Department of Homeland Security 

Office of Inspector General 

The State of New York’s Management of 


State Homeland Security Program and 


Urban Areas Security Initiative Grants 


Awarded During Fiscal Years 


2006 through 2008
 

OIG-11-30 January 2011 
Offce of Inspector General

U.S. Department of Homeland Security

Washigton, DC 20528

Homeland

Security

JAN i 3 2lJf

Preface

The Department of Homeland Security (DHS) Office ofInspector 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 par of our oversight responsibilities to promote economy,

effciency, and effectiveness within the department.

The attached report presents the results of the audit ofthe State of New York's

management of State Homeland Security Program and Urban Areas Security Initiative

grants awarded during Fiscal Years 2006 through 2008. We contracted with the

independent public accounting firm Foxx & Company to perform the audit. The contract

required that Foxx & Company perform its audit according to generally accepted

government auditing standards. Foxx & Company's report identifies six reportable

conditions where State management of the grant funds could be improved, resulting in

14 recommendations addressed to the Assistant Administrator, Grant Programs

Directorate, Federal Emergency Management Agency. Foxx & Company also identified

a best practice that should be considered for use by other jurisdictions. Foxx & Company

is responsible for the attached auditor's report dated January 5, 2011, and the conclusions

expressed in the report.

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

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

trust this report wil result in more effective, effcient, and economical operations. We

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

Anne L. Richards

~o(U4

Assistant Inspector General for Audits
 

January 5, 2011 

Ms. Anne L. Richards 

Assistant Inspector General for Audits 

Office of Inspector General 

U.S. Department of Homeland Security 

245 Murray Drive, S.W. Building 410 

Washington, D.C. 20528 

Dear Ms. Richards: 

Foxx & Company performed an audit of the State of New York’s management of the 

Department of Homeland Security’s State Homeland Security Program and Urban Areas 

Security Initiative grants for Fiscal Years 2006 through 2008. The audit was performed 

in accordance with our Task Order No. TPD-FIG-BPA-07-0007, Call 0003 dated 

September 29, 2009. This report presents the results of the audit and includes 

recommendations to help improve the State’s management of the audited State Homeland 

Security Program and Urban Areas Security Initiative grants. 

Our audit was conducted in accordance with applicable Government Auditing Standards, 

2007 revision. The audit was a performance audit as defined by Chapter 1 of the 

Standards and included a review and report on program activities with a compliance 

element. Although the audit report comments on costs claimed by the State, we did not 

perform a financial audit, the purpose of which would be to render an opinion on the 

State of New York’s financial statements or the funds claimed in the Financial Status 

Reports submitted to the Department of Homeland Security. 

We appreciate the opportunity to have conducted this audit. Should you have any 

questions, or if we can be of any further assistance, please call me at (513) 639-8843. 

Sincerely, 

Foxx & Company 

Martin W. O’Neill 

Partner 
Table of Contents/Abbreviations 

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

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

Results of Audit ................................................................................................................ 6 

Measurable Goals and Objectives ......................................................................... 6 

Recommendations ................................................................................................. 8 

Management Comments and Auditors’ Analysis ................................................. 9 

Sustainability Plans for Long Term Support ...................................................... 10 

Recommendation ................................................................................................ 12 

Management Comments and Auditors’ Analysis ............................................... 12 

Noncompliance with Procurement Regulations .................................................. 13 

Recommendations ............................................................................................... 17 

Management Comments and Auditors’ Analysis ............................................... 17 

Noncompliance with Grant Inventory Requirements ......................................... 18 

Recommendations ............................................................................................... 21 

Management Comments and Auditors’ Analysis ............................................... 21 

Untimely Expenditure of Grant Funds ................................................................ 22 

Recommendation ................................................................................................ 25 

Management Comments and Auditors’ Analysis ............................................... 26 

Salary Claims Not Based on Actual Expenditures ............................................. 26 

Recommendations ............................................................................................... 28 

Management Comments and Auditors’ Analysis ............................................... 29 

Appendices 

Appendix A: Purpose, Scope, and Methodology .............................................. 30 

Appendix B: Management Comments to the Draft Report .............................. 33 

Appendix C. Organization Chart ...................................................................... 45 

Appendix D: Report Distribution ..................................................................... 46 

Abbreviations 

DHS Department of Homeland Security
 

FEMA Federal Emergency Management Agency 

FY Fiscal Year
 

OIG Office of Inspector General 
OIG 

Department of Homeland Security 

Office of Inspector General 

Executive Summary 

Foxx & Company completed an audit of the State of New York’s 

Management of State Homeland Security Program and Urban 

Areas Security Initiative grants awarded during Fiscal Years 2006 

through 2008. The audit objectives were to determine whether the 

State distributed and spent Homeland Security Program funds 

strategically, effectively, and in compliance with laws, regulations, 

and guidance. The audit included a review of approximately 

$565 million in State Homeland Security Program and Urban 

Areas Security Initiative grants awarded to the State of New York. 

Generally, the State did an efficient and effective job of 

administering program requirements in accordance with grant 

guidance and regulations. The State’s plans linked funding to allhazard capabilities and to goals that were established based on risk 

assessments. Also, the State effectively monitored the grant 

programs. 

However, some improvements are needed in the State’s 

establishment of measurable goals and objectives, identification of 

long-term capability sustainment options, compliance with 

procurement and inventory requirements, and timeliness of 

expenditures. Additionally, the State needs to ensure that salary 

claims made by subgrantees are based on actual expenditures. 

Our 14 recommendations call for the Federal Emergency 

Management Agency to require the State of New York to initiate 

improvements which, if implemented, should help strengthen 

program management, performance, and oversight. Federal 

Emergency Management Agency officials did not concur with 

recommendations 2, 3, and 4. In addition, State officials did not agree 

with recommendations 1, 2, 4, 5, 6, 13, and 14. The State officials’ 

written response to the recommendations is included as Appendix B. 

The State of New York’s Management of State Homeland Security Program and 

 Urban Areas Security Initiative Grants Awarded During Fiscal Years 2006 through 2008 

Page 1
 
 

Background 

The Homeland Security Grant Program is a federal assistance grant 

program administered by the U.S. Department of Homeland 

Security (DHS) Grant Programs Directorate within the Federal 

Emergency Management Agency (FEMA). The current Grant 

Programs Directorate, hereafter referred to as FEMA, began with 

the Office of Domestic Preparedness, which was transferred from 

the Department of Justice to DHS in March 2003. The Office of 

Domestic Preparedness was subsequently consolidated into the 

Office of State and Local Government Coordination and 

Preparedness which, in part, became the Office of Grants and 

Training, and which subsequently became part of FEMA. 

Although the grant program was transferred to DHS, applicable 

Department of Justice grant regulations and legacy systems still 

were used as needed to administer the program. For example, 

through Fiscal Year (FY) 2008 the Office of Justice Programs’ 

Grants Management System was used to receive grantee 

applications and to administer the award and reporting processes. 

Also, prior to the transfer, the State Administrative Agency entered 

payment data into the Office of Justice Programs’ Phone Activated 

Paperless Request System, which was a drawdown payment 

system for grant funds. That payment system was replaced in 

April 2007 by FEMA’s Payment and Reporting System. This 

system allows grantees to make payment requests and complete 

and transmit quarterly Financial Status Reports online. 

Homeland Security Grant Program 

The Homeland Security Grant Program provides federal funding to 

help state and local agencies enhance their capabilities to prevent, 

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

disasters, and other emergencies. The Homeland Security Grant 

Program 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. 

Depending on the FY, the program included some or all of the 

following programs: 

•	 State Homeland Security Program supports the 

implementation of State Homeland Security Strategies to 

address the identified planning, organization, equipment, 

training, and exercise needs to prevent, protect against, respond 

The State of New York’s Management of State Homeland Security Program and 

 Urban Areas Security Initiative Grants Awarded During Fiscal Years 2006 through 2008 

Page 2
 
to, and recover from acts of terrorism and other catastrophic 

events. 

•	 Urban Areas Security Initiative Program funds address the 

unique planning, organization, equipment, training, and 

exercise needs of high-threat, high-density Urban Areas, and 

assists the areas in building an enhanced and sustainable 

capacity to prevent, protect against, respond to, and recover 

from acts of terrorism. 

•	 Law Enforcement Terrorism Prevention Program provides 

resources to law enforcement and public safety communities 

(working with their private partners) to support critical 

terrorism prevention activities, including: establishing / 

enhancing fusion centers and collaborating with non-law 

enforcement partners, other government agencies, and the 

private sector. 

•	 Citizen Corps Program mission is to bring community and 

government leaders together to coordinate the involvement of 

community members in emergency preparedness, planning, 

mitigation, response, and recovery. 

•	 Metropolitan Medical Response System Program funds 

support designated jurisdictions to further enhance and sustain 

a regionally integrated, systematic mass casualty incident 

preparedness program that enables a response during the first 

crucial hours of an incident. The program prepares 

jurisdictions for response to all-hazards mass casualty 

incidents, including chemical, biological, radiological, nuclear, 

and explosives terrorism, epidemic disease outbreaks, natural 

disasters, and large-scale hazardous material incidents. 

State Administrative Agency 

The governors of each state appoint a State Administrative Agency 

to administer the Homeland Security Grant Program. The State 

Administrative Agency is responsible for managing the grant 

programs in accordance with established federal guidelines. The 

State Administrative Agency is also responsible for allocating 

funds to local, regional, and other state government agencies. 

In 2001, the Governor of New York created the Office of Public 

Security by Executive Order. This office was later codified in 

State legislation as the Office of Homeland Security. The Office 

of Homeland Security is the State Administrative Agency for the 

The State of New York’s Management of State Homeland Security Program and 

 Urban Areas Security Initiative Grants Awarded During Fiscal Years 2006 through 2008 

Page 3
 
Homeland Security Grant Program. The New York Office of 

Homeland Security administered all of the Homeland Security 

Grant Program grants included in our audit scope. The New York 

State Office of Homeland Security’s organizational structure is 

depicted in Appendix C. In July 2010, the Office of Homeland 

Security was merged with the State Emergency Management 

Office and four other State organizations to become the Division of 

Homeland Security and Emergency Services. 

The State of New York has five Urban Areas Security Initiative 

areas: New York City, Buffalo, Albany, Syracuse, and Rochester. 

The State’s Office of Homeland Security, Homeland Security 

Strategy Work Group, is comprised of representatives of 15 State 

agencies. The Work Group guides the planning process for State 

Homeland Security Program grant funds. The Group meets 

monthly to assess progress on local and state initiatives. It is 

responsible for developing the State’s Investment Justifications 

and the State Preparedness Reports. Each Urban Areas Security 

Initiative has its own group for planning, strategy development, 

identifying needs, and preparing Investment Justifications. 

Grant Funding 

FEMA awarded the State of New York approximately 

$625 million in Homeland Security Grant Program funds during 

FYs 2006 through 2008. As part of this program, the State 

received $565 million in State Homeland Security Program and 

Urban Areas Security Initiative grants. During that timeframe, the 

State Administrative Agency awarded funds to the following 

subgrantees which included counties, cities, State agencies, urban 

areas, and a Native American tribe: 

•	 2006: 73 subgrantees comprised of 56 counties, 9 cities, 

6 State agencies, and 2 urban areas; 

•	 2007: 75 subgrantees comprised of 57 counties, 9 cities, 

6 State agencies, 1 Native American tribe, and 2 urban areas; 

and 

•	 2008: 63 subgrantees comprised of 52 counties, 4 cities, 

1 State agency, 1 village, and 5 urban areas; 

Table 1 displays a breakdown of the State Homeland Security 

Program and Urban Areas Security Initiative grant funds by year. 

Some urban areas did not receive grant funds during each of the 

fiscal years. 

