[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]
TOP MANAGEMENT CHALLENGES:
GRANT MANAGEMENT AT
THE U.S. DEPARTMENT OF JUSTICE
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON CRIME, TERRORISM,
HOMELAND SECURITY, AND INVESTIGATIONS
OF THE
COMMITTEE ON THE JUDICIARY
HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRTEENTH CONGRESS
SECOND SESSION
__________
JANUARY 28, 2014
__________
Serial No. 113-64
__________
Printed for the use of the Committee on the Judiciary
Available via the World Wide Web: http://judiciary.house.gov
______
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COMMITTEE ON THE JUDICIARY
BOB GOODLATTE, Virginia, Chairman
F. JAMES SENSENBRENNER, Jr., JOHN CONYERS, Jr., Michigan
Wisconsin JERROLD NADLER, New York
HOWARD COBLE, North Carolina ROBERT C. ``BOBBY'' SCOTT,
LAMAR SMITH, Texas Virginia
STEVE CHABOT, Ohio ZOE LOFGREN, California
SPENCER BACHUS, Alabama SHEILA JACKSON LEE, Texas
DARRELL E. ISSA, California STEVE COHEN, Tennessee
J. RANDY FORBES, Virginia HENRY C. ``HANK'' JOHNSON, Jr.,
STEVE KING, Iowa Georgia
TRENT FRANKS, Arizona PEDRO R. PIERLUISI, Puerto Rico
LOUIE GOHMERT, Texas JUDY CHU, California
JIM JORDAN, Ohio TED DEUTCH, Florida
TED POE, Texas LUIS V. GUTIERREZ, Illinois
JASON CHAFFETZ, Utah KAREN BASS, California
TOM MARINO, Pennsylvania CEDRIC RICHMOND, Louisiana
TREY GOWDY, South Carolina SUZAN DelBENE, Washington
RAUL LABRADOR, Idaho JOE GARCIA, Florida
BLAKE FARENTHOLD, Texas HAKEEM JEFFRIES, New York
GEORGE HOLDING, North Carolina DAVID N. CICILLINE, Rhode Island
DOUG COLLINS, Georgia
RON DeSANTIS, Florida
JASON T. SMITH, Missouri
[Vacant]
Shelley Husband, Chief of Staff & General Counsel
Perry Apelbaum, Minority Staff Director & Chief Counsel
------
Subcommittee on Crime, Terrorism, Homeland Security, and Investigations
F. JAMES SENSENBRENNER, Jr., Wisconsin, Chairman
LOUIE GOHMERT, Texas, Vice-Chairman
HOWARD COBLE, North Carolina ROBERT C. ``BOBBY'' SCOTT,
SPENCER BACHUS, Alabama Virginia
J. RANDY FORBES, Virginia PEDRO R. PIERLUISI, Puerto Rico
TRENT FRANKS, Arizona JUDY CHU, California
JASON CHAFFETZ, Utah LUIS V. GUTIERREZ, Illinois
TREY GOWDY, South Carolina KAREN BASS, California
RAUL LABRADOR, Idaho CEDRIC RICHMOND, Louisiana
Caroline Lynch, Chief Counsel
C O N T E N T S
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JANUARY 28, 2014
Page
OPENING STATEMENTS
The Honorable F. James Sensenbrenner, Jr., a Representative in
Congress from the State of Wisconsin, and Chairman,
Subcommittee on Crime, Terrorism, Homeland Security, and
Investigations................................................. 1
The Honorable Robert C. ``Bobby'' Scott, a Representative in
Congress from the State of Virginia, and Ranking Member,
Subcommittee on Crime, Terrorism, Homeland Security, and
Investigations................................................. 3
The Honorable Bob Goodlatte, a Representative in Congress from
the State of Virginia, and Chairman, Committee on the Judiciary 4
WITNESS
The Honorable Michael E. Horowitz, Inspector General, U.S.
Department of Justice
Oral Testimony................................................. 6
Prepared Statement............................................. 8
TOP MANAGEMENT CHALLENGES:
GRANT MANAGEMENT AT
THE U.S. DEPARTMENT OF JUSTICE
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TUESDAY, JANUARY 28, 2014
House of Representatives
Subcommittee on Crime, Terrorism,
Homeland Security, and Investigations
Committee on the Judiciary
Washington, DC.
The Subcommittee met, pursuant to call, at 10 a.m., in room
2141, Rayburn Office Building, the Honorable F. James
Sensenbrenner, Jr. (Chairman of the Subcommittee) presiding.
Present: Representatives Sensenbrenner, Goodlatte, Gohmert,
Coble, Scott, and Richmond.
Staff present: (Majority) Allison Halataei, Parliamentarian
and General Counsel; Sarah Allen, Counsel; and (Minority) Ron
Le
Grand, Counsel.
