support the accompanying narrative provided on the impacts 

of proposed budget reductions; and that instead of providing details on obligations, 

FAMS officials provided projections, which did not incorporate actual spending. 

TSA CFO staff told us that their review of spending data that showed FAMS was 

obligating funds at a slower rate than expected, and that since FAMS was still meeting its 

mission targets, TSA was comfortable with proposing budget reductions for FAMS. 

However, they also told us that the data on which they relied were from several legacy 

financial systems and were of questionable quality, that they did not have access or did 

not get data on the funds FAMS received from FAA, and that no one in the TSA CFO’s 

office had time to perform program impact analyses. 

Although FAMS memos written to TSA during the development of the reprogramming 

asserted that there would be “significant to severe” operational impacts if funds were 

reduced, TSA officials said that FAMS provided TSA with little supporting data to 

validate these claims. The TSA CFO objected to FAMS’s impact characterizations and 

said FAMS’s spending estimates were inconsistent. In order to settle the funding 

questions, the TSA Administrator decided to conduct a program audit of FAMS’s funding 

and operations. The results of this review revealed that as of late July 2003, there was a 

projected deficit of approximately $16 million out of the FAMS $529 million8

 budget 

($441 million in fiscal year 2003 funding, plus $88 million carryover). This deficit was 

partially alleviated when DHS adjusted the second reprogramming notice to restore 

approximately $9 million to FAMS. Consequently, the total reduction in the FAMS 

budget from its initial fiscal year 2003 funding level was $95 million, rather than the 

$104 million described in the first reprogramming, as shown in table 1. 

 

 

6

 Pub. L. No. 108-7, 117 Stat. 11 (2003). 

7

 The May 15 plan totaled $913 million ($763.3 million reprogramming plus a $150 million transfer) and the 

July 25plan totaled $1.16 billion ($854.8 million reprogramming plus a $306.5 million transfer). 8

 The program audit conducted in late July 2003 identified an additional $300,000 available to FAMS, which 

brought FAMS’s funding level to $529.7 million. However, since discussions within TSA and FAMS 

surrounding the reprogramming commonly referred to a funding level of $529.4 million, this figure is used 

in this report. 
Page 6 GAO-04-577R Air Marshal Reprogramming 

Table 1: Progression of FAMS Funding Level During Fiscal Year 2003

Dollars in millions 

Fiscal year 

funding 

level 

Change Reprogramming 

total

February 26: Fiscal year 2003 

congressional mark 

$545 

March 26: Reduction based on attrition 

and other unspecified agency 

requirements 

-$40 

April 28: Reduction based on personnel 

compensation and benefits savings 

-$38.7 

April 28: Reduction to cover the cost of 

other Aviation Operations purposes 

-$25 

Total reductions proposed in May 15 and 

July 25 reprogrammings 

 -$104

Resulting proposed funding level $441 

Plus fiscal year 2002 carryover funds +$88 

Total funds available to FAMS $529 

Adjustment to reprogramming plan +$9 

Revised total reductions proposed in final 

July 31 reprogramming 

 -$95

Final total of funds available to FAMS $538 

Source: GAO summary of TSA and FAMS budget information and memos. 

 

Degree of Senior Officials’ Awareness of the Implications of FAMS Funding 

Reductions Is Unknown 

The TSA Administrator was made aware of both the FAMS characterization of the 

anticipated impact of the funding reductions and the TSA CFO’s objections to the FAMS 

claims. In fact, the TSA Deputy Administrator told us that he and the Administrator 

approved the reprogramming in early May 2003. 

The reprogramming was approved and submitted by DHS. In response to a question 

regarding the Secretary’s involvement, DHS officials told us that “Secretary Ridge was 

briefed regarding the fact [that] there were TSA reprogrammings, but was not briefed on 

the specifics of the impact on FAMS. Instead Department officials relied on TSA for its 

detailed analysis and evaluation of the FAMS impact.” 

