On April 26, 1996, the Congress enacted Public Law No. 104-134, which earmarked $15 million for the District of Columbia MPD from no year funds appropriated to the Department of Justice for “Violent Crime Reduction Programs, State and Local Law Enforcement Assistance.” The law stated that the $15 million was in lieu of funds that would have been available under the formula allocation of local law enforcement block grants. The law required that the $15 million be deposited into an escrow account maintained by the Authority for MPD for law enforcement purposes. The law also provided that the funds be disbursed from the escrow account pursuant to the instructions of the Authority and in accordance with a plan developed by the Chief of Police after consultation with the relevant congressional committees. The spending plan was initially based on a series of workshops held to identify and recommend solutions to critical problems confronting the department. The workshops were directed by the former Chief of Police, with participation from both police officers and civilian members of various ranks and grades. Among the concerns expressed were the shortage of patrol cars, motorcycles, uniforms, and specialized equipment needed to conduct tactical operations and investigations. Based on these concerns, a spending plan was developed and transmitted to the congressional committees on May 29, 1996. After MPD consulted with the committees, in its letter dated September 4, 1996, the Chairmen did not object to the allocation of the $15 million as shown in the final spending plan adopted on September 4, 1996. The contracts were awarded by MPD to carry out the spending plan after obtaining approval from the Authority, which has maintained a tracking report on approved contracts and purchase orders. Contracts funded in full or in part by the $15 million have also been reviewed by the Authority for consistency with the spending plan and the availability of funds. In accordance with Public Law 104-134, the $15 million was deposited in an escrow account of the Authority for MPD law enforcement purposes. Following the delivery of goods and services by vendors, payment vouchers have been prepared and certified by MPD, and payments to the vendors made from the District’s General Fund. Finally, the vouchers have been batched and forwarded to the District’s Treasury for verification of payment and transmitted to the Authority to request drawdown of funds from the escrow account to reimburse the District’s General Fund. From June 4, 1996, when the Authority deposited the $15 million in an MPD interest-bearing escrow account, through September 30, 1998, the funds in the account earned $1.3 million in interest income. The Authority may spend the interest earned on escrow accounts on behalf of the District at its discretion. The Authority transfers the amount of interest earned on the escrow account to a separately maintained interest-bearing account before it spends any of that amount on behalf of the District. As of September 30, 1998, the Authority had transferred $911,280 in interest earned on the MPD escrow account to the separately maintained account (see table 1). The Authority used $508,283 from the separately maintained interest account to pay an outside consultant for ongoing work studying and making recommendations regarding MPD’s organization and operations. Meanwhile, the Authority reimbursed the District’s General Fund $10.3 million from the MPD escrow account for payments made to carry out the spending plan. As of September 30, 1998, $5.2 million remained in the MPD escrow account, including $429,987 in interest earned and not transferred ($1,341,267 in interest earned less $911,280 in interest transferred to the Authority’s interest account). The funds in the MPD escrow account include sufficient funds to reimburse the District for the remaining obligations related to the spending plan. Our objectives were to (1) determine whether funds were spent according to the approved spending plan, (2) determine the time frame involved in spending the funds, and (3) verify whether items purchased with the funds were received and distributed to the appropriate offices. To satisfy our audit objectives, we reviewed MPD’s expenditure tracking reports on its budgeted amounts, obligations, expenditures, payments to vendors from the District’s General Fund, and reimbursements from the Authority for each project, from the inception of the spending plan (September 4, 1996) through April 10, 1998. We selected 103 payment vouchers out of a total of 172 based on high dollar amounts. These 103 payment vouchers represented the material transactions and approximately 99 percent of the total dollar value of MPD- reported actual expenditures as of April 10, 1998. We examined the selected vouchers, consisting of purchase orders, invoices, and receiving reports, to verify that contracted services were rendered and inventory items and other supplies were received, placed into operation, and appropriately charged against the $15 million. We interviewed MPD and Authority officials about procurement