The State of New York’s Management of State Homeland Security Program and 

 Urban Areas Security Initiative Grants Awarded During Fiscal Years 2006 through 2008 

Page 4
 
 

Table 1 

New York 

Homeland Security Grant Program Awards 

Fiscal Years 2006 through 2008 

Funded Activity FY 2006 FY 2007 FY 2008 Total 

State Homeland 

Security Program $27,460,000 $38,810,000 $76,500,000 $142,770,000 

Urban Areas 

Security Initiative $128,160,000 $139,560,000 $154,319,000 $422,039,000 

Law Enforcement 

Terrorism 

Prevention 

Program 

 $26,010,000 $27,710,000 Not

 Applicable $53,720,000 

Citizen Corps 

Program $882,000 $668,000 $665,000 $2,215,000 

Metropolitan 

Medical Response 

System Program 

$1,162,000 $1,291,000 $1,606,000 $4,059,000 

Total $183,674,000 $208,039,000 $233,090,000 $624,803,000 

Scope of Audit 

Foxx & Company completed an audit of the State of New York’s 

management of DHS’ State Homeland Security Program and 

Urban Areas Security Initiative grants awarded during FYs 2006 

through FY 2008. The objectives of the audit were to determine 

whether the State distributed and spent Homeland Security Grant 

Program funds strategically, effectively, and in compliance with 

laws, regulations, and guidance. Nine researchable questions 

provided by the DHS Office of Inspector General (OIG) 

established the framework for the audit. The researchable 

questions were related to the State Administrative Agency’s 

planning, management, and evaluations of grant activities. 

Appendix A provides additional details on the Purpose, Scope, and 

Methodology of this audit, including the nine researchable 

questions. 

The State of New York’s Management of State Homeland Security Program and 

 Urban Areas Security Initiative Grants Awarded During Fiscal Years 2006 through 2008 

Page 5
 
Results of Audit 

State Grants Management Practices Were Generally Effective, 

But Required Some Improvements 

Generally, the State did an efficient and effective job of administering 

program requirements in accordance with grant guidance and regulations. 

The State’s plans linked funding to all-hazard capabilities and to goals that 

were established based on risk assessments. Also, the State effectively 

monitored the grant programs. 

However, improvements were needed to enhance New York’s 

management of the grants including: 

•	 Develop measureable capability goals and objectives, 

•	 Identify long-term capability sustainment options, 

•	 Ensure compliance with procurement regulations and inventory 

requirements, 

•	 Improve the timeliness of grant fund expenditures, and 

•	 Ensure that salary claims of subgrantees are based on actual 

expenditures. 

We have provided 14 recommendations that will enhance the effectiveness 

of the State’s grants management and overall use of the grant funds to 

improve preparedness and response capabilities. In addition, the audit 

resulted in $4.3 million in grant expenditures being questioned. 

Measurable Goals and Objectives 

For FYs 2006 through 2008 the State Office of Homeland Security could 

not demonstrate specific improvement and accomplishments based on its 

strategic goals and objectives because the State did not provide an 

adequate basis for measuring improvements in the State’s preparedness 

and response capabilities. For FYs 2006 through FY 2008 the Agency had 

not developed measurable goals and objectives consistent with federal 

requirements. The State revised its goals and objectives for FY 2009 and 

State Office of Homeland Security officials believed that these revisions 

were improvements over the prior goals and objective. The revised goals 

and objectives, however, were also stated in a manner which made 

measuring progress difficult. To measure performance in achieving goals 

and objectives the Agency relied on information that estimated progress 

toward achieving goals and objectives. As a result, the State did not 

The State of New York’s Management of State Homeland Security Program and 

 Urban Areas Security Initiative Grants Awarded During Fiscal Years 2006 through 2008 

Page 6
 
provide specific documentation to demonstrate the effect that grant funds 

had on the capability of first responders. 

Code of Federal Regulations Title 44 § 13.40, Monitoring and reporting 

program performance, requires that grantees monitor grant and subgrant 

supported activities to assure that performance goals are being achieved. In 

addition, Department of Homeland Security State and Urban Areas 

Homeland Security Strategy Guidance on Aligning Strategies with the 

National Preparedness Goal, dated July 22, 2005, states that 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. Therefore, 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 — the objective is not beyond a state, region, 

jurisdiction, or locality’s ability; 

•	 Results-oriented — identifies a specific outcome; and 

•	 Time-limited —a target date exists to identify when the objective 

will be achieved. 

New York State Office of Homeland Security officials acknowledged that 

they did not have a basis for measuring improvements in the State’s 

preparedness and response capabilities. The officials pointed out they 

have participated in DHS efforts to develop a Cost-to-Capability system. 

According to State Office of Homeland Security officials, the 2009 State 

strategy had been revised to emphasize the development of metrics for 

measuring progress. The 2009 strategy, however, contains goals and 

objectives that are not specific, and therefore, difficult to measure. For 

example, one goal is to Strengthen Communications and Emergency Alert 

Capabilities. An objective under this goal is to support State and regional 

planning efforts to find interoperable communications solutions. State 

Office of Homeland Security officials also stated that they obtained 

information on the estimated progress towards achieving goals and 

objectives from an annual assessment and information from surveys of 

subgrantees and first responders. In addition, State Office of Homeland 

Security officials pointed out that in some areas progress can be 

quantitatively measured. For example, State Office of Homeland Security 

effectively measures the capability advancement of Bomb Squads and 

Hazardous Materials Teams. 

The State of New York’s Management of State Homeland Security Program and 

 Urban Areas Security Initiative Grants Awarded During Fiscal Years 2006 through 2008 

Page 7
 
According to the State officials, the development of measurable goals was 

difficult. The State had not developed measurable goals because FEMA 

had not required the State to do so and FEMA had approved the State 

strategy for FYs 2006 through 2008. Also, the officials pointed out that 

DHS had not developed metrics for measuring progress. State officials 

stated that the progress on projects was addressed in annual FEMA 

monitoring reports which provided estimated percentages for completing 

projects. In addition, the State’s participation with DHS on the Cost-toCapability pilot project did not leave a positive impression with State 

Office of Homeland Security officials regarding DHS’ assistance in 

developing metrics. In a September 2009 letter to DHS, State Office of 

Homeland Security officials provided the following observations: 

•	 The Cost-to-Capability prototype fails to account for the essential 

role that risk plays in the allocation of homeland security resources. 

It does not capture State and local threat levels, which are critical to 

the effective distribution of grant funds. 

•	 The system does not accurately measure capabilities or 

programmatic effectiveness.
 

•	 It does not provide for any linkage to State or Urban Areas 

Homeland Security Strategies; strategies that FEMA requires and 

that have guided the grant funding process since 2003. 

•	 It is highly subjective and not user friendly or intuitive. 

While we did not verify the above observations, we recognize that without 

measurable goals and objectives and a mechanism to collect objective, 

results-oriented data from local jurisdictions and first responders, the State 

did not have a basis to evaluate the effect of grant expenditures on its 

preparedness and response capabilities. Also, the State could not consider 

progress toward goals and objectives for future funding and management 

decisions. State Office of Homeland Security officials stated that they use 

a risk based approach for making funding decisions rather than progress in 

achieving goals and objectives. Without information on achieving specific 

and measurable goals and objectives, however, FEMA would not know 

what measurable progress was being made to improve preparedness and 

response capability or the amount of additional funding and time that 

would be needed to ultimately achieve goals and objectives. 

Recommendations 

We recommend that the Assistant Administrator, Grant Programs 

Directorate, require the Director of the New York State Office of 

Homeland Security to: 

The State of New York’s Management of State Homeland Security Program and 

 Urban Areas Security Initiative Grants Awarded During Fiscal Years 2006 through 2008 

Page 8
 
 

Recommendation #1: Develop strategic goals and objectives 

applicable to first responder capabilities that are specific, 

measurable, achievable, results-oriented, and time limited. 

Recommendation #2: Incorporate the goals and objectives into a 

statewide system for measuring local jurisdiction first responder 

progress toward achieving the goals and objectives. 

Recommendation #3: Include the progress achieved in the goals 

and objectives along with risk in the decision making process for 

future first responder grant funding decisions. 

Management Comments and Auditors’ Analysis 

FEMA did not concur with recommendation #2 and #3. FEMA 

stated that the Homeland Security Strategy was meant to be a 

strategic document providing a framework to identify needed 

capabilities and was not designed to measure progress and identify 

gaps. We do not agree with FEMA’s position. Once strategic 

goals and objectives are developed that are specific, measurable, 

achievable, results-oriented, and time limited as stated in 

recommendation #1, the goals and objectives should be used to 

measure progress and the progress achieved should be considered 

in future grant funding. While the Homeland Security Strategy 

was not designed to measure progress and identify gaps, there is a 

need for goals and objectives that comply with federal 

requirements and provide a basis for measuring progress in 

achieving needed capabilities. 

The State Administrative Agency disagreed with the assessment 

leading to recommendation #1. The Agency officials said that it 

has complied with all federal requirements and implemented a 

strategy approved by DHS. The officials also said that measuring 

preparedness is difficult and complicated by FEMA’s inability to 

develop a system for assessing the impact of grant funding. 

The State Administrative Agency also disagreed with 

recommendation #2. The Agency officials said that it should not 

be required to do what the federal government has been unable to 

do. While it does not employ mathematical progress measures, it 

uses other processes to understand progress made through the use 

of federal grants. We recognize that while measuring progress is 

difficult, it should not be a reason for not trying to quantitatively 

measure progress. 

The State of New York’s Management of State Homeland Security Program and 

 Urban Areas Security Initiative Grants Awarded During Fiscal Years 2006 through 2008 

Page 9
 
For recommendation #3, the officials said that it considered both 

progress and risk in making grant funding decisions. Although we 

recognize that the State uses risk as a measure in grant funding 

decisions, we believe that using progress achieved should also be 

an important factor in funding decisions. 

The Assistant Administrator, Grant Programs Directorate, needs to 

provide corrective actions for the recommendations and a plan to 

implement them within 90 days. 

Sustainability Plans for Long Term Support 

Sustaining long-term activities funded by the Homeland Security Grant 

Program may not be possible without continued federal funding. Actions 

by the State and subgrantees indicated that the Homeland Security Grant 

Program was being viewed as continuing indefinitely, even though the 

Homeland Security Grant Program is not an entitlement program. Multiyear projects were approved that extended beyond the grant period without 

identified state and local funds for completing the projects. Investment 

Justifications for projects within the programs indicated that additional 

federal funding would be needed to sustain the capabilities achieved with 

the projects. As a result, the sustainment of capabilities in the long run 

and the completion of projects funded by multi-year contracts may be in 

jeopardy should the funding for the Homeland Security Grant Program be 

discontinued or severely reduced. 

The Homeland Security Grant Program receives funds through annual 

appropriations. The amount appropriated varies from year-to-year and is 

not guaranteed for any future year. Each grant program has specific 

appropriations and periods of performance within which the funds must be 

used. Grantees may only fund investments that were included in a specific 

year’s Investment Justifications that were submitted to DHS and evaluated 

through the agency’s peer review process. State Office of Homeland 

Security and New York City officials stated that while these funds are 

limited, the State and the City also have expended significant amounts of 

their own funds for Homeland Security projects. 

The DHS funding provided to grantees through the Homeland Security 

Grant Program over the past several years has created a perception that 

this funding will continue indefinitely as would be the case for entitlement 

programs, such as Medicare and Social Security. Unlike entitlement 

programs, the annual appropriations for the Homeland Security Grant 

Program are based on budget justifications provided to the Congress by 

DHS. State Office of Homeland Security officials stated, however, that 

The State of New York’s Management of State Homeland Security Program and 

 Urban Areas Security Initiative Grants Awarded During Fiscal Years 2006 through 2008 

Page 10
 
information on proposed federal budgets and commitments to continue the 

war on terrorism indicates that funding will continue in the future. 

The State’s Investment Justifications for FY 2006-2008 included 

45 programs. Our review showed that of the 45 individual program 

justifications, 25 (56%) indicated that federal funds were needed to sustain 

the program, or that the capability would not be sustained without federal 

funding. For the other 20 programs that did not mention that federal funds 

were needed, the justifications either did not mention funding sources or 

indicated that other sources, such as state or local funding, would be 

needed to sustain the capability. State Office of Homeland Security 

officials stated that the number of letter characters allowed for addressing 

sustainability in investment justifications was limited on the FEMA 

document. Therefore the amount of information provided was limited by 

this restriction. For FY 2010, FEMA did not require investment 

justifications to address sustainability. State Office of Homeland Security 

officials stated that other than the investment justification requirement, 

they were unaware of any other mandates requiring developing or 

reporting information on sustainment. 