In addition, OMB staff cleared the reprogramming. When asked whether the OMB 

Director was informed of the reprogramming implications for FAMS, an attorney from 

OMB General Counsel’s office told us that the OMB Director is informed of budget 

execution matters on an “as needed” basis and that it is not OMB’s policy to say whether 

the Director was notified of any specific reprogramming. When asked about 

programmatic impact, OMB staff said that no one in DHS, TSA, or FAMS is able to 

describe the impact in other than in dollar terms. 
Page 7 GAO-04-577R Air Marshal Reprogramming 

Impact of FAMS Budget Reductions Was Minimal 

As the budget reductions were being imposed on FAMS by TSA, FAMS officials stated in 

memos and other documents that the impact of the reductions could have ranged from 

significant to severe. The Deputy Assistant Administrator for Aviation Security Law 

Enforcement9 claimed that reducing the program to the $441 million level would result in 

a budget shortfall totaling tens of millions of dollars, staff shortages, and a reduction in 

FAMS coverage of long-haul flights by approximately 90 percent. FAMS officials were 

also concerned that the budget reductions would not allow FAMS to bring the number of 

air marshals to its fully anticipated level. They estimated that as a result of the budget 

reductions, many thousands of domestic missions on which they could have placed air 

marshals would not be covered. 

However, although DHS and TSA reduced FAMS’s fiscal year 2003 budget by about 20 

percent, the actual impacts of the budget reductions on FAMS operations were not as 

significant as FAMS officials had estimated. The number of air marshals remained 

relatively constant over the fiscal year; by the end of the period, the number of air 

marshals was only 1 percent lower than at the beginning of the year. The number of 

missions10 flown monthly by air marshals decreased by about 22 percent during fiscal 

year 2003, but according to FAMS officials much of this reduction was attributable to 

factors other than the budget reduction. One factor was the more than 230 percent 

increase in the number of international missions. FAMS officials told us that 

international missions significantly reduced the total number of missions conducted, 

since each additional international mission results in approximately four fewer domestic 

missions. Another factor was the assignment during the year of 58 air marshals to 

support Joint Terrorism Task Force functions. In addition, almost 100 air marshals were 

taken off-line because their background clearances had not been completed. Other 

factors contributing to the reductions in missions flown included decreases in the 

average number of days flown by air marshals to address “quality of life” issues and 

disruptions in flight schedules late in the fiscal year caused by blackouts in the Northeast 

and Hurricane Isabel. 

Senior FAMS officials stated that the eventual fiscal year 2003 operational impacts on the 

program resulting from the budget reductions were “minimal,” but that significant to 

severe impacts on the program were narrowly avoided. One of these officials said that 

the impacts were minimal because they took measures to maintain a level of operations 

consistent with the number of available air marshals. Consequently, they reduced 

equipment and supply purchases, delayed training activities, and used funds originally 

intended to establish the FAMS field office structure to support ongoing FAMS 

operations instead. They said that by midsummer 2003, the budget reductions began to 

have operational impacts. The number of overnight stays was reduced by 80 percent 

during an 11-day period in order to reduce travel costs, and air marshals flew mostly 

regional flights to enable them to return home at the completion of each day’s missions.11

 

 

9

 Deputy Assistant Administrator for Aviation Security Law Enforcement was the title of the FAMS 

Director. 

10 “Missions” includes both domestic and international flights. 

11 According to FAMS officials, one mission equals one flight. 
Page 8 GAO-04-577R Air Marshal Reprogramming 

The FAMS officials said that these program reductions would have continued for the 

remainder of the fiscal year, but the restoration of the $8.7 million in late July 2003 

permitted them to restore the level of overnight stays, longer duration flights, and 

advanced training programs. 

Although the reductions in FAMS funding did not have a significant impact on its current 

level of operations, they contributed to FAMS not reaching anticipated staffing levels. 

FAMS had intended to increase the number of air marshals to a certain level during fiscal 

year 2003,12 but was unable to do so because of funding constraints. During the fiscal 

year, the number of on-board air marshals differed by 4 to 7 percent from fully 

anticipated levels. Although more air marshals would result in greater coverage of 

flights, the reduction in coverage because FAMS was not at fully anticipated levels was 

not substantial. Because FAMS was operating under a continuing resolution until late 

February 2003 and was precluded from increasing the number of air marshals during that 

period, and because it would have taken until June 2003 to achieve fully anticipated staff 

levels, only a relatively small amount of additional flights would have been covered by air 

marshals for the remainder of fiscal year 2003 had FAMS received greater funding.13 

Although the budget reductions had some impact on ongoing operations and FAMS’s 

ability to increase staffing to fully anticipated levels and implement stand-up activities, it 

is not possible to determine what effect, if any, these impacts had on aviation security. 

