Prisoner Operations: United States Marshals Service Could Better Estimate Cost Savings and Monitor Efforts to Increase Efficiencies
Released: 2016-05-23T00:00:00


Highlights: section_title: Why GAO Did This Study
paragraphs: The Department of Justice's (DOJ) USMS is responsible for managing more than 50,000 federal prisoners during criminal proceedings until their acquittal or their conviction and transfer to the Federal Bureau of Prisons to serve their sentence. USMS provides housing, clothing, food, transportation, and medical care. The USMS does not own or manage any of its own facilities and instead relies on a combination of federal, state, local, and privately-managed facilities to house and care for these prisoners. Senate Report 113-78 of the Continuing Appropriations Act of 2014 included a provision for GAO to assess the costs of housing federal inmates and detainees.

This report (1) identifies the primary costs associated with USMS prisoner operations, and the trends in spending from fiscal years 2010 through 2015; (2) assesses recent actions USMS has taken to reduce its prisoner operations costs and how much has been saved; and (3) determines systems USMS has to identify additional opportunities to save costs. GAO analyzed USMS's financial and operational data related to its prisoner operations costs from fiscal year 2010 through 2015, analyzed USMS documentation, and interviewed USMS officials.

section_title: What GAO Found
paragraphs: From fiscal years 2010 through 2015, the U.S. Marshals Service's (USMS) largest prisoner costs were housing payments to state, local, and private prisons. For example, in fiscal year 2015 USMS spent 86 percent of its $1.4 billion in prisoner operation costs on housing. While total prisoner costs and prisoner populations decreased since fiscal year 2012, per prisoner costs increased. USMS officials attributed the increase in part to lower than expected prisoner populations, resulting in USMS not filling guaranteed bed space at certain facilities. Also, prisoner costs generally were higher in districts with larger populations and limited use of federal facilities, for which USMS does not pay. Both population and costs were highest in 5 districts along the southwest border (see figure).

USMS has implemented actions that it reports have continued to save prisoner-related costs from fiscal years 2010 through 2015, such as the alternatives to pre-trial detention program to reduce prisoners in USMS's custody. However, for actions with identified savings over this time period, GAO found that about $654 million of USMS's estimated $858 million in total savings is not reliable. For example, USMS identified $375 million in savings from the alternatives to pre-trial detention program for fiscal years 2010 through 2015, but did not verify the data or methodology used to develop the estimate or provide documentation supporting its reported savings for fiscal years 2012 onward. By developing reliable methods for estimating costs and validating savings, USMS would be better positioned to assess the effectiveness of its cost savings efforts.

USMS has designed systems to identify opportunities for cost efficiencies, including savings. For example, the agency requires districts to conduct annual self-assessments of their procedures to identify any deficiencies which could lead to cost savings. However, USMS cannot aggregate and analyze the results of the assessments across districts. Developing a mechanism to do so would better position USMS to identify deficiencies or develop corrective actions that could result in additional cost savings opportunities.

section_title: What GAO Recommends
paragraphs: GAO recommends that USMS develop reliable methods for estimating cost savings and validating reported savings achieved, and establish a mechanism to aggregate and analyze the results of annual district self- assessments. USMS concurred with the recommendations.

section_title: Letter
paragraphs: The Department of Justice’s (DOJ) United States Marshals Service  (USMS) is responsible for managing more than 50,000 federal  prisoners—providing for their housing, clothing, food, transportation,  medical care, and presenting prisoners for court appearances during  criminal proceedings. According to DOJ’s budget documentation, in  fiscal year 2015, USMS allocated approximately $1.65 billion to provide  housing, transportation, and medical care for its prisoners, and for USMS  salaries and expenses involved in prisoner security and transportation.  The USMS does not own or manage any of its own facilities and instead  relies on a combination of federal, state, local, and privately-managed  facilities to house and care for these prisoners. Presidentially-appointed  U.S. Marshals lead USMS’s multi-missioned operations within the 94  geographical districts, which align with U.S. Court judicial districts  throughout the states and territories.

Senate Report 113-78 of the Continuing Appropriations Act of 2014  included a provision for GAO to, among other things, assess the costs of  housing federal prisoners and opportunities to offset those costs. This  report focuses on USMS’s prisoner operations responsibilities and costs.  Specifically, this report (1) describes the primary costs associated with  USMS prisoner operations, and the trends in spending from fiscal years  2010 through 2015; (2) assesses recent actions USMS has taken to  reduce its prisoner operations costs and how much has been saved; and  (3) determines what systems USMS has to identify additional  opportunities to save costs.

To identify costs and trends, we reviewed USMS’s congressional budget  justifications for activities from fiscal years 2010 through 2015 to identify  USMS-reported cost drivers. We selected this time period because we  believe that 6 years is sufficient time to identify trends in prisoner  operations costs. We focused our review on the USMS Federal Prisoner  Detention appropriation (FPD) because it pays for about 85 percent of  total USMS prisoner operations costs. We also obtained and analyzed  data for USMS’s financial and operational activities related to prisoner  operations from fiscal years 2010 through 2015, including obtaining  underlying cost data for housing, medical, and transportation costs, which  we then aggregated at the district level.

We have assessed the reliability of these data and, though we found  some inconsistencies, determined them reliable for the purposes of  identifying and describing the primary cost drivers and the districts’  relative prisoner operation costs from the FPD. This reliability assessment  included conducting checks for completeness and logical consistency,  obtaining documentation on systems end-user capabilities and data  control, interviewing data users and managers, and comparing data to  previous USMS reported data. The inconsistencies we identified included  receiving different total costs for state and local prison facility usage,  missing fewer than 5 days of population counts at private facilities, and  missing or inconsistent facility designations. The largest discrepancy  between our calculated costs and USMS reported total costs appeared in  fiscal year 2012 at less than 2 percent. In addition, we interviewed  officials from the Prisoner Operations Division (POD) in headquarters to  obtain USMS’s views on identified cost drivers and trends. POD is  responsible for developing policy and working with district U.S. Marshals  to, among other things, identify cost efficient methods for detaining  prisoners. We corroborated POD officials’ views by conducting interviews  with USMS officials in 3 selected districts—the Southern District of  California, the Northern District of Georgia, and the District of Maryland.  We chose these districts because of geographical disparity, size of prison  populations, and unique actions taken or ancillary missions conducted.  While not generalizable to all USMS districts, these views provide insights  into costs and trends in prisoner operations.

To assess the recent actions USMS has taken to reduce its prisoner  operations costs, we reviewed USMS’s congressional budget justification  and interviewed officials to compile a list of prisoner-related actions that  had monetized cost savings for fiscal years 2010 through 2015. We  chose this time period to align with our review of USMS’s prisoner  operations cost trends. To determine the extent to which USMS’s  estimated savings are reliable, we analyzed USMS documents and data,  where available, such as documentation of the methodology and resulting  dollar figures from each initiative’s savings estimate. We compared each  of USMS’s cost savings estimates against Office of Management and  Budget’s Guidelines and Discount Rates for Benefit-Cost Analysis of  Federal Programs and best practices outlined in Assessing the Reliability  of Computer-Processed Data to determine the extent to which the  estimates were sufficiently comprehensive, accurate, consistent, and  transparent. For each savings estimate for which we were able to obtain  documentation of assumptions and methodologies, we assessed whether  major assumptions were reasonable by conducting or evaluating  sensitivity analyses, and reviewed estimates to ensure that assumptions  were consistently and accurately applied. Further, we interviewed agency  officials to corroborate initiatives we had identified; identify any  unreported cost savings actions; and obtain an explanation of the  methodologies behind cost savings estimates, clarify discrepancies, and  obtain information in support of the estimates.

To determine USMS’s systems to identify additional cost savings  opportunities, we reviewed the processes and tools that USMS used in  fiscal years 2010 through 2015 to identify, implement, and promote cost- efficiency and savings, such as its Strategic Plan and scorecards it uses  to track facility use in its districts. To address how USMS identifies  additional cost savings opportunities, we analyzed elements of USMS’s  internal control system related to achieving operational efficiencies and  interviewed cognizant USMS officials responsible for programming and  internal controls to determine whether USMS has designed a  management structure and processes to routinely assess its  administrative and operational activities for possible corrective actions.  We did not independently test USMS’s internal controls to determine  whether they mitigate all possible risks and are operating as intended. We  reviewed USMS’s mechanisms and processes leading to its internal  review of operational and administrative functions, including its process  for taking corrective action related to high-cost areas, such as  procurement and human resources, and compared those characteristics  with those called for in Standards for Internal Control in the Federal  Government and in implementing the guidance in the OMB Circular No.  A-123, Management’s Responsibility for Internal Control, which defines  management’s responsibility for internal control in federal agencies. For  more information about our scope and methodology, see appendix I.

We conducted this performance audit from March 2015 to May 2016 in  accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
subsections: section_title: Background
subsections: section_title: USMS’s Organization and Funding
paragraphs: USMS operations cover five broad mission areas, including prisoner  security and transportation, which is overseen by its Prisoner Operations  Division (POD). The POD at USMS headquarters is responsible for  managing the prison-related expenses, developing policy for district  personnel when conducting prisoner-related operations, and supporting  district activities to, among other things, identify cost-effective measures  to house and care for prisoners. U.S. Marshals direct operations in 94  districts, and generally operate autonomously from headquarters.