We noted several multi-year commitments that relied on future federal 

funding. For example, the Fire Department New York approved a multiyear contract based on the likelihood that federal funding would be 

available for the life of the contract. The Fire Department New York 

entered into a $5.5 million contract on October 18, 2006, for development 

of a Patient Tracking System. The system would be utilized by the Fire 

Department New York for electronically tracking the movement of 

patients from initial contact by Fire Department New York through 

transfer of care to a medical receiving facility. The system would provide 

needed information in mass casualty incidents. The term of the contract 

was from February 22, 2007, through February 21, 2011. This contract 

period exceeded the original term of the grant performance period of 

July 1, 2006, through June 30, 2008. The deliverables for the contract 

were expected to extend beyond the grant period and the project would not 

be completed until near the end of the contract period (February 2011). At 

the time of our visit a substantial amount of work had yet to be completed 

for the Patient Tracking System project. Cumulative State Homeland 

Security Program expenditures as of February 25, 2010, were $378,874 of 

the $5.5 million dollar contract ceiling. 

The Fire Department New York and the New York City Office of 

Management and Budget officials operated under the assumption that 

grant funds from future years would be available for project expenditures. 

A Fire Department New York official stated that, if federal funding was 

not available, the City would have to bear the cost of the contract. The 

The State of New York’s Management of State Homeland Security Program and 

 Urban Areas Security Initiative Grants Awarded During Fiscal Years 2006 through 2008 

Page 11
 
project would be reviewed and would not go forward if the project was 

still in the initial phase. The award of long-term contracts anticipates that 

federal funds will continue to be available to complete the projects. 

The threat of terrorism and other hazards, and the annual award of funds 

from the Homeland Security Grant Program, have caused grantees and 

subgrantees to assume that federal funds will continue to be available. 

Nevertheless, DHS had required the States to address sustainability plans 

for long term support of acquired capabilities. However, the wording in 

the State’s grant applications only addressed sustainability in general 

terms and did not actually identify other sources of funding should federal 

funding be reduced or eliminated all together. 

The sustainment of capabilities in the long run and the completion of 

projects funded by multi-year contracts may be in jeopardy if future 

federal funding is not available or significantly reduced. If this occurs, 

grantees and subgrantees would have to provide support to retain acquired 

preparedness and response capabilities. If the required funds exceeded the 

financial ability of the grantee and subgrantees, the acquired capabilities 

could be reduced or eliminated. 

Recommendation 

We recommend that the Assistant Administrator, Grant Programs 

Directorate, require the Director of the New York Office of 

Homeland Security to: 

Recommendation #4: Identify on-going and proposed projects 

for FYs 2006 through 2008 that will need federal funding beyond 

the grant period, estimate the timeframe and the amount of money 

needed to complete the projects, and provide contingency plans 

with options for sustaining the capabilities being acquired in the 

absence of federal funds. 

Management Comments and Auditors’ Analysis 

FEMA did not concur with recommendation #4. FEMA officials 

said that addressing long-term sustainment of grant-funded 

activities is outside the scope of the audit, and that the State was 

not in violation of regulations or grant requirements. Imposing this 

requirement on the State is unreasonable and inequitable since it is 

not a requirement of all grant recipients. FEMA officials said that 

the issue of long-term sustainment of the projects/initiatives is a 

cross-cutting issue that should be discussed at the highest levels of 

The State of New York’s Management of State Homeland Security Program and 

 Urban Areas Security Initiative Grants Awarded During Fiscal Years 2006 through 2008 

Page 12
 
DHS, as requiring a state or urban area to complete such a task has 

broad policy implications. 

We do not agree with FEMA’s position. The purpose of the audit 

was to determine whether grant funds were spent strategically, 

effectively, and in compliance with laws, regulations, and 

guidance. To determine whether grant funds are being spent 

effectively, it is important to know if funded projects will be 

completed or sustained should future Federal funding be reduced 

or eliminated. Obtaining project completion and sustainment 

requirements is important information for approving future funding 

and should not be delayed because of the perceived need of a high 

level policy discussion. The State should have information 

available from Investment Justifications or other sources to 

determine the time period for completing and sustaining grant 

funded projects. Accordingly, gathering this information should 

not be an undue burden. 

The State Administrative Agency disagreed with Recommendation 

#4. The State officials said that additional grant funding is 

available to support on-going and proposed projects. The officials 

further stated that the audit did not take into account funds 

approved for grant cycles FYs 2009 and 2010 that provided 

available funding until 2013. The State officials also said that the 

information contained in DHS Bulletin No. 336 regarding use of 

funds to sustain investments was omitted from the report. This 

bulletin allows grant funding to maintain and sustain current 

investments. 

The recommendation, however, is focused on completing projects 

and not maintaining previous investments. We believe that the 

funding information that would be obtained through 

implementation of the recommendation would be useful for 

planning the completion of projects in the absence of federal funds. 

The Assistant Administrator, Grant Programs Directorate, needs to 

provide corrective actions for the recommendation and a plan to 

implement it within 90 days. 

Noncompliance with Procurement Regulations 

The New York City Police Department awarded contracts without the use 

of full and open competition, and did not comply with federal 

requirements in procuring equipment. The New York City Police 

Department used a confidential and special expense purchase process that 

The State of New York’s Management of State Homeland Security Program and 

 Urban Areas Security Initiative Grants Awarded During Fiscal Years 2006 through 2008 

Page 13
 
involved negotiating directly with vendors for purchasing equipment and 

other items. Using this process, the New York City Police Department 

purchased 145 items costing more than $10,000 each without being 

advertised and without the receipt of required sealed bids in accordance 

with New York state law and the subagreement provisions. The 

noncompetitive process was used because the New York City Police 

Department did not want to disclose information that could be used to 

compromise the equipment by terrorists or others. The process, however, 

denied the Department the full value of a competitive market place. The 

Department may have paid more for the equipment than if an open bidding 

process had been used. As a result of the noncompliance with 

requirements, we have questioned $4.1 million of equipment purchased 

through the confidential and special expense process. 

Grantees and subgrantees that receive State Homeland Security Program 

and Urban Areas Security Initiative grant funds are required to comply 

with all applicable laws, regulations, and program guidance. These 

regulations include FEMA’s codified regulation, Code of Federal 

Regulations Title 44 Part 13, Uniform Administrative Requirements for 

Grants and Cooperative Agreements to State and Local Governments. 

Procurement is addressed in Code of Federal Regulations Title 44 §13.36 

(a), which states that a State will follow the same policies and procedures 

it uses for procurements from its non-Federal funds. The State will ensure 

that every purchase order or other contract includes any clauses required 

by Federal statutes and executive orders and implementing regulations. 

The grant contracts that the State Office of Homeland Security utilized for 

awarding State Homeland Security Program and Urban Areas Security 

Initiative funds to subgrantees requires the subgrantee to make 

procurements in accordance with New York State General Municipal Law 

Article 5-A and other applicable regulations. Section 103 of Municipal 

Law Article 5-A states all purchase contracts involving an expenditure of 

more than $10,000 shall be awarded to the lowest responsible bidder after 

advertisement for sealed bids. New York City Police Department 

Officials stated that they follow procurement standards set forth by the 

New York City Procurement Board rules. These standards define small 

purchase procurements as those of not more than $100,000. Procurements 

over $100,000 are subject to public solicitation and award and for those 

valued over $5,000 at least five vendors shall be solicited from a small 

bidders purchase list. Because the New York City subagreements required 

using the $10,000 threshold for bidding and we were not provided with 

documentation that released the City from this requirement, we believe 

that the New York City Police Department was required to use advertised 

procurement for purchases over $10,000. 

The State of New York’s Management of State Homeland Security Program and 

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The New York City Police Department officials told us that they were 

concerned about publicly disclosing sensitive information on equipment 

procured that could be used by terrorists or others for criminal activities. 

Accordingly, the New York City Police Department adopted a confidential 

and special expense procurement process in order to not make public 

information that would be disclosed in an open bidding process. State 

officials said that the confidential and special expense purchase process 

was unique to the New York City Police Department and not used by 

other New York State subgrantees. 

The Federal Acquisition Regulation does contain provisions that allow for 

non-competitive contracts for circumstances such as a unique source or 

national security. The circumstances for these type awards must be 

documented with justification for other than full and open competition. 

We question the use of the confidential and special expense purchase 

process by the New York City Police Department to purchase some items, 

as confidentially was not an apparent issue. 

According to the March 2007 New York Police Department protocol the 

New York City Police Department conducts limited procurement 

outreach and negotiates directly with vendors for purchasing equipment 

when using the confidential and special expenses purchase process. The 

vendors agreed to comply with New York City Police Department 

confidentially requirements and other conditions for items costing more 

than $100,000 that were purchased without being advertised and without 

the receipt of required sealed bids. New York City officials stated that 

while the purchased items were not publicly advertised, the Police 

Department did solicit bids from multiple vendors except in cases where 

only a single source was available. The Police Department selected the 

vendors from this solicitation of bids and believed this process was equal 

to the competitive process of publicly soliciting bids. Because we were 

not provided with the procurement information or contract specifications 

by City officials during our field work, we could not verify that this 

protocol was being followed as described. 

For confidential and special expense purchases of $100,000 or less, 

officials stated that a less formal competitive process was used but was 

comparable with the federal procurement regulations. Additional 

information was not provided on the process for procurements of 

$100,000 or less, so we could not validate whether or not it was actually 

working as prescribed. In addition, a New York City Police Department 

presentation provided to us describing the implementation of the 

confidential and special expense purchase process stated that no oversight 

approvals were required for purchases under $100,000. Also, according to 

a New York City Police Department official, the confidential and special 

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expense purchases were not approved by the State Office of Homeland 

Security. Documentation obtained showed that about $4.1 million of 

equipment had been purchased through the confidential and special 

expense purchase process for items costing over $10,000 under the DHS 

awards within the scope of our audit. 

An October 2009 fiscal monitoring report by the State Office of Homeland 

Security Fiscal Monitoring Unit contained observations regarding New 

York City Police Department equipment property and procurement 

records. The report stated that equipment property and procurement 

records for transactions selected for review were not made available by the 

New York City Police Department. For eight transactions selected for 

review, no procurement files were made available for the transactions. 

The report further stated that without reviewing any procurement records, 

the State Office of Homeland Security was unable to determine if the New 

York City Police Department was in compliance with procurement 

procedures or grant contract requirements. During a follow-up visit to the 

New York City Police Department in March 2010, different transactions 

were selected for testing and three issues were reported regarding property 

records, mainframe server identification, and grant management 

procedures. In a final August 2010 report, the issues were resolved except 

for the finalization of the grant management procedures. 

The State procurement regulations did not contain provisions that allowed 

for non-competitive contracts without adequate justifications documented 

for other than full and open competition. We question the New York City 

Police Department’s claim that confidentially was an apparent issue for 

many of the items purchased without competition. Also, other grantees 

and subgrantees in New York State and other states have purchased 

similar equipment through advertised procurement for items the New 

York City Police stated were confidential type items. 

In addition, the State Administrative Agency as the grantee had not 

enforced the contractual agreement with the New York City Police 

Department that required compliance with State and federal procurement 

requirements for purchases over $10,000. The Police Department’s 

noncompetitive procurements, particularly of high cost equipment and 

services, denied the Department the full value of a competitive market 

place. The Department may have paid less for the equipment if an open 

bidding process had been used. As a result of the City not complying with 

procurement requirements, the $4.1 million of equipment purchased with 

federal funds by the New York City Police Department is questioned. 

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Recommendations 

We recommend that the Assistant Administrator, Grant Programs 

Directorate, require the Director of the New York Office of 

Homeland Security to: 

Recommendation #5: Ensure that New York City Police 

Department complies with federal procurement regulations and 

provides the visibility necessary for independent reviews of the 

Department’s procurement activities. 

Recommendation #6: Conduct a review to determine allowable 

cost and recover any unreasonable amount (up to $4.1 million) 

from the City of New York used to pay for equipment items not 

purchased in accordance with the grant procurement requirements 

under the confidential and special expense process. 

Management Comments and Auditors’ Analysis 

FEMA concurred with recommendation #5 and #6. However, the 

State Administrative Agency did not concur with recommendation 

#5 and the conclusion that the New York City Police Department 

is not in compliance with Federal procurement regulations. In its 

response, the State officials said that the New York City Police 

Department is in compliance with New York City procurement 

requirements and the process is competitive. 

We disagree with this position. The process used by the New York 

City Police Department does not follow the competitive 

procurement requirements contained in its contract with the State 

nor did it comply with the requirements contained in the New York 

City Procurement Board rules. The Department’s process did not 

comply with the federal requirement that procurements over 

$100,000 be competitively bid. 