According to FAMS officials, concept of operations allows for varying coverage of flights 

as long as all high-risk flights are covered. According to FAMS officials, all high-risk 

flights were covered during fiscal year 2003. Moreover, while the FAMS funding was 

reduced, funding for other aviation security programs increased as a result of the 

reprogramming. Consequently, any negative impacts on aviation security that may have 

resulted from the FAMS reductions may have been offset by positive security impacts in 

other aviation security programs. In this regard, OMB staff noted that it is not possible to 

determine the impact of the TSA reprogramming, other than that FAMS funding was 

reduced. 

Legal Issues: No Impoundment or Delegation Problems 

You asked us to determine whether a special impoundment message reporting a deferral 

should have been sent to the Congress. Based on what we learned in our review of this 

reprogramming, we conclude that DHS was not required to transmit a special 

impoundment message in accordance with the Impoundment Control Act of 1974. The 

act requires the President to transmit a special message to the House of Representatives 

and the Senate whenever there is an impoundment, which is defined as any action or 

inaction by an officer or employee of the U.S. government that delays or precludes the 

obligation or expenditure of budget authority provided by the Congress. One type of 

impoundment is a deferral—a temporary delay in obligating or expending budget 

authority. There is a distinction between deferrals,14 which require a special message, 

and “programmatic” delays, which do not. Programmatic delays typically occur when an 

 

12 The number of air marshals on-board or anticipated is classified. 

13 The number of flights covered by air marshals is classified. 

14 Deferrals are authorized only when they provide for contingencies, achieve savings made possible by 

changes in requirements or greater efficiency in operations, or as otherwise specifically authorized by law. 

2 U.S.C. § 684(b). 
Page 9 GAO-04-577R Air Marshal Reprogramming 

agency is taking steps to implement a program even if funds temporarily go unobligated. 

A withholding of funds pending consideration of reprogramming by congressional 

committees is generally considered to be based on programmatic considerations and 

represents a reasonable means of facilitating an agency’s authority to reprogram budget 

authority among activities funded from the same lump-sum appropriation. 

TSA delayed obligating funds pending consideration of its reprogramming notification by 

the appropriate congressional committees, and TSA intended to obligate the FAMS funds 

for an authorized purpose within its lump-sum appropriation.15 Thus, we conclude that 

the agency’s delay in obligating funds based on the facts and circumstances presented 

did not constitute a deferral requiring the transmittal of a special message to the 

Congress under the Impoundment Control Act. 

Furthermore, it was appropriate that the Under Secretary for Management signed the 

reprogramming notice rather than the Secretary of Homeland Security. There is no 

statute or other authority that requires the Secretary to sign the department’s 

reprogramming notifications himself. The Homeland Security Act gives the 

responsibility to the Under Secretary for Management to act for the Secretary in the 

management and administration of the department, including budget, appropriations, 

expenditure of funds, accounting, and financial duties. 

Improvements in Budget Execution for Future Consideration 

The Antideficiency Act requires that an agency head prescribe, by regulation, a system of 

administrative control of funds that must be approved by OMB.16 OMB staff said that 

they are working with DHS on a more formalized apportionment process, which could 

potentially serve as a framework for a system of administrative control of funds.17 For 

fiscal year 2004, the department issued budget execution guidance that included 

procedures for reprogramming funds. The procedures provide specific guidance on 

reprogrammings based on congressional criteria, clear expectations of what information 

is required to justify a proposed reprogramming action, and an early post-appropriations 

review to determine the need to reprogram funds. Furthermore, the current guidance 

encourages, but does not require, components to identify separately the obligation and 

expenditure of earmarked funds and notes that cumulative reprogrammings below 

reporting thresholds can result in a need to notify the appropriations subcommittees. 

Although these are all positive developments, DHS could better articulate the 

consultation and approval process that it will use. 

 

15 In fiscal year 2003, FAMS was funded within the TSA lump-sum appropriation. 

16 31 U.S.C. § 1514.

