D

Billions of dollars are saved annually through the Department of Justice’s successful defense of the public fisc in lawsuits alleging unwarranted monetary claims.  Plaintiffs advancing contract claims, allegations of government misconduct, claims of patent infringement and the like, expose the government to potentially staggering losses. The Department consistently mounts a strong defense against unwarranted and exaggerated claims to ensure that only those claims with merit under the law are paid.

Performance Measure:  % of Defensive Civil Monetary Cases Where 85% or More of the Claim is Defeated [Civil Division (CIV)]
            FY 2002 Target:  80%
            FY 2002 Actual:  86%
            Discussion: For the third straight year, the Civil Division exceeded its 80% goal.  This accomplishment understates CIV's success because, by definition, the measure excludes cases that do not specify monetary amounts, such as challenges to provisions in entitlement programs, including Medicare.  CIV's effective defense of these provisions that limit federal expenditures affect billions of dollars of public funds annually.

D

The Department of Justice serves a vital role when the laws, programs and policies of the United States are attacked in court.  These actions run the full gamut, such as challenges to Presidential determinations under the War Powers Act, to suits disputing the administration of the Medicare program. 

By securing favorable resolutions in civil cases, the Department ensures the intent of Congress, as well as represents the government’s response to some of the most probing issues of our time.  Examples include litigation concerning the freezing of terrorist financial assets, inclusion of the words “under God” in the Pledge of Allegiance, campaign finance reform, airline passenger identification requirements and luggage searches, intercepted cell-phone communications, and the military’s press policy.

Department of Justice attorneys must respond to a variety of immigration-related suits, including a heightened level of counterterrorism litigation and constitutional challenges to new immigration laws or reformed procedures.  Landmark cases concern the detainees at Guantanamo Bay and New York, the media’s access to immigration hearings, and constitutional challenges to the USA Patriot Act. The majority of immigration cases involve individual or class actions opposing actions by the INS and immigration judges.

Performance Measure: % of Favorable Resolutions in Civil Cases [CIV, EOUSA]
            FY 2002 Target:  80%
            FY 2002 Actual:  85%
            Discussion:  As in prior years, the performance target was surpassed, protecting the interests of the American people by effective legal representation in more than 51,000 cases.

STRATEGIC GOAL 5:  Fairly and Effectively Administer the Immigration and Naturalization Laws of the United States

13% of the Department’s Net Costs support this Goal.

At the Ports-of-Entry
Immigration Inspectors identify and examine persons seeking entry into the United States at air, land, and sea Ports-of-Entry (POEs) in order to prevent the entry of terrorists, criminals, and unlawful migrants.  This mission entails the full range of law enforcement and border security responsibilities balanced with the need to foster travel and tourism and facilitate commerce.

INS works with other Federal Inspection Services to obtain and utilize all available information before passengers arrive at United States borders via air, land, or sea.  The analysis of that data  provides information necessary to prevent illegal entry, human trafficking, and smuggling, among other crimes.

Between the Ports-of-Entry
The Border Patrol’s National Strategic Plan is the basis for a four-phased, multi-year approach to the deployment of new resources along the U.S. borders, initially concentrating on areas of greatest illegal entry.  The strategy has a national focus of “prevention through deterrence” as a means to restrict illegal traffic and encourage legal entry. Deterrence is defined as raising the risk of apprehension so high that it is futile to attempt entry.  The four-phased approach builds-up resources along the entire Southwest Border as well as the northern border and coastal areas of the U.S.

Areas with the highest concentration of illegal entry are given the highest priority.  The strategy focuses resources on specific sectors (further defined by corridors) in priority order.   Phase I includes San Diego and El Paso.  Phase II covers Tucson and McAllen. Phase III concentrates on Del Rio and Laredo and the remainder of the Southwest border.  Phase IV includes the Northern Border and Coastal areas, as well as new areas of activity.

The primary indicator of successful deterrence is the significant reduction followed by leveling off of attempted entry.  Optimum deterrence is defined, as the level at which applying more Border Patrol agents and resources would not yield a significant gain in arrests/deterrence.  This is a critical point in the strategy, as it would make little sense to try to reach essentially zero illegal entry attempts in one location while there are literally thousands of such attempts in another.  Through sufficient staffing in recent years, the Border Patrol has profiled and predicted the trend pattern to reaching optimum deterrence.  After several years of staffing increases, a peak is reached in staffing levels and arrests, followed by a reduction in illegal entry attempts (deterrence), culminating in a leveling off of both resources and arrests (optimum deterrence).  It can take up to 6-8 years to reach optimum deterrence provided there are sufficient resources.