Mr. Sensenbrenner. The Subcommittee will come to order.
Without objection, the Chair is authorized to declare
recesses of the Subcommittee at any time.
Last year, the Subcommittee held a hearing on waste,
duplicative spending and inefficient operations at the
Department of Justice. At that hearing, we questioned why the
Department had spent $165 million on a prison in Illinois
despite opposition from Members of this Committee and the House
Appropriations Committee, a prison which remains largely empty.
We also questioned the Department's exorbitant conference-
related expenses, including $600,000 for event planners.
Unfortunately, these are only two examples of the
Department's inability to act as a responsible steward of
taxpayer dollars.
Today's hearing continues the Subcommittee's focus on
wasteful and unnecessary spending at the Department by focusing
on one important aspect of the problem, how the Department
manages its grant programs. Since 1998, the Justice
Department's Inspector General has compiled an annual list of
the top management and performance challenges facing the
Department every year since 1999. The issue of grant management
has been included. The IG's most recent list, released in
December 2013, is no different. This means that for over a
decade the Department has recognized that the effective grant
oversight is a major challenge and, despite that, has been
unable to resolve the problems repeatedly outlined by the IG.
We are honored to have Inspector General Horowitz here
today to help us understand why an issue as important as grant
oversight remains a challenge for the Department. From Fiscal
Years 2009 to 2013, the Department awarded approximately $17
billion of grant funding to state, local, and non-governmental
recipients. In Fiscal Year 2014 alone, the Department's three
grant-making offices received $2.2 billion in funding, which is
a $32 million increase over 2013 levels.
No doubt, the large number of grant programs created by
Congress and administered by the Department only exacerbates
this problem. The Justice Department administers over 200 grant
programs and other forms of direct Federal assistance through
three separate offices: the Office of Justice Programs, OJP;
the Office of Violence Against Women, OVW; and the COPS Office.
As the IG and the Government Accountability Office have noted,
there is a significant amount of overlap between these offices
and their many grant programs. Most of these grants are used to
support important law enforcement needs across the country,
including assistance to states to develop more robust sex
offender registry systems, improve the recidivism and
rehabilitation of convicted felons, and address the crisis of
the mentally ill in our criminal justice systems.
These programs are all laudable and worthwhile. However, in
light of the current economic environment in which our Nation
faces a national debt of $17 trillion, it is critical that
Congress and the Department closely scrutinize how every dollar
is spent.
A number of developments over the past year have given me
great concern about how the Department is managing grant
programs. For example, the Office on Violence Against Women
recently announced that for its current grant solicitation
period, only previous grant recipients will be allowed to apply
for certain competitive grants, and some of these programs will
not actually be competitive. This is in direct conflict of
Congress' intent when it created competitive grants, not to
mention the Department's stated commitment to promoting new and
innovative programs. This sort of special treatment for those
grantees already on the Department's ``preferred list'' also
opens these programs up to potential corruption and
malfeasance.
I look forward to hearing Mr. Horowitz's view on this and
whether his office is looking into these changes.
I am also greatly concerned by recent changes to the Public
Safety Officer's Benefit Program which provides a $330,000 lump
sum payment to survivors of fallen law enforcement officers,
fire fighters and other first responders, and disability
benefits to officers catastrophically injured in the line of
duty.
Through the history of PSOB, the OJP General Counsel has
always been required to review each case to ascertain whether
the claimant is legally entitled to benefits. However, last
summer the Department announced it would stop requiring the
General Counsel's Office to individually review all approvals
or denials of PSOB claims. I sent a letter to the Department on
June 4 of last year asking for clarification on these changes,
including whether every payment would continue to receive
individual legal concurrence under the new system, and I have
yet to receive a response.
It is my understanding that the IG's office is currently
reviewing the PSOB program, and I look forward to hearing his
views on this change.
Finally, I hope to hear Mr. Horowitz's suggestions for ways
that the Department and Congress, if necessary, can help
streamline the bureaucratic operations at the Justice
Department. It goes without saying that every dollar that is
wasted in Washington due to unnecessary waste and duplication
of resources is a dollar that could be better spent in the
field or returned to taxpayers.
It is now my pleasure to recognize for his opening
statement the gentleman from Virginia, Mr. Scott, the Ranking
Member of the Subcommittee.
Mr. Scott. Thank you, Mr. Chairman, and I welcome this
hearing and discussion about spending at the Department of
Justice and ways of ensuring that taxpayer dollars are being
spent in a manner that is both efficient and effective.
Each of us on this panel, regardless of party, is committed
to eliminating wasteful spending and unnecessary duplication or
overlapping funding. In the last 13 years, the Department of
Justice Office of the Inspector General has issued its
memorandum entitled, ``Top Management Challenges.'' In 12 of
those memos, grant management has consistently been cited as
one of those challenges. The 2013 memo cites protecting
taxpayer funds from mismanagement and abuse as a challenge and
addresses the risks for mismanagement of taxpayer funds that
are distributed to grant recipients and contractors.