The State Administrative Agency did not concur with 

recommendation #6. The State officials said that the procurement 

process used does not skirt competitive requirements but carries 

out a competitive process in a controlled information environment. 

We disagree with this position. The New York City Police 

Department has defined, controlled, and used a unique 

procurement process not used by any other subgrantees in the 

State. The State Administrative Agency has in its response 

attempted to provide reasons why the process, which employs a 

The State of New York’s Management of State Homeland Security Program and 

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controlled rather than open competitive process, complies with 

existing procurement requirements. However, documentation was 

not provided to show that items were procured in an open and 

competitive manner. The State officials also said that the audit 

does not properly portray the interaction between the State’s Fiscal 

Monitoring Unit and visits with the New York City Police 

Department in which the Fiscal Monitoring Unit is trying to 

understand nuances of the confidential procurement of the process. 

We believe that the State Administrative Agency should have been 

aware of the process before it was used to purchase $4.1 million 

dollars of equipment in a less than open competitive environment. 

The Assistant Administrator, Grant Programs Directorate, needs to 

provide corrective actions for the recommendations and a plan to 

implement them within 90 days. 

Noncompliance with Grant Inventory Requirements 

State subgrantees did not always maintain inventory records in accordance 

with federal requirements. Compliance with property record requirements 

was not being followed at 3 of 22 subgrantees we visited and 18 of 27 

subgrantees visited by the State Fiscal Monitoring Unit. As a result, the 

State did not have reasonable assurance that the assets procured with 

federal funds were adequately safeguarded to prevent loss, damage, or 

theft of the property. 

Code of Federal Regulations Title 44 § 13.32 (d) Management 

requirements, establishes procedures for managing 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 cost, 

description, identification number, location, use, condition, and 

ultimate disposition. 

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

reconciled with the property records at least every two years. 

•	 A control system must be developed to ensure adequate safeguards 

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

or theft shall be investigated. 

Code of Federal Regulations Title 44 § 13.20 (a)(3) requires that effective 

control and accountability be maintained for all grant and subgrant cash, 

real and personal property, and other assets. Grantees and subgrantees 

must adequately safeguard all such property and must assure that it is used 

solely for authorized purposes. Also, Code of Federal Regulations Title 2 

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§ 215.34 (f)(4) requires that a control system be in effect to ensure 

adequate safeguards to prevent loss, damage, or theft of the equipment. In 

the State of New York, contracts between the grantee and the subgrantees 

also require subgrantees to maintain control and accountability over assets 

acquired with federal funds. 

Issues concerning compliance with federal inventory requirements have 

been a frequently reported problem within the State of New York. 

Inventory records at 3 of 22 subgrantees we visited did not contain 

required information such as equipment serial number, location, or 

evidence that a physical inventory had been conducted every two years. 

In addition, the State Department of Homeland Security Fiscal Monitoring 

Unit reported noncompliance with federal property management 

requirements was reported for 18 of 27, or 67%, of the subgrantees it 

visited. Note that two entities were visited by both organizations resulting 

in a total of 19 subgrantees where property problems were identified. 

Noncompliance for the 19 subgrantees involved inventory records that did 

not contain all of the required information such as the property’s cost, 

description, identification number, location, use, or condition. For 

example, in September 2009 the Fiscal Monitoring Unit reported that one 

subgrantee’s inventory records did not contain information on who holds 

title, location, use and condition, and disposition data. There was also no 

evidence that periodic inventories were completed. In addition, our 

review showed that inventory records for another subgrantee did not 

contain information to support that required periodic inventories were 

conducted, and did not contain title, use, and condition information. 

A State Office of Homeland Security official said that subgrantees were 

not always aware of the federal property management requirements. Even 

though the terms of the subgrantee contracts with the grantee included 

compliance with Federal requirements for maintaining inventory records, 

the subgrantees were not complying with the requirements. The State 

official said that the State office continuously educated subgrantees on 

State and federal requirements through annual regional meetings and site 

visits. The officials also said that information is provided by the State 

agency’s website and through responses to emails and phone calls from 

subgrantees. 

Six subgrantees within the New York City urban area were among the 

19 subgrantees found by the State Fiscal Monitoring Unit and our audit to 

not be in compliance with federal inventory requirements. As shown 

below, the City’s noncompliance has been a continuing problem. 

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•	 During Fiscal Year 2006, the New York Department of Homeland 

Security would not approve grant contracts until the New York City 

took actions to remedy the non-compliant inventory practices. 

•	 In March 2008, the DHS Office of Inspector General reported 

(Report OIG-08-32 dated March 26, 2008) that the City needed to 

improve its inventory record system. The OIG review showed that 

each subgrant agency used a different method of controlling and 

reporting assets. The OIG concluded that developing a city-wide 

database would enable the city to monitor on-hand assets; increase 

the visibility of quantities, locations, and availability of assets during 

response and recovery efforts; and help avoid duplicate assets. 

In response to the identified inventory problems, the City of New York’s 

Office of Management and Budget contracted for the development of an 

automated Grant Tracking System to track equipment inventory items of 

$5,000 or greater. The city-wide Grant Tracking System was operational 

in July 2009 and all nine City agencies were inputting inventory 

information. However, the information put into the system by the nine 

City agencies was not independently tested to determine if the information 

was accurate and complete. According to a New York City Office of 

Management and Budget official, they are planning to conduct a 

comprehensive review of equipment records in the Grant Tracking System 

to ensure that the baseline equipment list for each City agency is accurate. 

New information placed into the system could be tested by verifying the 

entries with the fiscal cost reports submitted to the State by subgrantees. 

The City’s System contained over 4,000 equipment items with a total 

value that exceeds $80 million. The System did not contain the location, 

manufacturer, and serial number for equipment costing approximately 

$4.1 million that was purchased under the New York City Police 

Department’s confidential and special expense procurement system. The 

system also did not include software items of $5,000 or greater. Computer 

software is classified as equipment under the DHS Authorized Equipment 

List and classified as equipment for procurements by the New York Office 

of Homeland Security. Because software was not included in the Grant 

Tracking System, the number of software items purchased and the total 

cost was not available. Subsequent to our visit, a New York City Office of 

Management and Budget official stated that all software equipment with a 

unit cost greater than $5,000 is now being entered into the Grant Tracking 

System retroactively. 

Without the required property management records, there is a potential for 

subgrantees to not maintain, safeguard, control, or adequately account for 

millions of dollars of assets procured with federal funds. If subgrantees do 

The State of New York’s Management of State Homeland Security Program and 

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Page 20
 
 

 

not have accurate records of existing equipment, they cannot make sound 

management decisions regarding what additional equipment they need in 

the future. 

Recommendations 

We recommend that the Assistant Administrator, Grant Programs 

Directorate, require the Director of the New York State Office of 

Homeland Security to: 

Recommendation #7: Reaffirm and enforce the property 

management requirements for equipment purchased with federal 

funds in individual subgrantee contracts. 

Recommendation #8: Require subgrantees that are not in 

compliance to provide a plan to the State to become compliant 

within a specified timeframe. 

Recommendation #9: Confirm that New York City officials have 

conducted a comprehensive review of equipment records in its 

Grant Tracking System to ensure that the baseline equipment list 

for each City agency is accurate. 

Recommendation #10: Ensure that all software with a unit cost 

greater than $5,000 is being entered into Grant Tracking System 

retroactively and for software acquired in the future. 

Recommendation #11: Inventory all the required property 

information for items purchased under the New York City Police 

Department confidential and special expense procurement process. 

Management Comments and Auditors’ Analysis 

FEMA concurred with recommendation #8, #9, #10, and #11. The 

State Administrative Agency also concurred with the 

recommendations. 

•	 For recommendation #8 the State officials said that it will 

continue to work with subgrantees to ensure compliance. 

The officials said that New York City has added additional 

controls to ensure compliance with inventory requirements. 

•	 For recommendation #9, the officials said that the Criminal 

Justice Coordinator of the New York City Mayor’s Office 

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has conducted a review of equipment records to ensure 

accuracy of equipment records. 

•	 For recommendation #10, the officials said that software 

with a unit cost of $5,000 or greater is now being entered 

into the Grants Tracking System. 

•	 For recommendation #11, the officials said that the New 

York City Office of Management and Budget is working 

with the New York Police Department to collect the 

required property information and enter it into the Grants 

Tracking System with availability for defined 

administrators to view the sensitive information. 

We believe that the State Administrative Agency and New York 

City have taken steps to address the intent of the recommendations, 

but further action will be needed to fully implement the 

recommendations. 

The Assistant Administrator, Grant Programs Directorate, needs to 

provide corrective actions for the recommendations and a plan to 

implement them within 90 days. 

Untimely Expenditure of Grant Funds 

The State obligated grant funds to subgrantees in accordance with federal 

requirements, but the funds were not available for expenditure for months 

after the date of obligation because the subgrantees needed to sign 

contracts with the State before seeking reimbursement. The time available 

for subgrantees to make expenditures and be reimbursed by the State was 

significantly reduced and overall expenditure of grant funds was delayed. 

As a result, the opportunity for first responders to be better equipped, 

trained, and prepared was delayed because it took 8 to 12 months for 

subgrantees to received signed contracts from the State. 

FEMA Information Bulletin No. 257 dated July 17, 2007 addressed the 

condition that there were many requests by grantees for extending the 

grant performance periods for FY 2002, 2003, and 2004 grants. The 

bulletin recognized that there were problems in making timely 

procurements but that it was important to ensure that funds were obligated 

and expended in a timely manner, within established periods for 

performance. In addition, FEMA’s Program Guidance for the FY 2008 

Homeland Security Grant Program stated that FEMA strongly encouraged 

the timely obligation of funds from local units of government to other 

subgrantees. In addition, the Program Guidance for FYs 2006 and 2007 

The State of New York’s Management of State Homeland Security Program and 

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required that no less than 80% of the total grant funds available to local 

units of government be obligated by the State within 60 days of the receipt 

of funds. For FY 2008 this requirement was within 45 days. 

The State Office of Homeland Security required that contracts be made 

with subgrantees for the award of grant funds before subgrantees could 

seek reimbursement from the State Office of Homeland Security for grant 

expenditures. The State notified subgrantees of the obligated amount they 

would receive within the required federal timeline of within 60 or 45 days. 

Therefore, the State technically complied with grant guidance. However, 

while notified of the amounts, the funds were not available to the 

subgrantee for reimbursement of expenditures until a contract between the 

grantee and subgrantee was approved by the State Office of Homeland 

Security. 

The State and subgrantee review processes took several months and 

delayed the expenditure of grant funds. The process provided extensive 

financial controls over grant funds and started with the subgrantees 

submitting an application for funding to the State Office of Homeland 

Security. The application was reviewed by the State program and fiscal 

review units and the State prepared a contract for grant funds which was 

mailed to the subgrantee. The contract was approved through the local 

approval process and was then returned to the State. The contract was 

signed by the State and approved by three State organizations. After 

approval it was mailed to the subgrantee and then the subgrantee could 

request from the State reimbursement for expenditures. 

Table 2 below shows for FYs 2006, 2007, and 2008, the average time 

taken from the obligation of funds to subgrantees until the subgrantees 

received contract awards. Also included are total grant funds obligated to 

and the amounts expended by the subgrantees and reimbursed by the State 

as of September 30, 2009. 

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Table 2 

Timeliness of Grant Funds Expenditures 

FY 2006 - 2008 

Grant Program 

and Fiscal Year 

Average Months 

from Subgrantee 

Obligation to 

Contract Award 

Total 

Contract 

Awards 

Amount 

**Expended 

and 

Reimbursed 

Percent 

Expended 

and 

Reimbursed 

FY 2006 

State Homeland 

Security Program 10.5 $25,824,775 $14,756,035 57% 

New York City* 11.1 $118,227,500 $13,143,075 11% 

Buffalo* 10.5 $3,710,000 $1,983,957 53% 

FY 2007 

State Homeland 

Security Program 8.9 $33,355,800 $4,865,000 15% 

New York City* 8.9 $129,475,000 $4,347,749 3% 

Buffalo* 8.4 $5,142,443 $1,979,247 38% 

FY 2008 

State Homeland 

Security Program 9.8 $45,736,426 $91,754 0% 

New York City* 11.2 $132,657,528 $0 0% 

Buffalo* 11.3 $4,384,800 $0 0% 

Albany* 12.0 $1,405,600 $21,023 1% 

Syracuse* 9.3 $1,280,800 $29,112 2% 

Rochester* 11.7 $1,172,800 $0 0% 

*Urban Areas Security Initiative Grants 

** According to State Office of Homeland Security officials the “Amount Expended and 

Reimbursed” could be very deceiving. While many of the Urban Areas Security 

Initiatives may have expended funds, reimbursement requests have not yet been 

submitted to the State. Therefore, the actual amount expended could be significantly 

more than the amount reimbursed at any point in time. 

