Department of Homeland Security
 

The State of Arkansas’ Management of 

State Homeland Security Program Grants Awarded 

During Fiscal Years 2008 Through 2010 

OIG-12-116 September 2012
 
 

 

 OFFICE OF INSPECTOR GENERAL 

 Department of Homeland Security 

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

SEP 7 2012 

MEMORANDUM FOR: Elizabeth M. Harman 

Assistant Administrator 

Grant Programs Directorate 

Federal Emergency Management Agency 

FROM: hards 

spector General for Audits 

Anne L. Ric

Assistant In

SUBJECT: ThefStatefoffArkansas’fManagementfoffStatefHomelandf

SecurityfProgramfGrantsfAwardedfDuringfFiscalfYearsf2008f

Throughf2010f

Attached for your action is our final report, ThefStatefoffArkansas’fManagementfoffStatef

HomelandfSecurityfProgramfGrantsfAwardedfDuringfFiscalfYearsf2008fThroughf2010.ff

We incorporated the formal comments from the Federal Emergency Management 

Agency (FEMA) in the final report. 

 

The report contains five recommendations aimed at improving the overall management, 

performance, and oversight of FEMA’s State Homeland Security grant program. Your 

office and the Arkansas Department of Emergency Management concurred with four of 

the recommendations. As prescribed by the Department of Homeland Security 

Directive 077-1, Follow-Up and Resolutions for the Office of Inspector General Report 

Recommendations, within 90 days of the date of this memorandum, please provide our 

office with a written response that includes your (1) agreement or disagreement, 

(2) corrective action plan, and (3) target completion date for each recommendation. 

Also, please include responsible parties and any other supporting documentation 

necessary to inform us about the current status of the recommendation. Until your 

response is received and evaluated, the recommendations will be considered open and 

unresolved. 

Consistent with our responsibility under the InspectorfGeneralfAct, we are providing 

copies of our report to appropriate congressional committees with oversight and 

appropriation responsibility over the Department of Homeland Security. We will post 

the report on our website for public dissemination. 

Please call me with any questions, or your staff may contact Mark Bell, Deputy Assistant 

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

Attachment 
 

 

 

 

 OFFICE OF INSPECTOR GENERAL 

 Department of Homeland Security 

 Table of Contents 

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

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

Results of Audit ................................................................................................................... 3
 

Improvements Are Needed To Enhance the State of Arkansas’ Grant 

Management Practices................................................................................................. 3

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

Management Comments and OIG Analysis ............................................................... 15 

Appendixes

Appendix A: Objectives, Scope, and Methodology ................................................. 18 

Appendix B: FEMA Management Comments to the Draft Report .......................... 20 

Appendix C: State of Arkansas Management Comments to the Draft Report ....... 23 

Appendix D: Description of Homeland Security Grant Program ............................. 29 

Appendix E: Description of State of Arkansas’ Homeland Security Grant Program 

Process ................................................................................................ 30 

Appendix F: Number of Days Elapsed Between Required Obligation and 

Availability ........................................................................................... 31 

Appendix G: Major Contributors to This Report ..................................................... 32 

Appendix H: Report Distribution ............................................................................. 33 

Abbreviations

ADEM Arkansas Department of Emergency Management 

CFR Code of Federal Regulations 

DHS Department of Homeland Security 

FEMA Federal Emergency Management Agency 

FY fiscal year

HSGP Homeland Security Grant Program 

MOA memorandum of agreement

OIG Office of Inspector General

SAA State Administrative Agency

SHSP State Homeland Security Program 

www.oig.dhs.gov OIG-12-116
 

 OFFICE OF INSPECTOR GENERAL 

 Department of Homeland Security 

Executive Summary

Public Law 110-53, ImplementingfRecommendationsfoffthef9/11fCommissionfActfoff

2007, as amended, requires the Department of Homeland Security (DHS) Office of 

Inspector General (OIG) to audit individual States’ management of State Homeland 

Security Program and Urban Areas Security Initiative grants. This report responds to the 

reporting requirement for the State of Arkansas. 

The objectives of the audit were to determine whether the State of Arkansas distributed 

and spent State Homeland Security Program grant funds effectively and efficiently, and 

in compliance with applicable Federal laws and regulations. We also addressed the 

extent to which grant funds enhanced the State’s ability to prevent, prepare for, protect 

against, and respond to natural disasters, acts of terrorism, and other manmade 

disasters. The audit included a review of approximately $19 million in State Homeland 

Security Program grants awarded to the State during fiscal years 2008 through 2010. 

Generally, the State of Arkansas distributed and spent the State Homeland Security 

Program grant awards in compliance with applicable laws and regulations. However, 

the following improvements are needed: 

•	 The State’s strategies should include measurable objectives. 

•	 The Federal Emergency Management Agency (FEMA) should issue guidance for 

developing adequate performance measures to assess overall State capabilities and 

preparedness. 

•	 The State Administrative Agency should obligate grant funds to subgrantees more 

timely. 

•	 The State Administrative Agency should better monitor subgrantees to ensure 

compliance with requirements pertaining to procurement, inventory, and 

accountability. 

These issues exist because FEMA and the State Administrative Agency, Arkansas 

Department of Emergency Management have not provided sufficient guidance and 

oversight for the grant process. Our five recommendations call for FEMA to initiate 

improvements that, if implemented, should help strengthen grant program 

management, performance, and oversight. FEMA concurred with four of the five 

recommendations. 

www.oig.dhs.gov 1 	 OIG-12-116 
 

 OFFICE OF INSPECTOR GENERAL 

 Department of Homeland Security 

Background 

DHS provides Federal funding through the Homeland Security Grant Program (HSGP) to 

help State and local agencies enhance capabilities to prevent, deter, respond to, and 

recover from terrorist attacks, major disasters, and other emergencies. Within DHS, 

FEMA is responsible for administering the HSGP. FEMA supports preparedness by 

developing policies, ensuring that adequate plans are in place and validated, defining 

capabilities required to address threats, providing resources and technical assistance to 

States, and synchronizing preparedness efforts throughout the Nation. Appendix D 

details the interrelated grant programs that constitute the HSGP. 

HSGP guidance requires the Governor of each State and U.S. Territory to designate a 

State Administrative Agency (SAA) to apply for and administer grant funding awarded 

under HSGP. The SAA is the only entity eligible to apply for HSGP funds. FEMA requires 

that the SAA be responsible for obligating grant funds to local units of government and 

other designated recipients within 45 days after receipt of funds. The Governor of 

Arkansas appointed the Arkansas Department of Emergency Management (ADEM) as 

the SAA. ADEM is not only the SAA but also the emergency management agency for the 

State of Arkansas. 

During FYs 2008, 2009, and 2010, the State of Arkansas was awarded approximately 

$19.3 million in State Homeland Security Program (SHSP) funds. Arkansas does not have 

an urban area designated by FEMA. During this period, ADEM subawarded SHSP funds 

to 77 local jurisdictions and 5 State agencies. 

Public Law 110-53, as amended, requires DHS OIG to audit individual States’ 

management of SHSP and Urban Areas Security Initiative grants. This report responds 

to the reporting requirement for the State of Arkansas. Appendix A provides details on 

the objective, scope, and methodology of this audit. 

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 OFFICE OF INSPECTOR GENERAL 

 Department of Homeland Security 

Results of Audit 

Improvements Are Needed To Enhance the State of Arkansas’ Grant 

Management Practices 

Generally, the State of Arkansas distributed and spent the SHSP grant awards in 

compliance with applicable laws and regulations. However, the following

improvements are needed: 

•	 The State’s strategies should include measurable objectives. 

•	 FEMA should issue guidance for developing adequate performance 

measures to assess overall State capabilities and preparedness. 

•	 ADEM should obligate grant funds to subgrantees more promptly. 

•	 ADEM should better monitor subgrantees to ensure compliance with 

requirements pertaining to procurement, inventory, and accountability. 

Homeland Security Strategies 

The State’s Homeland Security Strategy did not always contain measurable 

objectives. According to the DepartmentfoffHomelandfSecurityfStatefandfUrbanf

AreasfHomelandfSecurityfStrategyfGuidancefonfAligningfStrategiesfwithfthef

NationalfPreparednessfGoal, dated July 22, 2005, an objective sets a tangible and 

measurable target level of performance over time against which actual 

achievement can be compared, including a goal expressed as a quantitative 

standard, value, or rate. For each goal, there should be at least one objective or 

performance measure against which to track progress. The guidance also 

mandates that an objective should be— 

•	 Specific, detailed, particular, and focused—helping to identify what is to be 

achieved and accomplished; 

•	 Measurable—quantifiable, providing a standard for comparison, and 

identifying a specific achievable result; 

•	 Achievable—not beyond a State, region, jurisdiction, or locality’s ability;

•	 Results-oriented—identify a specific outcome; and 

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 OFFICE OF INSPECTOR GENERAL 

 Department of Homeland Security 

•	 Time-limited—having a target date to identify when the objective will be 

achieved. 