Last year alone, the Department's three major grant-
awarding agencies mentioned by the Chairman awarded over $2.2
billion in grants to state, local, and tribal private
organizations to conduct research, law enforcement activities,
provide training and technical assistance, and implement
criminal justice-related programs. To put it another way, the
grants awarded by these three major grant-making agencies
within the Department constitute a very significant part of the
budget of the Department of Justice.
The distribution of such large sums of taxpayer dollars
necessitates constant scrutiny in order to identify areas of
waste, fraud and abuse, and unnecessary duplication. Then we
have to take corrective action. It is only through such
oversight that the Department of Justice will be assured that
funds awarded to grantees are being managed appropriately and
in compliance with established guidelines.
That oversight reveals significant issues pertaining to
grantees, one of which was Big Brothers Big Sisters had a
significant portion of their grant questioned. But upon
learning of these issues and while the audit was ongoing, it is
my understanding that Big Brothers Big Sisters retained
compliance counsel and a forensic accounting firm to begin
bringing them back into accord with the grant requirements, and
it has since submitted a corrective action plan to continue
working with the Department of Justice to resolve the
recommendations on questioned costs.
We cannot turn a blind eye to the fact that despite these
issues, Big Brothers Big Sisters actually exceeded their grant
program goals by engaging 16,000 at-risk and tribal youth in
their mentoring program, significantly more than was their
original goal. Since the goals were achieved, we need to
consider the taxpayer dollars saved. If Big Brothers Big
Sisters targets their money and prevents 10,000 children from
potentially going to jail, we could save hundreds of millions
of dollars in terms of avoided incarceration costs.
If the program just saves 10 percent of the 16,000 newly-
mentored youth from prison, that would save $50 million a year
in incarceration costs. Remember, we are only talking about $20
million in expenditures.
So as we consider the possible impropriety of millions of
dollars as currently and technically unallowed, we also need to
measure the grants in terms of goals achieved and long-term
savings that result. So let's include that as part of the
discussion, the benefits of prevention that result from an
organization such as Big Brothers Big Sisters using the money
effectively and saving money.
I am pleased to have the Department of Justice's Inspector
General here to shed light on these issues and look forward to
see what progress has been made, and I hope that he will also
recommend what Congress can do to help.
So, thank you, Mr. Chairman. I look forward to his
testimony.
Mr. Sensenbrenner. Thank you.
The gentleman from Virginia, Mr. Goodlatte, the Chairman of
the full Committee, is recognized for an opening statement.
Mr. Goodlatte. Thank you, Chairman Sensenbrenner. I am
pleased to take part in this hearing on oversight of the
Justice Department grant programs. The Judiciary Committee
plays an important role in examining how the Department spends
taxpayer dollars, and this hearing is part of those efforts.
Starting in 1999, the Office of the Inspector General has
included grant management in its annual list of the
Department's top management challenges. In 2013, grant
management was again included in this list under ``Protecting
Taxpayer Funds from Mismanagement and Misuse.'' The continued
listing of grant management as a top management challenge
reflects the size, scope, complexity, and associated risks of
mismanagement of the numerous grant programs administered by
the Department.
A review of recent IG audits and reports reveals some of
the challenges facing grant administrators at the Department.
These include the identification and management of high-risk
grantees, the implementation of appropriate training and
testing methods for grantees, the establishment of procedures
to verify information provided on grant applications, and
improving coordination and thereby reducing duplication among
the Department's many grant programs.
In a recent and particularly noteworthy matter, the
Inspector General audit last year questioned more than $19
million of the $23 million in youth mentoring grants awarded to
Big Brothers Big Sisters of America, and suggested that the
remaining $4 million of unused funds should be put to better
use. The Justice Department announced in response to this audit
that it would freeze funds to Big Brothers Big Sisters, but I
am concerned that a short-term freeze does not address the
underlying problem. This is particularly true given that just
weeks later, the IG issued a second report questioning another
grantee's use of almost $1 million in youth mentoring grant
money.
I am greatly concerned that the problems with these
grantees, and many others, went unnoticed by the Department for
years, despite periodic audit reviews and oversight. I look
forward to hearing today whether these IG reports are
indicative of systemic issues within OJP's grant management
procedures and what Congress can do to help solve the problem.
America continues to face difficult fiscal times. Law
enforcement agencies are not immune from this. There is little
doubt that the financial support the Federal Government
provides to state and local law enforcement agencies through
Byrne JAG and other grants is oftentimes critical. As with many
other aspects of government, these grant programs are not
always designed or administered as efficiently as they should
be, which means that less money is actually spent to help the
boots on the ground.