Subgrantees we visited viewed the lengthy time it took to receive 

approved contracts as problematic for timely expenditure of funds. For 

example, one Urban Areas Security Initiative official stated that they 

received their first approved FY 2008 contract on July 21, 2009. The 

State Office of Homeland Security was awarded funds for the Urban 

Areas Security Initiative on September 16, 2008, approximately 10 

months earlier. 

According to State Office of Homeland Security officials, subgrantees do 

make obligations of funds for projects before seeking reimbursement from 

the State, but this obligation information is not compiled by the State. 

Also, subgrantees often wait until projects are completed before requesting 

The State of New York’s Management of State Homeland Security Program and 

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Page 24
 
 

reimbursement from the State. However, we were not provided with 

documentation supporting these statements. The officials further stated 

that the State has been working closely with the State Division of the 

Budget and Office of the State Comptroller to tighten the timeframe for 

making the funding available to local jurisdictions. The State Office of 

Homeland Security officials stated that they will continue to work with 

these agencies as needed. As part of grantee monitoring visits and annual 

regional grantee meetings, the officials said that the local jurisdictions are 

educated on the time it takes to get this funding approved. The State 

Office of Homeland Security officials stated they worked with the 

subgrantees at the local level to ensure information is provided to State 

Office of Homeland Security early enough in the process to ensure timely 

approval of contracts. Despite these efforts, measurable reductions in the 

timeliness of the process have not occurred and the process has not been 

changed. 

New York is a home rule state which means the lowest level of 

government has the authority over the expenditure of funds, including 

grant funds. The local units of government must approve the planned 

expenditure of grant funds before the subgrantee submits a draft contract 

to the State. This process can take months to complete because of local 

governing bodies schedules to meet and consider the draft contract. 

Additional time is taken to review and approve subgrantee approved 

contracts by the State and return the contract to the subgrantee. 

The process delays the expenditure of grant funds and shortens the time 

period subgrantees have to expend funds within the authorized grant 

period of performance. The delayed expenditures affect the opportunity 

for the first responder to enhance preparedness and response capability. 

This specifically affects the timing of expenditures, such as training, that 

require time for subgrantees to coordinate activities with other 

participants. 

Recommendation 

We recommend that the Assistant Administrator, Grant Programs 

Directorate, require the Director of the New York Office of 

Homeland Security to: 

Recommendation #12: Assess the current processes and 

procedures involved with the execution of subgrantee awards to 

identify efficiencies to expedite expenditures. 

The State of New York’s Management of State Homeland Security Program and 

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Management Comments and Auditors’ Analysis 

FEMA concurred with recommendation #12. The State 

Administrative Agency also concurred with recommendation #12. 

The State officials agree that grant funds be made available to 

subgrantees in a timely manner but it is important to maintain 

proper oversight of funds. The process used by the State is to 

ensure that planned expenditures are allowable before the State 

awards a contract to a subgrantee. In addition, expenditure delays 

may be caused by procurement delays and federal requirements. 

The officials also said that they were concerned about what 

constituted timely availability of funds. 

The Assistant Administrator, Grant Programs Directorate, needs to 

provide corrective actions for the recommendations and a plan to 

implement them within 90 days. 

Salary Claims Not Based on Actual Expenditures 

The Fire Department New York did not have a reasonable basis to support 

its claims for salary expenditures, specifically $143,437 claimed for 

salaries of personnel backfilling for other employees (participants) who 

were attending training. The amounts claimed were not based on payrolls 

documented in accordance with federal requirements. Rather, the amounts 

were based on a model that computed estimated backfill expenditures 

rather than actual time charges. As a result, the claimed amounts were not 

supported by adequate documentation. Accordingly, we question the 

$143,437 claimed for personnel backfill expenses. 

According to the Code of Federal Regulations Title 2 Part 225 

Appendix B Selected Items of Cost: Compensation for personnel services 

(Formerly Office of Management and Budget Circular A-87) all 

remuneration, paid currently or accrued, for services rendered during the 

period of performance under Federal awards, including but not necessarily 

limited to wages, salaries, and fringe benefits whether treated as direct or 

indirect costs, will be based on payrolls documented in accordance with 

generally accepted practice of the governmental unit and approved by a 

responsible official(s) of the governmental unit. Furthermore, the Code of 

Federal Regulations Title 2 Part 225 Appendix A, states that a cost must 

be reasonable to be allowable under a federal grant and be adequately 

documented. 

Under contracts with the State of New York, subgrantees agreed to 

comply with federal requirements including Office of Management and 

Budget Circular A-87. The contracts required that expenditures be 

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supported by detail itemization in State Office of Homeland Security 

format. 

Personnel backfill expenses are the result of personnel working overtime 

in order to perform the duties of other personnel who are temporarily 

assigned to FEMA-approved activities outside their core responsibilities. 

Personnel backfill expenses are allowable under the State Homeland 

Security Program and Urban Areas Security Initiative grant programs. 

The Fire Department New York was the only organization in the State of 

New York that used a model to compute backfill amounts, according to a 

State Office of Homeland Security official. 

The personnel backfill amounts claimed were based on a model that 

computed estimated backfill expenditures rather than actual time charges. 

The State Office of Homeland Security claims that this practice was 

approved by the Department of Justice. In support of this position they 

provided an August 26, 2003 email from a Department of Justice 

employee approving of the practice for Byrne Grants (a Department of 

Justice State and Local Law Enforcement Grant Program). The email was 

in response to a July 14, 2003, Fire Department New York letter to the 

Department of Justice requesting the ability to submit replacement cost 

information based on a model approved by FEMA during the submission 

of personnel service costs related to the World Trade Center Disaster. The 

State also provided a letter from FEMA supporting approval of the 

practice. However, the letter was not a formal approval letter from the 

agency for the model to be used for all future grant awards. 

Furthermore, the State provided a FEMA Project Work Sheet from 

Disaster 1391-DR (911 disaster) for overtime incurred to backfill for New 

York Fire Department employees for managing the search and rescue and 

recovery operations at the World Trade Center site, the Office of the Chief 

Medical Examiner, and the Staten Island Landfill in the amount of 

$24,617,123. State Office of Homeland Security officials stated that Title 

2 Code of Federal Regulations 225 Part B does provide for substitute 

systems for allocating salaries and wages to Federal awards if required for 

approval by the cognizant agency. Although the model may have been 

used for a specific disaster, it was not approved by FEMA for the awards 

we reviewed or all future grant awards. The State is inferring that the 

backfill model is a form of an indirect cost plan since the alternative 

methodology it is citing in the federal regulations discusses methods of 

recovering indirect costs. As such the methodology would have to be 

submitted to FEMA for review, analysis, and approval for a specific time 

period. Because the cost of the backfill employees changes over time, 

costs that were applicable to one year may not necessarily reflect costs in 

another year. 

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Fire Department New York officials claimed that the model resulted in 

lower personnel backfill expenses claimed than if actual employee costs 

were used. The Fire Department New York provided information on why 

the costs were less using the model, but this information was not a 

comparison of actual expenses to model estimates for a given time period. 

In addition, we were not provided with documentation which showed that 

FEMA had reviewed and approved the model for the awards reviewed. 

Accordingly, we could not determine if the personnel backfill expenses 

were reasonable. 

The above condition exists because the Fire Department New York 

personnel claim that they do not have the capability to identify actual time 

charges because of the size of the organization. Furthermore, the State 

Office of Homeland Security Fiscal Monitoring Unit accepted Fire 

Department New York’s utilization of the model during their monitoring 

visit. Regardless, the subgrantee was not in compliance with Code of 

Federal Regulation Title 2 Part 225 because the personnel backfill 

amounts expenditures claimed were not based on actual payroll amounts 

nor was the backfill model specifically approved for the awards reviewed. 

While FEMA approved the model for a specific disaster in 2002 there is 

no evidence it approved or was aware that the model was being used for 

ongoing grant programs. Without knowing the actual payroll amounts it is 

unclear whether the model amounts were more or less than actual payroll 

amounts. 

Recommendations 

We recommend that the Assistant Administrator, Grant Programs 

Directorate, require the Director of the New York Office of 

Homeland Security to: 

Recommendation #13: Require the Fire Department New York 

to compute actual payroll costs in determining the amounts 

charged for backfill expenditures, or submit to FEMA the backfill 

model for its analysis and evaluation to determine if the model 

results in a reasonable allocation of backfill costs to the current 

grant awards. 

Recommendation #14: Disallow any of the $143,437 claimed 

that are determined to be in excess of the amounts determined to be 

reasonable by FEMA. 

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Management Comments and Auditors’ Analysis 

FEMA concurred with recommendation #13 and #14. 

However, the State Administrative Agency did not concur with 

recommendation #13. The State officials said that identifying the 

overtime coverage for specific individuals is a difficult challenge 

and, because of this challenge, the Fire Department New York 

developed a model to calculate backfill costs. The State officials 

said that FEMA is aware that this model is being used by the Fire 

Department New York. 

We disagree with the position of the State Administrative Agency 

because while compliance with regulations is challenging, it is not 

a valid reason for noncompliance. No evidence was provided that 

FEMA was aware that the model was being used for the grant 

programs reviewed or that FEMA approved the model for the grant 

programs reviewed. 

The State Administrative Agency did not concur with 

recommendation #14 in its response. The State officials said that, 

because it believes FEMA was aware of the use of the model, the 

Fire Department New York acted in good faith. 

As stated above, there is no evidence that FEMA was aware of or 

approved the use of the model for the grant programs reviewed. 

Therefore, we disagree with the position taken by the State 

Administrative Agency. 

The Assistant Administrator, Grant Programs Directorate, needs to 

provide corrective actions for the recommendations and a plan to 

implement them within 90 days. 

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Appendix A 

Purpose, Scope, and Methodology 

The purpose of the audit was to determine whether the State of 

New York distributed and spent State Homeland Security Program 

and Urban Areas Security Initiative grant funds strategically, 

effectively, and in compliance with laws, regulations, and 

guidance. The goal of the audit was to identify problems and 

solutions that can help the State of New York better prepare for 

and respond to threats, acts of terrorism, and other hazards. The 

audit further enabled us to answer the following nine researchable 

questions: 

• Were measurable goals developed from plans? 

• Do funded plans link all-hazards capabilities to goals? 

• Were funds and resources distributed based on goals? 

• Does the State accurately measure risk? 

• Does the State measure response capabilities? 

• Can the State demonstrate improved performance? 

• Were grants administered compliantly? 

• Did the State monitor grant programs? 

• What innovative practices can be used by other states? 

The scope of the audit included the State Homeland Security 

Program and Urban Areas Security Initiative grant awards for 

FYs 2006, 2007, and 2008 as described in the Background section 

of this report. 

The audit methodology included work at FEMA Headquarters, 

State of New York offices, each of the urban areas that received 

grants, and various subgrantee locations. To achieve our audit 

objective, we analyzed data, reviewed documentation, and 

interviewed the key state and local officials directly involved in the 

management and administration of the State of New York’s 

Homeland Security Grant Programs. We conducted 22 site visits 

and held discussions with appropriate officials from 6 counties, 

10 local governments or first responders, and 6 State agencies 

awarded State Homeland Security Program and Urban Areas 

Security Initiative grants, in order to determine if program grant 

funds were expended according to grant requirements and Stateestablished priorities. 