The State’s FYs 2008 through 2010 Homeland Security Strategy had 18 goals and 

85 objectives. The goals did not include measurable objectives to demonstrate 

quantifiable improvement and accomplishments to reduce the State’s 

vulnerability to terrorism and natural disasters. The State’s goals and objectives 

were not always updated. There were very limited changes or updates to the 

goals or objectives for any of the grant years we reviewed. 

According to a FEMA official, FEMA reviewed the State strategy to ensure 

compliance with the DepartmentfoffHomelandfSecurityfStatefandfUrbanfAreasf

HomelandfSecurityfStrategyfGuidancefonfAligningfStrategiesfwithfthefNationalf

PreparednessfGoal, which includes measurability, specificity, and timeliness. 

However, FEMA could not provide documentation of the review. 

The guidance requires that the State’s strategy contain measurable goals to 

assist in tracking progress. None of the 18 goals for FYs 2008 through 2010 

contained a measurable performance tracking method. Table 1 lists examples of 

shortcomings in the State’s strategy objectives. 

www.oig.dhs.gov 4 	 OIG-12-116 
 

 OFFICE OF INSPECTOR GENERAL 

 Department of Homeland Security 

Table 1: Shortcomings in the State’s Strategy Objectives 

Goal Objective Shortcomings 

FY 2008 Goal #1 

(Prevention): Develop a 

statewide, interoperable,

voice and data 

communication network for 

State and local first 

responders. determination of credible 

intelligence. Estimated completion 

date is February 2009.

FY 2008 Goal #4 (Recovery): 4.1 Ensure that all jurisdictions, The objective is not—

1.4 Utilize resources available 

through local, State, and Federal 

entities which will provide 

information from across the State 

that can be shared through law 

enforcement channels for 

The objective is not—

• Specific 

• Measureable 

• Results-oriented

Ensure that each State and local, have as a part of • Specific 

jurisdiction has appropriate their emergency operations plans • Measureable 

means for recovery from a all-hazard recovery that includes • Results-oriented

man caused and/or natural man caused and/or natural 

disaster event using lessons disasters. ADEM as the SAA will be 

learned from others so that responsible for progression of 

there is a continued objectives 4.1–4.3, with a

progression of recovery completion date of October 2007.

efforts. 

FY 2009 Goal #1 1.1 Phase 1: Supported by both the The objective is not—

(Prevention): Develop a Law Enforcement Terrorism • Specific 

statewide, interoperable, Prevention Program and the State • Measureable 

voice and data Homeland Security Program, • Time limited 

communication network for establish, upgrade, and/or enhance 

State and local first interoperable communications 

responders. statewide through the Arkansas 

Wireless Information Network. This 

showed a completion date of

December 2007.

Source: DHS OIG and ADEM, State Homeland Security Strategy.
 

Without adequate goals and measurable objectives, the State does not have an 

effective basis for monitoring progress, compiling key management information, 

tracking trends, and keeping planned work on track. Measurable goals and 

objectives would give the State a foundation to evaluate its progress on 

preparedness, prevention, response, and recovery capabilities.

Performance Measures

ADEM does not have sufficient performance measures to use as a basis for 

determining progress toward the goals and objectives in the State strategy. 

According to 44 Code of Federal Regulations (CFR) 13.40, Monitoring and 

Reporting Program Performance, grantees must monitor grant- and subgrantsupported activities to ensure that performance goals are being achieved. 

www.oig.dhs.gov 5 OIG-12-116 
 

 

 OFFICE OF INSPECTOR GENERAL 

 Department of Homeland Security 

Based on the activities presented to our team, there is no way to evaluate the 

progress of the State’s emergency preparedness and response capabilities as a 

result of grant funding. The State develops goals in the strategy to determine 

what it will accomplish to be better prepared for manmade and natural disasters. 

The objective within the strategy explains how the State plans to accomplish the 

goals. The Homeland Security National Preparedness Guidelines explain that for 

each goal, there should be at least one objective or performance measure to 

track progress in achieving the goal. 

In the absence of guidance from FEMA, ADEM officials said that they measure 

performance by conducting exercises and generating after-action reports. Based 

on the results of these exercises and reports, ADEM officials assert that they know 

how prepared they are to respond to emergencies. Although the after-action

reports provide lessons learned and areas for improvement, the results are not 

quantifiable. 

FEMA has not provided specific guidance to States for developing performance 

measures. FEMA has given States emergency preparedness priorities and target 

capability needs. States use this information as a basis for their State SelfAssessments.1

 However, the guidance has changed each year since 2008 in 

substantive ways that require States to shift priorities and focus. ADEM officials 

said these changes make it difficult to measure performance and to make yearto-year comparisons. 

Under Public Law 111-271, RedundancyfEliminationfandfEnhancedfPerformancef

forfPreparednessfGrantsfAct, Congress required the National Academy of Public 

Administration to assist FEMA with developing and implementing measurable 

national preparedness capability requirements and evaluation criteria (in terms 

of speed, effectiveness, and efficiency, among other factors). These requirements 

will include a specific timetable for developing a set of quantifiable performance 

measures and metrics to assess the effectiveness of the programs under which 

covered grants are awarded. 

Without adequate performance measures, ADEM does not have a sufficient 

basis to evaluate progress in emergency preparedness and response capabilities 

as a result of grant expenditures. ADEM is unable to adequately determine 

progress toward its goals and objectives. 

1

 The Arkansas Capabilities Assessment Tool project was ADEM’s process for assessing current levels of 

specific target capabilities. 

www.oig.dhs.gov 6 OIG-12-116 
 

 OFFICE OF INSPECTOR GENERAL 

 Department of Homeland Security 

Timely Obligation of Grant Funds

ADEM did not obligate SHSP funds within 45 days as stipulated in the FEMAf

HomelandfSecurityfGrantfProgramfGuidance.ffThis guidance requires ADEM to 

obligate passthrough grant funds within 45 days of FEMA’s award date and 

includes the following requirements: 

•	 There must be some action to establish a firm commitment on the part of 

the awarding entity. 

•	 The action must be unconditional (i.e., no contingencies for availability of 

funds) on the part of the awarding entity. 

•	 There must be documentary evidence of the commitment.

•	 The award terms must be communicated to the official grantee. 

ADEM did not obligate funds timely to subgrantees for acquiring goods and 

services. We reviewed 16 subgrantees for FYs 2008 through 2010, and in all 

instances grant funds were not obligated to the subgrantees timely.2 For 

example, funds were not made available to one subgrantee until 1,031 days after 

the required period. Appendix F illustrates the calculation of the number of days 

elapsed between the required obligation date and the actual date grant funds 

were obligated and made available to the subgrantees. 

We attribute the delays in funding obligation to ADEM policies regarding the 

release of funds to subgrantees. Subgrantees must spend the entire prior year’s 

grant funds before they can spend grant funds for the next fiscal year. This 

prevents subgrantees from planning projects extending over multiple award 

periods and starting other projects with the next year’s funding. Subgrantees 

must also have the following year’s budget approved before they can spend 

funds. By delaying funding, ADEM reduces subgrantees’ procurement timelines 

and their ability to obtain the best price for goods and services. 

Procurement Practices 

The State and subgrantees have not ensured that Federal, State, and local 

regulations were followed for procurements of equipment and services with 

2

 The 16 subgrantees include only local jurisdictions. The two State agencies excluded from the analysis 

were not subject to the same policies for availability of funds. 

www.oig.dhs.gov 7 	 OIG-12-116 
 OFFICE OF INSPECTOR GENERAL 

 Department of Homeland Security 

HSGP funds. We identified 14 of 18 subgrantees that did not adhere to Federal, 

State, and local procurement requirements by failing to— 

• Obtain an adequate number of qualified quotes or formal bids; 

• Conduct a cost analysis; or 

• Justify sole source procurements. 

Table 2 lists the subgrantees with noncompliant procurement transactions and 

the dollar values, which total more than $1 million.