I am committed to finding ways to streamline these programs
to minimize waste to ensure that they run as efficiently as
possible and with less of an administrative burden on law
enforcement agencies. I look forward to hearing from the
Inspector General on ways in which we can address these
challenges while maintaining an efficient process to provide
needed support to law enforcement agencies around the country.
Thank you, Mr. Chairman. I yield back.
Mr. Sensenbrenner. Thank you very much.
Without objection, all Members' opening statements will be
placed in the record at this point.
Let me now introduce the Inspector General, Michael E.
Horowitz. He was sworn in as the fourth confirmed Inspector
General on April 16, 2012. In this capacity, he oversees a
nationwide workforce of approximately 450 special agents,
auditors, inspectors, attorneys and support staff whose mission
is to detect and deter waste, fraud, abuse and misconduct in
DOJ programs and personnel, and to promote efficiency in
Department of Operations.
Mr. Horowitz most recently worked as a partner at
Cadwalader, Wickersham and Taft, LLP, where he focused his
practice on white-collar defense, internal investigations and
regulatory compliance. He has also served as a commissioner on
the U.S. Sentencing Commission, where he was instrumental in
rewriting the guidelines for corporate compliance programs, and
for fraud, anti-trust, intellectual property, and money
laundering offenses.
He previously worked for the DOJ in the Criminal Division
of main Justice from 1999 to 2002, first as Deputy Assistant AG
and then as Chief of Staff. Prior to joining the Criminal
Division, he was an Assistant U.S. Attorney for the Southern
District of New York from 1991 to 1999, and from 1997 to 1999
he was the Chief of the Public Corruption Unit; then from 1995
to 1997, Deputy Chief of the Criminal Division.
He received a Bachelor of Arts degree from Brandeis and
received his law degree from Harvard Law School.
Without objection, your written statement will be entered
into the record in its entirety, and I ask that you summarize
your testimony within 5 minutes or less. I do have a canned
script about red, yellow and green lights. I think you know all
about them.
So, Mr. Horowitz, proceed.
TESTIMONY OF THE HONORABLE MICHAEL E. HOROWITZ, INSPECTOR
GENERAL, U.S. DEPARTMENT OF JUSTICE
Mr. Horowitz. Thank you, Mr. Chairman, Chairman Goodlatte,
Ranking Member Scott, Members of the Subcommittee. Thank you
for inviting me to testify today.
Grant management is one of the top management challenges
facing the Department of Justice. Over the past 5 fiscal years,
my office has issued more than 200 grant-related audit reports
making about 1,000 recommendations and nearly $100 million in
dollar-related findings. During that same period we opened 109
grant-related investigations that resulted in 12 criminal
convictions and over $1.6 million in recoveries.
As noted in our recent Top Management Challenges report,
the Department has reported taking important steps toward
making improvements in its grant-management process, which are
highlighted in my written statement. The Department needs to
continue to aggressively identify high-risk grantees and place
appropriate restrictions on their funds or halt their funding
altogether.
The Department's grant-making components also must ensure
that their own operations are streamlined to ensure maximum
value for the taxpayer. Reports by both my office and the GAO
have found that savings could be realized by reducing
duplication and improving coordination among the Department's
three grant-making components.
Further, the Department should ensure that grantees have
the capability to use grant funds in an effective manner, seek
to improve data reporting by grantees so that the Department
can evaluate a grant's effectiveness, and enhance coordination
between its grant-making components and those DOJ components
whose operations could be affected by the grants.
Our recent audit highlighting grants to local law
enforcement to support the use of drones demonstrated the need
for such efforts in each of these areas.
While audits and investigations are vital to our oversight
of grant management, the OIG has taken other substantial steps
to help prevent and deter misconduct in this area. For example,
we have conducted training sessions for grant managers and
recipients regarding fraud prevention and deterrence. We
published a report summarizing the ideas and best practices
derived from the OIG's experiences in grant oversight, and we
examined the Department's own efforts to monitor and oversee
grants through the Office of Justice Programs, which we found
had significantly improved.
Additionally, I chair the Grant Fraud Committee of the
Financial Fraud Enforcement Task Force. The committee played a
key role in developing grant fraud training for special agents
and auditors across the inspector general community.
The committee also provided comments to the Office of
Management and Budget on drafts of its proposed grant circular,
which was issued this past December. One important and positive
change in the new grant circular is the requirement mandating
that grantees disclose to the awarding agency or pass-through
entity any violations of Federal criminal law involving fraud,
bribery, or gratuities.
Finally, a recurring concern in the inspector general
community is the lack of visibility absent in OIG audit or
investigation as to how grant funds are used by recipients.