USMS’s prisoner operations activities are funded through two separate  appropriations: the Federal Prisoner Detention (FPD) appropriation, and  the Salaries and Expenses (S&E) appropriation. USMS uses FPD funding  for the housing and care of federal prisoners in private, state, and local  facilities. This appropriation also includes expenses related to prisoner  transportation and medical care. The POD allocates funding from the  FPD to district U.S. Marshals for their related prisoner costs, and is  responsible for tracking the financial management of the FPD  appropriation and monitoring district prisoner-related expenditures.

USMS’s Office of Professional Responsibility, Compliance Review   (OPR-CR) oversees the internal compliance review of USMS staff,  division and district offices; the implementation of OMB Circular A-123;  and ensures the integrity of the agency’s internal controls and the  reliability of its financial reporting. OPR-CR is responsible for coordinating  USMS’s assessments under the Federal Managers’ Financial Integrity Act  (FMFIA), as well as planning and executing the A-123 assessments in  support of management’s annual assertions of the organization’s internal  controls effectiveness.

section_title: USMS Detention Expenditures
paragraphs: The primary drivers of USMS’s detention expenditures are the number of  prisoners in USMS custody, and the length of time they are held in  detention. The average number of prisoners in USMS custody per day— the average daily population (ADP)—is directly influenced, among other  things, by the activities and decisions of federal law enforcement, U.S.  Attorneys, and the federal judiciary. For instance, as figure 1  demonstrates, USMS’s ADP in fiscal year 2015 was concentrated along  the southwest border, reflecting law enforcement and prosecutorial  priorities related to immigration. For a complete list of ADP by district for  fiscal year 2015, see appendix II.

Further, as figure 2 shows, USMS’s ADP peaked in fiscal year 2011 at  61,469, but fell to 51,670 in fiscal year 2015, a 16 percent decrease.  According to USMS, this may be the result of factors such as reduced  funding for federal law enforcement agencies, hiring freezes resulting  from the sequestration that occurred in fiscal year 2013, and changes in  prosecutorial practices and priorities stemming from the Attorney  General’s Smart on Crime initiative, which is a set of actions directed at  addressing DOJ’s ongoing issues related to prison overcrowding, costs,  and recidivism.

section_title: Prisoner Housing
paragraphs: USMS does not own or operate its own detention facilities. Instead it  relies on existing federal, state, and local infrastructure, and to some  extent on private contract facilities, to house USMS prisoners. As such,  USMS acquires bed space for prisoners through (1) use of beds at  Federal Bureau of Prisons (BOP) facilities, for which USMS does not pay;  (2) intergovernmental agreements (IGA) with state and local jurisdictions  that have excess prison or jail bed capacity and with which USMS  negotiates a daily rate for the use of a bed, and (3) private jail facilities  with which USMS enters a fixed price contract based on a minimum  number of prisoners it guarantees to house at a facility.

section_title: USMS Facility Payments Are the Primary Prisoner Operations Cost, and Total Prisoner Operations Costs Have Decreased Since Fiscal Year 2012
subsections: section_title: Facility Payments Comprise About 86 Percent of USMS’s Prisoner Operations Costs
paragraphs: In fiscal year 2015, USMS expended about $1.20 billion in payments to  state and local government and private detention facilities. As illustrated  in figure 3, this accounted for about 86 percent of the total $1.40 billion  USMS expended through its FPD appropriation. Such payments cover  prisoner housing, including meals, clothes and linens, and other  incidentals associated with providing care for prisoners in USMS  custody. In addition to prisoner housing payments, USMS expended  about $115 million on medical care in fiscal year 2015—about 8 percent  of spending during the fiscal year. Such expenses include health care  services, transportation costs for moving prisoners to offsite medical  facilities and the cost of external guards securing prisoners at these  facilities. Transportation services was the third largest cost category,  comprising an additional $53 million—4 percent of total costs in fiscal  year 2015. The prisoner transportation category includes transportation  services and guard costs associated with securing the prisoners during  transportation. In addition, USMS spent about $24 million—or 2 percent  of total costs in fiscal year 2015—on system-wide detention program  expenditures, which include headquarters operations and information  technology systems support. For more details on the trends in each of  these cost areas, see appendix III.

section_title: Federal Prisoner Population and Detention Costs Have Decreased Since Fiscal Year 2012, but Per Prisoner Costs Have Increased
paragraphs: As figure 4 illustrates, from fiscal years 2010 through 2012, FPD nominal  costs increased from $1.41 billion to nearly $1.54 billion, an increase of  about 9 percent over the two-year period. By fiscal year 2015, costs  dropped slightly below fiscal year 2010 nominal costs, with expenditures  at about $1.40 billion. USMS officials attribute the decrease in costs to the  decrease of ADP, indicating fewer prisoners to house from fiscal year  2012 through fiscal year 2015.

To show changes in cost per prisoner, we adjusted the expenditures data  to account for inflation changes for all 6 years. As figure 5 shows, our  analysis of the inflation-adjusted FPD costs per prisoner—FPD costs  divided by annual ADP—found that FPD per prisoner costs were highest  in fiscal year 2015. USMS data show that ADP reached its peak in fiscal  year 2011 at about 61,500, and has since dropped.

USMS officials stated that per prisoner detention costs fluctuate for  various reasons. For instance, USMS makes agreements with facilities  based on future-year forecasts of ADP, including providing monthly  minimum guaranteed costs for guaranteed space at certain facilities,  where there is an anticipated need for additional prisoner housing in the  future. In years when ADP did not meet forecasted amounts, USMS paid  guaranteed minimum amounts for fewer prisoners than projected, leading  to higher costs per prisoner. Additionally, USMS officials stated that in  some circumstances, USMS continued to use some of these facilities  even though it might not have been the most cost effective approach.  USMS officials stated that they continue to use state and local  government facilities in some districts to maintain relationships with law  enforcement. This helps ensure that USMS can rely on these jurisdictions  in future years for both prisoner operations and other operations requiring  state and local cooperation, such as leveraging state and local law  enforcement officials and resources to help capture fugitives. Specifically,  the USMS officials explained that, if USMS does not help the jurisdictions  to maintain their prisoner infrastructure, then some facilities in these  jurisdictions would likely close. As a result, USMS would have fewer  facilities available to detain federal prisoners in these jurisdictions, and  fewer state and local personnel available to aid USMS with its other  missions.

USMS’s total medical costs also rose from fiscal years 2010 to 2015.  While the USMS annual ADP decreased during this time period, nominal  medical expenditures increased by 30 percent from $88 million to $115  million. USMS’s medical costs as a percentage of total prisoner costs also  increased from about 6 percent to 8 percent. USMS officials stated that  medical costs can fluctuate widely regardless of the number of prisoners  based on the number and type of procedures, which can affect the total  costs expended in the FPD. USMS officials stated that it had more  expensive medical procedures, such as more heart, diabetic, and optical  procedures, to cover in 2015 than in 2010.

section_title: Costs Are Higher in Districts Where Prisoner Population Is Concentrated and the Districts Cannot Rely on BOP Facilities to House Most Prisoners
paragraphs: In general, districts with larger prisoner populations have more costs than  districts with lower prisoner populations. Specifically, the 10 districts with  the highest average ADP for fiscal year 2015 accounted for about 50  percent of the average daily detention population for USMS. These 10  districts also accounted for about 49 percent of total expenditures among  all districts. In addition, we found that the 5 districts along the Southwest  border with Mexico had both the highest ADP and the highest attributed  costs among the districts. See figure 6 for a breakout of costs attributed to  district operations. For a list of district costs for housing, medical, and  transportation costs, see appendix II.

Our analysis shows that ADP does not entirely explain the cost trends  among districts. For instance, among the 10 districts with the highest  ADP, 4 of them account for only about 4 percent of total district costs  among all 94 districts, while the other 6 districts account for almost 45  percent of the remaining total district costs. As figure 7 shows, this is in  large degree because these 4 districts—the Southern District of New  York, the District of Puerto Rico, the Southern District of Florida, and the  Central District of California—rely heavily on federal facilities operated  and paid for by BOP, not USMS, placing between 73 and 87 percent of  the ADP in a BOP facility in a given year. The remaining 6 districts,  however, rely less heavily on federal facilities—for which USMS does not  pay—and more heavily on a mixture of IGA, and private infrastructure to  house its prisoners.

Moreover, 5 of the 6 districts with the highest ADP that rely more heavily  on state and local or private facilities are also located along the southwest  border. USMS officials stated that bed space in locations with the  highest ADP—such as along the southwest border—often overtake the  federal, state, and local facilities’ capacity. In response, USMS has  entered into contracts with private facilities to meet the demand.  According to USMS officials, while private facilities appear to be more  expensive overall, most are located in districts where the costs of bed  space are already more expensive than average because the demand  outstripped capacity. Thus, paying for private facility capacity requires  paying higher costs.

