Department of Homeland Security
 

Costs Claimed by Bristol Township Volunteer Fire 


Department under Fire Station Construction Grant 


No. EMW-2009-FC-01627R 


American Recovery and Reinvestment Act of 2009 

OIG-12-97 July 2012
 
OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

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

JUL 1 3 2012 

MEMORANDUM FOR: Elizabeth M. Harman 

Assistant Administrator 

Grant Programs Directorate 

Federal Emergency Management Agency 

FROM: Anne L. Richards ~;;!~ Assistant Inspector General for Audits 

SUBJECT: Costs Claimed by Bristol Township Volunteer Fire 

Department Under Fire Station Construction Grant 

No. EMW-2009-FC-01627R 

Attached for your information is our final letter report, Costs Claimed by Bristol 

Township Volunteer Fire Department Under Fire Station Construction Grant No. EMW2009-FC-01627R. We incorporated the formal comments from the Office of Policy and 

Program Analysis, Federal Emergency Management Agency (FEMA), in the final report. 

The report contains one recommendation for FEMA to resolve $21,164 of questionable 

costs that Bristol Township Volunteer Fire Department claimed for reimbursement. The 

Office of Policy and Program Analysis concurred with the recommendation and said that 

FEMA will take steps to resolve the questioned costs. As prescribed by 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 Inspector General Act, we are providing 

copies of our report to appropriate congressional committees with oversight and 

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

the report on our website for public dissemination. 

Major contributors to this report are Roger La Rouche, Director of Recovery Act Audits; 

Matthew Mongin, Auditor; and Kevin Donahue, Report Referencer. 
 

 

 OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Please call me with any questions, or your staff may contact John E. McCoy II, 

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

Attachment 

www.oig.dhs.gov 2 OIG-12-97 
 OFFICE OF INSPECTOR GENERAL 

 Department of Homeland Security 

Background 

The American Recovery and Reinvestment Act of 2009 (Recovery Act), as amended, 

appropriated $210 million to FEMA for competitive grants for modifying, upgrading, or 

constructing non-Federal fire stations. Effective September 25, 2009, FEMA awarded a 

grant of $2,235,191 to the Bristol Township Volunteer Fire Department (Fire 

Department) for constructing a new fire station. 

 

The grant specified a period of performance from September 25, 2009, to September 24, 

2012. As of October 30, 2011, the Fire Department had completed construction of the 

new fire station (figure 1) and had received reimbursements of $1,927,826 from FEMA 

for project design, engineering, construction, and management. 

Figure 1. New Bristol Township Fire Station 

Source: Bristol Township Volunteer Fire Department. 

Under the terms of the grant, the Fire Department agreed to use the grant funds 

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

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

Application Kit), and to comply with Office of Management and Budget (OMB) Circular 

A-87, Revised, Cost Principles for State, Local and Indian Tribal Governments (2 CFR Part 

225) and the Uniform Administrative Requirements for Grants and Cooperative 

Agreements to State and Local Governments in 44 Code of Federal Regulations (CFR) 

Part 13. 

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

Audits of States, Local Governments, and Non-Profit Organizations, and Recovery Act 

provisions for submitting quarterly recipient reports to the Federal Government on the 

www.oig.dhs.gov 3 OIG-12-97
 
 

 

 

 

 

 

 

 OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

use of Recovery Act funds; paying prevailing wages as determined by the Secretary of 

Labor; and using American-made iron, steel, and manufactured goods. 

Results of Audit 

Of the $1,927,826 claimed for reimbursement by the Fire Department, we questioned 

$21,164 claimed for a security system and parts of a telephone system that were not 

eligible for reimbursement under the grant. We concluded that the Fire Department 

complied with grant requirements for submitting required Recovery Act reports to the 

Federal Government and for ensuring that contractors were paid prevailing wages, and 

used American-made iron, steel, and manufactured goods in the construction of the 

new fire station. 

Ineligible System and Equipment ($21,164) 

We questioned costs of $21,164 for a system and equipment that are not eligible for 

reimbursement according to FEMA’s program guidance. 