While existing grant management processes involve detailed pre-
award review, and grantees are required to maintain detailed
accounting records regarding their use of grant funds, the
financial reports they file with the grant-making agencies do
not include details on individual transactions that would
provide transparency.
Two audit reports we recently issued illustrate this point.
Earlier this month, we issued an audit report on $800,000 in
grants awarded to the Philadelphia Safety Net. We questioned
nearly $480,000 of the awarded funds as being unallowable,
unsupported or unreasonably spent, including $276,000 related
to the executive director's salary. Last year we issued an
audit report questioning more than $19 million awarded to Big
Brothers Big Sisters of America. That recipient was in material
non-compliance with the majority of the grant requirements and
its management practices were inadequate to safeguard grant
funds.
Had my office not conducted these two audits, this misuse
of grant funds likely would never have come to light because
the reports they submitted to the Department did not, on their
face, reveal the improper uses of grant funds that we later
uncovered. This is an area where greater transparency is a
necessity.
The OIG will continue its efforts to prevent and detect the
misuse of Department grant funds, and we appreciate the support
of this Committee for our work.
Thank you, and I would be pleased to answer any questions
the Committee may have.
[The prepared statement of Mr. Horowitz follows:]
__________
Mr. Sensenbrenner. Thank you very much.
I recognize myself for 5 minutes.
Mr. Horowitz, I am very concerned about the change in
policy by the Justice Department relative to public safety
officers' benefits programs. Obviously, somebody who is killed
or disabled in the line of duty should be given benefits. I
think everybody around here supports that, and everybody around
here following 9/11 has supported an expansion of those
programs.
But there is a change in how applications have been
processed, and instead of an independent legal review, which is
what people who apply for Social Security Disability end up
having, there is kind of a blanket program that the DOJ has
done. I sent a letter over 6 months ago to the DOJ asking for
answers to some questions. They have not responded.
Are you looking into this, and can you tell me how far you
have gotten and if you have made any at least tentative
conclusions?
Mr. Horowitz. We are looking into it, Mr. Chairman. We have
had an audit ongoing of the PSOB when this change occurred, and
so this change has now become part of our review as well, and
we hope in the coming months we will be finalizing and issuing
our report. I do not have any preliminary conclusions to
provide the Committee at this point, but I will certainly keep
the Committee updated as we finalize our review.
Mr. Sensenbrenner. Now, the second question I would like to
ask you is we have heard instances from you and from Members of
this Committee and others that people who have been nicked for
misusing government grant programs seem to be able to go back
to the government trough without any type of penalty.
Have you looked into this, and have you any recommendations
on whether we should raise the bar a little bit or raise the
bar so high that they can not get any more government grants or
have a moratorium, some kind of penalty for people who have
been found misusing the government grants so that they can not
keep on doing business as usual?
Mr. Horowitz. I think there are a couple of things that are
important to do in that regard. One is we are trying to make
greater efforts to use the suspension and debarment tools that
we have been given by the Congress. But I think one of the
things that both the agencies need to do and IGs need to do is
share information more effectively across agencies and across
IGs, and that is perhaps one area where some ability needs to
be given to the IGs, for example, in order to share data about
grant recipients so that when we make a finding in our agency,
that a grant recipient is not able to go to other agencies and
not have them be aware of what we have done.
Mr. Sensenbrenner. Finally, relative to the Office of
Violence Against Women, I have always been a big supporter of
the competitive grant program. When I was the Chair of the
Science Committee, then Ranking Member George Brown and I
really imposed competitive grants on the scientific agencies
that help finance basic research. The Office of Violence
Against Women, Congress created competitive grants, and the DOJ
has been kind of going back on that. They said that new
organizations that had not received competitive grants really
can not apply for, I think, up to six of the programs, which I
think stifles innovation and new ways to deal with this
problem.
What have you been able to find on that, and what can we do
as a Congress to continue to urge the competitive grant program
to stay in place?
Mr. Horowitz. We are aware of that change and we are
looking at that change for the reasons you indicate. There is
an importance to making sure that grant giving is like contract
giving, considered competitively, considered for a variety of
reasons, done fairly, and that is something we are looking at.
Again, I do not have anything immediately to report to the
Committee, but I will certainly keep you and the Committee
updated.
Mr. Sensenbrenner. Thank you very much.
I yield back.
The gentleman from Virginia, Mr. Scott.
Mr. Scott. Thank you, Mr. Chairman.
Mr. Horowitz, you mentioned drones. What was the problem
there?
Mr. Horowitz. Well, among many issues that we found in the
grant area, we identified two grants the Department had given
to local law enforcement agencies, each for $150,000. The grant
recipients did as they were expected to when they bought the
drones, so there was no misuse of funds. But what we found was
6 years later, the drones had not been used. So our concern was
that the Department never followed up, never determined whether
the use of the money was, in fact, effective.