Although an eventual reduction in arrests is a primary indicator of illegal entry attempts (and therefore deterrence), other critical indicators include: decrease in border related crime, decrease in recidivism, shifting of illegal activity to non-traditional points of entry and through non-traditional methods, increase in smuggling fees, increase in property values and commercial and public development along the border, etc.  Each of these factors is part of a comprehensive analysis conducted for each area.  The effectiveness of the Border Patrol’s National Strategic Plan is evidenced by the significant changes in illegal entry attempts in the San Diego, California; El Paso and Brownsville, Texas; and the Nogales, Arizona border areas. The ultimate impact is the increase in quality of life in these areas.

D

As a result of the events of September 11, 2001, the Border Patrol redirected its attention forward into Phase IV of the National Strategy expanding its focus to include the Northern Border and coastal areas of the U.S.  Additional Border Patrol Agents and Aircraft Pilots were deployed to the Northern Border, and the Border Patrol expanded its Integrated Border Enforcement Team (IBET) to all sectors along the Northern Border.  The IBET increases cooperation and exchange of intelligence between other federal, state, and local law enforcement agencies.  Representatives of the Royal Canadian Mounted Police are an integral part of the IBET teams.  

Performance Measure: High Priority Border Corridors Demonstrating Optimum Deterrence
            FY 2002 Target: 8
            FY 2002 Actual: 8
            Discussion: The Border Patrol met the FY 2002 target of eight high priority border corridors demonstrating optimal deterrence.  In addition, all nine southwest border sectors demonstrated an increase in operational effectiveness (above the FY 2000 baseline) in one or more corridors.  This increase in effectiveness was accomplished while expanding Border Patrol operations to address concerns that arose subsequent to the events of September 11, 2001.         Border Patrol enforcement efforts along the Southwest Border have contributed to an increase in the quality of life in communities located adjacent to the border.  The Border Patrol has been credited with the reduction of crimes commonly committed by undocumented migrants in specific areas where the Border Patrol maintains an enhanced enforcement presence.  These decreases in criminal activity and undocumented alien traffic have created a safer border environment, which has resulted in increased property values and rejuvenated certain residential neighborhoods.

INS is responsible for timely, accurate processing of applications for immigration benefits.  The current focus is to increase performance in Adjustment of Status application casework processing while meeting completion and backlog goals.

Quality is a primary consideration for application processing.  INS strives to maintain a high level of compliance with Naturalization Quality Procedures.  These procedures are designed to ensure that naturalization processing is performed consistently, correctly, and fairly.  Standardized reporting of compliance with Adjustment of Status Quality Procedures is under development.

D

Performance Measure: Average Case Processing Time [INS] (NOTE: This average is calculated by dividing the average of the past 12 months of completions into the number of pending applications at the end of September.)
            FY 2002 Target:
            Naturalization: 8 months
            Adjustment of Status: 10 months
            FY 2002 Actual:
            Naturalization: 10 months
            Adjustment of Status: 13 months
            Discussion:  A formal plan was developed to eliminate the backlog of immigration benefit applications over a 2-year period and achieve and maintain a 6-month processing standard for all applications.  Although the INS met the numerical case completions target for naturalization and 97% of the adjustment of status case completions target, the INS did not meet the processing time goals for these applications in FY 2002.  Naturalization applications increased significantly after September 11, 2001.  INS also instituted additional security checks on all applications in FY 2002, which required significant resources.  Future backlog elimination milestones will be revised to accommodate the receipt levels and security checks.

D

The rapid, continuing growth of passenger and vehicular traffic places greater demands on the inspection process.  In addition, multiple terrorist attacks on the U.S. on September 11, 2001, compels INS to continue increased scrutiny at all POEs to ensure border integrity and increase enforcement of our nation’s immigration laws, thereby preventing entry of terrorists and other criminals.  These necessary enforcement actions can result in longer lines and increased waiting times, especially at United States land border POEs.

While INS cannot compromise its enforcement mission, it strives to effectively manage the movement of travelers and commerce at POEs.  To accomplish that objective, INS works with transportation companies and other federal agencies to obtain and utilize all available information before passengers arrive at U.S. borders.

The INS and the U.S. Customs Service (USCS) agree that cooperation in policy and operational matters enhances the enforcement and traffic management objectives of each agency.  To this end, INS coordinates efforts with USCS and the other federal inspection services to facilitate the inspection of bonafide travelers.