17 The purpose of such a system is to ensure that when authority to obligate funds is delegated to heads of 

offices or programs within an agency, managers are prevented from overobligating or overexpending 

either the amounts available in an appropriation or fund or the amounts apportioned or reapportioned by 

OMB. This system must be designed to enable the head of the department or agency to identify the person 

responsible for an obligation or expenditure exceeding an appropriation, apportionment, or 

reapportionment. It is at the agency’s discretion, in this case DHS, to decide how and to whom to delegate 

authority to subdivide and obligate apportioned funds while also considering the mission, organizational 

structure, and needs of senior management, consistent with effective and efficient management. 
Page 10 GAO-04-577R Air Marshal Reprogramming 

We recommend that the Secretary of Homeland Security (1) articulate the consultation 

and approval process for reprogrammings and, in particular, state how senior 

management will communicate final reprogramming decisions to officials of affected 

programs; (2) require components to identify separately the obligation and expenditure 

of earmarked funds, which agencies must be able to report; and (3) specify how the 

department plans to monitor cumulative reprogramming actions below reporting 

thresholds that can result in a need to notify the appropriations subcommittees. 

Agency Comments and Our Evaluation 

We provided DHS and the OMB with a draft of this report for review and comment. OMB 

had no comments. DHS’s written comments are reprinted in their entirety in enclosure 

IV. 

In its comments, DHS generally agreed with our observations. However, while 

recognizing that the scope of our engagement was limited to the reprogramming of 

FAMS funding, DHS felt that it was important to emphasize that during the period 

covered by our review there was tremendous uncertainty regarding (1) the availability of 

funding, (2) new mission requirements, and (3) lack of a baseline funding history. 

DHS also suggested five specific changes to our report language as follows: 

1. DHS suggested that we state that the fiscal year 2004 Appropriation Conference 

Report included $95 million in carryover (the amount in question from the House 

reprogramming denial) to be available to address TSA Aviation Security needs. 

The scope of our review only covered fiscal year 2003. This congressional action 

is outside the scope of our report. 

2. DHS suggested that a reference be inserted in our sequence of events in the 

enclosure that the program audit was completed before the reprogramming 

package was resubmitted on July 31, and a chart summarizing its findings was 

presented at meetings with House and Senate Appropriations Committee staff. 

Although we asked for documentary support, DHS did not provide evidence that 

this was completed prior to the submission of the July 31 revised reprogramming 

notification and therefore we have not made that change. 

3. DHS also suggested that we change our statement in the second paragraph on 

page five that “no one in the TSA CFO’s office had time to perform program 

impact analyses.” DHS commented that the TSA CFO staff conducted some 

limited analysis. However, TSA officials told us that their agency did not have the 

time or the staff to conduct “program impact evaluations.” Although justifications 

for moving funds from FAMS were provided by DHS to us, the data to support 

these judgments were not. 

4. In addition, DHS suggested that we use the term “target strength” rather than 

“fully authorized level” when describing FAMS staffing levels. We have made 

changes in the text of our report to reflect “anticipated level,” which we believe 

appropriately characterizes the level of air marshal staffing that FAMS had 

planned to reach and that the Congress had intended. 
Page 11 GAO-04-577R Air Marshal Reprogramming 

5. For the first bullet in the reprogramming sequence for July/August 2003 in the 

enclosure, DHS suggested that a comment should be added to state the revised 

reprogramming amount submitted on July 25, 2003, was “at the same level 

proposed in May.” We have made changes in the text of our report to incorporate 

this suggestion. 

Scope and Methodology 

To examine the reprogramming process DHS and TSA followed in fiscal year 2003 with 

specific attention to coordination with the FAMS program, we interviewed senior DHS, 

TSA, and FAMS officials and their staffs. We also interviewed OMB’s Homeland Security 

Branch Chief and program examiners to understand their roles in the May and July 

proposals and to get their perspectives on the actions taken. Although evidence 

provided by DHS reflects some of the communication between TSA and FAMS, the 

documents and data provided permit us to opine on neither the accuracy of assertions by 

either TSA or FAMS nor the reasonableness of TSA’s analysis and conclusions and the 

FAMS counterarguments. 

Most of our information on the development, review, and approval of the reprogramming 

as it relates to FAMS is based on interviews and other testimonial evidence. To 

determine what and when information was made available to TSA and DHS officials and 

to find support for respective claims, we reviewed and summarized FAMS, TSA, and DHS 

budget information, internal memorandums and correspondence, and briefing 

documents. 

To examine the claims about programmatic implications, we analyzed data provided by 

DHS, TSA, and FAMS. We also interviewed DHS, TSA, and FAMS officials. 

To determine whether a deferral or impoundment notice was necessary and to consider 

delegation authority, GAO General Counsel staff interviewed DHS and TSA General 

Counsel staff and reviewed relevant statutes, committee reports, and DHS delegations. 