Mr. Scott. So what should happen to those grant funds?
Mr. Horowitz. Well, in situations like that, the Department
should not in the first instance be awarding grant funds to
recipients who can not put them to good use. But it should
certainly learn from its mistakes and go forward and understand
what grants can be effective, what grants perhaps are not
effective.
Mr. Scott. Is there any evaluation of the programs for
effect, whether or not the programs, say a mentoring program,
actually addresses the problem it is seeking to solve?
Mr. Horowitz. From my experience in the 20 months I have
been here, I have seen inconsistent efforts at that, and
generally when it is done it is at a higher level, not at a
more detailed level, to determine whether there is truly a good
return on investment.
Mr. Scott. Well, you know that there are some prevention
programs that can save three, four, five, even ten times the
money spent. Other prevention programs do not work. Do you
evaluate which is which?
Mr. Horowitz. When we do audits, what we do is go to the
grant-making agency to see what data they have. So if they have
collected the data, we can review that. We do not go out in our
audits generally to the grant recipient and try to drill down
on their documentation because in that instance we are
primarily looking at the financial issues when we get to the
grant.
Mr. Scott. Do you audit whether or not they are targeting
the most at-risk potential clients?
Mr. Horowitz. We look, again, to what the Department has
done in our audit and whether they have done what we think they
should do, and then we report on, if the Department has failed
to do it, where we think they have failed to do that.
Mr. Scott. Do you calculate the cost savings generated by
the program?
Mr. Horowitz. Again, we do not undertake to calculate the
cost savings. We are not getting that kind of data and getting
that information primarily because the Department grant-making
agency generally is not getting that kind of data.
Mr. Scott. Should there be a requirement that we do
significant evaluations of programs to see if they are
effective and see if they are saving money?
Mr. Horowitz. I personally think that is of value and
importance, that when the government or, frankly, any
organization gives out money, it understands not just was the
money spent pursuant to rules but what was the value obtained,
received from the program.
Mr. Scott. And where should that take place? How do we
ensure that happens?
Mr. Horowitz. Well, I think it has to occur at the grant-
making agency or, if there is a component involved, say, at the
Department of Justice, the component should be undertaking that
effort.
Mr. Scott. Now, with Big Brothers Big Sisters, are you
aware that there was a private independent audit done over the
years that found no difficulties?
Mr. Horowitz. I am aware of that.
Mr. Scott. Is there any suggestion that money was stolen?
Mr. Horowitz. I do not believe we reported on anything like
that.
Mr. Scott. And you are aware that they are fixing whatever
problems there are?
Mr. Horowitz. They are in the remediation process is our
understanding, and we will be doing a follow-up review.
Mr. Scott. Okay, thank you.
I yield back.
Mr. Sensenbrenner. The gentleman from Virginia, Mr.
Goodlatte.
Mr. Goodlatte. Thank you, Mr. Chairman.
Mr. Horowitz, welcome. We are glad to have you back. We
value your work.
Mr. Horowitz. Happy to be here.
Mr. Goodlatte. Approximately what percentage of grant
audits each year involve some finding that grant funds were
used for unallowable expenses?
Mr. Horowitz. I do not know off the top of my head in terms
of the numbers, but just anecdotally from my 20 months on the
job, many of the grants that we issue have some findings
associated with them either with non-compliance of a serious
nature or not keeping the records as required, which may or may
not be serious.
Mr. Goodlatte. My understanding is your office puts out
dozens of audits each year in which the Department is entirely
unaware that a grantee is misspending money, sometimes for
years until your office discovers it. What else needs to be
done by these various Department of Justice agencies to
identify the problem sooner, and what additional review can
Congress mandate to deal with this?
Mr. Horowitz. I think a very important part of this is
transparency around the expenditures that are going on with
grant-making agencies, and we are not talking about additional
burdens on the grant recipient because they are already
required to keep those kinds of records internally.
The reports to the Department--and I think if you had my
colleagues up here in the IG community they would be saying the
same thing for their agencies. Have the same kind of reporting
that they are doing internally, not adding burdens to them
because it is already being done, have that information going
to the agencies, and I think consider whether it should be
public on websites such as USSpending.gov.
Mr. Goodlatte. And it is also my understanding that the
Department of Justice does not always automatically cut off
existing or future funding to grantees like they did freeze
those funds for Big Brothers and Big Sisters, which is, of
course, a very important organization and we welcome their good
work. But that seems to be because it was highlighted an
exception rather than a rule. I think most of our constituents
would be surprised that an entity can be subject to a negative
Inspector General's report and still be eligible for more
taxpayer money.
Can you speak to that? How do we address that problem?