In addition to identifying the 10 districts with the highest ADP for fiscal  year 2015, we also identified the 10 districts with the highest costs per  day—that is, prisoner housing, medical, and transportation costs directly  attributable to each district divided by the average daily detention  population—which are listed in table 1.

Similar to our analysis of the districts with highest ADP, districts with the  highest costs per day is likely affected by whether they can use a BOP  facility to offset housing costs. In particular, as table 1 shows, of the 10  districts with the highest costs per day, none rely on BOP facilities to  house more than 4 percent of their prisoner populations. Further, only 2 of  the 10 districts rely on private facilities to house more than 10 percent of  their prisoner populations. USMS officials stated that other factors affect  the variation of costs. For instance, officials explained that variations in  the prevailing wage rates in the district impact housing costs greatly.  USMS officials stated that wage rates in northeast districts and Alaska  are higher than in other districts such as in the southeast districts.  Further, officials noted that real estate costs in different areas of the  country can greatly affect how much USMS must pay. For instance,  USMS officials stated that districts with large metropolitan areas, such as  Massachusetts and Maryland, pay higher real estate costs than in  locations that are more rural. Lastly, USMS officials stated that lower ADP  in districts in more remote locations results in higher costs per ADP  because there are some structural costs that then are shared among  fewer prisoners. For instance, Alaska and Maine rank among the lowest  ADPs on average, and the per day jail costs include higher indirect costs  such as maintenance of the prisoner facilities. Such variations may affect  jail costs per day among all the districts to some extent; therefore, it is  difficult to compare costs among the districts without considering such  pressures on cost.

section_title: USMS Has Taken Steps to Reduce Prison Costs, but Could Improve the Reliability of Its Cost Savings Estimates
subsections: section_title: USMS Implemented Several Initiatives and Other Actions to Reduce Prison Operations Costs
paragraphs: USMS has implemented a number of actions to manage costs and meet  its strategic goal of optimizing detention operations, which it estimates  have achieved costs savings in fiscal years 2010 through 2015.  Specifically, USMS automated its detention management services,  developed housing options intended to reduce costs, invested in  alternatives to pre-trial detention to help reduce housing and medical  expenditures, and improved its management of medical claims. Table 2  provides detail on the key cost saving initiatives that USMS has identified  and USMS’s estimated total cost savings.

In addition to the above initiatives, officials explained that USMS has  sought to avoid costs by increasing USMS’s use of federal facilities.  Doing so allows USMS to decrease costs because, according to a USMS- BOP memorandum of understanding, BOP allocates and maintains  detention bed space to house USMS’s prisoners, and USMS does not  incur housing related costs for the use of these federal spaces. USMS  officials explained that they have not developed a cost savings estimate  for the BOP bed space USMS uses because USMS does not consider its  use of BOP facilities as a cost saving action. Officials, however, noted  that USMS monitors unused federal bed space and calculates additional  costs USMS could avoid if districts were to use those unoccupied spaces.  For example, USMS estimated it could have avoided an additional $21.6  million in costs if districts had utilized the unused BOP-allocated spaces  in the Brooklyn federal detention facility in fiscal year 2015. However,  according to USMS officials, operational limitations such as a federal  facility’s distance from assigned courthouses hinders USMS ability to fully  use all allocated spaces.

From fiscal years 2010 through 2015, USMS increased the percentage of  its prisoner population that used BOP facilities from about 18 percent of  total ADP in fiscal year 2010 to about 19 percent in fiscal year 2015.  Further, our analysis shows that USMS avoided costs ranging from $321  million to $392 million for fiscal years 2010 through 2015, if USMS had to  pay for bed space it used at BOP federal facilities. In addition, our  analysis found that the Department of Justice potentially saved $73  million in fiscal year 2015 by having USMS use allocated space at BOP  facilities to house its prisoners instead of housing those prisoners at  private facilities.

section_title: USMS Could Better Develop, Document, and Validate Some Estimates to Improve Reliability When Determining Cost Savings
paragraphs: According to USMS’s congressional budget justification and USMS  officials, the agency has realized approximately $858 million in total costs  savings through the cost savings initiatives identified in table 2. However,  based on our analysis of USMS’s cost savings estimates, discussions  with USMS officials, and comparison of the estimates against Office of  Management and Budget (OMB) and GAO guidance related to cost  estimation, we found that approximately $654 million of USMS’s total cost  savings estimate has limited reliability because five of USMS’s six cost  savings estimates were not sufficiently comprehensive, accurate,  consistent, or well-documented.

Specifically, based on guidance from OMB and GAO guidance for  assessing the reliability of computer processed data, reliable cost  estimates—such as USMS’s $858 million estimate—should be  comprehensive, accurate, consistent, and well-documented. In particular,  OMB guidance on conducting a cost-benefit analysis states that the  analysis should include a comprehensive estimate of different types of  benefits (such as cost savings) minus costs. OMB guidance further  states that the analysis should be explicit about the underlying  assumptions and key sources of uncertainty used to arrive at the  estimates of future benefits and costs. Key data, models used in the  analysis, and results of benefits and costs should be reported and well- documented to promote independent review and analysis. Further,  according to guidance for assessing the reliability of computer processed  data, including estimates and projections, data are reliable when data are  reasonably complete, accurate, and consistent—a subcategory of  accuracy. Table 3 shows the extent to which USMS’s estimates were  reliable and, if appropriate, limitations of the estimates, and details of our  analysis of the estimates by cost saving action follow. eIGA: Based on our analysis, USMS applied reasonable assumptions  and used a reasonable methodology to reliably estimate $204.3  million in savings from the implementation of eIGA. Specifically,  USMS calculated the difference in the “proposed” versus “negotiated”  per diem rate for each intergovernmental agreement which was  negotiated using this system. Additionally, savings identified can be  solely attributed to the implementation of the system because, prior to  eIGA, USMS did not negotiate the per diem rate for housing  prisoners. ePMR: Based on our analysis, we found that USMS applied  reasonable assumptions, but its estimate of $935,000 in cost savings  during fiscal years 2011 through 2015 from the implementation of  ePMR is not comprehensive. Officials said that as a result of  implementing ePMR, USMS has avoided $187,000 in costs per year  by not having to hire additional staff to manage the increased number  of medical claims, which have increased since then. They based this  estimate on the number of cases USMS headquarters managed in  fiscal year 2011. However, we found that the number of medical  cases USMS headquarters managed has increased since fiscal year  2011. As a result, USMS would have needed approximately 6  additional staff to manage the average number of medical claims in  fiscal years 2011 through 2015. Further, USMS costs avoided over  the five fiscal years would equal approximately $2.7 million, not  $935,000.

We found that USMS underestimated its ePMR costs savings  because it excluded efficiencies and savings realized in subsequent  years. OMB guidance recommends agencies include a  comprehensive analysis of benefits and costs. A savings estimate  that includes savings realized in all 5 fiscal years could help USMS  identify the full range of the program’s effect. eDesignate: Based on our analysis, the cost savings estimate of  $222 million for the implementation of eDesignate is not  comprehensive because USMS may have double counted savings  associated with the use of the system over time and included savings  not attributable to the system. Specifically, USMS officials told us  that eDesignate reduced the post-sentencing processing time for  prisoners in USMS’s custody, decreasing prisoner average detention  time, and, thereby, USMS’s housing costs. Figure 8 illustrates the  processing of sentenced prisoners using eDesignate.

To capture cost savings achieved after the use of eDesignate, USMS derived a baseline detention time using the average detention  time from fiscal years 2008 through 2010—73.4 days—to which  post-implementation average detention time could be compared;  calculated the difference in average detention times between the  baseline and monthly average detention time from FY 2011  through 2015; and multiplied this difference by the average daily costs of housing its  prisoners.

OMB guidance states that benefits and costs analysis should be  based on incremental benefits and costs. Specifically, all sunk costs  and benefits already realized should be ignored. However, our  analysis shows that USMS may have double counted the time  reductions and cost savings achieved over time by continuing to use  the same 73.4 days baseline to calculate change in detention time  and cost savings achieved each year after the implementation of  eDesignate. Specifically, as shown in table 4 the estimated amount of  cost savings is greater when USMS continues to measure against the  73.4 days baseline instead of revising the baseline each year to  account for reduced detention time achieved in the preceding years.  For instance, if USMS used the change in annual average detention  time to calculate costs savings for fiscal years 2011 through 2015, it  would have estimated approximately $52 million versus $222 million.  Thus, using this baseline may overstate the savings achieved from  reduced detention time. Further, USMS did not take into account any  other factors which might also have affected a change in average  detention time and, ultimately, savings estimates related to the  system. For example, officials said that a BOP contract closure at a  facility impacted USMS housing of its prisoners and resulted in the  high average detention time for fiscal year 2011.

In addition to double counting savings in its cost estimating  methodology, USMS included savings not attributable to the  implementation of the eDesignate system. Specifically, USMS  calculated detention costs avoided for the total number of USMS’s  prisoners instead of prisoners housed in non-BOP facilities. As  discussed above, USMS derived a costs savings estimate for  eDesignate by multiplying the reduction in prisoners’ detention time by  the daily costs of housing the prisoners. However, USMS does not  incur costs for USMS prisoners housed in BOP facilities, so  calculating costs avoided for all prisoners in its savings estimate  resulted in an overestimation.