Table 2: Number of Noncompliant Procurement Transactions and Dollar Values

Subgrantee

Number of 

Procurement 

Transactions 

Reviewed 

Number of 

Procurement 

Transactions 

Questioned 

Total Dollar 

Value of 

Questioned

Procurement 

Transactions

Federal, State, or 

Local Requirements 

Violated

Arkansas State

Police 10 7 $458,244

• Rate Quotes

• Cost Analysis 

• Sole Source 

Justification 

City of Little Rock 10 8 $231,848

• Formal Bidding 

• Rate Quotes

• Cost Analysis 

Union County 9 6 $203,098 

• Formal Bidding 

• Rate Quotes

Washington County 8 3 $57,313 • Rate Quotes

Faulkner County 9 7 $41,913 

• Formal Bidding 

• Rate Quotes

Greene County 7 7 $48,362 • Rate Quotes

Lawrence County 9 8 $30,183 • Rate Quotes

Garland County 4 4 $38,252 • Rate Quotes

Crittenden County 12 1 $28,026 • Rate Quotes

Benton County 6 2 $24,841 • Rate Quotes

Logan County 6 4 $15,097 • Rate Quotes

Pulaski County 11 1 $14,900 • Rate Quotes

Saline County 6 2 $13,420 • Rate Quotes

Sebastian County 7 3 $1,400 • Rate Quotes

Totals 114 63 $1,206,897

Source: DHS OIG.

According to 44 CFR Section 13.36, Procurement Standards,fsubgrantees will use 

their own procurement procedures, which reflect applicable State and local laws 

and regulations, provided that the procurements conform to applicable Federal 

law. This regulation provides uniform administrative requirements for grants 

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 OFFICE OF INSPECTOR GENERAL 

 Department of Homeland Security 

and cooperative agreements awarded to State and local governments. Federal 

procurement regulations governing subgrantees require the following: 

•	 All procurement transactions will be conducted in a manner providing full 

and open competition consistent with the standards of Section 13.36. 

44 CFR 13.36(c)(1).

•	 Small purchase procedures are relatively simple and informal procurement 

methods for securing services, supplies, or other property that do not cost 

more than the simplified acquisition threshold fixed at 41 U.S.C. 403(11) 

(currently $100,000). If small purchase procedures are used, price or rate 

quotations shall be obtained from an adequate number of qualified sources. 

44 CFR 13.36(d)(1). 

•	 Procurement by noncompetitive proposals may be used only when the 

award of a contract is infeasible under small purchase procedures, sealed 

bids, or competitive proposals, and in one of the following circumstances: 

44 CFR 13.36(d)(4)(i).

- the item is available only from a single source; 

- the public exigency or emergency for the requirement will not permit a 

delay resulting from competitive solicitation; 

- the awarding agency authorizes noncompetitive proposals; or 

- after solicitation of a number of sources, competition is determined 

inadequate. 

•	 A cost analysis (i.e., verifying the proposed cost data, the projections of the 

data, and the evaluation of the specific elements of costs and profits) is 

required. A cost analysis will be necessary when adequate price competition 

is lacking, and for sole source procurements, unless price reasonableness can 

be established by methods described in 44 CFR 13.36(f)(1). 44 CFR 

13.36(d)(4)(ii), (f)(1).

We identified sole source requests processed without proper justifications. One 

subgrantee awarded sole source contracts using FY 2008 grant funds for five of 

seven procurement transactions, totaling approximately $100,000. There is no 

documentation in the procurement file supporting the subgrantee’s research of 

other vendors capable of performing the tasks. Also, none of the letters of 

justification were signed by an agency official. 

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 OFFICE OF INSPECTOR GENERAL 

 Department of Homeland Security 

According to 44 CFR 13.36(b)(1), subgrantees will use their own procurement 

procedures as long as they conform to applicable Federal law and regulations. 

State of Arkansas Regulations R1:19-11-232 and R2:19-11-232 provide the 

requirements for requesting a sole source designation. An additional policy 

directive establishes guidance for agencies requesting approval of sole source 

purchases. Letters of justification are to be forwarded on agency letterhead 

addressed to the director of state procurement. The agency director, chief 

financial officer, deputy director, or administrator must review and sign each 

sole source justification letter. Sole source justification must be processed 

through the agency purchasing agent to the Office of State Procurement. 

Specific information should include detailed answers to the following questions: 

•	 Why is this service or commodity needed? 

•	 What method(s) were used to determine that a lack of responsible 

competition exists for this service or commodity? 

•	 How was it determined that this service, provider, or commodity has 

exclusive processes or properties? 

•	 Can requirements be modified so that the services or commodity can be 

competitively bid? If not, why? 

•	 Are there patent, copyright, or proprietary rights that make the required

service or commodity unavailable from other sources? 

•	 What would the agency do if the service or commodity were no longer 

available? 

•	 What program considerations make the use of a sole source critical to the 

successful completion of the task(s)? 

The noncompetitive procurements can be attributed to ADEM’s and the 

subgrantees’ limited knowledge of procurement requirements. Although 

memorandums of agreement (MOAs) between ADEM and its subgrantees 

require compliance with 44 CFR Part 13, the Uniform Administrative 

Requirements for Grants and Cooperative Agreements to State and Local 

Governments, the MOAs do not specifically mention Section 13.36, Procurement. 

Compliance with Federal procurement regulations is not emphasized during 

ADEM’s mandatory annual grant program overview conferences. 

According to an ADEM official, resources are limited for conducting onsite 

monitoring and uncovering subgrantee issues with following Federal 

procurement standards. ADEM has two grant program coordinators and a 

branch manager who are responsible for administering SHSP, which includes 

reviewing and approving budgets and payment requests for 77 local jurisdictions. 

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 OFFICE OF INSPECTOR GENERAL 

 Department of Homeland Security 

Without full and open competition, cost analysis, or sole source justification, the

grantee cannot be assured that the cost of the equipment or services is 

reasonable. Accordingly, the justification must include a cost analysis showing 

that a noncompetitive procurement is appropriate. This analysis will determine 

the reasonableness of the proposed price.

Grant Inventory Requirements 

ADEM did not always meet grant inventory requirements. Federal regulation 

44 CFR 13.32(d), Management Requirements, establishes procedures for 

subgrantees to manage equipment (including replacement equipment), whether 

acquired in whole or in part with grant funds, and includes the following 

minimum requirements: 

•	 Property records must be maintained and include the property’s description, 

identification number, source of the property, and the title holder, 

acquisition date, cost and percentage of Federal funds used in the cost, 

location, use and condition, and ultimate disposition. 44 CFR 13.32(d)(1). 

•	 A physical inventory of the property must be taken and the results reconciled 

with the property records at least every 2 years. 44 CFR 13.32(d)(2). 

•	 A control system must be developed to ensure that adequate safeguards are 

in place to prevent loss, damage, or theft of the property. Any loss, damage, 

or theft shall be investigated. 44 CFR 13.32(d)(3). 

•	 Adequate maintenance procedures must be developed to keep the property 

in good condition. 44 CFR 13.32(d)(4). 

ADEM’s inventory records did not always include serial numbers or other 

identifying numbers, accurate locations of equipment, and the Federal funds 

percentage. ADEM requires subgrantees to conduct semiannual inventory 

reviews, which include reporting inventory details to ADEM’s inventory website. 

This requirement is included in the subgrantee MOA with ADEM. 

ADEM inventory records did not show the Federal funds percentage for all 

purchases of the 173

 subgrantees we reviewed. An ADEM official believes that 

the inventory listing was meant to track the items purchased with the grant 

funds and did not find it necessary to have a percentage of Federal participation 

column in the inventory. 

3

 Only 17 subgrantees acquired and maintained equipment within our audit scope. 

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 OFFICE OF INSPECTOR GENERAL 

 Department of Homeland Security 

In some instances inventory was not tracked or stored properly. Only 9 of the 17 

subgrantees reviewed included all required serial or other identifying numbers in 

their inventory listing. ADEM records also showed two instances where 

equipment purchased was assigned to one location, but the physical location 

was elsewhere. 

Subgrantees did not always mark equipment purchased with HSGP funds. The 

FEMA grant agreement requires grant recipients, when practicable, to 

prominently mark any equipment purchased with grant funding with the 

statement, “Purchased with funds provided by the U.S. Department of 

Homeland Security.” This is to ensure that equipment purchased is easily 

identified and its intended use can be verified. None of the equipment we 

reviewed included such markings. This caused confusion when we attempted to 

validate the existence of a piece of equipment costing more than $100,000. 

ADEM relies on the subgrantees to provide updated and complete information 

for the inventory listing. ADEM’s division director of administration said that 

most subgrantees mark the larger equipment purchased with grant funds with 

tags and believes this satisfies the intent of the Federal requirement. 

Because of the limited oversight, subgrantees did not comply with ADEM’s 

inventory reporting requirements, even though they are made aware of these 

requirements in the MOA with ADEM. ADEM ensures that the subgrantees are 

aware of their requirement to report inventory twice a year, but has not 

conducted any onsite visits to verify proper labeling of equipment. As a result, 

ADEM cannot be assured that assets procured with grant funds are adequately

safeguarded to prevent loss, damage, or theft, and used as intended. This could 

result in an emergency situation in which ADEM may not always have knowledge 

of the location or ready access to vital emergency preparedness equipment. 