Mr. Horowitz. That is a significant concern again across
the IG community. I think I can speak for my other Inspector
General colleagues in this, which is the importance of making
sure that, first of all, as we do, we put out our reports
transparently, but also as we are doing our work, as agencies
are learning of problems within their own grants, that other
agencies also become aware of the issue so that there is the
awareness of problems across the Federal Government, not just
within, say, the Department of Justice.
Mr. Goodlatte. This problem has been on the Department of
Justice's list of management challenges for at least a dozen
years, and it implies to me that the Department has not been
taking the issue very seriously. What steps does the Department
need to take to get this challenge under control so the issue
can come off the list?
Mr. Horowitz. Well, I think there are a number of issues.
One is if those reports could go--the grant agencies, the grant
recipients are keeping about their individual expenditures
would come to the Department, that would help immeasurably with
oversight by the agency. The Justice Department and the Office
of Justice Programs has made important steps, and Congress
authorized in 2005 the Office of Audit Assessment and
Management that has made a number of improvements that have
occurred within the Office of Justice Programs.
Having more rigorous oversight within the grant-making
agency itself, were they obviously to do these audits, to do
the independent reviews, but the agencies themselves need to
police the grant recipients to make sure they are using the
money wisely and, as Congressman Scott indicated, doing a
better job evaluating what is the taxpayer benefit for the
funds being given out so that they know going forward what is
the best use of the money, particularly as the limits are
coming now.
Mr. Goodlatte. Let me get in one more question before my
time expires to follow up on that. Have you made those
recommendations to the Department in the past? And if so, how
have they reacted to those recommendations?
Mr. Horowitz. We have made certainly some of those, usually
in the context of the individual grants. The Department has
generally been responsive to our requests, but larger changes
such as having information about individual expenditures going
to the Department, that really cuts across. It is not just a
Justice Department issue. So I think that is a bigger change
that the IG community needs to think about, Congress needs to
think about, and I think that is an important issue to
consider. It is not just an OJP or an OVW or a COPS issue.
Mr. Goodlatte. Thank you very much.
Thank you, Mr. Chairman.
Mr. Sensenbrenner. The gentleman's time has expired.
The gentleman from Louisiana.
Mr. Richmond. Thank you, Mr. Chairman.
I guess I will start where Congressman Scott left off, and
that is we do not do a return-on-investment, a cost/benefit
analysis of grant performance at the end?
Mr. Horowitz. There is a very high-level, in some
instances, evaluation of that, but not what I think you
probably have in mind.
Mr. Richmond. So that does not happen in the beginning? I
would assume it happens in the awarding process to make sure
that we are giving them out to, at least on paper, the most
effective and efficient of the applicants.
Mr. Horowitz. Right. In the pre-award processes, we have
generally found very rigorous.
Mr. Richmond. But we do not have a back-end process, or you
are not sure of that?
Mr. Horowitz. We do not have what I would consider a
rigorous back-end process. There is a general review of the
performance metrics that have come in, but nothing much beyond
that, beyond what the grant recipient sends in.
Mr. Richmond. Now, if we had that performance metric on the
back end, would you suggest that that should come from an
independent office, or should it come from within the Justice
Department to see if those metrics were met satisfactorily?
Mr. Horowitz. I think probably every department is going to
be different here. Given the Department gives out a lot of
small-dollar grants, it probably is something that should be
done within the grant-making agency itself, subject to our
independent oversight, GAO's independent oversight at this
point. Institutions with big-dollar grants, perhaps it is a
different story. But the Department gives out so many grants,
it is probably hard to have it done entirely outside and
independently.
Mr. Richmond. And I guess if my information is correct, it
says that grant management has been a challenge, an articulated
challenge within the Department for at least the last 12 years.
Mr. Horowitz. Correct.
Mr. Richmond. How do we get it off there? It is easy to
give those recommendations and say that the agency is following
them. What are they not doing? Why can not we get this off of
center? I just do not understand why, if it is a focus, we can
not get past this being one of our top 10 management
challenges.
Mr. Horowitz. Well, again, the recent examples we have on
the drone report, the example I cited there, the Big Brothers
Big Sisters of America, the Philadelphia Safety Net, a couple
of others that I have referenced, you still see the problems
where given the high-level reporting that comes back, for
example, it is simply not possible for the grant-making
agencies, without our audits, to know in detail how the money
is being spent, and that is a primary problem.
A secondary problem is--we have commented on this before
and I think it needs to be done--merging back-office operations
of the three grant-making agencies at the Justice Department.
There are three grant-making agencies that were statutorily
created by Congress, but that does not mean that they need
different systems or different operations.
Two examples. COPS has a different financial management
reporting system than does OVW and OJP, which have one
together. We do not see a reason why there would need to be two
different systems. They have three different financial guides
for grant recipients. So if you are a grant recipient from the
Justice Department from the three agencies, you have three
different guides to follow.