Performance Measure: % of Total Commercial Flights to Clear Primary Inspection within 30 Minutes [INS]
            FY 2002 Target: 70%
            FY 2002 Actual: 73%
            Discussion: INS exceeded its target and cleared 73% of commercial flights through primary within 30 minutes.

STRATEGIC GOAL 6:  Protect American Society by Providing for the Safe, Secure, and Humane Confinement of Persons in Federal Custody

23% of the Department’s Net Costs support this Goal.

D

Historically, the USMS has administered the Federal Prisoner Detention (FPD) program for the federal government using funding appropriated specifically for the care of prisoners in federal custody.  In FY 2003, the Office of Detention Trustee will assume the oversight of the FPD program.  The FPD appropriation has provided financial support for the housing, subsistence, medical care, and medical guard services for federal detainees remanded to USMS custody.  The responsibility begins when a prisoner is brought into USMS custody.  It continues through the trial process, and ends when a prisoner is acquitted or arrives at a designated BOP facility to serve a sentence.  The USMS pre‑trial population is generated by public policy and multi‑component investigative and prosecutorial efforts within the DOJ or other federal law enforcement agencies. Since USMS, like BOP, is at the receiving end of the federal law enforcement initiatives and efforts, USMS has no control over the number of detainees remanded to its custody and has no option other than to house and care for the detainees.

Everyday, the Department must provide adequate, cost-effective, and appropriate transportation and bed space for each of the different categories of individuals placed into custody.  Factors affecting where an individual is confined include: 1) the proximity of the facility to the federal courthouse; 2) the cost per bed; 3) health issues; 4) the amenability of a facility to detain aliens; 5) the security of the facility; and 6) detention standards of confinement.  INS routinely utilizes its own facilities, contract facilities, state and local government facilities, and contract juvenile facilities to house detainees.  Detention bed space for detainees are routinely acquired through a combination of: 1) Intergovernmental Agreements (IGAs), where a daily rate is paid; 2) Cooperative Agreements (CAP) with state and local governments, where capital investment funding is provided in exchange for a guarantee of a certain number of bed spaces, for which a daily rate is paid when these bed spaces are used; 3) private contract facilities; and 4) federal detention facilities, where the government must pay for construction and operation of the facility.

Performance Measure: Jail Day Costs [USMS]
            FY 2002 Target:  $61
            FY 2002 Actual: $60
            Discussion: FY 2002 end of year data indicates an average jail day rate of $60, 1.5% lower than the projected rate of $61.  This slight decrease in the average jail rate is primarily a result of a smaller than anticipated impact of the D.C. Revitalization Act on the Federal Prisoner Detention Account in FY 2002.

The USMS continues to work cooperatively with the state and local governments and the private sector to establish and maintain adequate capacity to detain persons in federal custody in cost-effective, safe, secure and humane facilities, throughout the federal judicial process.  In FY 2002, the USMS met 72% of its housing needs through agreements with state and local governments or the private sector.  The remaining 28% of its prisoners were housed in federal detention facilities.

D

BOP constantly monitors facility capacity, population growth, and prisoner crowding.  As federal inmate population levels are projected to increase and continue to exceed the rated capacity of BOP, every possible action is being taken to protect the community, while keeping institutional crowding at manageable proportions to ensure that federal inmates continue to serve their sentences in a safe and humane environment.

Performance Measure: % Crowding by Security Level [BOP]
            FY 2002 Target:
            40% Low; 50% Medium; 47% High
            FY 2002 Actual:
            42% Low; 58% Medium; 41% High
            Discussion:  A contract delay for low security beds resulted in higher than anticipated crowding at low security BOP institutions; medium security BOP institutions were more crowded due to a delay in the planned mission change for Edgefield from high to medium security, and the new Petersburg Federal Correctional Institution (medium security level) was not activated as rapidly as earlier planned.  Crowding at high security BOP institutions was lower than projected as a result of Edgefield still housing high security inmates.

The goal of the BOP Facilities Management Program is to ensure existing facilities are maintained in compliance with security, safety, applicable regulations, building codes, and industry standards.  Established in 1994, facility training has been offered to both line staff and managers to develop staff skill levels for present and future facilities operations.  The training program has assisted institutions in lowering operating costs by training staff to perform required testing and maintenance procedures in-house and require less contracting with outside resources.