Subgrantee Program Monitoring 

ADEM’s monitoring efforts did not ensure subgrantee compliance with Federal 

laws and regulations. Office of Management and Budget Circular A-133, 

Compliance Supplement, Part 3-M, requires grantees to monitor subgrantees’ 

use of Federal awards through reporting, site visits, regular contact, or other 

means. Federal regulation 44 CFR 13.40, Monitoring and Reporting Program 

Performance, requires grantees to (1) provide day-to-day management of all 

grant- and subgrant-supported activities and (2) ensure that subgrantees comply 

with applicable Federal requirements and achieve program performance goals. 

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 OFFICE OF INSPECTOR GENERAL 

 Department of Homeland Security 

Some grant funds were being used for other than the intended purposes. 

According to 44 CFR 13.32(c), equipment shall be used by the grantee or 

subgrantee in the program or project for which it was acquired as long as 

needed, whether or not the project or program continues to be supported by 

Federal funds. We identified a subgrantee that purchased a vehicle intended for 

use by the bomb response team, yet the truck was marked and being used by 

the special weapons and tactics unit (see figure 1). 

Figure 1: Photos of Vehicle Intended for Bomb Squad 

Source: DHS OIG. 

ADEM monitors subgrantees through desk reviews of subgrantee budgets, 

payments, an inventory database, and after-action reports. ADEM also has area 

coordinators assigned to each region to assist in monitoring the region’s 

subgrantees if needed. However, these efforts do not always ensure subgrantee 

compliance with Federal laws and requirements. In addition, it was only when 

we asked for copies of any reviews that ADEM discovered that no reviews of 

subgrantees were conducted during the FYs 2008 through 2010 grant years. 

ADEM’s desk monitoring involves fielding inquiries and reimbursing subgrantees 

for submitted expenses. The process allows ADEM to track subgrantee 

expenditures to ensure proper use of grant funds. ADEM grant managers review 

receipts and expenditures to ensure that they are included in approved budgets 

and that projects are complete and meet approved target capabilities. However, 

the reimbursement process tracks financial data only and does not account for 

other monitoring requirements, including inventory of assets and verification of 

intended use. 

According to the director of administration for ADEM, ADEM did not monitor any 

of the subgrantees we reviewed for performance for the fiscal years included in 

our review. Although ADEM maintains an inventory database that tracks

equipment purchases, it did not conduct physical verification of subgrantee 

inventory. Without proper oversight, abuse of Federal funding may occur, 

because ADEM cannot ensure that the subgrantees are using grant funds as 

intended. 

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 OFFICE OF INSPECTOR GENERAL 

 Department of Homeland Security 

Recommendations 

We recommend that the Federal Emergency Management Agency Assistant 

Administrator, Grant Programs Directorate: 

Recommendation #1:

Require the director of the Arkansas Department of Emergency Management to 

revise its Homeland Security State Strategy to include specific, measurable, and 

results-oriented objectives in compliance with the most recent DHS guidance. 

Recommendation #2: 

Issue guidance for developing adequate performance measures to assess all of 

the State’s capabilities and preparedness. 

Recommendation #3: 

Require the director of the Arkansas Department of Emergency Management to 

remove the requirement for expending prior grant years’ funds from the 

memorandums of agreement so that funds are available to subgrantees in a 

timely manner. 

Recommendation #4: 

Require the director of the Arkansas Department of Emergency Management to— 

•	 Correct deficiencies identified pertaining to inventory records and 

property tags. 

•	 Emphasize during annual grant workshops the need to follow 44 CFR 

Sections 13.36 and 13.32 (Federal procurement and property inventory 

requirements), highlighting deficiencies identified during this audit.

Recommendation #5: 

Require the director of the Arkansas Department of Emergency Management to 

increase onsite monitoring to ensure subgrantee compliance with procurement, 

inventory, and accountability requirements. 

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 OFFICE OF INSPECTOR GENERAL 

 Department of Homeland Security 

Management Comments and OIG Analysis 

FEMA agreed with four of the five recommendations. FEMA acknowledged the 

need to improve the process. FEMA will use the findings and recommendations 

in the report to strengthen the effectiveness and efficiency of the programs’ 

execution and measurement. 

FEMA’s and the State’s Response to Recommendation #1: FEMA concurred 

with the recommendation. During their programmatic monitoring visit

conducted in September 2011, updates to the strategy were identified and are 

pending submission. These revised goals and objectives should be specific, 

measurable, achievable, results oriented, and time limited, and able to serve the 

State well in its homeland security efforts going forward. FEMA asked the State 

to submit its revised Homeland Security Strategy into the Grants Reporting Tool 

within 90 days of the Corrective Action Plan. 

ADEM indicated that it has already implemented an annual review of the State 

Homeland Security Strategy and will continue to list goals and objectives that 

support projects that can be measured based on ADEM’s baseline and 

measurements until directed otherwise by FEMA. 

OIG Analysis: FEMA’s planned corrective actions, once implemented, should 

resolve the recommendation. This recommendation will remain open and 

unresolved until we have reviewed the revised Strategic Plan. 

FEMA’s and the State’s Response to Recommendation #2: FEMA concurred 

with the recommendation. FEMA is coordinating with DHS stakeholders in the 

National Preparedness Directorate and the National Preparedness Assessment 

Division to develop metrics for grant program performance. FEMA expects these 

metrics to be incorporated into the FY 2012 grant programs, and modified 

annually for future programs to reflect current policies and new DHS priorities. 

ADEM responded that until a comprehensive performance measurement is put 

into place nationwide, it will continue to measure capability based on its 

assessment tool and its established baseline.

OIG Analysis: FEMA’s plan to develop metrics for grant program performance, 

once implemented, should resolve the recommendation. This recommendation 

will remain open and unresolved until we have reviewed the metrics.

FEMA’s and the State’s Response to Recommendation #3: FEMA did not concur 

with the recommendation. FEMA found the SAA to be compliant with its 

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requirement to obligate at least 80 percent of the funds awarded under the 

SHSP to local units of government within 45 days of receipt of funds. 

ADEM advised that in order to manage the grant program for the State of 

Arkansas and provide timely information concerning its expenditures to 

Congress, it intends to continue its established practice. The State recognizes 

this approach as the best practice for ensuring adequate accounting and

jurisdiction satisfaction for the grant program. 

OIG Analysis: We do not agree with FEMA that the SAA is compliant with the 

requirement to obligate at least 80 percent of the funds to the local units within 

45 days of receipt. According to grant guidance, the 45-day obligation must be 

unconditional (i.e., no contingencies for availability of funds) on the part of the 

awarding entity. Since the SAA requires subgrantees to spend their entire prior 

year’s grant funds before it makes grant funds available for the next fiscal year, it 

did not obligate funds within the 45-day timeframe. Therefore, this 

recommendation will remain open and unresolved until FEMA provides an action 

plan and evidence that it is consistently ensuring that funds are available timely

to subgrantees. 

FEMA’s and the State’s Response to Recommendation #4: FEMA concurred 

with the recommendation. FEMA responded that the SAA is responsible for 

ensuring that all property acquired with grant funds is inventoried and 

maintained according to the standards in 44 CFR Sections 13.36 and 13.32. 

FEMA asked ADEM to provide documentation detailing how it will correct 

deficiencies and communicate the requirements with subgrantees more 

effectively. FEMA asked that this documentation be submitted within 90 days. 

ADEM agreed and added that subgrantees will be more closely monitored. The 

State also will ensure that inventory is more clearly marked and procurement 

procedures better defined during desk and onsite monitoring visits. With the 

substantantial decrease in funding beginning in FY 2012, the State will be 

changing its entire award process and will look to suggestions as it puts the new 

system into place.

OIG Analysis: FEMA’s corrective action should resolve the recommendation. 

However, this recommendation will remain open and unresolved until we have 

reviewed documentation of the SAA correcting deficiencies and communicating 

the requirements to its subgrantees. 

FEMA’s and the State’s Response to Recommendation #5: FEMA concurred 

with the recommendation. FEMA indicated that it is the SAA’s responsibility to 

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monitor all subaward activities to ensure compliance with Federal and State 

laws, regulations, and guidance. Responsibilities include accounting for receipts 

and expenditures, managing cash, maintaining adequate financial records, and 

reporting and refunding expenditures disallowed by audits, monitoring, or other 

assessments and reviews. FEMA asked the SAA to provide documentation 

detailing how it will implement a more comprehensive subgrantee monitoring 

program for more effective oversight. FEMA asked that this documentation be 

submitted within 90 days. 