Mr. Richmond. Now, you mentioned Congress played a part in
that, at least setting up making sure that it is three
different----
Mr. Horowitz. Correct. And, in fact, within OJP, they have
seven sub-entities that give out grants.
Mr. Richmond. Now, have you issued to us in the same way--
and maybe you did and I just missed it--actions that Congress
can take to help Justice Department simplify, streamline, and
become more efficient and get closer to real-time monitoring so
that we catch things a little bit earlier than we are doing it
now?
Mr. Horowitz. I would have to go back and look at my
predecessor's testimony, but I believe it has been part of our
prior reports to Congress.
Mr. Richmond. Okay, and I would just quickly say can you
give us a report specifically about what we can do in Congress
to help? And with that, I would yield whatever I have left to
Congressman Scott.
Mr. Scott. You made, apparently, 1,000 recommendations?
Mr. Horowitz. I'm sorry.
Mr. Scott. You made about 1,000 recommendations?
Mr. Horowitz. Yes.
Mr. Scott. Could you inform us as to the status of those
recommendations?
Mr. Horowitz. Yes. About 700 or so have been met. We have
about 300-plus still open, and what I have started doing is
having every 6 months us compile our open reports and provide
them to the Attorney General and the Deputy Attorney General so
that they are aware and their staffs are aware--this is now
across the Justice Department--of open recommendations so that
they can be involved because, frankly, we in the past have sent
them to components, but leadership would not necessarily see
them, and that is what I am trying to do now and more
centralize it.
Mr. Scott. Can we get that report?
Mr. Horowitz. Let me--I believe they are all public, so I
do not think there is an issue with that, but let me just make
sure. Some of them could be in classified or other contexts. I
just need to double-check that.
Mr. Sensenbrenner. The gentleman's time has expired.
The gentleman from Texas, Mr. Gohmert.
Mr. Gohmert. Thank you, Mr. Chairman.
We sure appreciate your being here and even more appreciate
your work, Mr. Horowitz.
We do have--and I understand this has been mentioned
earlier--different grant programs that do not necessarily
communicate or communicate effectively. Do you have any
recommendations for how we could go about making sure that
there was better communication between the grant programs so
that we do not overly fund something that needed one grant and
got three, and then not fund something adequately that really
needed more help?
Mr. Horowitz. I think one of the key issues is
transparency. The more there is public about the grants, what
they are awarded for and how they are being spent, it gives
multiple eyes on the grants. We are more likely to get
whistleblower concerns or other concerns where there is
misconduct going on. So I think that is an important part of
it, and making sure that agencies are aware of what other
agencies are awarding grants for, because that is another place
for potential overlap, not just within our three components in
the Justice Department.
Mr. Gohmert. I understand, but it has been one of my
concerns about other areas of grant programs, not just grant
programs but actually where the government makes payments and
then turns around later and says wait a minute, we did our
review after we gave you the payment and it turns out we gave
too much.
It seems like it is better to know before a payment is made
whether or not it is a good idea, and if all the agencies are
doing is examining what another agency did after the fact, then
that money is gone. You are not going to get it back because it
has been received, it has been spent, and I am not a fan of
going back and demanding communities give back after they have
already spent.
So I was looking for a way that we could foster better
communications between grant programs so that they could see
who had applied, or if there were a requirement on the forms or
on applications to say what all else they had applied for, what
they had received in the past so that they would not be
penalized for applying to more than one, but if there were
indications that they were likely to get another grant, then
they would not have it tripled up.
Mr. Horowitz. Yes, and I agree, Congressman. I think on
grant applications, reporting where else you have gotten grants
from across the Federal Government, whether you are under
suspension or disbarment, whether you are under active
investigation, whether criminal or otherwise. That kind of
information--if one grant recipient is under investigation by
the Justice Department, the components should know that that is
occurring. So requiring that information up front under penalty
of perjury I think is an important part of the process.
Mr. Gohmert. So, yes, I would say that if law enforcement
is after them, the other law enforcement ought to know that
they are investigating the people they are about to give money
to.
But do you know, are there any requirements like that in
the application process? Did you specifically look at the
application process?
Mr. Horowitz. I am not aware of any. We are actually
looking at that question now.
Mr. Gohmert. And would you agree, as you say you are
looking at it, if you find it is not there, would you agree to
make that part of your recommendations that they should make
that part of the application process, to identify what grants
they have received in the past and what others they have
applied for?
Mr. Horowitz. Yes.
Mr. Gohmert. Okay. Thank you so much. I really appreciate
it.
Mr. Sensenbrenner. The gentleman's time has expired.
Mr. Horowitz, when you come here, you always give us all
kinds of good ideas on how to help you out. Please keep on
doing it, and you will be back.
Without objection, the Subcommittee is adjourned.
[Whereupon, at 10:44 a.m., the Subcommittee was adjourned.]