- - - - - 

We are sending copies of this report to the Secretary of Homeland Security. In addition, 

this report will be available at no charge on the GAO Web site at http://www.gao.gov. 
Page 12 GAO-04-577R Air Marshal Reprogramming 

If you or your staff have any questions about this report, please contact Susan Irving at 

(202) 512-9142 or irvings@gao.gov or Cathleen Berrick at (202) 512-3404 or 

berrickc@gao.gov. This report was prepared under the direction of Denise Fantone, 

Assistant Director, and Jack Schulze, Assistant Director, with the assistance of Carlos 

Diz, Assistant General Counsel. Other key contributors were Leo Barbour, Jonathan 

Barker, Joseph Byrns, Leah Nash, and Gladys Toro. 

Sincerely yours, 

Susan J. Irving 

Director, Federal Budget Analysis 

Strategic Issues 

Cathleen A. Berrick 

Director, Homeland Security and Justice Issues 

Enclosures - 4
Page 13 GAO-04-577R Air Marshal Reprogramming 

Enclosure I

DHS and TSA Reprogramming Sequence

Note: Unless otherwise indicated, the information below is based on interviews and 

other testimonial evidence. We were unable to obtain documents that would permit us 

to substantiate many conflicting assertions, and given the lengthy delay in receiving 

documents, we were unable to go back to DHS, TSA, or FAMS for clarification and 

validation while still meeting the requester’s needs. The double asterisk (**) indicates 

that we have documents to support statements, were otherwise able to confirm 

assertions or facts, or both. 

February/March 2003 – Development of Reprogramming and FAMS Cut 

• Appropriation enacted on February 20;** the TSA CFO informed the DHS CFO of 

a $1.976 billion “shortfall” within the TSA account. To help mitigate the situation, 

a reprogramming would be necessary to realign TSA programs and funds. 

• FAMS staff reported that on March 26 FAMS incurred a reduction from $545 

million to $505 million (-$40 million) for fiscal year 2003. 

• FAMS acknowledged that it was asked to do a zero-based review;** however, no 

evidence of the review or of the results of the review were provided. 

April 2003 – Further Development of Proposal and More FAMS Cuts 

• DHS and TSA staff continued to work on developing a reprogramming proposal. 

• On April 25 TSA notified FAMS of an immediate hiring freeze.** 

• On April 28 FAMS was affected by a second reduction of fiscal year 2003 funding 

from $505 million to $466 million (-$38.7 million) based on personnel 

compensation and benefits savings.** 

• FAMS reported that on April 28 it incurred a third funding reduction from $466 

million to $441 million (-$25 million) to cover the cost of other Aviation 

Operations purposes. 

Early May 2003 – FAMS Claims Severe Impacts 

• FAMS claimed that TSA imposed a “hard” hiring freeze effective on May 5, with no 

authority to backfill for attrition; the TSA CFO disagreed with this 

characterization of the hiring freeze. 

• On May 5 TSA’s Chief Operating Officer (COO) directed FAMS in writing to revise 

spending plans to stay within $529 million, $441 million in fiscal year 2003 funding 

and $88 million in carryover available to FAMS.** 

• On May 8 FAMS projected a $53 million budget “shortfall” based on the 

$529 million funding level.** 
Page 14 GAO-04-577R Air Marshal Reprogramming 

Early May 2003 – Reprogramming Sent to Homeland Security Appropriations 

Subcommittees 

• The TSA Deputy Administrator told us that he and the Administrator approved 

reprogramming. 

• TSA CFO briefed DHS and OMB on the final proposal. 

• OMB staff cleared the reprogramming; OMB told us that the OMB Director is 

informed of budget execution matters on an “as needed” basis and that it is not 

OMB’s policy to comment on specific reprogrammings. 

• The reprogramming was submitted by DHS on May 15 with reduction of $104 

million for FAMS. 

Mid to Late May 2003 – FAMS Continues to Claim Severe Impacts 

• After denial of the May 15 reprogramming by both subcommittees, DHS and TSA 

sought to adjust the reprogramming. 

• FAMS briefed the TSA COO on “impact of severe budget reductions”;** briefings 

and memos on FAMS’s objections to the cutbacks were forwarded to senior TSA 

officials, including the TSA Administrator. 