and payment delays and also met with Thompson, Cobb, Bazilio & Associates, the independent auditors of the Authority. While we obtained an understanding of internal controls and management of the funds, we did not evaluate internal controls. We conducted our financial-related work from March 23, 1998, through August 31, 1998, in accordance with generally accepted government auditing standards. We requested written comments on a draft of this report from the Chief of Police and the Chairperson of District of Columbia Financial Responsibility and Management Assistance Authority. The Chief of Police and the Authority’s Executive Director provided us with comments, which are discussed in the “District’s Comments and Our Evaluation” section and are reprinted in appendix I and II, respectively. MPD spent the funds consistent with its spending plan, as shown in table 2. Of the $11.1 million (73 percent of the total amount) disbursed through August 31, 1998, most was used to purchase (1) patrol and unmarked vehicles with equipment, (2) cameras, (3) motorcycles, (4) computer work stations and automated equipment for the seven police districts, (5) new uniforms, and (6) bulletproof vests. Most of the remaining $3.9 million obligated but not yet spent is for the District Cellblock Renovations and Automated Reports projects budgeted for $2.2 and $1.2 million, respectively. The funds for the automated reports project were obligated in May 1998, and the related work is expected to be completed in June 1999. The funds for the cellblock renovations were obligated in March 1998, but because design specifications had not been finalized as of September 1998, MPD was not able to provide us with a scheduled completion date. The September 4, 1996, spending plan included 21 individual projects. Subsequently, the chiefs of police requested and the Authority approved two separate revisions that redistributed the residual and unobligated funds and added one project. The residual funds became available as a result of some projects coming in under budget and the unobligated funds that resulted from the three deferred projects. These revisions enabled MPD to purchase additional bulletproof vests in excess of the original budgeted number, as well as mountain bikes and associated equipment (project number 22) as part of the summer crime initiative. The September 4, 1996, spending plan developed by MPD was based on estimated acquisition amounts and installation costs. Actual costs were different from the budgeted estimates as a result of various factors such as changing market conditions. Because some of the items were available for less than originally estimated, the difference was available for other purposes. Project 19 on table 2 shows the $165,000 originally designated for the purchase of bulletproof vests, plus a net of $140,834 in residual funding that resulted from the communications console project (number 14) being completed under budget. This additional funding allowed MPD to purchase 400 vests, in addition to the 500 initially budgeted. Project 22, in the amount of $277,966, represents unobligated funds not used on the September 4, 1996, spending categories and deferred projects. This total consists of the net difference of $182,311 between planned and actual amounts used for nine completed projects, plus $95,655 that was freed up when three projects were deferred. To meet the Commission on Accreditation for Law Enforcement Agencies (CALEA) standards, MPD had originally budgeted $70,000 for General Order Revisions, $12,000 for a Re-writable CD System to distribute training to field units, and $25,000 for a Library Enhancement project. These three projects were deferred by the new Chief of Police to allow a new management team to assess CALEA requirements and decide on the best method or structure to satisfy these requirements. At the time the decision was made to defer the projects, the library project had already been started and almost half the funds allocated to that project had been spent, leaving $13,655 of the original $25,000 available for reprogramming. The Chief of Police plans to use other management reform funds to complete these projects. While the funds were appropriated on April 26, 1996, MPD was not ready to proceed with ordering equipment and contracting for services when the account was established in June 1996. Between April and September 1996, MPD developed and refined its spending plan and consulted with congressional committees. The first purchase orders totaling $745,000 for lockers, shredders, printers, and cameras—projects 5, 6, 16, and 18—were received by the Authority on December 2, 1996. In a February 5, 1997, letter to MPD, the Authority expressed concern about MPD’s lack of progress in spending the remainder of the $15 million and requested from the former Chief of Police an action plan detailing his strategy for completing the remaining procurements. In MPD’s response to the Authority, the former Chief of Police attributed the lack of progress to the number of procurement levels required in the District’s complex procurement process.