In its response, ADEM advised that protocols for monitoring as well as a regular 

schedule have already been put into place. 

OIG Analysis: FEMA’s corrective action should resolve the recommendation. 

This recommendation will remain open and unresolved until we have reviewed 

documentation of the SAA’s implementation of a more comprehensive 

subgrantee monitoring program for more effective oversight of its subgrantees. 

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 OFFICE OF INSPECTOR GENERAL 

 Department of Homeland Security 

Appendix A 

Objectives, Scope, and Methodology 

The Department of Homeland Security (DHS) Office of Inspector General (OIG) was 

established by the HomelandfSecurityfActfoff2002 (Public Law 107-296) by amendment 

to the InspectorfGeneralfActfoff1978. 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 provides the results of our work to determine whether the State of Arkansas 

spent SHSP grant funds (1) effectively and efficiently and (2) in compliance with 

applicable Federal laws and regulations. We also addressed the extent to which funds 

enhanced the State’s ability to prevent, prepare for, protect against, and respond to 

natural disasters, acts of terrorism, and other manmade disasters. 

HSGP and its interrelated grant programs fund a range of preparedness activities, 

including planning, organization, equipment purchase, training, exercises, and 

management and administration costs. However, only SHSP funding, equipment, and 

supported programs were reviewed for compliance. The scope of the audit included the 

SHSP grant awards for FYs 2008, 2009, and 2010. We reviewed the State’s plans to 

improve preparedness and all-hazards response, the goals set within those plans, the 

measurement of progress toward the goals, and the assessments of performance 

improvement that result from this activity (see table 3). 

Table 3: State of Arkansas Homeland Security Grant Program Awards

Funded Activity FY 2008 FY 2009 FY 2010 Total

State Homeland Security Program $ 6,170,000 $ 6,524,500 $ 6,613,200 $19,307,700

Citizen Corps Program $190,973 $190,294 $162,925 $544,192

Metropolitan Medical Response 

System Program $ 321,221 $321,221 $317,419 $959,861

Total $6,682,194 $7,036,015 $7,093,544 $20,811,753

Source: DHS OIG. 

We visited the designated SAA, ADEM, and the following 18 subgrantees4

 that had been 

awarded funding in FYs 2008, 2009, and 2010. 

• Arkansas Department of Emergency Management (State agency) 

• Arkansas State Police (State agency) 

• City of Little Rock Office of Emergency Management 

4

 The 18 subgrantees were selected from 77 local jurisdictions and five State agencies.

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•	 Benton County 

•	 Craighead County 

•	 Crittenden County 

•	 Faulkner County 

•	 Garland County 

•	 Greene County 

•	 Jackson County 

•	 Lawrence County 

•	 Logan County 

•	 Mississippi County 

•	 Pulaski County 

•	 Saline County 

•	 Sebastian County 

•	 Union County 

•	 Washington County 

At each location, we interviewed responsible officials, reviewed documentation 

supporting State and subgrantee management of grant funds, and inspected selected 

equipment procured with grant funds. We also judgmentally selected transactions to 

determine whether funds were expended according to grant requirements and Federal, 

State, and local regulations. In addition, for 16 of the subgrantees we reviewed the 

timely obligation of grant funds, and for 17 of the subgrantees we reviewed inventory 

records. Our selection was based on the following criteria: 

•	 The top two State agencies, because they received 90 percent of the SHSP funds 

allocated to State agencies for the 3 years; 

•	 The five local jurisdictions in the mid-Arkansas area, because they averaged more 

than $100,000 in SHSP funds for the 3 years; and 

•	 The top two local jurisdictions receiving SHSP funds for the 3 years in the other areas 

of the State, to ensure coverage throughout the State. 

We conducted this performance audit between October 2011 and April 2012 pursuant 

to the InspectorfGeneralfActfoff1978, as amended, and according to generally accepted 

government auditing standards. Those standards require that we plan and perform the 

audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our

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

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

audit objectives. 

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FFICE OF INSPECTOR GENERAL 

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Appendix B

FEMA Management Comments to the Draft Report 

u.s. Dtpl l'1mt.n1 or IIDmtland S",ur;l)' 

Washil\i.1on. DC 20472 

Jl/l 30 :", 

MEMORANDUM FOR: Anne L. Richards 

Assistant Inspector General for Audits 

Office of Inspector General 

>uJ'-- David J. Kaufman ~ L.~ 

V Director 

Office of Policy and Program Analysis 

SUBJECT, Comments to OIG Draft Report, The Sfate of Arkansas' 

Mallagemem olStafc Nome/and Security Grams Awarded During 

Fiscct/ Years 2008 flll"Oligh 20/0 

Thank you for the opportunity to comment on the draft rcport. The findings in the report will be 

used to strengthen the effectiveness and efficicney of how we execute and measure our 

programs. We recognize the need to continue to improve the process, including addressing the 

recommendations raised in this report. Our responses to the recommendations are as follows: 

OIG Recommendation # 1: We recommend that the Federal Emergency Management Agency 

Assistant Administrator, Grant Programs Directorate require the director of the Arkansas 

Department of Emergency Management to revise its Homeland Security State Strategy to include 

specifi c, measurable, and results oriented objectives in compliance with the most recent DHS 

guidance. 

FEMA Response to Recommendation #1: FEMA concurs with this recommendation. FE~lA 

approved the State's Homeland Security Strategy revision in March 2011. During the 

programmatic monitoring visit conducted by FEMA in September 20 11 , updates to the Strategy 

were identified; these changes are currently pending submission to FEMA. It is also FEMA's 

intent that these revised goals and objectives are specific, measureable, achievable, resuils· 

oriented, and time limited, and will serve the State well in its homeland security efforts going 

forward. FEMA requests that the State submit its revised Homeland Security Strategy into the 

Grants Repon ing Tool within 90 days of this Corrective Action Plan. 

OIG Recommendation #2: We recommend that the Federal Emergency Management Agency 

Assistant Administrator, Grant Programs Directorate require the Director of the Arkansas 

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OFFICE OF INSPECTOR GENERAL 

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Department of Emergency Management to issue guidance for developing adequate performance 

measures to assess all of the State's capabilities and preparedness. 

FEMA Response to Recommendation ##2: FEMA concurs with the recommendation. The 2011 

State Preparedness Report (SPR) Survey Tool is a significant departure from past versions of the 

tool as it aligns to Presidential Policy Directive 8 and requires each State Administrative Agency 

(SAA) to assess preparedness levels against 31 Core Capabilities. The past version of the SPR 

Survey Tool was predicated on 37 Target Capabilities and not Core Capabilities. The SAA and 

its state partners completed the assessments on behalf of its 77 counties. 

In addition to the SAA completing and submitting an annual SPR to FEMA as required under 

the Homeland Security Grant Program, the SAA has also developed a statewide Homeland 

Security Strategy that will help shape the State of Arkansas' future homeland security and 

preparedness priorities, ultimately ensuring that the state can be both prepared and resilient in 

the face of a threat, hazard or terrorist event. 

FEMA is coordinating with DHS stakeholders in the National Preparedness Directorate (NPD) 

and the National Preparedness Assessment Division (NP AD) for the development of metrics for 

grant program performance. These metrics are anticipated to be incorporated into the FY 2012 

grant programs, and modified annually for future programs to reflect current policies and new 

DHS priorities. 

Based on the SAA's completion of the SPRand Homeland Security Strategy, coupled with 

FEMA's current performance measmement initiatives, FEMA believes this recommendation 

has been fully addressed, and therefore requests the recommendation be considered resolved 

and closed. 

OIG RecommeDdation ##3: We recommend that the Federal Emergency Management Agency 

Assistant Administrator, Grant. Programs Directorate require the director of the Arkansas 

Department of Emergency Management to remove the requirement for expending prior grant 

years' funds from the memoranda of agreement so that funds are available to subgrantees in a 

timely manner. 

FEMA Response to Recommendation ##3: FEMA does not concur with this recommendation. 

FEMA has found the SAA to be compliant with its requirement to obligate at least 800/0 of the 

funds awarded under the State Homeland Security Grant Program to local units of government 

within 45 days of receipt of funds. FEMA has enclosed the Initial Strategy Implementation Plan 

(ISIP) reports from FEMA's Grants Reporting Tool demonstrating Arkansas' obligation of 

funding to local units of government within the 45 day requirement (see dates for submission and 

approved) for 2008, 2009 and 20 I O. These enclosures demonstrate that the SAA obligated more 

than their required 80% of funds to local governments. 

FEMA recognizes this to be appropriate grants management practice and requests this 

recommendation to be resolv~ and closed. 