We conducted site visits to the following 22 subgrantee 

organizations: 

• Albany County 

• Erie County 

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Appendix A 

Purpose, Scope, and Methodology 

• Monroe County 

• Niagara County 

• Onondaga County 

• Westchester County 

• City of Albany 

• City of Binghamton 

• City of Niagara Falls 

• City of Rochester 

• City of Schenectady 

• City of Syracuse 

• City of Troy 

• City of Utica 

• New York City Police Department 

• Fire Department of New York 

State Agencies 

• Department of Agriculture and Markets 

• Department of Health 

• Department of State 

• Division of Military Affairs 

• Emergency Management Office 

• New York Division of State Police 

At each location, we interviewed responsible officials, reviewed 

documentation supporting State and subgrantee management of the 

awarded grant funds (including expenditures for equipment, 

training, and exercises), and physically inspected some of the 

equipment procured with the grant funds. 

We conducted the audit between December 2009 and May 2010, in 

accordance with Government Auditing Standards as prescribed by 

the Comptroller General of the United States (Yellow Book-2007 

Revision). Those standards require that we plan and perform the 

audit to obtain sufficient, appropriate evidence to provide a 

reasonable basis for our findings and conclusions based on our 

audit objectives. We believe that the evidence obtained provides a 

reasonable basis for our findings and conclusions based on our 

audit objectives. 

Although this audit included a review of costs claimed, we did not 

perform a financial audit of those costs. This was a performance 

audit as defined by Chapter 1 of the standards, and included a 

review and report of program activities with a compliance element. 

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Appendix A 

Purpose, Scope, and Methodology 

Foxx & Company was not engaged to and did not perform a 

financial statement audit, the objective of which would be to 

express an opinion on specified elements, accounts, or items. 

Accordingly, Foxx & Company was neither required to review, nor 

express an opinion on, the costs claimed for the grant programs 

included in the scope of the audit. Had Foxx & Company been 

required to perform additional procedures, or conducted an audit of 

the financial statements in accordance with generally accepted 

auditing standards, other matters might have come to their 

attention that would have been reported. This report relates only to 

the programs specified and does not extend to any financial 

statements of the State of New York. 

While the audit was being performed and the report prepared under 

contract, the audit results are being reported by the DHS Office of 

Inspector General to appropriate Federal Emergency Management 

Agency and State of New York officials. 

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Appendix B 

Management Comments to the Draft Report 

NEW YORK STATE 

DIVISION OF HOMELAND SECURITY AND EMERGENCY SERVICES 

OFFICE OF COUNTER TERRORISM 

David A. Paterson, Governor James M. Sherry, Director 

November 10, 2010 

Martin W. O’Neill 

Foxx & Company 

324 West Ninth Street 

Cincinnati, Ohio 45202 

Dear Mr. O’Neill: 

Thank you for the opportunity review and comment on the draft audit report entitled, “The State of New York’s 

Management of State Homeland Security Program and Urban Areas Security Initiative Grants Awarded during Fiscal 

Years 2006 through 2008.” 

Given New York State’s threat profile and history of man-made and natural disasters, the Division of Homeland 

Security and Emergency Services1 very much appreciates the need to ensure the effective use of federal homeland 

security grant funding. We also welcome federal oversight and insight into our grants management processes. 

However, we disagree with the underlying analyses of 7 of the 14 recommendations identified in the audit report. 

The audit report disregards material facts and makes broad generalizations and misleading statements in several of the 

recommendations. Some recommendations are included despite the fact that the relevant issues have already been 

addressed. There are instances where recommendations are made without any discernable criteria, such as federal law, 

regulation or U.S. Department of Homeland Security (DHS) or Federal Emergency Management Agency (FEMA) 

policy. 

We invested a great deal of time and effort with the audit team to explain our processes and demonstrate how our 

efforts align with the requisite federal requirements. We are very disappointed that the audit report failed to accurately 

reflect the level of detail we provided throughout this process. For this reason, in accordance with Section 8.33 of the 

Government Auditing Standards of 2007, we must insist that this letter and our detailed rebuttal (enclosed) be included 

in the final audit report.

 Sincerely, 

James M. Sherry 

Executive Deputy Commissioner & 

Director, Office of Counter Terrorism 

Division of Homeland Security and Emergency Services 

1

 As part of the Governor’s SFY2010-2011 Executive Budget, the legacy Office of Homeland Security was 

merged into the new Division of Homeland Security and Emergency Services (DHSES). DHSES serves as 

the State Administrative Agency for the federal homeland security grant programs. 

1 

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New York State’s Audit Rebuttal 

Recommendation #1: Develop strategic goals and objectives applicable to first responder capabilities that 

are specific, measurable, achievable, results-oriented, and time limited. 

NYS Response: DHSES disagrees with this assessment and the assertion that the State has not developed 

measurable goals and objectives consistent with federal requirements. As stated by the report, the State of 

New York has complied with all federal requirements and has implemented a State Homeland Security 

Strategy, duly approved by DHS. Using a scale provided by DHS part of their annual monitoring visit, we 

have been able to assess the progress made on our goals and objectives and we continue to improve our 

State Homeland Security Strategy. 

DHSES has recently completed a major revision of the State Homeland Security Strategy, which involved 

hundreds of New York’s State and local stakeholders. The goals and objectives are aligned with the federal 

priority areas and the national preparedness capabilities. We have worked to assess our preparedness 

capabilities, but the inability to measure capability improvements and demonstrate the effect that the grant 

funds have had on the capabilities of first responders are issues the entire nation is struggling with. A task 

force of federal, state, local and tribal stakeholders commissioned to review national preparedness efforts 

recently found that, “...while stakeholders across the nation have been working to improve preparedness, 

specific measurable outcomes for these efforts have yet to be defined and assessed.”2 

Measuring preparedness is inherently a difficult challenge, one made more complicated by FEMA’s 

inability to develop a consistent and viable system for assessing capability and the impact of grant funding. 

The failure of the Cost to Capability project and recent GAO and Inspector General Reports3

 highlight 

FEMA’s challenges. Further underscoring this lack of federal guidance on national performance measures, 

federal legislation was recently enacted (HR3980) mandating DHS develop a standard of measurement 

against which state and local stakeholders can use to compare their level of progress and indicate 

capability. These examples are not intended as criticisms of our federal partners, rather they are 

offered to highlight the complexity of the issue and disingenuous nature of holding state and local 

stakeholders to standards that do not currently exist. 

Despite the challenges, DHSES and our State and local stakeholders have and will continue to work closely 

with FEMA to assist them in developing tools to assess and measure preparedness, because it is critical 

FEMA have feedback from “end-users” when developing national polices and preparedness measures. 

DHSES will also maintain an open dialogue with our federal, state and local stakeholders regarding our 

strategic planning efforts, gathering feedback through surveys, regional workshops, meetings and other 

mechanisms to ensure our strategy remains effective and that we continue to advance our goals and 

objectives. 

2 Perspectives on Preparedness: Taking Stock Since 9/11 

http://www.fema.gov/pdf/preparednesstaskforce/perspective_on_preparedness.pdf 

3 GAO Report: FEMA Has Made Limited Progress in Efforts to Develop and Implement a System to Assess National 

Preparedness Capabilities http://www.gao.gov/new.items/d1151r.pdf 

DHS Inspector General Report: FEMA’s Preparedness for the Next Catastrophic Disaster - An Update 

http://www.dhs.gov/xoig/assets/mgmtrpts/OIG_10-123_Sep10.pdf 

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Recommendation #2: Incorporate the goals and objectives into a statewide system for measuring local 

jurisdiction first responder progress toward achieving the goals and objectives. 

NYS Response: DHSES disagrees with this recommendation and the assertion that states should be 

required to do what the federal government has, thus far, been unable to do. As our experience with the 

Cost to Capability pilot revealed, DHS currently lacks a sound “system” to measure the effectiveness of the 

use of grant funds. It is, therefore, unreasonable to expect that state and local stakeholders adhere to 

uniform standards of measurement absent a national system, or, in the least, clear and effective federal 

guidance. New York State has been a willing partner in the effort to help DHS identify and test systems to 

measure preparedness, and we remain committed to working with our federal, State and local stakeholders 

on this issue. 

Although DHSES does not currently employ ‘mathematical’ measurements, we utilize several 

comprehensive processes to understand how our local stakeholders are advancing homeland security goals 

and objectives through the use of federal grant funding. This process includes several elements outlined 

below: 

•	 Regional Workshops: Although we communicate with our stakeholders on a daily basis, DHSES 

facilities an annual series of “Regional Workshops” across the State dedicated to gathering feedback 

from our local grantees. Through these Workshops, the State provides detailed grant information to 

attendees. We also collect information from subgrantees on their strengths, weaknesses, and priority 

needs with regard to homeland security funding. This information, along with other data points, is 

utilized during our grant Investment Justification development process. 

•	 Contracts and Reporting: Prior to the initiation of projects, New York State engages an extensive 

contracting system with our grantees to document: 1) what projects will be funded; 2) how the funds 

will be used and; 3) how the various projects and initiatives support the homeland security goals and 

objectives. Each contract contains performance measures and quarterly reporting timeframes which 

grantees must comply with and report against. All of the contracts are monitored by DHSES Program 

Representatives. Each funded project must be cross-referenced with, and linked to, federal and State 

preparedness doctrines and documents, including our State Homeland Security Strategy, our 

Investment Justifications, National Priorities, Target Capabilities, and federal “G&T” Codes. This 

extensive process requiring subgrantees to crosswalk their projects with federal and State priorities and 

policies helps to underscore the importance of continuous evaluation and prioritization of federally 

funded activities. To help facilitate this data collection and analysis, all grant applications and contract 

information, including the quarterly reports, are captured through our web-based grants portal, EGrants. 

•	 Capability Assessments: New York State has conducted a series of Capabilities Assessments to 

better understand the capability strengths, weaknesses and needs of our local and State stakeholders. 

In 2006 and 2008, we launched formalized “Capabilities Surveys”, which assessed each County’s 

respective progress on 10 or more of the Target Capabilities identified by DHS. The data captured 

from these surveys was then used to better inform our Investment Justification development, 

prioritization and strategic grant planning efforts. Also, since FY 2007, New York State has completed 

the mandated State Preparedness Report (SPR) to assess our capabilities. The information collected 

via the SPR was reviewed, along with our other capabilities data, to better inform our decisionmaking. 

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•	 NIMS Typing for Team-Based Capabilities: In addition to our formalized Capability Assessments, 

New York State has also been an early proponent of the use of FEMA NIMS Typing Standards to 

assess progress and capability levels. NIMS Typing Standards exist primarily for “Team-Based 

Capabilities”, such as Explosive Device Response Operations, Search and Rescue, WMD/HazMat 

Decontamination and Response, etc. The State has focused “Targeted Grant Programs” to bolster and 

enhance these specialized capabilities of local stakeholders. Offering these Targeted Grants gives the 

State greater visibility into the true nature of local capabilities in highly technical areas. In terms of our 

Explosive Device Response Operations Targeted Grant, there are no formal NIMS Typing Standards 

associated with Explosive Detection Canine Teams. Accordingly, New York State is coordinating with 

DHS’ Office of Bombing Prevention to develop these standards. 

•	 After Action Reports: In addition to formalized Capability Assessments and NIMS Typing Analyses, 

we also look at past history, lessons learned and after action reports from exercises and significant 

incidents and responses. Our experience with local first responders indicates that this is one of their 

primary mechanisms for assessing capabilities and identifying priority needs for future rounds of 

grants. 

•	 Subject Matter Experts: DHSES also relies on subject matter experts from a range of disciplines to 

help us evaluate our progress and programs. Subject matter experts provide assistance in developing 

and shaping our annual grant Investment Justifications and State Homeland Security Strategy, both of 

which consider local progress towards our homeland security goals and objectives. DHSES holds 

monthly meetings of the Homeland Security Strategy Workgroup (HSSWG), which includes subject 

matter experts from more than 15 different State agencies involved in homeland security issues. We 

also host an annual UASI workshop to engage local subject matter experts from within and among 

UASI regions across the State. We actively work to ensure cross-talk and regular interactions between 

the HSSWG and our UASI and other local stakeholders, as well. 

Recommendation #3: Include the progress achieved in the goals and objectives along with risk in the 

decision making process for future first responder grant funding decisions. 

NYS Response: DHSES agrees that progress and risk are important factors to consider. In fact, we already 

take both factors into consideration when allocating homeland security grant dollars. That said, we firmly 

believe that risk should be the driving factor in the decision to allocate homeland security funding. We have 

long advocated this position to DHS and note that they too use risk (not progress) as the primary factor 

related to the allocation of grant awards. Every county in New York State has some degree of risk, which is 

why we use a risk-based formula to allocate a large portion of the local homeland security grant awards. 