USMS officials stated that they do not think that the $222 million in  savings is overestimated. They said that USMS did not need to adjust  the baseline to reflect incremental yearly changes in detention time  and costs savings because it was estimating the costs USMS would  have incurred without the implementation of eDesignate, not the  impact of the system on prisoner processing time. OMB guidance,  however, states that benefit-cost analyses should measure the  incremental benefits and costs by omitting costs or benefits already  realized. A baseline which adjusts to capture the actual change in  average detention time would better capture incremental benefits and  could help USMS identify events that affected detention time and  more accurately estimate eDesignate’s effects and costs savings.

Chesapeake Detention Facility: USMS’s cost savings estimate of  $53.6 million for the Chesapeake Detention Facility includes $13.6  million in transportation and medical costs avoided and $40 million in  housing costs avoided as a result of USMS having guaranteed use of  the Chesapeake detention facility. Though USMS conducted  sensitivity analyses for its housing cost savings estimate, our analysis  found that the estimate has limited reliability because it is not  accurate.

First, USMS may have overestimated the cost savings associated  with transportation and medical costs because it did not account for  the fixed costs for medical and transportation already included in its  payments for the Chesapeake Detention Facility. In particular, USMS  used the local average transportation costs for transporting USMS  prisoners and the average daily medical costs per prisoners to  estimate that it would have had to pay $13.6 million in transportation  and medical costs if such costs were not included in the agreement  with the facility. It identified the entire estimated transportation and  medical costs avoided as the savings.

However, this estimate may overstate the cost savings because  USMS’s methodology did not account for an estimate of how much of  the fixed costs it currently pays for the Chesapeake Detention Facility  are attributable to transportation and medical costs. As previously  noted, USMS pays a fixed cost for housing its prisoners at the  Chesapeake Detention Facility, which includes medical and  transportation services for USMS’s prisoners housed at the facility. If  such costs were not included in the fixed costs USMS paid for the  facility, USMS may have been able to negotiate a lower cost.  However, USMS’s methodology does not account for how the  negotiated fixed costs for the facility would have changed if medical  and transportation services were not included. Accounting for how the  fixed costs would have changed would provide a more accurate  estimate of the actual medical and transportation costs it did not have  to pay as a result of the agreement. For example, if the fixed costs  including medical and transportation USMS pays for the Chesapeake  Detention Facility are $20 million and USMS estimates that it could  have negotiated a fixed rate without medical and transportation of $18  million, then the estimate of fixed costs USMS currently pays that are  attributable to medical and transportation costs is $2 million. If this  were the case, then, after accounting for the $2 million currently  attributable to medical and transportation costs, the costs savings  would have equaled $11.6 million ($13.6 million less the $2 million)  versus the entire $13.6 million estimate of costs avoided.

Second, USMS’s housing cost savings estimate for the Chesapeake  Detention Facility is inaccurate because USMS inconsistently applied  the inflation rate in its $40 million savings estimate. Specifically,  USMS calculated savings using the difference between the cost of  operating Chesapeake and the costs of not having the guaranteed  use of the facility. To calculate the growth in costs over time for each  scenario, USMS assumed a 3 percent inflation rate, but applied the  rate inconsistently. Specifically, it applied a 3 percent inflation rate  once every three years for the change in costs to operate  Chesapeake, but applied a 3 percent inflation rate every year for the  change in housing costs if USMS did not have the guaranteed use of  the facility. As a result of this inconsistency, USMS generally  projected that the costs for operating the Chesapeake facility would  be lower when compared to the costs of housing their prisoners if they  did not have the guaranteed use of the facility, and this overestimated  costs savings achieved. Further, USMS assumed a 3 percent inflation  rate every 3 years instead of using the general inflation rate, as is  recommended by OMB guidance.

We found that USMS inaccurately estimated the medical and  transportation costs avoided as a result of its guaranteed use of the  Chesapeake facility because USMS did not prioritize the development  of the estimate. Specifically, officials said USMS developed its  housing estimate to show that acquiring the guaranteed use of  Chesapeake was an economically sound housing decision, and any  additional savings were secondary. As such, USMS did not focus on  the medical and transportation costs that it avoided and developed the  estimate in response to our inquiry. Additionally, USMS officials  acknowledged that they mistakenly applied an inconsistent inflation  rate, potentially resulting in an overestimation. They noted, however,  that USMS assumed a 3 percent inflation rate instead of the general  inflation rate in its estimate because that is the average rate officials  have observed over time.

Improved Management of Medical Claims: We found that the $2.4  million in costs savings related to the improved management of  medical claims and costs has limited reliability because it is not  accurate or comprehensive. USMS’s reported savings is comprised of  three categories: (1) $1.4 million in savings from effectively managing  costs for prisoners receiving medical care; (2) $740,962 from denied  claims; and (3) $279,360 from medical transport costs avoided. We  found that USMS’s costs savings related to effective management of  prisoners’ medical care and denied claims may be inaccurate  because USMS used the upper bound of costs ranges and average  costs, respectively, to estimate the savings for each category. For  savings related to effective management of prisoner medical care, in  at least one quarter of its estimated savings, USMS reported a range  of cost savings rather than a single estimate. For example, USMS  estimated a range of $20,000 to $50,000 for costs avoided for a  surgery. Because USMS used the upper bound of each range to  estimate total costs avoided for the effective management of  prisoners’ care, USMS may have overestimated its savings.

Similarly, USMS savings for denied claims may be inaccurate  because it used average costs per approved claim instead of the  actual costs of denied claims to estimate costs avoided. Specifically,  USMS multiplied the number of denied claims by the average costs  per medical claim they had approved to determine total costs avoided.  However, we found that average costs per claim approved may not be  a good proxy for costs per denied claim. According to officials,  medical costs can vary widely according to each individual case. Such  variations in costs can affect the average costs per claim and thus  USMS’s calculated cost savings. For instance, USMS calculated that  average costs per claim in two quarters in fiscal year 2015 ranged  from $220 per claim to $503 per claim for each quarter. Applying  these two different averages to 300 denied claims, we found that  there is a large difference in estimated savings—approximately  $66,000 and $150,900, respectively, or over 1.25 times difference  between the low and high calculated savings. As a result, using  average costs per approved medical claim may not be representative  of the actual costs for each claim denied and may under- or over-state  actual savings.

Additionally, a review of the documents USMS provided us shows that  USMS calculated savings for the actions that overlapped two of the  saving categories, thus potentially double counting some savings.  For example, USMS claimed approximately $90,000 in cost avoided  for effectively managing a prisoner medical case. However, this cost  avoidance resulted from a denied claim. As a result, this singular  action would also be counted as savings in the denied claims  category.

USMS officials noted that it would be work intensive for USMS to  calculate costs avoided for denied claims by using actual costs given  the volume of medical claims they receive and the average cost per  claim can be quickly calculated and multiplied by the number of  prisoner medical claims denied to facilitate cost savings reporting. We  recognize that calculating actual costs may be challenging; however,  USMS already uses actual costs to estimate the costs savings related  to the effective management of prisoners’ medical care. Thus, USMS  may use the same method to estimate savings for denied claims.  Further, data reliability guidance states estimates are accurate when  recorded data reflects the actual underlying information. A more  accurate and comprehensive savings estimate—calculating both the  lower and upper bound of cost estimates, using actual costs for claims  denied, and ensuring that savings are not double counted—could help  USMS better determine the full impact of its action on its rising  medical care costs.

Alternatives to Pre-Trial Detention: We also found that USMS’s  cost savings estimate of approximately $375 million from the  alternatives to pre-trial detention program—for fiscal years 2010  through 2015—had limited reliability because USMS lacked adequate  documentation to support the estimates, did not validate estimates,  and reported inconsistent savings estimates. As described earlier, the  Administrative Office of the U.S. Courts (AOUSC) administers the  alternatives to pre-trial detention program which helps to divert  defendants from detention in USMS’s custody. According to the  agreement between AOUSC and USMS, AOUSC is to provide USMS  with a report that includes the number of prisoners who otherwise  would have been detained, describes the types of services provided,  and includes the total expenditure from USMS’s allocated funds.  USMS officials reported that AOUSC had provided such reports,  which also estimated the housing costs USMS avoided as a result of  the program.

However, USMS officials stated that they have not received reports  with this information from AOUSC for fiscal years 2012 onward to  support or corroborate USMS’s reported estimate of $67 million per  year in savings for fiscal years 2012 onward. Our review of the fiscal  years 2010 and 2011 reports that included estimates of housing costs  avoided that we received from USMS found that AOUSC aggregated  some of the data to determine USMS detention costs avoided as a  result of the program, but did not specify the methodology for  aggregating the data or the assumptions used to derive different  factors in the estimate, as recommended by OMB guidance.As  such, we cannot determine if the method for estimating USMS cost  savings is reasonable.