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OFFICE OF INSPECTOR GENERAL 

 Department of Homeland Security 

OIG Recommendation #4: We recommend that the Federal Emergency Management Agency 

Assistant Administrator, Grant Programs Directorate require the Director of the Arkansas 

Department of Emergency Management to: 

• Correct deficiencies identified pertaining to inventory records and property tags. 

o Emphasize during ann4a1 grant workshops the need to follow CFR Title 44 Section 13.36 

and 13.32 (Federal procurement and property inventory requirements), highlighting 

deficiencies identified during this audit. 

FEMA Response to Recommendation #4: FEMA concurs with the recommendation. As the 

primary grantee, it is the SAA's responsibility to ensure all property acquired with grant funds is 

inventoried and maintained to the standards identified in CFR Title 44 Section 13.36 and 13.32. 

FEMA requests the 8AA provide docwnentation detailing how the 8M will correct these 

deficiencies and communicate the requirements with sub grantees more effectively. FEMA 

requests this documentation be submitted to the FEMA Grant Programs Directorate Program 

Analyst within 90 days. 

OIG Recommendation #5: We recommend that the Federal Emergency Management Agency 

Assistant Administrator, Grant Programs Directorate require the director of the Arkansas 

Department of Emergency Management to increase onsite monitoring to ensure subgrantee 

compliance with procurement,.inventory, and accountability requirements. 

FEMA Response to Recommendation #5: FEMA conClm with the recommendation. As the 

primary grantee, it is the 8AA's responsibility to monitor all sub.award activities to ensure 

compliance with federal and state laws, regulations, and guidance. Responsibilities include the 

accolUlting of receipts and expenditwes. cash management, maintaining of adequate financial 

records, reporting and refunding expenditwes disallowed by audits, monitoring or other 

assessments and reviews. FEMA requests the SAA provide documentation detailing how the 

SAA will implement a more comprehensive sub grantee monitoring program for more effective 

oversight. FEMA requests this documentation be submitted to the FEMA Grant Programs 

Directorate Program Analyst within 90 days. 

Again. we thank: you for the opportunity to provide our comments concerning your draft report. 

Please feel free to contact our audit liaison, Gina Norton at 202-646-4287, with additional 

questions or concerns. 

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FFICE OF INSPECTOR GENERAL 

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Appendix C 

State of Arkansas Management Comments to the Draft Report 

STATE OF ARKANSAS 

DEPARTMENT OF EMERGENCY MANAGEMENT 

MIKE BEEBE 

GOVERJ\OR 

July 31, 2012 

Ms, Anne L. Richards 

Assistant Inspector General for Audits 

DHS Office of Inspector General 

245 Murray Drive. SW, Building 410 

Washington, DC 20528 

Re: State of Arkansas' Management of State Homeland Security Program Grants Awarded 

DlU'ing Fiscal Years 2008-20 J a - Arkansas' ",'Titten comments to the Draft Report 

Dear Ms. Richards: 

Below please find comments concerning the OIG audit report for Ihe State of Arkansas State 

Homeland Security Grant Program. 

Improvements Are Needed to Enhance ,lte State of Arkansas' Grant Jfa"agemenl Practices 

Homeland Security Strategies 

During the writing process of the Homeland Security Strategies, which was reviewed during the 

audit, the Stal~ submiltt:u gual:s and objectives that met the guidel ines provided by Homeland 

Security. Although the strategies were written for the State to have a working document with 

whieh to move forward on projects, a major goal for us and many States was to also write a 

strategy that followed the Homeland Security (irant Program guide lines and would allow for the 

expenditure of the grant funds. The strategies were written pcr the guidance as was interpreted 

by our working groups, then provided to Homeland Security, as required, for their approval 

before any grant funding eouJd be expended. The report says that, "FEMA reviewed the State 

strategy to ensure compliance .. However, FEMA could not provide documentation to support 

that review." The following response was provided by FEMA in response to the question about 

fEMA 's review of our state strategy. "The 2008 Strategy was "ported" [10m a previous system 

into FEMA's Grants Reporting Tool (GRT) in 2007. This means that the document was 

originally submitted by the state and approved, and then was transitioncd into the GRT in 2007; 

according to GRT records, no changes were made until Novemher 2009. Each year, FEMA rolls 

the current version of every strategy into the next year. So it's possible that your 2007, 2008 and 

2009 strategies are all exactly the same even though they have different dates. It is up to 

individual grantees to update their strategies as deemed necessary; as priorities change and as 

goals and objectives ate accomplished and new ones arc identified. FEMA reviews stmtegy 

Arkansas' Homel,md SecurIty & DIsaster Preparedness Agem;:y 

Bulkllng 9501, Ca'llp Joseph r. R<Jblnson. North Little Rock. AR n1~.s600 

501-683-670i1 • FAX 5(11-683-1890 .1'I"tI/¥rI.1Idem.lrkansas.g<Jv 

AN EQUAl.. OPPORlUNITY EMPLOYER 

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FICE OF INSPECTOR GENERAL 

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Ms. Anne L. Richards 2 July 31 , 2012 

submissions against the criteria in the 2005 document referenced in your email below, for 

measurability, specificity, quantifiable and time-oriented. Unfortunately, I have no reports to 

provide for this request. 

The questions penaining to the state strategy where very unexpected during this audit since each 

state was required to use a template, based on the guidelines provided to us and then the strategy 

was subsequently approved by FEMA before awards were even made. 

In reference to the shnrtcomings nn page 5: 

Objective 1.4 is meant to show that the state will use resources available (wbether that is funding, 

equipment, manpower, etc) to share infonnation for use by the law enforcement community in the 

area of interoperable communications. .A.nd also allows for the use of the Law Enforcement 

Terrorism Prevention Program funds in order to support this goal (sioce grant funds can only be 

used in support of projects identified in the Homeland Security Strategy). This objective is 

specific since it can be tested by determining what resources were used; it is mcasureable and 

results oriented if interoperable communications is p:Jssible after the purchase of equipment which 

is tested through the uc;e of exercises and/or real world event" to detennine if we have met the goal 

and if indeed infonnation can be shared across law enforcement channels. This objective as with 

all others does provide an estimated completion date. 

Objective 4.1 is specific in that all jurisdictions must have as a part of their emergency operations 

plans provisions for all-hazard recovery; measurable as plans can be reviewed to determine if 

recovery is a part of the plans and results-oriented when tested either through exercise or real 

world events where recovery is necessary. A completion date was identified as October 2007. 

Objective 1.1 is specific in that a statewide interoperable communications system is being 

established/upgraded/enhanced with the use of the Law Enforcement Terrorism Prevention 

Program and State Homeland Security Grant Program funds; it is measureable when we reach the 

completion deadline and through exercise andlor real world events are able to communicate across 

the state and with multiple jurisdictions on one statewide system; and time limited in that a 

completion date of December 2007 was identified. This date was originally set for the 

establishment of the system with upgrades and enhancements set to follow after that. Since 

annual strategy reviews were not a requirement of the grant program, this strategy was not always 

updated on an annual basis which did leave some timelines in the original strategy that had already 

been met. With limited staff to manage the grant programs and ensure that funding was awarded 

and expended accurately priorities had to be established which became; those that allowed the 

funding to continue. We agrt:c tlwt annual updates would be the most appropriate but jf it was not 

required it was not completed with our limited staff. 

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FFICE OF INSPECTOR GENERAL 

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Ms. Anne L. Richards 3 July 31, 2012 

Performance Measures 

Perfonnance MeasureslPerfonnance Metrics are things that should have been established early in 

the grant programs (1999) so that a baseline could have been set and the entire Nation could have 

moved forward in a single fashion toward similar goals. Without a baseline set at the beginning of 

any grant program it is very difficult to come in 13 years later and try to determine what the 

basl!linl! shuuld have been and eVl!n mort: difficult or near impossible to go back truu far and 

dctcnninc what you had or could do at that given time. Now, Arkansas, as with all other states 

have had to learn how to look at their goals and objectives and determine how, as individual states, 

that we each measure where we are today. For Arkansas this has consistently been shown with 

exercises and the improvement plans as to what worked well and what didn't, then apply the 

purchase of equipment and training and exen::ise again to detennine if response has increased 

lbis is a measure of perfonnance and v.ithout initially established guidelines and baseline data, it 

is impossible to detennine adequacy. 

Since we did see a need for performance measures, although not initially required by the grant 

program, Arkansas utilized grant funding to conduct our own Capabilities Assessment Tool which 

was done at the local level so that a baseline could be established for our programs. We are 

eurrendy in the process of a tool that will address the States capabilities that will then be rolled up 

into one for an overall picture. 

Timely Obligation of Grant Fuods 

The audit report states the following: 

• There must be some action to establish a finn commitment on the part of the awarding entity. 

