Homeland Security Marked By Waste, Lack of Oversight

Items purchased by agencies with anti-terrorism grants
in California range from search and rescue vehicles
(top right) to detection devices for methane and ammonia
(left) or nerve and blister agents (bottom right).

California Emergency Management Agency

Soon after hijackers obliterated the World Trade Center towers eight years ago, Marin County received more than $100,000 in surveillance equipment to keep its water treatment system safe from a terrorist attack. But four years after the funds were awarded, state authorities found more than $67,000 worth of the gear still boxed in its original packaging. It had never been used. The rest of the homeland security money went toward an alarm system to protect remote tank and pump sites. Because of the region’s hilly terrain, the system didn’t even work. The Marin County example is not an isolated one. Under the state’s open-records laws, California Watch found scores of instances of wasteful spending, purchasing violations, error-prone accounting and shoddy oversight at agencies across the state during the years immediately following 9/11. California Watch, a new unit started by the nonprofit Center for Investigative Reporting, examined thousands of pages of documents from 160 monitoring reports written by state homeland security officials who visited cities and counties across California to inspect equipment and grant records for compliance with federal guidelines. Among the findings:

• Inspectors identified more than $15 million in questionable costs. The Lincoln Police Department in Placer County spent $47,000 on computer software designed to analyze crime reports so officials could better apply resources but, like Marin County, didn’t use what they bought. • Cities and agencies bought things with grant money that would not make California a safer place. One county tried to use anti-terrorism funds for a lawnmower but it was blocked at the last minute. Another county succeeded in buying a big-screen television. • Dozens of cities and agencies failed to keep adequate records on how they spent the money. In some cases, the poor record keeping resulted in thousands of dollars worth of overpayments to local agencies. In other cases, agencies were unable to find where they stored their own equipment. • Communities repeatedly bought large and small-ticket items without seeking competitive bids. Federal procurement rules designed to protect the taxpayer weren’t used on millions of dollars in new communications systems, night-vision goggles and bomb-disposal robots.