There is no federal directive on how the homeland security funding should be allocated; given New York’s 

threat profile we feel that risk should be the driving factor. 

Although risk is the driving factor in our funding decisions, we do very much consider progress and 

capability gaps/needs in the allocation funding as well. Progress and previous effectiveness are considered 

with the allocation of grant funds to support State level homeland security activities, and in the 

development of our targeted grant programs aimed at developing and enhancing critical capability areas at 

the local level. For example, DHSES has provided targeted grant funding to the State’s 12 local bomb 

squads since 2006. In 2008, the DHS Office of Bombing Prevention (OBP) conducted detailed capability 

assessments of each bomb squad in NYS. These assessments outlined squads’ capability gaps and needs 

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(i.e. equipment, training) using the NIMS Typing Guidelines provided by FEMA. Squads are now required 

to link their funding applications back to their capability assessment to ensure progress is being made 

toward the development of their capabilities (which align to homeland security goals and objectives). 

Moreover, using the NIMS Typing Standards, New York is able to ascertain how squads have used grant 

funds to increase their status (i.e. from a Type 4 to a Tier 3). It should also be noted that previous contract 

implementation is a factor considered in the bomb squad grant application, which is another example of 

how progress is considered. 

Other targeted grant programs have been developed based on the need to improve critical capability areas 

across the state, and DHSES will continue to analyze and consider progress as we develop current and 

future targeted grant programs. However, risk will remain the driving factor as it relates to the allocation of 

homeland security grant funding. 

Recommendation #4: Identify on-going and proposed projects for FYs 2006 through 2008 that will need 

federal funding beyond the grant period, estimate the timeframe and the amount of money needed to 

complete the projects, and provide contingency plans with options for sustaining the capabilities being 

acquired in the absence of federal funds. 

NYS Response: DHSES disagrees with this recommendation as it fails to recognize the fact that additional 

grant funding is available to support on-going and proposed projects. This audit looked at funding for FFY 

06-08, but it did not take into account the two additional grant cycles (FFY 09-10) that have since been 

approved, which means grantees will have funding available at least until 2013 as the grants have a 

minimum three year performance period. The President’s 2011 budget includes additional homeland 

security funding, which will further extend the available resources. 

The recommendation also clearly and directly contradicts the recent decision of the Department of 

Homeland Security Secretary, issued in Information Bulletin No. 336 on November 30, 2009, specifically 

allowing the use of federal homeland security funding to maintain and sustain current and previous 

investments. We question the audit report’s omission of this key fact. The preparedness task force 

mentioned earlier has also recommended that grantees have the flexibility to use federal grant funds to 

support maintenance and sustainment costs without limitation. Furthermore, most, if not all, localities are 

realistically unable to establish funding source “contingency plans” absent a specific earmark or 

appropriation. Without appropriate legal authority, state and local governments may not establish a ‘preidentified’ funding source as a contingency plan. If such a funding source is properly designated with the 

requisite legal budgeting authority, such an ‘alternate’ funding source may arguably violate nonsupplanting rules. Nonetheless, the additional responsibilities placed on state and local governments to 

support national homeland security efforts require a sustained commitment of federal funding, particularly 

during these challenges fiscal times. It is an inevitable certainty that without this sustained commitment of 

federal funding our national preparedness capabilities will begin to erode – not due to a lack of state and 

local commitment, but rather the limitation in resources. Additionally, as we are unaware of formal DHS 

guidance on the issue, the notion of homeland security grant funding as an entitlement program appears an 

editorial comment on behalf of the auditors. 

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Despite the need for continued homeland security funding, DHSES also appreciates the need to leverage 

other resources in support of the capabilities developed with the federal funds. We will stress this point 

both in the application process and in the guidance we offer to our State and local grantees. We must also 

point out, however, that the audit fails to fully recognize the commitment of State and local resources 

beyond the federal grant programs, , as millions of State and local dollars go to support homeland security 

efforts, particularly as it relates to the funding of personnel, the most critical homeland security resource. 

New York State has invested more than $400 million in State resources on homeland security programs and 

initiatives from 2006 to date, with an annual average of nearly $84 million. Even during these austere fiscal 

times, New York State is poised to invest an additional $42 million in capital funding in the State 

Preparedness Training Center and up to $75 million annually to support interoperable and emergency 

communications, a local priority and goal in the State Homeland Security Strategy. 

Few, if any, jurisdictions expend more of its local resources on homeland security than the City of New 

York. New York City’s local annual commitment for anti-terrorism measures amounted to $330 Million in 

2009 alone. The City invested nearly $500 Million to design and roll out a broadband data network to 

support emergency communications, and many millions more to upgrade public health labs and hospitals, 

and to enhance protection at critical infrastructure. 

The examples outlined above highlight New York’s commitment to the homeland security mission. It also 

underscores the fact that this is a long–term effort, sometimes necessitating that contracts extend beyond 

fixed grant years. Long-term projects will often take several years to complete and grantees are well aware 

that if grant funds are no longer available, they will need to obtain other funding sources. This is clearly 

spelled out in the contract agreement. As a federal multiple year appropriation, grantees generally have 

three years to spend the federal funds (absent federally-approved extensions) and often approve contracts 

knowing that additional federal funds are “in the pipeline” as outlined above. 

Recommendation #5: Ensure that New York City Police Department complies with federal procurement 

regulations and provides the visibility necessary for independent reviews of the Department’s procurement 

activities. 

NYS Response: DHSES disagrees with this assessment and the conclusion reached that the New York 

City Police Department (NYPD) is currently not in compliance with federal procurement regulations. The 

NYPD uses Department of Homeland Security grant funds to purchase equipment and technology utilized 

to prevent and protect New York City from future terrorist plots. New York City procurements are 

authorized by the Charter of the City of New York and adopted by joint action of the City Council and the 

Procurement Policy Board, and the Board sets the small purchase procurement threshold at $100,000 – not 

$10,000. 44 CFR §13.36(b)(1) requires that grantees and subgrantees follow their own procurement 

procedures provided that the procurements conform to applicable federal law and the standard; DHSES 

does recognize this special condition in the NYC contracts. The City is required to follow the procedures of 

its Procurement Policy Board, which is directed in many instances by New York City Charter, including 

the small purchase purchasing threshold of $100,000, which is directly aligned with the federal competitive 

bidding threshold. The auditors failed to appreciate this distinction with New York City’s grant contract. 

Purchases made under $100,000 are made under a less formal competitive process and comports with 

federal procurement regulations. Second, the auditors erroneously described the NYPD’s procurement 

process as “non-competitive.” While the NYPD may not have publicly advertised the type, 

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quantity, and technical specifications of equipment and services purchased by the NYPD in order to 

prevent such information from falling into the hands of would-be terrorists, the audit erroneously equates 

the NYPD’s efforts with a “non-competitive” procurement process. 

Having done so, the auditor then speculates that the NYPD “may have paid less for the equipment if an 

open bidding process had been used.” In fact, these purchases are conducted through a competitive process 

(except where only a single source is available) consistent with the process used for advertised proposals. 

The NYPD solicited proposals and considered bids from multiple vendors, conducted technical evaluations 

of each, and determined fair and reasonable pricing. 

Except as specifically noted below, or where otherwise permitted, multiple vendors are solicited and 

multiple vendors submitted proposals in response to a solicitation by the NYPD. The NYPD often solicited 

requests from vendors that have existing City, State and/or federal contracts. Occasionally, and as federal 

regulations and State law permit, the NYPD solicited a proposal from only one vendor when there was only 

one vendor that could provide the services (e.g., proprietary software or hardware or unique goods or 

services). 

The NYPD is always required to demonstrate that the prices received are “fair and reasonable”. This is 

done through one or more of the following methods: 1) by comparing the price received to the price listed 

on an existing contract, OGS or GSA schedule; 2) by comparing price offered to the price paid by other 

purchasers – typically other municipalities or law enforcement agencies; 3) by comparing historically 

similar procurements; and/or 4) by using a method called price per technical point. When using price per 

technical point, they first have an evaluation committee score the proposals that were received. They then 

divide the vendor’s total cost by their average proposal score. The vendor with the lowest price per 

technical point is superior. 

Recommendation #6: Conduct a review to determine allowable cost and recover any unreasonable 

amount (up to $4.1 million) from the City of New York used to pay for equipment items not purchased in 

accordance with the grant procurement requirements under the confidential and special expense process. 

NYS Response: DHSES disagrees with this recommendation. The NYPD’s procurement process, by 

DHSES’ estimate, does not seek to skirt competitive requirements, but rather attempts to carry out a 

competitive process within a controlled information sharing environment. DHSES will work with the 

NYPD to ensure that the NYPD’s procurement process is conducted in accordance with 44 CFR 13.36. 

It should also be noted that the audit does not properly portray the dialogue, meetings and resolution of the 

DHSES Fiscal Monitoring Units visits with the NYPD. Both parties have worked collaboratively to 

understand the nuances of this issue and we will ensure compliance with federal, State and local 

requirements. 

Recommendation #7: Reaffirm and enforce the property management requirements for equipment 

purchased with federal funds in individual subgrantee contracts. 

NYS Response: DHSES agrees with this recommendation. As stated in the report, DHSES expends a 

significant amount of effort in educating sub-recipients on the very specific federal property record 

requirements under 44 CFR and then verifying compliance. Although subgrantee property 

records may not include the level of detail the federal guidelines require, few, if any, subrecipients are wholly lacking 

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in property record retention. Most, if not all, subgrantees are substantially compliant with these 

requirements. Additionally, the lack of federally required data fields, such as ‘who holds title’, does not 

automatically result in deficiencies in safeguarding the assets purchased, as stated in the report, nor does it 

mean that the subgrantee cannot locate the equipment or asses their future equipment needs. Regardless, 

DHSES continues to reaffirm and enforce the federally mandated property record and management 

requirements and will research innovative ways to do so. 

Recommendation #8: Require subgrantees that are not in compliance to provide a plan to the State to 

become compliant within a specified timeframe. 

NYS Response: DHSES agrees with this recommendation. DHSES has and will continue to work with our 

subgrantees to ensure compliance. DHSES has an inventory tracking system (TC/MAX) utilized for the 

hundreds of pieces of CBRNE equipment associated with the 172 WMD Trailers across the State. DHSES 

will work with our subgrantees to determine if and how TC/MAX can be used to comply with their local 

inventory tracking needs, as well. 

New York’s State largest subgrantee, New York City, has several internal controls in place to manage 

inventory and to track equipment purchased with federal funds. Equipment assets are subject to the 

provisions of the New York City Comptroller's Internal Control and Accountability Directives and 

Comptroller's Memoranda. On inventory, the Comptroller’s Office has outlined the requirements for each 

City agency to follow in order to manage assets, to maintain internal inventory records, and to conduct an 

annual physical inventory of capital assets. 

For DHS grants, New York City added an additional layer of controls through the development of a Grant 

Tracking System (GTS). GTS is a web-based inventory tracking system to manage and track DHS funded 

equipment. There are currently 4,356 equipment assets recorded in GTS. For each asset, GTS allows the 

City to collect important information and to store this information centrally, including a description of each 

equipment item, the serial number, the date the equipment was purchased, the location and condition of 

each asset, and the last date the asset was inventoried. GTS has helped the City systematically control and 

report on DHS assets, and to make the information available centrally for our oversight team. 

Since the OIG visit, a number of enhancements have been made to GTS and several new processes have 

been instituted. When New York City developed GTS, it worked with a vendor to customize many 

different functions. One key area was the report generation capability. Today, GTS is used to generate the 

Fiscal Cost Reports for quarterly reporting. In this past quarter, New York City has greatly improved its 

ability to generate reports centrally that can focus on specific grant programs, agencies, and defined time 

periods. To expand the information collected under each asset, the City has made it possible for agencies to 

now upload images, drawings and documents. 

Recommendation #9: Confirm that New York City officials have conducted a comprehensive review of 

equipment records in its Grant Tracking System to ensure that the baseline equipment list for each City 

agency is accurate. 

NYS Response: DHSES agrees with this recommendation. The Mayor’s Office of the Criminal Justice 

Coordinator (CJC) conducted a comprehensive review of the equipment records recorded in GTS. CJC 

worked with the GTS Program Manager and each City agency to cross check the information in GTS 

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Management Comments to the Draft Report 

against the information each agency had provided on the standard reporting form, the Fiscal Cost Report. 