• There must be documentary evidence of the conunitment 

• The awanl tenns mllst be communicated to the official grantee. 

o Within the 45 day time frame ADEM provides a lener to the senior official of each 

digible entity that includes the ammUlt of funding being obligated to their jurisdiction, the 

timc frwne for cx:penditurc of the grunt funds, along with the special conditions of the 

award i.e. following the OMB circulars, etc. (these items are copied and pasted directly 

from the award document .. of the SAA intn the ~uh grantee letter). A copy of the letter is 

sent to the Grant Program Coordinator in each jurisdiction as well as maintained in a 

separate grant file for each jurisdiction in the SAA office. 

• The action must be unconditional on the part of the awarding entity. 

o Each year an application is submitted for an HSGP award and each period of perfonnance 

runs tor three years. At any given time the SAA may have 4 to 5 open grant periods for 

the HSGP. In addition. for several years the LElFP had to be kept separately making it 8 

to 10 accounts for basically d1e same program/different years. One of the mandates that 

have always come with the grant program is accountability: accountability for the 

equipment; accountability for the sub grantees; accountability for the funding, etc. After 

staning to receive these grants in 1999 and working for several years with the 

jurbdil:tiumi; each year applying for and awarding yet another grant with different 

guidelines and a ncw end date, it became very cwnbcrsome and confusing for not only the 

state as the SAA but for the jwisdictions to keep straight what equipment could or could 

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Ms. Anne L. Richards 4 luly3 1,2012 

not be bought with a specific grant year and to ensure that there was no comingling of 

fimds. Add to this the push that was coming from Congress in the fonn of data calls for 

SAA's to detennine why grant funds were not being expended expeditiously. To meet 

this chaHenge Arkansas put into place a system where awards were made for each grant 

year SO that jurisdictions had visibility of all funds available to them however. to assist 

with acCOWltillg and effective grants administration, the first gmnt received must be 

expended before the next grant would be released for expenditure. nus allowed thc local 

jurisdictions to plan for upcoming project<; but also allowed them to focus on a project and 

complete it before trying to move on to another. It kept the funding streams separate and 

therefore enabled them to account for all their funds and make everything less confusing 

which also increased the expenditure ratc. Since implementing the system our monitoring 

visits with the local jurisdi(.1ions have fOWld fewer accoWlting errors and their satisfaction 

with the program has increased. Monitoring visits from Region VI as well as FEMAIDHS 

from DC have shown this to be a best practice in accoWJting for fimds and projects and we 

have bem able to provide a dearer pi(.;lure of whc:re WI! an: in eat:h of gnml prugnuns al 

any given time. The report states that ADEM did not make funds available to the sub 

grantees when in fact the expenditure rate of the sub grantee was the determining factor in 

when they expended/utilized their next award. This system does not prevent planning but 

enhances it, when jurisdictions know what is coming and must move on their current 

projects to get to the next olle. Jurisdictions must also provide timely budgets for approval 

so that they can begin to expend. Again, this puts more accountability at the jwisdiction 

level to ensure that the items they want to purchase are allowable under the grant program 

before funds are expended. 

Procuremcnt Practices 

This is an area that can and is addressed during monitoring visits. As stated in the report as well as 

in other States, on site monitoring v.rith limited staff is difficult at best. The minimal amount of 

M&A available funding has made it extremely difficult to staff enough to administer the daily 

operations of lh~ prognnn lu t:Ilsure thal funds art: expended properly and be on site to ensLUe that 

the jurisdictions procurement practices are being followed. Each year the SM requires that at 

least one person (usually the POC) from each jurisdiction participate in a grant workshop where 

all of these types of requirements are outlined. Many times the rate quotes are obtained by the 

jurisdictions through online processes but are not printed and docwnented for file. We understand 

that more in-depth monitoring is key to finding these types of issues and as of the time of this 

audit have already implemented a monitoring protocol and schedule. 

GraDt Invent()ry Requirements 

WiUl limited fWlding, Arkansas has not purchased an expensive inventOI)' control system but 

rather uses a web based system where jurisdictions ore required to update their inventory at lease 

semi-annually. In the report there is noted that our records showed equipment assigned to one 

location however upon site visit the equipment wa" in another location. With the inventory 

required semi-annually it is possible that equipment may be located in a different location since it 

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FICE OF INSPECTOR GENERAL 

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Ms. Anne L. Richards 5 July 31,2012 

is used for response. Since very little of the equipment purchased with this grant is meant to be 

stationary we did not find this to be outside of daily use of the equipment. 

The report states that sub grantees did not always mark equipment purchased with HSGP fWlds 

""ith a sticker indicating HSGP nmds. In the grant guidance this is not listed as a requirement 

however it is something that all sub grantees are advised that, "when practicable" items should be 

marked with the statement "Purchased with funds provided by the US Department of Homeland 

Security". For all other items the jurisdiction tag system should be used in which their records 

""ill indicate that the equipment ,,·:as purchased ""ith an HSGP grant 

Sub grantee Program .Monitoring 

As stated in the report as well as in other States, on site monitoring \\ith limited staff is difficult at 

best. The minimal amount of M&A available funding has made it extremely difficult to staff 

enough to administer the daily operations of the program to ensure that funds are expended 

properly and be on site to ensure the appropriate practices of the jurisdictions. Each year the SAA 

requires that at least one person (usually the POC) from each jurisdiction participate in a grant 

workshop where all of these types of requirements are outlined. The report mentioru a particular 

instance where a vehicle was purchased for the use by the bomb team, yet the truck was marked 

SWAT. In talking with the jurisdiction this vehicle contained bomb team equipment and was 

used every time the bomb team was called out. In addition, the jurisdiction advised that at any 

time the vehicle was deployed, a bomb technician was on board to render scene safety as deemed 

necessary. The vehicle has since been labeled "Bomb Squad". (See photo) 

In the report is the statement " .. .it was only when we asked for copies of any reviews that ADEM 

discovered that no reviews of sub grantees where conducted during the FY2008 through 201 0 

grant years." With our system of expending one grant before another could be expended, we were 

in tln: fmal :sl.<Jgt:s of t:xptnding FY2008 when this audit occurred with mallY juri&iictions just 

starting to expend FY20Q9 and very little funds had been expended for FY20 1 O. Monitoring visits 

had been conducted in the months prior to the auditors visit but the FY2008, 2009 and 2010 funds 

had not been a part of those particular monitot;ng visit~ so the report'i were not reviewed. Again, 

we understand that more in-depth monitoring is key to finding issues and as of the time of this 

audit have already implemented a monitoring protocol and schedule. 

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OFFICE OF INSPECTOR GENERAL 

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Ms. Anne L. Richards 6 July 31, 2012 

Slate t)f ArkurmlS RelPt)ns~ (t) Ihe RecummendutWm· 

Recommendation #1: 

ADEM as the SAA has already implemented an annual review of the State Homeland Security 

Strategy and will continue to list goals and objectives that support projects ,",ithin our state that 

can be measured based on our baseline with our measurements wril directed otherwise by 

FEMAlDHS. 

N.ecommendation #2: 

Until such time as a comprehensive perfonnance measurement is put into place nationwide 

Arkansa5 ,",ill continue to measure capability based on our assessment tool and the baseline we 

have established. 

Recommendation #3: 

In urder tu pruperly manage the grant prognull fur the Slate of Arkw:C::i<:L'l ,1ud pruvide timely 

infonnation concerning our expenditures to Congress wc intend to continue our pmcticc already 

established as it is the best practice for ensuring adequate accounting and jurisdiction satisfaction 

for the grant program. 

Rt!(:ommeodation #4: 

Sub grantees will be more closely monitored and inventory more clearly marked as well as 

procurement procedures better defined during desk and on site monitoring visits. With the 

substantial decrease in funding beginning in FY 12 we will be changing our entire award process 

and will look to these suggestions as we put the new system into place. 

Recommendation #5: 

Protocols tor monitoring as well as a regular schedule ha,:e already heen put into place. 

Please do not hesitate to contact us with any questions or concerns regarding the infonnation 

provided in this document. 

Sincerely. 

Director and State Homeland Security Advisor 

DM:to 

www.oig.dhs.gov 28 OIG-12-116 
 

 OFFICE OF INSPECTOR GENERAL 

 Department of Homeland Security 

Appendix D 

Description of Homeland Security Grant Program

HSGP provides Federal funding to help State and local agencies enhance capabilities to 

prevent, deter, respond to, and recover from terrorist attacks, major disasters, and 

other emergencies. HSGP encompasses several interrelated Federal grant programs 

that together fund a range of preparedness activities, including planning, organization, 

equipment purchase, training, and exercises, as well as management and administration 

costs. Programs include the following: 

•	 The State Homeland Security Program provides financial assistance directly to each 

of the States and U.S. Territories to prevent, respond to, and recover from acts of 

terrorism and other catastrophic events. The program supports the implementation 

of the State Homeland Security Strategy to address identified planning, equipment, 

training, and exercise needs. 

