The Department of Justice established the ODP in 1998 within the Office of Justice Programs to assist state and local first responders in acquiring specialized training and equipment needed to respond to and manage terrorist incidents involving weapons of mass destruction. ODP, which was transferred to DHS upon its creation in March 2003, has been a principal source of domestic preparedness grant funds. These grants are a means of achieving an important goal—enhancing the ability of first responders to prevent, prepare for, respond to, and recover from terrorist incidents with well-planned and well-coordinated efforts that involve police, fire, emergency medical, public health, and other personnel from multiple jurisdictions. In March 2004, the Secretary of Homeland Security consolidated ODP with the Office of State and Local Government Coordination to form the Office of State and Local Government Coordination and Preparedness (SLGCP). In addition, other preparedness grant programs from agencies within DHS were also transferred to SLGCP. SLGCP, which reports directly to the Secretary, was created to provide a one-stop shop for the numerous federal preparedness initiatives applicable to state and local first responders. Within SLGCP, ODP continues to have program management and monitoring responsibilities for the domestic preparedness grants. From fiscal year 2002 through fiscal year 2005, the amount of domestic preparedness grants awarded by ODP increased from about $436 million to about $3.3 billion. The scope of ODP’s grant programs expanded as well, from funding only first responder advanced equipment, exercises, and administrative activities in fiscal year 2002 to funding a range of preparedness planning activities, exercises, training, equipment purchases, and related program management and administrative costs in fiscal year 2005. During fiscal years 2002 through 2005, the State Homeland Security Grant Program and Urban Areas Security Initiative program accounted for about 69 percent of total ODP grant funds. Table 1 shows the amounts provided for the domestic preparedness grant programs. For fiscal years 2002 through 2005, ODP awarded approximately $2.1 billion in urban area grant funds to selected urban areas identified by DHS. The amount of individual urban area grants is determined through a combination of factors, including current threat estimates, an assessment of each area’s critical assets, and population density. For the same period, ODP awarded approximately $5.1 billion in statewide grant funds to states to enhance domestic preparedness. Under its current funding formula, approximately 40 percent of statewide grant funds are shared equally among states, while the remaining amount is distributed according to state population. Several congressional proposals have been advanced to alter the statewide funding formula to base it more directly on risk considerations. One proposal would largely maintain the portion of funds shared equally by the states but would base the distribution of the remaining funds on a risk- based formula similar to the one currently used for urban area grants. Another proposal from the House Homeland Security Committee would reduce the minimum amount of funding shared equally by states to approximately 14 percent of total funding and establish a board to allocate the remaining funds through an evaluation of threat, vulnerability, and the potential consequences of a terrorist attack. GAO supports a risk-based approach to homeland security. Adoption of a risk management framework can aid in assessing risk by determining which vulnerabilities should be addressed in what ways within available resources. Assessing risk for specific assets or locations is defined by two conditions: (1) probability or likelihood, quantitative or qualitative, that an adverse event would occur, and (2) consequences, the damage resulting from the event, should it occur. Because it is unlikely that sufficient resources will be available to address all risks, it becomes necessary to prioritize both risks and the actions taken to reduce those risks, taking cost into consideration. For example, which actions will have the greatest net potential benefit in reducing one or more risks? Over time, ODP has modified its grant application processes and procedures for awarding grants to states, governing how states distribute funds to local jurisdictions, and facilitating reimbursements for states and localities. To obtain funding, state and urban area grantees must submit applications to ODP and have them approved. In fiscal year 2004, ODP began to streamline the application process. According to ODP, based on feedback from the grantees, and to continue to improve the grant programs, it combined three grant programs into a single grant application solicitation. In fiscal year 2005, the number of combined programs increased to six. ODP stated that the consolidation was done to streamline the grant application process and better coordinate federal, state, and local grant funding distribution and operations. For the statewide grant programs, ODP has allowed the states flexibility in deciding how the grant programs are structured and implemented in their states. In general, states are allowed to determine such things as the following: the formula for distributing grant funds to local jurisdictional units; the definition of what constitutes a local jurisdiction eligible to receive