Ineligible Security System – $14,361 

The Fire Department claimed $14,361 for the purchase and installation of electronic 

door locks on the interior and exterior doors of the new fire station. This system uses 

individual key cards for each authorized user and has a master controller that records 

access by card users. We questioned the costs because FEMA’s Guidance and 

Application Kit identifies security systems as an ineligible cost for the fire station 

construction grant. 

Ineligible Telephone System – $6,803 

The Fire Department claimed $12,991 for the purchase and installation of a telephone 

system providing communications for the new fire station. We contacted FEMA 

regarding the eligibility of telephone systems under the station construction grant 

because the Guidance and Application Kit does not list telephone systems as eligible or 

ineligible for reimbursement. FEMA advised us that installation of telephone wiring is 

eligible under the grant, but telephone sets, switching panels, and accessories are not 

eligible. We determined that the Fire Department paid $6,188 for the eligible telephone 

system wiring and its installation. We questioned the remaining $6,803 because it was 

for ineligible phones and related equipment. 

www.oig.dhs.gov 4 OIG-12-97 
 

 

 

 OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Compliance With Requirements for Reporting, Buying American, and Paying Prevailing 

Wages 

The Recovery Act requires recipients to submit quarterly reports on funds received and 

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

grantees use American-made iron, steel, and manufactured goods and that laborers and 

mechanics be paid, at a minimum, prevailing wages as determined by the Secretary of 

Labor under 40 U.S.C. Chapter 31, Subchapter IV. We verified that the Fire Department 

submitted the required quarterly reports. In addition, we confirmed that the Fire 

Department included the prevailing wage requirement in its public solicitation for 

construction bids and the manufacturing source identification requirements in the 

building specifications. Moreover, the project architect instituted sufficient controls to 

ensure that these provisions were honored. Controls included a requirement for 

subcontractors to comply with the provisions, review and certification of all invoices and 

onsite inspection by the architect, and a requirement for vendors/contractors to submit 

vouchers showing payment of prevailing wages 

Recommendation 

We recommend that the Assistant Administrator, Grant Programs Directorate: 

Recommendation #1: 

Resolve the questioned costs of $21,164 pertaining to the security system and parts of the 

telephone system that were claimed for reimbursement but not eligible under the grant. 

Management Comments and OIG Analysis 

FEMA provided formal comments to our draft report, which are included as appendix B. 

FEMA Comments to Recommendation #1 

FEMA concurred with the recommendation. In lieu of asking the Fire Department to 

return the funds, FEMA is allowing the Fire Department the “opportunity” to submit a 

proposal to substitute $21,164 of eligible program costs that were not included in the 

scope of work of the initial grant. FEMA will request that the Fire Department submit 

the proposal within 90 days of its receipt of FEMA’s grantee notification memorandum 

transmitting the final audit report. 

www.oig.dhs.gov 5 OIG-12-97 
 

 

 OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

OIG Analysis 

FEMA adequately addressed the recommendation. The recommendation, however, will 

remain unresolved and open until FEMA provides a target completion date or evidence 

that proposed substitute costs are eligible and of a sufficient amount to offset the 

questioned costs of $21,164 and amends the grant agreement to provide for the 

substitute costs. 

www.oig.dhs.gov 6 OIG-12-97 
 

 

 OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Appendix A 

Objectives, Scope, and Methodology 

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

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

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

special reports prepared as part of our oversight responsibilities to promote economy, 

efficiency, and effectiveness within the Department. 

The objective of the audit was to determine whether costs invoiced were allowable, 

allocable, and reasonable according to the grant agreement and applicable Federal 

requirements. The audit covered costs of $1,927,826 claimed by the Fire Department 

from July 2010 to September 2011 and reimbursed by FEMA. 

In conducting our audit, we— 

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

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

administrative requirements; 

•	 Interviewed Fire Department personnel to gain an understanding of their 

accounting system and the applicable internal controls; 

•	 Reviewed the independent auditor’s fiscal year 2010 single audit report and 

interviewed the responsible auditor to identify issues and other conditions that 

could affect our examination; 

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

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

incurred and claimed for FEMA reimbursement; 

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

of FEMA reimbursements; 

•	 Used the grant provisions and applicable Federal requirements to determine 

whether amounts claimed were eligible for reimbursement; 

•	 Performed fraud detection procedures; and 

www.oig.dhs.gov 7	 OIG-12-97 
 

 

 

 OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

• Inspected the new fire station and surrounding property. 