•	 The Urban Areas Security Initiative provides financial assistance to address the 

unique planning, equipment, training, and exercise needs of high-risk urban areas, 

and to assist in building an enhanced and sustainable capacity to prevent, respond 

to, and recover from threats or acts of terrorism and other disasters. Allowable 

costs for the urban areas are consistent with SHSP. Funding is expended based on 

the Urban Area Homeland Security Strategies. 

HSGP also includes other interrelated grant programs with similar purposes. Depending 

on the fiscal year, these programs may include the following: 

•	 Metropolitan Medical Response System

•	 Citizen Corps Program 

•	 Operation Stonegarden (beginning FY 2010)

www.oig.dhs.gov 29 	 OIG-12-116 
 

 

 

 

 

 OFFICE OF INSPECTOR GENERAL 

 Department of Homeland Security 

Appendix E

Description of State of Arkansas’ Homeland Security Grant 

Program Process5

1. FEMA Releases 

Guidance to the 

State 

Administrative 

Agency (SAA) 

2. SAA updates 

Strategy & 

develops 

Investment 

Justification (IJ) 

State of Arkansas Grant Process 

3. SAA meets with 

the Governor, 

advisory group 

and executive 

committee 

Also complete the 

IJ based on the 

guidance 

6. FEMA Review 

and the grant 

award document is 

sent back to SAA 

7. SAA signs the 

award letter 

accepting the 

grant funds 

( No Funds 

Exchange) 

8. Award letter goes 

back to FEMA for 

signature approval 

9.The Grant 

Authorization 

Notice (GAN) goes 

to SAA---GAN has 

period of 

performance and 

all details of the 

award date and 

special conditions 

4. Recommendations 

from the advisory group 

go to the executive 

committee, then to the 

governor 

5. The application 

from the SAA is 

submitted to FEMA 

10. SAA must obligate 

80 percent of the funds 

awarded to subgrantee 

within 45 days of 

receipt of the funds 

11. Award letter 

has been accepted 

by SAA---

Subgrantee time 

frame to spend 

funding starts 

12. Award Letter is signed by 

SAA Director and County 

Judge 

13. MOA comes 

back to SAA 

14. SAA reviews 

the budget for 

approval 

-to ensure total 

request matches 

total award 

15.Budget Approval 

letter is sent back to 

subgrantee with 

completion of the 

review 

Note: Subgrantee and SAA may 

go back and forth to ensure the 

procurements is allowable 

according to FEMA policy 

Note: Award Letter has the funding 

categories, the Memo of Agreement 

(MOA), special conditions, and is 

split out between SHSP and Law 

Enforcement Terrorism Prevention 

Program 

17. Sub grantee order 

& receive 

procurement. 

18. Invoice for 

procurement sent 

to SAA from 

sub grantee 

Note: A Jurisdiction Reimbursement 

Request form is sent to SAA from Sub 

grantee with the procurement invoice 

attached 

19. Spreadsheet with 

purchases goes to sub 

grantee from SAA 

20. Grant Payment 

Authorization (GPA) 

This is when SAA uses 

the FEMA Payment and 

Reporting System to draw 

down funds 

21. Funds are released 

from state Treasury to sub 

grantee 

(Funds exchange) 

Note: Takes 5-7 business days to receive the funds 

from FEMA in the State Treasury. Then it takes 

another 5 business days for the sub grantee to 

receive the funds from the State Treasury. The 

funds must stay with the State Treasury for at least 

24 hours before funds are released to subgranteee 

22. A confirmation 

letter is sent from the 

subgrantee that the 

funds were received 

16. SAA Release of 

Funds letter to sub 

grantee 

(No funds Exchange) 

5

 Source: DHS OIG. 

www.oig.dhs.gov 30 OIG-12-116 
 

 

 

 

 OFFICE OF INSPECTOR GENERAL 

 Department of Homeland Security 

Appendix F 

Number of Days Elapsed Between Required Obligation and 

Availability

Subgrantee

Date FEMA 

Awarded Funds to

State 

Funds Required 

To Be Obligated 

Within 45 Days

Actual Date Funds 

Were Obligated 

Number of Days Late 

Benton County

9/3/2008 10/18/2008 1/24/2011 828

8/21/2009 10/5/2009 7/12/2011 645

9/17/2010 11/1/2010 12/12/2011 406

City of Little Rock 

9/3/2008 10/18/2008 2/5/2010 475

8/21/2009 10/5/2009 7/27/2011 660

9/17/2010 11/1/2010 12/12/2011 406

Craighead County

9/3/2008 10/18/2008 8/27/2010 678

8/21/2009 10/5/2009 10/20/2011 745

9/17/2010 11/1/2010 12/12/2011 406

Crittenden County

9/3/2008 10/18/2008 12/3/2010 776

8/21/2009 10/5/2009 7/14/2011 647

9/17/2010 11/1/2010 12/12/2011 406

Faulkner County

9/3/2008 10/18/2008 3/16/2009 149

8/21/2009 10/5/2009 8/22/2011 686

9/17/2010 11/1/2010 12/12/2011 406

Garland County

9/3/2008 10/18/2008 9/1/2010 683

8/21/2009 10/5/2009 11/23/2011 779

9/17/2010 11/1/2010 12/12/2011 406

Greene County

9/3/2008 10/18/2008 8/19/2010 670

8/21/2009 10/5/2009 11/17/2011 773

9/17/2010 11/1/2010 12/12/2011 406

Jackson County 

9/3/2008 10/18/2008 8/15/2011 1031

8/21/2009 10/5/2009 12/8/2011 794

9/17/2010 11/1/2010 12/12/2011 406

Lawrence County

9/3/2008 10/18/2008 11/10/2010 753

8/21/2009 10/5/2009 9/13/2011 708

9/17/2010 11/1/2010 12/12/2011 406

Logan County

9/3/2008 10/18/2008 3/4/2009 137

8/21/2009 10/5/2009 8/27/2010 326

9/17/2010 11/1/2010 12/12/2011 406

Mississippi County 

9/3/2008 10/18/2008 3/17/2011 880

8/21/2009 10/5/2009 9/21/2011 716

9/17/2010 11/1/2010 12/12/2011 406

Pulaski County

9/3/2008 10/18/2008 4/8/2010 537

8/21/2009 10/5/2009 2/14/2011 497

9/17/2010 11/1/2010 12/12/2011 406

Saline County 

9/3/2008 10/18/2008 3/12/2010 510

8/21/2009 10/5/2009 11/18/2010 409

9/17/2010 11/1/2010 12/12/2011 406

Sebastian County

9/3/2008 10/18/2008 7/14/2009 269

8/21/2009 10/5/2009 8/4/2010 303

9/17/2010 11/1/2010 12/12/2011 406

Washington County 

9/3/2008 10/18/2008 6/7/2010 597

8/21/2009 10/5/2009 7/14/2011 647

9/17/2010 11/1/2010 12/12/2011 406

Union County 

9/3/2008 10/18/2008 6/9/2010 599

8/21/2009 10/5/2009 3/8/2011 519

9/17/2010 11/1/2010 12/12/2011 406

Source: DHS OIG. *Note: FY 2010 was calculated as of December 12, 2011, the date of the OIG file review. 

www.oig.dhs.gov 31 OIG-12-116 
 OFFICE OF INSPECTOR GENERAL 

 Department of Homeland Security 

Appendix G

Major Contributors to This Report 

Patrick O’Malley, Director 

Cheryl Jones, Audit Manager 

Tia Jackson, Program Analyst 

Richard Kotecki, Auditor 

Melissa Motley, Program Analyst 

Brian Smythe, Program Analyst 

Sandra Ward-Greer, Auditor 

Jeffrey Wilson, Program Analyst 

Jeanne Genao, Independent Referencer

www.oig.dhs.gov 32 OIG-12-116 
 

 OFFICE OF INSPECTOR GENERAL 

 Department of Homeland Security 

Appendix H

Report Distribution 

Department of Homeland Security

Secretary 

Deputy Secretary 

Chief of Staff 

Deputy Chief of Staff

General Counsel 

Executive Secretariat

Director, GAO/OIG Liaison Office 

Assistant Secretary for Office of Policy 

Assistant Secretary for Office of Public Affairs 

Assistant Secretary for Office of Legislative Affairs 

Acting Chief Privacy Officer 

Federal Emergency Management Agency

Administrator 

Assistant Administrator, Grant Programs Directorate 

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 

www.oig.dhs.gov 33 OIG-12-116 
 

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

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

at: @dhsoig. 

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

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