• The TSA Administrator directed FAMS in writing to stay within $441 million and 

take recommended measures to achieve savings.** 

June 2003 – Ongoing Dialogue between FAMS and TSA 

• The TSA CFO objected to FAMS impact characterizations, saying** that FAMS 

reductions were reviewed and approved by the TSA Administrator; FAMS staff 

had indicated that they were “ok” at the $529 million level; and FAMS spending 

estimates included inconsistencies, for example, FAMS monthly spending 

estimates were higher than the average monthly actuals. 

• FAMS responded with detailed claims of “significant to severe” operational 

impacts:** 90 percent reduction of long-haul flights effective on or about July 1,

continued “hard” hiring freeze, and a halt in enhancements to the mission 

scheduler system and a delay in Phase II training. 

• The TSA CFO requested a review of FAMS program obligations. 

July/August 2003 – Revised Reprogramming Sent to Homeland Security 

Appropriations Subcommittees, and FAMS Program Audit Conducted 

• Revised reprogramming submitted by DHS on July 25 with FAMS reductions at 

the same level proposed in May. 

• Package resubmitted by DHS on July 31 with $9 million restored ($95 million 

reduction for FAMS). 

• On August 25, TSA Aviation Operations, COO, and CFO staff finalized a program 

audit of FAMS obligations and spending. This audit identified** 

o a projected deficit of about $16 million with proposed reductions in 

training, mission deployments, and other offsets; and 

o budget execution process issues: 

 the lack of a TSA allotment to FAMS or other agency components, 

 possible FAMS certification of funds without TSA knowledge, and 

 lack of updated FAMS spending plans. 
Page 15 GAO-04-577R Air Marshal Reprogramming 

August/September 2003 – Reprogramming Approved 

• The Senate approved the reprogramming on the condition that reallocation would 

not, among other things, “decrease the number of air marshals currently assigned 

to domestic and international flights.”** 

• The House approved the reprogramming, except for the proposed reduction from 

the FAMS program.** 
Page 16 GAO-04-577R Air Marshal Reprogramming 

Date Uncertain – DHS Secretary Briefed on Reprogramming

• According to DHS, “Secretary Ridge was briefed regarding the fact [that] there 

were TSA reprogrammings, but was not briefed on the specifics of the impact on 

FAMS. Instead Department officials relied on TSA for its detailed analysis and 

evaluation of the FAMS impact.” 
Page 17 GAO-04-577R Air Marshal Reprogramming 

Enclosure II

Specific Reprogramming Requirements for Agencies under the Jurisdiction of 

Homeland Security Appropriations Subcommittees

Emergency Wartime Supplemental Appropriations Act, 2003 

 Pub. L. No. 108-11, 117 STAT. 584 (2003) 

SEC. 1601. (a) None of the funds provided by this Act, or provided by previous 

Appropriations Acts to the agencies in or transferred to the Department of 

Homeland Security that remain available for obligation or expenditure in fiscal 

year 2003, or provided from any accounts in the Treasury of the United States 

derived by the collection of fees available to the agencies funded by this Act shall 

be available for obligation or expenditure through a reprogramming of funds 

which: (1) creates a new program; (2) eliminates a program, project, or 

activity; (3) increases funds for any program, project, or activity for which 

funds have been denied or restricted by Congress; or (4) proposes to use funds 

directed for a specific activity by either the House or Senate Committees on 

Appropriations for a different purpose, unless the Committees on 

Appropriations of both Houses of Congress are notified 15 days in advance of 

such reprogramming of funds.

(b) None of the funds provided by this Act, or provided by previous 

Appropriations Acts to the agencies in or transferred to the Department of 

Homeland Security that remain available for obligation or expenditure in fiscal 

year 2003, or provided from any accounts in the Treasury of the United States 

derived by the collection of fees available to the agencies funded by this Act, 

shall be available for obligation or expenditure for programs, projects, or 

activities through a reprogramming of funds in excess of $5,000,000 or 10 

percent, whichever is less, that: (1) augments existing programs, projects, or 

activities; (2) reduces by 10 percent funding for any existing program, project, 

or activity, or numbers of personnel by 10 percent as approved by Congress; or 

(3) results from any general savings from a reduction in personnel which 

would result in a change in existing programs, projects or activities, as 

approved by Congress; unless the Committees on Appropriations of both Houses 

of Congress are notified 15 days in advance of such reprogramming of funds.
Page 18 GAO-04-577R Air Marshal Reprogramming 

Enclosure III 

Briefing Slides provided to the Staff of the Subcommittee on Homeland 

Security, House Committee on Appropriations 

Reprogramming Process—Summary of Findings

• FY 2003 was marked by changing organizational structure and budget uncertainties including 

the CR, the need to develop estimates without historical experience, changing mission needs 

and costs. 