Additionally, USMS officials said that USMS did not verify AOUSC’s  calculation of fiscal years 2010 and 2011 savings. USMS, however,  reported savings for those and subsequent fiscal years in its  congressional budget justifications. USMS officials told us that USMS  extrapolated AOUSC’s estimations from fiscal year 2011 to report on  more recent savings. Officials said that, generally, USMS gets a  savings of $10 for every dollar AOUSC expends from USMS-allocated  funds for the program. However, we found that since fiscal year 2011,  AOUSC expended less than $3 million of USMS-allocated funds, but  USMS continued to report a $67 million per year cost savings, which  was estimated based on AOUSC fiscal year 2011 expenditures of  approximately $3 million. Further, USMS reported different savings for  fiscal year 2011, $44 million in fiscal year 2011 versus the $67 million  it reported in its fiscal year 2013 and 2014 congressional budget  justification, indicating that the estimates are inaccurate. It is likely that  USMS’s costs savings for the program have decreased from $67  million, given the decrease in use of allocated funds by AOUSC.

AOUSC acknowledged that, since a change in its staff in 2012, the  reports it provided to USMS did not include information such as the  number of prisoners who otherwise would have been detained, which  would have been required to estimate USMS’s cost avoided, but  instead provided detailed program expenditures to USMS for fiscal  years 2012 onward in order to seek reimbursement. Similarly, USMS  staff acknowledged that they had not sought reports from AOUSC that  would have allowed them to calculate costs avoided, and had not  verified any of AOUSC’s prior calculations. Both AOUSC and USMS  officials stated that they intend to communicate with each other to  obtain the information detailed in the agreement, and USMS officials  indicated that they plan to validate the cost savings in the future.  However, USMS officials did not provide documentation or a  timeframe in which they will do so. Further, OMB guidance states that  it is potentially valuable for agencies to verify and determine whether  anticipated benefits and costs for the program have been realized.  This verification can be used to determine necessary corrections in  the program, and to improve future estimates of benefit and costs.  Also, by ensuring that it has complete and validated information  necessary to estimate costs avoided, documenting its methodology,  and assuring that its estimates are consistent over time, USMS would  be better able to report reliable costs avoided for the alternatives to  detention program.

As described above, five of USMS’s costs savings estimates have limited  reliability because the estimates were not sufficiently comprehensive,  accurate, consistent, or well-documented. By developing reliable methods  for estimating and validating cost savings—such as ensuring estimates  are comprehensive, accurate, consistent, and adequately documented— USMS would be better positioned to assess the effectiveness of its cost  savings actions and inform decision makers—including Congress—about  these efforts.

section_title: USMS Has Designed Systems to Identify Opportunities for Additional Cost Efficiencies, but Could Improve its Monitoring of Internal Control
subsections: section_title: USMS has Systems to Help Identify Opportunities for Cost Efficiencies and Savings
paragraphs: USMS has several systems it uses to help it identify cost savings  opportunities, including:  Strategic Plan. USMS’s 2012-2016 Strategic Plan helps guide the  agency in fulfilling its mission and achieving its strategic goals. One such  strategic objective is to provide for the safe, secure, humane, and cost- effective containment of its prisoners, and one of the performance goals it  uses to achieve this objective is to hold detention and transportation costs  at or below inflation. According to the strategic plan, one of the ways it  seeks to meet this goal is by enabling effective and equitable allocation of  district resources for transportation expenditures. For example, according  to USMS POD officials, they have implemented a process as a result of  guidance in the strategic plan which allows them to reallocate resources  at the district level for guard and transportation costs when unexpected  costs are incurred by the districts. USMS initially allocates money each  fiscal year across the 94 USMS districts, but in addition it sets aside  separate funding to cover unexpected costs such as transporting ill  prisoners outside of facilities where they are housed for further medical  care. While USMS can anticipate that these events will occur, it cannot  foresee which districts will incur these costs. Districts’ requests for  additional funding beyond their fiscal year allocations are submitted via a  supplemental funding request that is reviewed by POD, which then grants  the request and provides the additional funding to the district. In addition,  POD is currently developing a policy which will allow it to determine a  methodology to more effectively and equitably distribute transportation  resources across the districts. This initiative is expected to be rolled out in  October 2017, according to USMS officials.

USMS guidance to districts. USMS’s Policy Directive 9.2 establishes  how USMS districts will house prisoners in different types of facilities.  Specifically, it states that districts must first use a BOP federal facility  where there is space available, as USMS does not have to pay for these  spaces. In 2007, USMS signed a memorandum of understanding in which  BOP allocated a certain amount of bed space to USMS prisoners at more  than a dozen of its federal facilities. In fiscal year 2015, BOP housed  approximately 10,000, or 19 percent, of USMS’s prisoners in BOP  facilities.

Next, USMS districts must, according to the directive, use space available  in state and local facilities for which USMS has established IGAs and a  per diem amount to pay for each prisoner. Third, the guidance directs  districts to use private facilities. In addition to this guidance, however,  POD officials noted that they guide districts to consider private facilities  with space where USMS has a “guaranteed minimum” number of spaces  it is paying for, before the districts consider state and local facilities (the  IGAs). This is because, if USMS exceeds the guaranteed minimum in the  contract, the contractor provides a dramatically reduced per diem cost per  detainee above the guaranteed minimum contract amount. The officials  noted that fewer than 30 of USMS’s districts use private facilities, and that  private facilities account for the smallest percentage of facilities that  USMS uses to house its prisoners. Our analysis confirmed this  assessment, finding that there were only 21 districts using private  facilities from fiscal years 2010 through 2015 to house at least a half of 1  ADP during each fiscal year.

However, our analysis of USMS detention data also found that some  districts appeared to select private detention space over less costly  federal spaces, in seeming contradiction with USMS guidance. For  example, several districts that have access to one federal facility place a  large number of prisoners in other private facilities at a higher cost to their  districts. POD officials stated that based on the number of factors U.S.  Marshals must consider in placing prisoners in available bed spaces, it is  not always feasible to use the available federal detention spaces. POD  officials also told us that they provide additional guidance to U.S.  Marshals in those districts that have access to or are the home district for  private facilities. For example, according to the officials, the U.S. Marshal  in each district must consider issues like the security risk the prisoner  poses, the prisoner’s medical condition, the need to separate defendants  on a particular case, and the need to keep prisoners close to the  courthouse where they are making their appearances. In addition, even if  USMS presents a prisoner to a BOP federal facility, BOP has the right to  refuse to accept a prisoner at one of its facilities. According to BOP, this  is only done in cases where the facility cannot accommodate a particular  prisoner due to medical or security issues. Overall, BOP officials told us  they try to accommodate USMS, even in facilities where USMS has  exceeded its allocation at a particular facility. Thus, while some districts  make placement decisions that do not comport with the policy directive as  written, these occurrences are infrequent, and are practiced by a minority  of districts that have both private and federal prison spaces available to  them, and are following additional guidance provided to them by POD in  making their determinations on where to place specific prisoners.

Scorecards. POD tracks district utilization of federal and private bed  spaces through quarterly scorecards. According to USMS officials, they  encourage districts to utilize federal and private bed space, and the  quarterly scorecard system is their way of checking on the district’s  performance in cost-efficient bed space allocation. These scorecards  reflect which private and federal facilities are being underutilized, and at  what percent or rate. The scorecard lists each federal and private facility,  the USMS allocation or number of bed spaces for each facility, and the  actual amount of ADP in that facility (USMS’s use). Scorecards are color  coded green, yellow, and red based on whether the district is meeting the  USMS allocated amount of ADP in the facility. If a facility on the score  card is under its allocation, or “in the red,” POD does an assessment of  which facilities that district is using to house prisoners. While POD  officials stated they cannot dictate to a U.S. Marshal which facility to use  for a specific prisoner, they noted that if they find, for example, that a  district is using an IGA or a higher priced facility rather than a facility with  guaranteed minimum bed spaces, then POD officials call the district to  provide coaching on utilizing allocated bed space.

In addition to monitoring utilization levels at detention facilities, USMS  also calculates a cost avoidance amount based on the amount of space it  should be using at these facilities, and the amount of space currently  being occupied by its prisoners. According to USMS officials, it performs  calculations to determine its potential cost avoidance numbers for private  and federal facilities as part of its ongoing monitoring and prisoner  reassignment efforts.

USMS officials noted that their current monitoring and prisoner  reassignment efforts are ad hoc, but the agency is currently working to  formalize its use of the scorecards and its facility utilization review  process. USMS officials stated that they are currently working to formalize  the scorecard system and monitoring, and expect to be able to begin  monthly reviews in June 2016.

Internal control. We reviewed the elements of USMS’s internal control  system that are designed to specifically provide USMS with opportunities  to identify cost efficiencies and generally found that its internal control  processes align with Standards for Internal Control in the Federal  Government and the Office of Management and Budget’s (OMB) Circular  No. A-123, Management’s Responsibility for Internal Control, which  defines management’s responsibility for internal control in federal  agencies. Internal control is an integral component of an organization’s  management that is to provide reasonable assurance that objectives are  achieved, including the efficiency of operations. We focused our review  on USMS’s internal control objective related to achieving operational  efficiencies.