We conducted this performance audit between October 2011 and February 2012, 

pursuant to the Inspector General Act of 1978, as amended, and according to generally 

accepted government auditing standards. Those standards require that we plan and 

perform the audit to obtain sufficient, appropriate evidence to provide a reasonable 

basis for our findings and conclusions based upon our audit objectives. We believe that 

the evidence obtained provides a reasonable basis for our findings and conclusions 

based upon our audit objectives. 

www.oig.dhs.gov 8 OIG-12-97 
 OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Appendix B 

Management Comments to the Draft Letter Report 

U.S. [)cparlmcllf of Homelund Secur il}' 

Washill),'\UIl. DC 20472 

MAy 3 f 1012" -

MEMORANDUM FOR: Anne L. Richards 

Assistant inspector General for Audits 

Orfict:: urthe Inspector General 

FROM: f}avid J. Kaufman /2;::; ______ Director 7 -vOffice of Policy and Program Analysis 

SUBJECT: Comments to UIG Draft Report, Review a/Costs Claimed by lJristol 

Township. Oh io. Vuhlllleer Fire Deparlmcml, Brislu/viJIe. Ohio, Under 

Fire Statioll COl1struCtiOIl Gral1l Nrmtbcr EMW-2009-FC-O/627R 

The Federal Emergency Management Ageney (FEMA) appreciates th!! opJXJrtunity to review and 

respond to the Department of Homeland Security (DHS) Offi ce oflnspeetor General (OIG) Draft 

Report. As noted in our responses to your recommendations, below - FEMA is continuing to work 

to resolve the issues identified in the audit. 

O IG Recommendation #1: We recommend that the Assistant Administrator, Grant Programs 

Directorate, resolve the questioned costs of$2 1. 164 pertaining to the security system and parts of the 

telephone system that were claimed for reimbursemcnt but not eligible undcr thc grant. 

FEMA Response to the Draft Report: FEMA concurs with this recommendation. 

FEMA agrees that the telephone and security system expenses are ineligibl e under the Station 

Construction Grant (SCG) Program. Rather than requesti ng that the department return the funds to 

FEMA, FEMA will al low the department an opportunity to seek an altemative resolution. FEMA 

will request that the department submit a proposal to substitute a minimum ofS2 l,l64 worth of 

eligible expenses toward the SeG Program that were not originally included in their awarded scope 

of work. FEMA will request that the depanmem submit Ihal proposal within 90 days of their rect::ipt 

of the final rcport with the grantce notification memorandum. If the proposal is acceptable, FEMA 

will amend their grant to incur these charges toward the sca program as replacement for the 

ineligible costs. The ineligible security and phone system would then be considered expenses 

outside of the grant and paid to r by the department. 

FEMA requests that this recommendation be considered resolvcd and open pending the grantee's 

implementation of this corrective action plan. 

www.r~"Im gov 

www.oig.dhs.gov 9 OIG-12-97 
 OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Again. we thank you for the opportunity to review your report. If you have further questions. please 

do not hesitate to call Gina Norton, FEMA Audit Liaison Office, 202-646-4287. 

2 

 

www.oig.dhs.gov 10 OIG-12-97 
 

 

 

 

 

 

 OFFICE OF INSPECTOR GENERAL 

Department of Homeland Security 

Appendix C 

Report Distribution 

Department of Homeland Security 

Secretary 

Deputy Secretary 

Chief of Staff 

Deputy Chief of Staff 

General Counsel 

Executive Secretary 

Director, GAO/OIG Liaison Office 

Assistant Secretary for Office of Policy 

Assistant Secretary for Office of Public Affairs 

Assistant Secretary for Office of Legislative Affairs 

Recovery Act Coordinator 

Administrator, Federal Emergency Management Agency 

Federal Emergency Management Agency Audit Liaison Office 

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 11 OIG-12-97 
 

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