The chaos that surrounded homeland security spending in California raises new questions about safeguards as Washington proceeds to directly hand the state and those same communities an estimated $465.2 million in economic stimulus funds for public safety programs as part of President Obama’s attempt to save the nation’s beleaguered economy. Like homeland security grants, lawmakers and the president want the recovery package to be spent as quickly as possible. Government auditors say that even now the Department of Homeland Security can’t gauge how much the grants have made America safer. Local officials and other experts, meanwhile, worry a lack of oversight could lead to the same types of mistakes with the stimulus package that plagued anti-terrorism funding. “The guidance we get from Sacramento is not always clear on what we’re supposed to do,” said Tony Richno, deputy director of the Modoc County Office of Emergency Services. “It’s very difficult to comply and sometimes the rules are unreasonable. But we accepted the money and knew what we were getting into.” Brendan Murphy, director of grants management for the California Emergency Management Agency, said several areas of the state have improved their handling of federal funds. He said that site inspections done by his office are resulting in fewer negative findings. “You see communities that might have been struggling a few years ago,” Murphy said. “They’re not struggling anymore, or are at least doing better.” Many states did not carry out required oversight, and California only began doing site visits at cities and counties in 2006 – years after much of the money had been distributed. That meant problems with the grants languished before state inspectors uncovered them. The Golden State has frequently outpaced the rest of the nation in total dollars awarded due to its size and top attractions, from the Golden Gate Bridge to Disneyland to the Los Angeles International Airport. California has taken in at least $1.9 billion between 2003 and 2009 from major grant programs. A number of grant beneficiaries had no problems managing the money they received and met the expectations of the federal government. State inspectors reviewed about $550 million in spending and found that much of it was spent properly. But not all of it. Guidelines created potential problems At the outset, guidelines regulating homeland security grants created an environment for potential problems. Recipients were required to draft plans right away for how they would spend the money – training exercises, gas masks, bomb-mitigation vehicles, surveillance devices, new digital radios all needed to be financed and deployed as quickly as possible. Local communities complained they were short of the staff needed to complete mountains of grant forms, conduct inventories of the equipment purchased and compile invoices that proved how they spent the money. In addition to its abandoned security system, Marin County also received $40,000 for medical cache supply trailers that weren’t actually purchased, and $2,300 more went to hundreds of rounds of ammunition, which is not allowable under grant rules. Once discovered by monitors, the county was permitted to use the money for other items instead of paying it back, a common occurrence. Chris Godley, the head of emergency services for Marin County, said local grant managers were often inadequately trained and attended only brief classes offered by the state on how to control the money. Unlike other programs, he added, the federal government allowed just a small percentage of antiterrorism funds to be used for administrative expenses, which made them more difficult to manage. “It probably costs us $40,000 to administer a $500,000 grant,” he said. “Most other grants allow more, but Congress wanted to make sure this money was spent on the street for first responders.” Godley said that Marin County tried to think practically about the money – using it to strengthen the area’s search and rescue teams rather than create radical new capabilities like a bomb squad. Colusa County, a quiet agricultural community in the Central Valley with 21,000 people, sought reimbursement for a $321 Toro lawn mower, records show. Ten stretchers costing a total of $3,100 also were bought by the county with 2002 grant funds. But when inspectors arrived in 2007, the items were being stored in the original packaging. An official there told California Watch the stretchers are now ready for immediate deployment. The 8,900-student Sonoma State University bought a 40-inch, $2,300 plasma TV, which the school told inspectors would be used for “training preparations in terrorism.” Campus police Chief Nate Johnson said the television is actually mounted in the school’s tightly quartered emergency operations center so his staff can watch CNN and other newscasts during disasters. Los Angeles County didn’t follow rules Questionable and improper spending wasn’t limited to smaller communities that may have lacked the sophistication needed to manage federal grants. Officials in Los Angeles County spent $20,000 on a Chevrolet Monte Carlo, $1,500 on a shotgun safe from the “Homeland Security Safe Co.” and $3,558 on 70 replica firearms, none of which were permitted under grant guidelines. Spokesman Ken Kondo of the county’s Office of Emergency Management said local authorities approved the vehicle – a sport coupe used by the sheriff’s terrorism unit. Inspectors, however, considered it to be an inappropriate use of homeland security funds. “When something became disallowed, the state didn’t want the money back,” Kondo said. “They wanted us to spend it on something else that is allowable.” The mayor’s office in Los Angeles transferred $661,439 worth of grant funds to the county sheriff during 2006 for a 44-foot fast-response boat with a kitchenette and mount capable of holding an M60 machine gun. But the city didn’t receive prior authorization from the state or the Department of Homeland Security to do so. The paperwork was completed after monitors discovered the boat, records show. State officials in charge of the grants have not required even simple invoices before reimbursing local governments with antiterrorism money, according to a U.S. Inspector General report released in March. Instead, the state relied on promises from local bureaucrats about how the money was being spent, believing it could eventually check on the claims later during site visits. Yet those site visits didn’t commence until 2006 – long after many of the grants were spent, federal auditors found. “Documents such as purchase orders, receipts, or delivery notices, were not present to support millions of dollars in grant expenditures,” stated the audit by Inspector General Richard Skinner of the Department of Homeland Security. California’s weak internal controls didn’t guarantee purchases were “eligible, allowable, and supportable in accordance with federal guidelines.” Matthew Bettenhausen, the governor’s homeland security adviser and head of the California Emergency Management Agency, responded in a letter to the inspector general challenging the report’s conclusions. He insisted California had created a system that enabled his office to review grant applications and confirm allowable purchases. Bettenhausen added that staffers at the agency responsible for the grants also carry out on-site workshops, meetings and conferences across the state to help guide grant recipients. Grants director Murphy told California Watch that requiring the state to collect every receipt would create an administrative nightmare. “That’s why we chose to keep it at the local level,” he said. Those counties that stick it out can go a long way with the money. San Francisco spent $3.3 million paying police overtime to quell antiwar demonstrations in 2003. But state monitors questioned every dime of it years later, arguing that the expenses weren’t related to “critical infrastructure protection.” This despite claims made by then-Mayor Willie Brown that terrorists might use the protests as “cover” to attack bridges and other sites. A homeland security official in Washington said then that the grants could not be used “for overtime or operational expenses.” But after inspectors raised doubts about the charge, leaders in San Francisco managed to produce a letter from California’s former homeland security chief, George Vinson, that authorized the large expenditure. Records show the $3.3 million also covered food consumed during the protests by police as well as gas used