Table 5 provides examples of USMS’s specific internal control processes,  organized by standard. We did not independently test USMS’s internal  controls to determine whether they mitigate all possible risks and are  operating as intended.

section_title: USMS Lacks a Mechanism to Analyze Deficiencies Identified Annually
paragraphs: We found that USMS has designed an internal control system which  could help it to identify opportunities to achieve operational efficiencies,  including on-site compliance reviews where each district is assessed  every 6 to 7 years. In addition, each district is to test its internal control  over the efficiency of its operations through a standardized, annual self- assessment process. However, agency officials reported that USMS does  not have a way to aggregate or analyze the results of these self- assessments, which are the only reviews available for each district each  year.

According to USMS officials, their current process includes tools such as  Sharepoint that are not able to aggregate the self-assessment data, or  run any type of data analytics. They also stated that they completed a  business process analysis in fiscal year 2015 that may help them compile  the findings of the reviews, but they are still unable to aggregate the  results. The officials said that they recognize the need for an integrated  system that would allow them to compile the self-assessments, corrective  action plans, and compliance reviews. Officials also stated that currently,  they have four different systems in which they have to manually input  information. They stated that integrating these into one overall system  would increase productivity, accountability, and USMS’s overall  compliance rate. In addition, according to these officials, having a data  analysis capability would allow USMS to detect deficiency trends and  patterns, which could increase and enhance its reporting capabilities. For  example, USMS could report on a quarterly basis which would enable it to  more closely monitor district compliance rates.

Because USMS cannot aggregate or analyze the annual SAG self- assessment results, which it relies on for those districts not being  assessed during USMS’s district review cycle, it cannot identify whether  the same control deficiencies are occurring across districts or in the same  districts over time, hindering its ability to promptly resolve these issues or  to identify agency-wide deficiencies and develop corrective actions in key  risk areas. For example, one control activity that is to be tested regularly  is whether the district reviews purchase cardholder statements to ensure  that only authorized goods and services are purchased, and that no  purchase exceeds a set threshold. With no ability to aggregate self- assessment results to identify whether a deficiency in an area such as  this is occurring across many districts in a given year, or across the same  district over a number of years, USMS may not be able to promptly  resolve inaccurate purchases, potentially resulting in issuing payments  that are higher or lower than they should be.

A 2012 DOJ Office of Inspector General (OIG) audit of USMS also  similarly commented on USMS’s on-site review timeline, finding that  USMS had not ensured that district and division procurement officials  were complying with federal, DOJ, and USMS policies, and that these  noncompliance problems resulted from an inability to effectively manage  and oversee those procurement activities at the district and division  level. As such, the OIG recommended that USMS strengthen its  inspection and review of certain activities by shortening the length  between on-site reviews of operations in the district and division offices.  USMS officials told us that they are continuing to work on implementing  the recommendation to ensure that they are performing their on-site  reviews closer to a 3 to 4 year cycle, which is standard among other  agencies. USMS has already improved its on-site compliance review  cycle from past years. Currently, officials stated that USMS reviews each  district every 6 to 7 years as compared to every 12 years in 2012, and it  increased the number of on-site reviews from 11 to 14 per year in 2012 to  18 per year now. According to USMS officials, they are on track to  perform 16 on-site reviews in fiscal year 2016, and are continuing to  increase the number of on-site reviews in response to the 2012 OIG  recommendation.

However, in the years between the on-site reviews, USMS relies on  information from the annual self-assessments for each district to identify  deficiencies and develop needed corrective actions. According to  Standards for Internal Control in the Federal Government, internal control  monitoring assesses the quality of performance over time and promptly  resolves the findings of audits and other reviews. Corrective actions are a  necessary complement to control activities in order to achieve objectives.  By developing a mechanism that would allow them to aggregate and  analyze results from the annual self-assessments, USMS would be better  positioned to more consistently and comprehensively identify deficiencies  and monitor corrective actions across districts and over time that could  result in additional opportunities to achieve cost savings and efficiencies.

section_title: Conclusions
paragraphs: USMS provided for the care of over 50,000 federal prisoners daily at a  cost of about $1.4 billion in fiscal year 2015. In managing these funds,  USMS has taken steps to leverage and identify opportunities to achieve  cost savings and efficiencies. Such actions include the implementation of  detention management systems, the support of AOUSC’s Alternative to  pre-trial detention, and the implementation of a scorecard system to track  district use of private and federal facilities in order to identify opportunities  for cost efficiencies.

However, USMS does not fully know how much its actions have saved  because it has not developed reliable and transparent methods for  estimating costs savings. In addition, it has not established a consistent  and reliable mechanism for reviewing results of various operational  assessments at the district level, which hinders its ability to consistently  and comprehensively identify deficiencies and monitor corrective actions  across districts and over time. Establishing such mechanisms and  developing more reliable methods to estimate cost savings could help  USMS to resolve its noted deficiencies more promptly, more accurately  report savings it has achieved to the Congress, and ultimately allow it to  operate more efficiently and effectively.

section_title: Recommendations for Executive Action
paragraphs: To ensure that costs savings estimates are reliable, we recommend that  the Director of the USMS direct its Prisoner Operations Division to  develop reliable methods for estimating cost savings and validating  reported savings achieved.

To enable USMS to more consistently identify deficiencies and monitor  corrective actions, we recommend that the Director of the USMS  establish a mechanism to aggregate and analyze the results of annual  district self-assessments.

section_title: Agency Comments
paragraphs: We provided a draft of this report to DOJ and the Administrative Office of  the U.S. Courts (AOUSC) for review and comment. Liaisons from DOJ  and USMS responded in an email that DOJ had no formal comments on  the report, and concurred with the recommendations. The AOUSC liaison  also responded in an email that AOUSC had no written comments on the  report. The USMS liaison provided technical comments, which we  incorporated as appropriate.

We are sending copies of this report to DOJ, AOUSC, appropriate  congressional committees and members, and other interested parties. In  addition, this report is available at no charge on GAO’s website at  http://www.gao.gov.

If you or your staff have any questions, please contact Diana Maurer at  (202) 512-8777 or maurerd@gao.gov. Contact points for our Offices of  Congressional Relations and Public Affairs may be found on the last page  of this report. GAO staff that made significant contributions to this report  are listed in appendix IV.

section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: We addressed the following questions as part of this review:  (1) What are the primary costs associated with United States Marshals  Service (USMS) prisoner operations, and what have been the trends in  spending from fiscal years 2010 through 2015?  (2) What recent actions has USMS taken to reduce its prisoner operations  costs and how much has been saved?  (3) To what extent does USMS have systems in place to identify  additional opportunities to save costs?

To identify costs and trends, we reviewed USMS’s congressional budget  justifications covering fiscal years 2010 through 2015 to identify USMS- reported cost drivers. We selected this time period because we believe  that 6 years is sufficient time to identify trends in prisoner operations  costs, and GAO last reported on USMS prisoner costs in fiscal year  2010. We focused our review on the USMS Federal Prisoner Detention  (FPD) appropriation, which pays for about 85 percent of total prisoner- related costs. We obtained underlying data from USMS and aggregated  it at the district level. In particular, we obtained operational data for  USMS’s prisoner activities from fiscal years 2010 through 2015,  specifically obtaining detention population counts per year for all prisoner  facilities by USMS district and daily detention population counts for  private and fixed rate facilities. We also obtained financial data that  pertained to housing, medical, and transportation costs, which we then  aggregated at the district level. This included the housing costs for each  facility, including per diem agreements for applicable state and locally- managed facilities and contract rates for facilities with guaranteed  minimum terms. While USMS districts do not manage private prison  facility contracts, we prorated the cost of private prison usage by district  by determining the proportion of the total annual average daily detention  population in private facilities associated with the district and dividing the  total private facility costs by that proportion.

To determine medical costs, we obtained district-level medical services  information, medical guard services costs per district, and medical-related  transportation costs per district, which we summed to obtain district level  costs. To determine transportation costs, we obtained and summed costs  per district for in-district transportation guard support and costs for other  contract-rate guards. We also obtained Justice Prisoner and Alien  Transportation System (JPATS) air and ground transportation cost  information from USMS for JPATS’s USMS prisoner operations, and  attributed ground transportation costs to the respective district  responsible for the prisoners moved. However, we were unable to  determine the costs of JPATS air support by district, as the agency does  not collect information or manage the JPATS air program to attribute such  costs by district.

We assessed the reliability of these data and, and we found some  inconsistencies with the data. This reliability assessment included  conducting checks for completeness and logical consistency, obtaining  documentation on systems end-user capabilities and data control,  interviewing data users and managers responsible for maintaining data,  and comparing data to previous USMS reported data. The  inconsistencies we identified included inconsistencies in reported costs by  facility managed by state and local facilities and calculated costs based  on the reported per diem costs and the average daily population  attributed to the facilities. Further, we identified missing or inconsistent  facility designations that led to differing costs by facility. However, we  were able to address these inconsistencies and determined that they did  not greatly impact cost data for district prisoner operations. We also found  detention population data were missing for less than five days for each  fixed-rate facility (including private facilities and two state and local fixed- rate facilities). We found that the missing data did not severely impact our  calculation of costs and were able to account for the missing data in our  cost calculation. Because of these inconsistencies, USMS deobligations  in prisoner operations-related funding in later years, and differences due  to rounding, USMS-reported costs and annual average daily population  differ slightly from the calculated costs and populations in this report. We  found these differences to be minimal, affecting total costs by less than 2  percent in fiscal year 2012 and less than 1 percent in all other years  except for in fiscal year 2015, where USMS had made obligations for  costs to be incurred in fiscal year 2016. However, these obligations have  been removed from the data as they were not in the scope of the review.  The result was a difference in total costs of less than 1 percent in fiscal  year 2015. Therefore, we found the data to be reliable for the purposes of  identifying and describing the primary cost drivers and the districts’  relative prisoner operation costs from the FPD.