funds, such as a multicounty area; the organization or agency that would be designated to manage the grant program; and whether the state or local jurisdictions would purchase grant-funded items for the local jurisdictions. Urban area grantees, for the most part, have had flexibilities similar to those of the states and could, in coordination with members of the Urban Area Working Group, designate contiguous jurisdictions to receive grant funds. For the first round of the urban area grants in fiscal year 2003, the grants were made directly to the seven urban areas identified as recipients. Starting with the second round of urban area grants in 2003, grants were made to states, which then subgranted the funds to the designated urban areas, but retained responsibility for administering the grant program. The core city and county/counties work with the state administrative agency to define the geographic borders of the urban area and coordinate with the Urban Area Working Group. Once the grant funds are awarded to the states and then subgranted to the local jurisdictions or urban areas, certain legal and procurement requirements have to be met, such as a city council’s approval to accept grant awards. Once these requirements are satisfied, states, local jurisdictions, and urban areas can then obligate their funds for first responder equipment, exercises, training, and services. Generally, when a local jurisdiction or urban area directly incurs an expenditure, it submits related procurement documents, such as invoices, to the state. The state then draws down the funds from the Justice Department’s Office of Justice Programs. According to this office, funds from the U.S. Treasury are usually deposited with the states’ financial institution within 48 hours. The states, in turn, provide the funds to the local jurisdiction or urban area. Since the first announcement of the dramatic increase in first responder grants after the terrorist attacks of September 11, 2001, the speed with which the funding reached localities has been a matter of concern and some criticism. Congress, state and local officials, and others expressed concerns about the time ODP was taking to award grant funds to states and for states to transfer grant funds to local jurisdictions. Beginning in fiscal year 2003, ODP, at congressional direction, demonstrated significant progress in expediting grant awards to states. For the fiscal year 2002 statewide grants, ODP was not required to award funds to states within a specific time frame. During fiscal year 2002, ODP took 123 days to make the statewide grant application available to states and, on average, about 21 days to approve states’ applications after receipt. For the second round of fiscal year 2003 statewide grants, however, the appropriations act required that ODP make the grant application available to states within 15 days of enactment of the appropriation and approve or disapprove states’ applications within 15 days of receipt. According to ODP data, ODP made the grant application for this round of grants available to states within the required deadline and awarded over 90 percent of the grants within 14 days of receiving the applications. The appropriations act also mandated that states submit grant applications within 30 days of the grant announcement. According to ODP data, all states met the statutory 30-day mandate; in fact, the average number of days from grant announcement to application submission declined from about 81 days in fiscal year 2002 to about 23 days for the second round of fiscal year 2003 statewide grants. The transfer of funds from states to local jurisdictions has also received attention from Congress and ODP. To expedite the transfer of grant funds from the states to local jurisdictions, ODP program guidelines and subsequent appropriations acts imposed additional deadlines on states. For the fiscal year 2002 statewide grants, there were no mandatory deadlines or dates by which states should transfer grant funds to localities. One of the states we visited, for example, took 91 days to transfer these grant funds to a local jurisdiction while another state we visited took 305 days. Beginning with the first round of fiscal year 2003 statewide grants, ODP required in its program guidelines that states transfer grant funds to local jurisdictions within 45 days of the grant award date. Congress subsequently included this requirement in the appropriations act for the second round of fiscal year 2003 statewide grant funds. To ensure compliance, ODP required states to submit a certification form indicating that all awarded grant funds had been transferred within the required 45- day period. States that were unable to meet the 45-day period had to explain the reasons for not transferring the funds and indicate when the funds would be transferred. According to ODP, for the first and second rounds of the fiscal year 2003 grants, respectively, 33 and 31 states certified that the required 45-day period had been met. To further assist states in expediting the transfer of grant funds to local jurisdictions, ODP also modified its requirements for documentation to be submitted as part of the grant application process for fiscal years 2002 and 2003. In fiscal year 2002, ODP required states to submit and have approved by ODP budget detail worksheets and program narratives indicating how the grant funds would be used for equipment, exercises, and administration.