CJC is now in the process of reconciling a few inconsistencies to ensure quality assurance. Going forward, 

CJC and the Office of Management and Budget will conduct quarterly reviews of equipment records in 

GTS to ensure that the baseline equipment list for each City agency is accurate. This process will be 

outlined in a revised Policies and Procedures document that the City will soon distribute. 

DHSES anticipates that the issues associated with this recommendation will be addressed within the next 

90 days. 

Recommendation #10: Ensure that all software with a unit cost greater than $5,000 is being entered into 

Grant Tracking System retroactively and for software acquired in the future. 

NYS Response: DHSES agrees with this recommendation. All software with a unit cost greater than 

$5,000 is now being entered into the Grant Tracking System, and we will soon conduct a review to ensure 

that software purchases from earlier grant cycles have been entered, as well. Over $100,000 in software 

purchases have been recorded in GTS. 

DHSES anticipates that the issues associated with this recommendation will be addressed within the next 

90 days. 

Recommendation #11: Inventory all the required property information for items purchased under the New 

York City Police Department confidential and special expense procurement process. 

NYS Response: DHSES agrees with this recommendation. The Mayor’s Office of Management and 

Budget is working with the Police Department to collect the property information on the expense items 

they have entered into GTS. Each of the items in question has been bar coded and these records now exist 

in GTS. The NYC Office of Management and Budget is working with the NYPD to arrange for secure user 

rights, so that defined administrators can enter and view sensitive property-related information. 

DHSES anticipates that the issues associated with this recommendation will be addressed within the next 

90 days. 

Recommendation #12: Assess the current processes and procedures involved with the execution of 

subgrantee awards to identify efficiencies to expedite expenditures. 

NYS Response: DHSES agrees that it is imperative that grant funds be made available to subgrantees in a 

timely manner. However, it is equally important that the awarding agencies maintain proper oversight over 

the grantees’ use of these funds and ensure that these funds are used appropriately and as intended. This 

process helps to ensure fiscal accountability and allows DHSES to review and track expenditure plans and 

progress on previous projects (see DHSES response to Recommendations 2 and 3) before funds are 

awarded. 

The report explicitly states that New York State is in compliance with the 45/60-day congressional 

obligation requirement, yet the recommendation overlooks this noted compliance and provides a 

conclusory statement that funds were not provided in a timely manner. We are concerned, however, that 

the report does not articulate what criteria forms the basis for this recommendation, nor does it define 

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Management Comments to the Draft Report 

what is considered the “timely” availability of funds. The contracting process referred to in the report is 

governed by New York State Finance Law, which requires a multi-step review process that includes 

DHSES fiscal and program staff, review by the Attorney General’s Office and final approval from the State 

Comptroller. Although the entire process can take several months, the time also includes the requisite local 

planning and approval process. For example, grantees have 60 days to complete the grant applications, and 

often times must gain approval from their local governing bodies before accepting the grant awards. 

As stated above, the local applications must include linkages to the State Homeland Security Strategy goals 

and objectives, as well as anticipated budgets, so that DHSES can ensure that the planned expenditures are 

allowable and in accordance with federal guidelines and regulations. In New York’s experience, these 

issues are most appropriately addressed before the contract award to ensure that funds will be expended 

appropriately and so that local grantees are not placed in a position where costs were incurred in good faith 

only to later discover later that the expenditures were not allowable. 

As it relates to the actual expenditure of the funds, procurement delays and federal requirements can slow 

the process as well. For example, FEMA requires an Environmental and Historical Preservation (EHP) 

review be completed prior to the approval of initiatives that may impact the environment in some capacity. 

For large projects, these reviews may take up to a year; therefore, funds cannot be spent until those 

approvals have been received. Additionally, since the grants are reimbursement-based, grantees must 

actually incur the expenses and submit vouchers prior to reimbursement. Oftentimes, subgrantees may 

decide to wait until projects are completed to submit for reimbursements. DHSES is not aware of any law, 

regulation or rule that would preclude them from submitting for reimbursement in this way as long as they 

do so within the grant performance period; however, it is understandable that timing reimbursement 

requests in such a way may create the appearance that federal funds are not expended when in fact they are 

merely awaiting reimbursement. 

Although we are confident in our process, we always seek to improve the contract award practices within 

our control in order to achieve a well-functioning process that is both efficient and well planned. The 

regional workshops outlined previously have proven to be an effective way of gathering local feedback on 

our contracting process and other grant related issues. 

Recommendation #13: Require the Fire Department New York to compute actual payroll costs in 

determining the amounts charged for backfill expenditures, or submit to FEMA the backfill model for its 

analysis and evaluation to determine if the model results in a reasonable allocation of backfill costs to the 

current grant awards. 

NYS Response: DHSES disagrees with this recommendation. The New York City Fire Department 

(FDNY) is contractually required to maintain fixed-post coverage in Engine, Ladder, Squad, and Rescue 

Companies, along with their HazMat Unit, Battalions and Divisions at all times with uniformed members 

of specified ranks. When staffing drops below the fixed post level, this creates a vacancy that must be filled 

by a replacement firefighter on straight time, or overtime if no straight time employees are available. 

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When members are detailed to training, they are removed from the field chart and follow a 40-hour 

Monday to Friday schedule. For every forty hours of training conducted, FDNY has calculated that fiftythree hours of overtime is needed to cover the individual's field schedule. An 80 hour program would 

involve 92 hours of backfill. Based on the fact that the FDNY has several hundred vacancies on any given 

day, the Overtime Impact Factor - the percentage of time in which a post needs to be covered due to a 

vacancy - has a weighted average of 100%. Due to this, identifying overtime coverage against specific 

vacated posts (i.e., Firefighter Jones covering Firefighter Smith's day tour due to training) becomes an 

extremely difficult challenge. 

Because of this challenge, the FDNY developed a model to capture training-related backfill costs for the 

purpose of claiming and documenting these amounts under federal grants. 2 CFR 225.8 allows for the use 

of random sampling or other approved method for determining personal service costs. The FDNY model 

was first proposed to, and approved by, the federal government during the FEMA WTC Public Assistance 

process. During this process, the FDNY claimed backfill expenses under FEMA Project Worksheet #753 

(FIPS No. 061-51000-29). During FEMA's review of the FDNY's claim, they determined that the 

methodology and resulting claim amount did not exceed the actual overtime paid out by the FDNY. 

This methodology was also subsequently approved the U.S. Department of Justice and FEMA is aware that 

FDNY continues to use this model. The model involves taking the actual number of attendees at a training 

program, breaking the list of attendees down by rank, determining the total daily hours lost in the field, and 

multiplying an average overtime hourly rate for each rank. 

It is worth mentioning that the FDNY does maintain payroll documentation for each employee consistent 

with general accounting principles. 

Recommendation #14: Disallow any of the $143,437 claimed that are determined to be in excess of actual 

time charges. 

NYS Response: DHSES disagrees with this recommendation. As outlined above, FEMA is aware of 

FDNY’s model and methodology and provided initial federal approval for its use. In light of these facts, the 

FDNY acted in good faith, and a requirement to disallow such funds would, in our view, be arbitrary and 

capricious. The Fiscal Monitoring Unit within DHSES will continue to monitor this practice and help to 

identify and correct any administrative issues. We further request that FEMA re-affirm its approval of 

FDNY’s methodology to avoid unnecessary confusion in the future. 

Potential Best Practices: We were disappointed that the audit report failed to identify any best practices; 

New York State has a variety of innovative initiatives that should be considered. These initiatives are 

outlined below: 

•	 Regional Stakeholder Workshops: These annual workshops are used to provide technical assistance 

on grant issues; share insights into DHSES and other State-level undertakings; identify best 

practices/lessons learned; and gauge capability improvement. But most importantly, they provide 

customer service and a feedback loop to local grantees. 

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•	 State Preparedness Training Center: The State is making progress in its plans to establish the State 

Preparedness Training Center (SPTC); a New York State facility which serves as a hub for emergency 

response training for natural, technological and terrorism related disasters for first responders at all 

levels of government. On December 6, 2008, the State Preparedness Training Center was officially 

accredited by the Commission on Accreditation for Law Enforcement Agencies, as one of only two 

training academies in New York State (along with the New York City Police Department Training 

Bureau) to become accredited. The State has dedicated $42 million in funding for 2010 to further 

advance the development of the SPTC. This funding will support the development of a Simulations 

Complex and other unique training resources that will help to ensure the highest level of preparedness 

for New York’s first responders. 

•	 Preparedness Capability Workshop: DHSES developed this workshop to help our State and local 

stakeholders better understand how the national preparedness capabilities and doctrine relate to the 

homeland security grant programs and the State Homeland Security Strategy. DHSES has provided 

multiple deliveries of the workshop across the State and it was recently identified by FEMA as a 

possible national best practice. Several states have asked for copies of the workshop materials, further 

supporting the notion of it being endorsed as a best practice. 

•	 Targeted Grants: DHSES has used federal homeland security dollars to develop several strategically 

focused grant programs addressing discrete capabilities in which small investments can provide 

concrete and demonstrable improvements. Using various metrics (national recognition of typing, etc.), 

these grants help to provide easily measurable impacts of federal funding dollars. The targeted grant 

programs are currently aimed at developing and sustaining capabilities related to: Bomb Squads, 

Technical Rescues/USAR, HazMat Teams, Explosive Detection Canines, and Animal Sheltering. 

•	 Monitoring (Contract/Fiscal) Efforts: As part of NYS’s commitment to accountability and good 

governance, DHSES has long engaged in both programmatic and fiscal monitoring of grantees to 

ensure they are meeting the grant requirements and spending the funds appropriately. DHSES has 

established a Contracts Unit with dedicated representatives for the various grantees in New York State. 

Each Contract Representative engages in field visits and regular programmatic monitoring to provide 

ongoing customer service to our local grantees. A separate and distinct Fiscal Monitoring Unit also 

works with grantees to identify and correct any fiscal compliance/reporting issues. Although every 

State has some monitoring procedures in place, we are unaware of any State with a more robust 

monitoring program than New York. 

•	 Logistics Center: DHSES has established a centralized Logistics Center to process, maintain and track 

the CBRNE equipment associated with the 172 WMD Trailers across State. The Logistics Center helps 

to ensure some degree of equipment standardization and interoperability and provides for ongoing 

maintenance and calibration of the equipment. 

•	 Risk Formula: This formula assesses risk to jurisdictions (counties) across New York State based on 

more than 30 variables related to numerous aspects of homeland security risk. This data-driven 

analysis includes threat elements (both terrorism and all-hazards), vulnerability 

elements (critical infrastructure) and consequence elements (critical infrastructure and population 

elements). This analysis is subsequently used to guide the distribution of grant funds. 

12 

The State of New York’s Management of State Homeland Security Program and 

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Page 44
 
Appendix C 

Organizational Chart 

New York State Office of Homeland Security 

Organizational Chart 

The State of New York’s Management of State Homeland Security Program and 

 Urban Areas Security Initiative Grants Awarded During Fiscal Years 2006 through 2008 

Page 45
 
Appendix D 

Report Distribution 

Department of Homeland Security 

Secretary 

Deputy Secretary 

Chief of Staff 

Deputy Chief of Staff 

General Counsel 

Executive Secretary 

Director, GAO/OIG Liaison Office 

Assistant Secretary for Office of Policy 

Assistant Secretary for Office of Public Affairs 

Assistant Secretary for Office of Legislative Affairs 

Federal Emergency Management Agency 

Administrator 

Assistant Administrator, Grant Programs Directorate 

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 

The State of New York’s Management of State Homeland Security Program and 

 Urban Areas Security Initiative Grants Awarded During Fiscal Years 2006 through 2008 

Page 46 
ADDITIONAL INFORMATION AND COPIES 

To obtain additional copies of this report, please call the Office of Inspector General (OIG) at (202) 254-4100, 

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

OIG HOTLINE 

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

misconduct relative to department programs or operations: 

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

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

• Email us at DHSOIGHOTLINE@dhs.gov; or 

• Write to us at: 

DHS Office of Inspector General/MAIL STOP 2600, 

Attention: Office of Investigations - Hotline, 

245 Murray Drive, SW, Building 410, 

Washington, DC 20528. 

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