In addition, we interviewed USMS Prisoner Operations officials to obtain  USMS’s views on identified cost drivers and trends. We corroborated  USMS headquarters officials’ views by conducting interviews with USMS  officials in selected districts. Specifically, we conducted interviews with 3  different USMS districts—the Southern District of California, the Northern  District of Georgia, and the District of Maryland—to obtain field office  views on the costs and trends occurring over the past 6 years. We chose  these districts because of geographical disparity, size of prison  populations, and unique actions taken or ancillary missions conducted at  the district. Specifically, the Southern District of California has on average  one of the largest prison populations of any district and works with  numerous types of facilities to house prisoners. The Northern District of  Georgia has one large private facility and also serves as a transportation  center in the southeast for neighboring districts to transfer prisoners to  different facilities throughout the country. The District of Maryland is the  only district to have a state-owned facility currently participating in the  capital improvement program, a program where USMS provides funding  for improvements to state and local facility infrastructure. While the  information we obtained from our site visits is not generalizable to all  USMS districts, it provides insights into costs and trends in prisoner  operations.

To determine the recent actions USMS has taken to reduce its prisoner  operations costs, we reviewed USMS’s congressional budget  justifications and interviewed officials to compile a list of prisoner-related  actions that had monetized cost savings for fiscal years 2010 through  2015. We limited our analysis to those identified initiatives or actions that  had any monetized cost savings associated with them for fiscal years  2010 through 2015. We chose this time period to align our review of  USMS’s costs savings efforts with our review of USMS’s prisoners  operations cost trends for those 6 years. To determine the extent to which  USMS’s estimated savings are reliable, we analyzed USMS documents  and data, where available, such as documentation of the methodology  and resulting dollar figures from each initiative’s savings estimate, and  housing costs data. We compared each of USMS’s cost savings  estimates against guidance for developing and documenting reliable cost  savings estimates, including the Office of Management and Budget’s  Guidelines and Discount Rates for Benefit-Cost Analysis of Federal  Programs, Standards for Internal Control in the Federal Government, and  GAO’s guidance for Assessing the Reliability of Computer-Processed  Data to determine the extent to which the estimates were sufficiently  comprehensive, accurate, consistent, and documented. Additionally, for  each well-documented savings estimate, we assessed whether major  assumptions were reasonable by conducting or evaluating sensitivity  analyses. We also reviewed estimates to ensure that reasonable  assumptions were consistently and accurately applied. Additionally, we  used USMS’s housing data on facilities’ per diem costs per prisoner and  average daily population to determine the percentage of USMS prisoners  housed in federal Bureau of Prisons’ (BOP) facilities for fiscal years 2010  through 2015—for which USMS does not pay—and to monetize any  potential cost savings resulting from USMS housing some of its prisoners  in BOP facilities.

To monetize potential costs savings, we developed two estimates: (1) an  estimate of USMS’s potential costs avoided by using BOP facilities for  fiscal years 2010 through 2015; and (2) an estimate of the potential cost  savings to the Department of Justice’s (DOJ)—of which both USMS and  BOP are component agencies—in fiscal year 2015 due to USMS housing  its prisoners in BOP facilities versus in potentially more costly non-federal  facilities. To estimate the costs avoided by USMS, we used BOP- identified daily per capita costs for housing prisoners to calculate USMS’s  potential costs avoided by housing its prisoners in BOP facilities from  fiscal years 2010 through 2015. To develop this cost avoidance estimate,  we assumed that USMS would pay BOP to house USMS prisoners at  BOP’s daily per capita cost. These daily per capita costs are determined  and published by BOP for each type of federal facility on an annual basis.  We classified, confirmed, and applied the respective BOP daily per capita  rates to each BOP facility in which USMS prisoners were housed. Then,  we multiplied the total number of prisoners USMS housed in these BOP  facilities by the appropriate daily per capita cost, using USMS’s data on  its average daily population for these facilities. Finally, we summed total  costs for each facility for fiscal years 2010 through 2015 to determine the  total costs avoided for each of these fiscal years.

To estimate the potential cost savings to DOJ, we used USMS’s fiscal  year 2015 prisoner population and costs data and BOP’s per capita costs  to compare the costs of housing USMS’s prisoners in BOP facilities  versus the costs to house those prisoners in private or state and local  facilities. We made the following assumptions: (1) if USMS were to pay  for housing its prisoners at BOP facilities, USMS’ rate would be the daily  per capita cost per prisoner, as published by BOP, (2) the existing private  or state and local facilities would meet the demand of housing USMS  prisoners housed in BOP facilities if USMS did not have the use of BOP  facilities, and (3) the current private or state and local facilities would  meet USMS’s housing demand at the same costs per day as they did in  fiscal year 2015. To develop the estimate, we first identified the USMS  districts that primarily used BOP facilities in fiscal year 2015. These 22  districts housed at least 2.5 percent of their total average daily population  in BOP facilities. We then determined the costs these districts would have  paid to BOP to house their prisoners, using BOP facilities’ total daily per  capita rates and the districts average daily population for each BOP  facility. We then determined the difference in costs (i.e., potential cost  savings) between these districts housing their prisoners in BOP facilities  and these districts housing those same prisoners in private or state and  local facilities. Because USMS has the potential to use either private  facilities or state and local facilities to house its prisoners, we developed  two estimates to compare with the costs of housing prisoners in BOP  facilities—one assuming prisoners were housed in private facilities, and  one assuming prisoners were housed in state and local facilities.

To determine the costs to house the prisoners in private facilities, we  identified the private facilities that each district used in fiscal year 2015,  determined the private facilities’ effective per diem costs, and derived a  weighted private facility per diem cost for each district. The weighted per  diem cost took into account USMS’s average daily population for each  facility compared to USMS’s total average daily population for private  facilities in each district. We applied weighted per diem costs for each  district to the average daily population the districts placed in BOP  facilities. We then summed the estimated total costs for using BOP  facilities and the estimated total costs of housing these prisoners in  private facilities for these districts, and compared the two to determine  cost savings, if any. We repeated the above methodology for state and  local facilities. Further, we interviewed agency officials to corroborate  initiatives we had identified as well as to identify any other unreported  cost savings actions. We also interviewed officials who estimated the  savings to explain the methodologies, clarify any discrepancies, and  provide any additional information in support of the estimates.

To determine the extent to which USMS has systems designed to identify  additional opportunities to save costs, we reviewed the processes and  tools at USMS from fiscal years 2010 through 2015 that identify,  implement, and promote cost-efficiency and savings initiatives throughout  its institutions, such as USMS’s use of score cards to determine district  utilization of private and federal facilities, and the agency’s strategic plan.  We also spoke with USMS officials to discuss how its districts implement  USMS policy directive guidance, and in what instances the districts may  deviate from the stated guidance, as well as USMS’s oversight of district  adherence to and deviation from internal policy guidance. We chose this  time period to align with our review of USMS’s prisoner operations cost  trends for those 6 years.

With respect to identifying additional opportunities to realize cost  efficiencies or reduce costs, using our financial analysis as context, we  analyzed elements of USMS’s internal control system related to the  control objective of achieving operational efficiencies and interviewed  relevant officials to assess whether USMS has designed a management  structure and processes to routinely assess its administrative and  operational activities for possible corrective action. We did not  independently test USMS’s internal controls to determine whether they  mitigate all possible risks and are operating as intended. Specifically, we  reviewed USMS’s mechanisms and processes leading to its internal  review of operational and administrative functions, including its process  for taking corrective action related to high-cost areas, such as  procurement and human resources, and compared these characteristics  with those called for in Standards for Internal Control in the Federal  Government and in implementing the guidance in the OMB Circular No.  A-123, Management’s Responsibility for Internal Control, which defines  management’s responsibility for internal control in federal agencies. We  interviewed relevant officials to discuss current actions USMS internal  control officials have taken and are taking to include processes to identify  and implement corrective actions in high cost areas, and agency  oversight of these actions.