in their vehicles. Some purchases made by communities across California elicited complaints about wasteful spending that became national news. A number of cities and counties bought Segway scooters for their bomb squads. State records show that Sonoma County upgraded to the Segway x2, outfitted with all-terrain tires, oversized fenders and a trailer hitch. The x2, according to product literature, “can master intimidating patches of dirt, gravel, grass, or sand.” The Segway cost $4,700. The emergency services manager for Sonoma County, Sandy Covall-Alves, said its grant applications must be approved by all parties responsible for disasters – from the sheriff to the fire chief. “We take our purchases and projects very seriously and always look at what will benefit the greater good,” she said. Documentation not easy to find California Watch found that communities across the state struggled to keep sufficient documentation showing where and how they spent federal grant money. In Madera County, north of Fresno, officials from the local sheriff’s department hired a contractor to help manage the county’s grant purchases. The list included $200,000 for computer-aided dispatch, a $50,000 hazmat response vehicle, $16,000 in surveillance gear and more for portable radios and respirators. Problems didn’t appear immediately. But as grant awards increased and grew more complex, the contractor had difficulty showing the work he’d done. There were badly labeled and incomprehensible spreadsheets. Purchases became delayed. Department officials increasingly couldn’t reach him with questions. “His failures led to a cascade of confusing accounting errors that later proved irreconcilable,” said Eric Outfleet, a business manager for the sheriff. The county finally realized that grant records were in disarray and the contractor needed to be fired – more than two years after he had started. It took 2,000 hours of work to sort things out and months to locate and identify equipment scattered across the county, Outfleet said. By the time monitors from the state arrived in May of 2007, Madera County couldn’t produce sufficient records showing how it spent a total of $1.37 million. Local administrators informed the inspector that the county may have “inadvertently destroyed” documents needed to verify more than $279,000 in spending from their 2002 grants. Outfleet told California Watch that the county’s handling of grants has vastly improved over the last two years and his department “looks forward to demonstrating the success of our new accounting processes in the next monitoring visit.” Grant applications filled out by local officials are supposed to reflect the area’s actual needs. But inspectors found paperwork in Los Angeles County that showed endless changes to how they’d originally promised to spend the money. For three grants totaling nearly $70 million in spending, the Los Angeles County Office of Emergency Management made at least 392 modifications in just one year. Many such changes were done without approval from grant overseers in Sacramento. That meant the county “did not have sound investment justifications, therefore they did not meet their homeland security goals and objectives,” monitoring records from July 2007 show. At the time of the inspection, the county also for two years hadn’t inventoried the huge volume of equipment it bought, didn’t know where some of it was located and wasn’t sure who to call to find out. Officials in Los Angeles responded that the slightest change counted against them as a “modification,” even for such things as having funds left over. The emergency management office’s director, John Fernandes, said the county is responsible for purchases made by dozens of cities and special districts in the area. They’re all now required to compile full inventory logs. “Without question taxpayers should be secure that not a dime is being spent without checks and balances,” he said. “But if you’re talking to the fire chief or emergency manager, they’re going to say ‘What’s taking so long?’ It’s a painstaking process because of what goes into it.” California Watch found that careless accounting led to other communities receiving more in cash than they deserved. Agencies sought reimbursement for the same items twice – totaling at least $257,460 in double-billing. The excess payments were eventually corrected. The city of Oakland was forced to return more than $92,000 from the 2004 Urban Area Security Initiative. That error wasn’t discovered until the spring of 2007. Monterey County was reimbursed for one $7,642 line item and then attempted to get paid a second time before state officials figured out what occurred. Several communities could have benefited from earlier monitoring and told the state as much. Employee turnover occurred so frequently that local grant managers didn’t know what their predecessors had done. They struggled to answer questions from auditors. Monterey County’s grants administrator Bertha Simpson said the state didn’t previously track reimbursement requests by category, such as equipment and training, so Sacramento officials weren’t always aware what they were paying for. That began to change once the site visits occurred, she said. “I don’t ever want to go through that again.” Bidding process skipped by some Cities and counties also frequently failed to explain why they didn’t competitively bid out contracts for expensive equipment. At least $1.6 million in purchases were made without clear evidence that agencies pursued multiple bids from suppliers or had a sufficient excuse for not doing so. Inspectors raised questions about scores of other items, but it was impossible to determine a dollar figure because price tags often weren’t listed in the reports. Oakland’s bus system, for instance, sought a sole-source $100,000 contract for equipment capable of detecting improvised explosive devices. Other grantees hired consultants or bought all-terrain vehicles and rapid-response trucks under similar circumstances. The inspector general’s March report revealed that communities across the state were not aware of federal purchasing rules and bought gear without fair and open competition. In other cases, local agencies didn’t look closely to ensure no-bid contract proposals were reasonable. The inspector general identified $11.6 million in purchases where regulations weren’t followed. Auditors found that local authorities “preferred to avoid the burden of initiating competitive procurement whenever possible.” Cynthia Chimonyo, emergency planning coordinator for the Oakland Fire Department, said the city wasn’t aware public transit officials had not issued formal bids for purchases, but AC Transit has since been instructed to follow procurement guidelines. The city’s grant office was severely understaffed during the early years, added Renee Domingo, an emergency services manager for the fire department. There was only a single person in charge of Oakland’s entire program and no one available to carry out an inventory of millions of dollars in equipment. So did all of these new homeland security purchases make the state safer? That’s difficult to tell, according to Inspector General Skinner. His federal auditors found that California couldn’t evaluate improvements in its ability to respond to disasters and thus demonstrate how the grants have made a difference, a conclusion also contained in several other watchdog reports published this year that were critical of the Department of Homeland Security’s major grant programs in general. California’s preparedness goals weren’t specific or measureable, the audit declared, which meant the state “was not able to assess first responder capabilities or justify continued grants.” In his response letter, California Emergency Management Agency secretary Bettenhausen called the finding “subjective” and cited as an example of success the state’s swift-water rescue efforts, which improved after shortcomings in such missions were identified. According to Bettenhausen: “California has gone above and beyond what is required at the federal level in the measurement of preparedness and capabilities.” >> Read the Spanish version, courtesy of La Opinion. California Watch is a new reporting unit started by the nonprofit Center for Investigative Reporting. Last year, CIR began examining the effectiveness of America’s homeland security efforts in partnership with the Center for Public Integrity. To read more go to www.californiawatch.org.

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