• TSA and FAMS disagree on when and what FAMS was told about the reprogramming, about 

whether FAMS agreed to a cut, about the ability of FAMS to absorb a cut, and about the likely 

programmatic impact of the proposed cuts, and even about the nature of the hiring freeze 

imposed on the FAMS. 

 

• Documents and data provided to GAO do not permit GAO to opine on the accuracy of 

assertions by either TSA or FAMS, on the reasonableness of TSA’s analysis and conclusions or 

of the FAMS counter-arguments. 

• The TSA Administrator was made aware of FAMS characterization of the anticipated impact of 

the funding reductions and the TSA CFO’s objections to the FAMS claims. 

• According to DHS, “Secretary Ridge was briefed regarding the fact there were TSA 

reprogrammings, but was not briefed on the specifics of the impact on FAMS. Instead 

Department officials relied on TSA for its detailed analysis and evaluation of the FAMS 

impact.” 

• OMB staff cleared the reprogramming; An OMB attorney told us that the OMB Director is 

informed of budget execution matters on an “as needed” basis and that it is not OMB’s policy to 

say whether the Director was notified of any specific reprogramming. 
Page 19 GAO-04-577R Air Marshal Reprogramming 

 

Impact on FAMS due to Budget Reductions: Summary of Findings

• Internal Memos from FAMS to TSA during May-June 2003 indicate that FAMS officials said 

that the reduction in funds from the reprogramming would cause “significant to severe” 

operational impacts. 

• Mitigating steps were taken by FAMS in July and August of 2003, e.g: 

o FAMS temporarily (10 days) went to a regional deployment system to eliminate the 

need for overnight stays 

o FAMS said they continued to cover all “high risk” flights 

o Standup and other activities were deferred 

• In retrospect in February 2004, FAMS officials say that the impact on ongoing operations was 

“minimal,” but that restoration of the $8.7 million [late July when the proposed cut was 

changed from $104 to $95 million] was critical to preventing significant impacts. 

• Budget reductions did affect FAMS plans to ramp up staffing to fully authorized levels. 

• Impact on aviation security as a result of the reductions in FAMS funding cannot be assessed.

Legal Issues: Summary of Findings

• A special impoundment message [deferral] was not required. 

o Delay in obligating funds pending consideration of reprogramming notification by 

appropriations committees’ is a programmatic delay. Delay was for a reasonable 

time and TSA intended to obligate the funds for an authorized purpose within its 

lump-sum appropriation. 

• The Under Secretary for Management who signed the reprogramming notice to the 

Appropriations Subcommittees had authority to do so. 

o No statute requires the Secretary to sign. The Homeland Security Act specifically 

gives responsibility for management & administration of funds to the Secretary 

through the Under Secretary for Management. 
Page 20 GAO-04-577R Air Marshal Reprogramming 

Reprogramming Process Issues: The Future

• DHS has taken steps to improve budget execution, specifically with the development and 

issuance of FY 2004 guidance detailing procedures for reporting plans and usage, as well as 

reprogramming requirements. The procedures, which include (1) specific guidance based on 

congressional criteria, (2) clear expectations on what information is required to justify a 

proposed reprogramming action, and (3) an early post-appropriations review to determine 

the need to reprogram, are all positive developments. 

• In addition, DHS could better articulate: 

o The consultation and approval process to be used for reprogramming proposals, 

including how final reprogramming decisions will be communicated to the affected 

programs. 

o Guidance on tracking earmarked funds—instead of leaving it to individual 

components, require that transactions involving earmarked funds be separately 

identified through unique codes. 

o How the Department will identify when, as the result of cumulative reprogrammings 

below reporting thresholds, there is a need for a reprogramming notification. 

• OMB said they were working with the Department on a more formalized apportionment 

process. 
Page 21 GAO-04-577R Air Marshal Reprogramming 

Enclosure IV 

Comments from the Department of Homeland Security
Page 22 GAO-04-577R Air Marshal Reprogramming 
Page 23 GAO-04-577R Air Marshal Reprogramming 

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