We conducted this performance audit from March 2015 to May 2016 in  accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.

section_title: Appendix II: United States Marshals Service Districts Average Daily Population and Costs by Major Cost Category, Fiscal Year 2015
paragraphs: Table 6 provides the average daily detention population (ADP) and the  respective housing, medical, and transportation costs for each district in  fiscal year 2015. Additionally, the table provides housing costs associated  with prisoners under the custody of the United States Marshals Service  (USMS) Justice Prisoner and Alien Transportation System (JPATS).  Housing costs include costs both paid for by the districts as well as costs  for private facility usage, where USMS headquarters administers  payment. Medical costs include national managed care contract  payments for health services attributed to the districts, additional district  payments for health services, as well as payments for guard and  transportation support by district. A portion of medical payments are not  attributable to the districts and appear as a USMS headquarters cost.  Transportation costs include in-district support for services to move  prisoners from state, local, and private facilities as well from JPATS.  Further, the transportation costs associated with JPATS are for  nationwide air carrier costs that could not be attributed to the districts.

section_title: Appendix III: Trends in United States Marshals Service Prisoner Costs
paragraphs: From fiscal years 2010 through 2015, the United States Marshals Service  (USMS) expended at least $1.40 billion annually on prisoner housing,  medical care, and transportation. The information that follows describes  trends in these cost areas from fiscal years 2010 through 2015.
subsections: section_title: Housing Costs
paragraphs: To house federal prisoners, USMS paid for bed space through  intergovernmental agreements (IGA) with state and locally owned  prisoner facilities or through direct contracts with private facilities. Trends  in facility usage and costs show that while the majority of USMS prisoners  are housed in IGA facilities each year, the agency has used fewer IGA  facilities as the overall average daily population (ADP) has fallen, and the  percentage of ADP held in IGA facilities has dropped slightly over the 6- year timeframe. As a result, the nominal cost for using IGA facilities has  decreased by over $80 million from fiscal year 2010 to 2015. See table 7.

USMS’s costs of using private facilities from fiscal years 2010 through  2015 generally has followed the trend of increasing and decreasing with  ADP. USMS officials stated that once the agency has developed contract  terms with guaranteed minimum bed spaces and costs, the agency has  an incentive to ensure prisoner populations in private facilities do not fall  below the guaranteed daily bed space. Otherwise, USMS would be  paying for bed space it has not filled. As a result, while ADP has dropped  in private facilities, the percentage of annual ADP in private facilities has  slightly increased. Further, nominal costs have increased by about $50  million from fiscal year 2010 to 2015. See table 8.

section_title: Medical Costs
paragraphs: USMS medical costs generally comprise the second largest cost driver for  USMS prisoner costs, although medical costs were less than 10 percent  of total prisoner costs for each fiscal year from 2010 through 2015.  According to USMS officials, USMS has historically managed medical  care through the districts, though USMS began a nationally managed  program to better control costs beginning in fiscal year 2013. USMS  medical costs generally fall into three categories: (1) health care services,  such as payments to health care providers, and for supplies and  equipment; (2) USMS medical program costs including system-wide costs  such as USMS-employed practitioner review of medical records and  nationally-managed contracts; and (3) transportation and guard services  for medical care requiring outside services. However, beginning in fiscal  year 2013, USMS’s Prisoner Operations Division (POD) initiated a  nationally managed care contract to pay for districts’ health services. By  fiscal year 2014, USMS was paying for a substantial portion of the  districts’ health care services through the nationwide contract. As a result,  costs shifted from districts paying for individual health services to POD  paying for most medical costs through a nationally managed contract as a  medical program expenditure. However, medical guard and  transportation costs are still paid by the districts and not through a  nationally managed program. As illustrated in figure 9, while total medical  costs have grown from about $88 million to about $115 million, costs for  individual district-managed health services have decreased and  transportation and guard service costs have remained relatively the  same, increasing slightly from almost $20 million to about $22 million over  the 6-year time period.

section_title: Transportation Costs
paragraphs: Transportation costs include all support costs related to moving prisoners  between prison facilities or for court appearances and other court ordered  movements. Such costs include the cost for moving prisoners as well as  the labor costs associated with guarding and securing prisoners during  movement if a guard is not provided by district officials. Transportation  support costs generally comprise about 5 percent or less of total USMS  prisoner costs. Transportation support costs fall into two broad  categories: (1) in-district support for movements occurring within or  otherwise managed by district U.S. Marshals and (2) support provided by  the USMS Justice Prisoner and Alien Transportation System (JPATS) for  prisoner movements of more than 50 miles outside the originating district.  JPATS is a separate division of USMS that conducts major prisoner  movements for both USMS prisoners and for BOP inmates. JPATS can  move prisoners through both ground and air services and owns and  leases a number of aircraft for its prisoner movements. District U.S.  Marshals are responsible for managing and paying for in-district  transportation support, which generally constitute prison officers from the  facilities in which prisoners are housed. For JPATS support, POD has a  reimbursable agreement in place with JPATS to reimburse the division for  its transportation and labor costs. As illustrated in figure 10, the majority  of transportation costs are costs associated with JPATS air travel each  year. Specifically, air travel costs comprised between 52 and 61 percent  of total transportation support costs, with in-district support comprising the  second largest category, between 30 and 38 percent of annual  transportation costs.

section_title: Prisoner Guard Support Costs
paragraphs: As discussed above, USMS uses the assistance of state and local  officers and contracted private guards to supplement deputy U.S.  Marshals to, for example, facilitate prisoner movements within a district  and to provide guard services for medical procedures. U.S. Marshals  contract with IGA facilities or private facilities to move prisoners with the  facility-provided guards. In addition, districts may employ sworn officers  on an individual basis to conduct these activities. These officers are  referred to as district security officers. Further, JPATS employs state and  local officers and contract guards to augment its force when conducting  ground movements. Guard costs are captured as part of the medical cost  guard and transportation costs in figure 9, and the in-district and JPATS  support costs in figure 10. However, given that guard costs are reported  separately for medical and transportation costs above, table 9 provides a  breakout of guard costs by district for each of the three major types of  guard forces, as well as total guard costs, for fiscal year 2015.

section_title: Appendix IV: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact

section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, Jill Verret (Assistant Director),  Pedro Almoguera, Willie Commons, III, Tonnye’ Conner-White, Dominick  Dale, Kathleen Donovan, Jamarla Edwards, Eric Hauswirth, Scott  Hiromoto, Jeremy Manion, Amanda Miller, John Mingus, Caroline  Neidhold, Wade Tanner, and Michael Tropauer made key contributions to  this report.


Question-summary annotations: questions: question: What are the largest prisoner costs attributable to?
answer: From fiscal years 2010 through 2015, the U.S. Marshals Service's (USMS) largest prisoner costs were housing payments to state, local, and private prisons.
child_questions: question: What amount of the USMS operation costs went to housing in 2015?
answer: For example, in fiscal year 2015 USMS spent 86 percent of its $1.4 billion in prisoner operation costs on housing.

question: What has happened regarding prisoner costs and prisoner populations since 2012?
answer: While total prisoner costs and prisoner populations decreased since fiscal year 2012, per prisoner costs increased.
child_questions: question: Why did per prisoner costs increase?
answer: USMS officials attributed the increase in part to lower than expected prisoner populations, resulting in USMS not filling guaranteed bed space at certain facilities. Also, prisoner costs generally were higher in districts with larger populations and limited use of federal facilities, for which USMS does not pay.

questions: question: What is an example of a cost-saving prisoner-related action the USMS has implemented?
answer: USMS has implemented actions that it reports have continued to save prisoner-related costs from fiscal years 2010 through 2015, such as the alternatives to pre-trial detention program to reduce prisoners in USMS's custody.

question: What did GAO find regarding the reliability of the USMS’s savings?
answer: However, for actions with identified savings over this time period, GAO found that about $654 million of USMS's estimated $858 million in total savings is not reliable.
child_questions: question: Why is the USMS estimate of total savings unreliable?
answer: For example, USMS identified $375 million in savings from the alternatives to pre-trial detention program for fiscal years 2010 through 2015, but did not verify the data or methodology used to develop the estimate or provide documentation supporting its reported savings for fiscal years 2012 onward.

question: What would USMS be better positioned to do, were it to develop reliable methods for estimating costs and validating savings?
answer: By developing reliable methods for estimating costs and validating savings, USMS would be better positioned to assess the effectiveness of its cost savings efforts.

questions: question: What has USMS designed systems to identify?
answer: USMS has designed systems to identify opportunities for cost efficiencies, including savings.
child_questions: question: How does the USMS identify opportunities for cost efficiencies?
answer: For example, the agency requires districts to conduct annual self-assessments of their procedures to identify any deficiencies which could lead to cost savings.

question: Despite this, what can the USMS not do across districts?
answer: However, USMS cannot aggregate and analyze the results of the assessments across districts.
child_questions: question: Why is it important that the USMS develop a mechanism to do so?
answer: Developing a mechanism to do so would better position USMS to identify deficiencies or develop corrective actions that could result in additional cost savings opportunities.

questions: question: What is the DOJ’s USMS responsible for managing?
answer: The Department of Justice's (DOJ) USMS is responsible for managing more than 50,000 federal prisoners during criminal proceedings until their acquittal or their conviction and transfer to the Federal Bureau of Prisons to serve their sentence.
child_questions: question: What does USMS provide to the prisoners?
answer: USMS provides housing, clothing, food, transportation, and medical care.

question: What does the USMS rely on regarding care and housing of the prisoners?
answer: The USMS does not own or manage any of its own facilities and instead relies on a combination of federal, state, local, and privately-managed facilities to house and care for these prisoners.

question: What does Senate Report 113-78 include for GAO?
answer: Senate Report 113-78 of the Continuing Appropriations Act of 2014 included a provision for GAO to assess the costs of housing federal inmates and detainees.