D

Performance Measure: Per Capita Costs [BOP]
            FY 2002 Target: $63
            FY 2002 Actual: $62

            Discussion:  The BOP continues to hold per capita costs below the annual rate of inflation by using various cost containment initiatives, such as shared services at prison complexes and reduction of travel and equipment expenses.  During FY 2002, a second Federal Correctional Institution was activated at the Petersburg,VA, site.  In addition, during FY 2002, more inmates were housed in BOP facilities, contributing to lower per capita costs than originally projected.

STRATEGIC GOAL 7:  Protect the Federal Judiciary and Provide Critical Support to the Federal Justice System to Ensure It Operates Effectively

4% of the Department’s Net Costs support this Goal.

D

USMS has primary jurisdiction to conduct and investigate fugitive matters involving escaped federal prisoners; probation, parole, and bond default violators; and warrants generated by DEA investigations and certain other related felony cases.  USMS has maintained its own "15 Most Wanted" fugitives list since 1983.  Additionally, USMS sponsors interagency fugitive task forces throughout the United States focusing its investigative efforts on fugitives wanted for crimes of violence and drug trafficking.  Major Case fugitives are the highest priority fugitives sought by the USMS and consist of all fugitives connected with the USMS 15 Most Wanted and Major Case Programs.b Fugitive investigations are designated as major cases according to:  a) the seriousness of the offenses charged; b) the danger posed by the fugitive to the community; c) the fugitive’s history of violence, career criminal status, or status as a major narcotics distributor; d) the substantial regional, national, or international attention surrounding the fugitive investigation; and/or e) other factors determined by the USMS.  On the international front, USMS has become the primary American agency responsible for extraditing fugitives wanted in the United States from foreign countries. USMS also apprehends fugitives within the United States who are wanted abroad.

In support of its fugitive mission, USMS provides investigative support such as telephone monitoring, electronic tracking, and audio-video recording.  In addition, analysts provide tactical and strategic expertise and judicial threat analysis.  USMS maintains its own central law enforcement computer system, the Warrant Information Network, which is instrumental in maintaining its criminal investigative operations nationwide.  In addition, USMS is able to enhance fugitive investigative efforts through data exchanges with other agencies, such as the Social Security Administration, the DEA, the Department of Agriculture, the Department of Defense, the Department of State, and a variety of state and local task forces around the country.

Performance Measure: Warrants Cleared  [USMS]
            FY 2002 Target:  Class I Warrants Cleared: 32,712; Class II Warrants Cleared: 22,565
            FY 2002 Actual: Class I Warrants Cleared: 34,655; Class II Warrants Cleared: 29,022
            Discussion: USMS directed its investigative efforts to reducing violent crime, which includes organized crime, and drug and gang related violence.  During FY 2002, the USMS cleared four of the most wanted fugitives.

 STRATEGIC GOAL 8:  Ensure Professionalism, Excellence, Accountability, and Integrity in the Management and Conduct of Department of Justice Activities and Programs

1% of the Department’s Net Costs support this Goal.

D

The Department, through its Office of Professional Responsibility (OPR), works to ensure that Department attorneys meet and maintain the high ethical standards expected of the nation’s principal law enforcement agency.  Specifically, OPR reviews and investigates allegations of professional misconduct by Department attorneys, investigators, or law enforcement personnel where the allegations relate to the exercise of an attorney’s authority to investigate, litigate, or provide legal advice. Through the performance of OPR, the Department seeks to ensure that Department attorneys, and investigative and law enforcement personnel working with the attorneys, comply with obligations and standards imposed by law, applicable rules of professional conduct, or Department regulations or policy, and that instances of failure to comply with those standards are identified and attorneys appropriately disciplined.

Performance Measure: Investigations of Alleged Professional Misconduct by DOJ Attorneys [OPR]
            FY 2002 Target: 80 Investigations
            FY 2002 Actual: 76 Investigations; 23 instances of Professional Misconduct Found
            Discussion: Despite fluctuations in the level of attorney and non-attorney staffing, OPR was able to achieve 95% of target for FY 2002 performance.  Allegations of serious misconduct were promptly and thoroughly investigated.  Attorneys who were found to have engaged in professional misconduct were disciplined fairly and uniformly, and these matters were referred to the relevant state bar.  Trends in misconduct allegations were brought to the attention of Senior Department Executives for appropriate follow-up action. 

Each year, OJP develops a risk-based monitoring plan that considers inherent programmatic and recipient risks, including the amount of funding at risk, known problems, special requests, and a random sample of active awards. OJP currently initiates financial monitoring (covering both OJP and COPS grant programs) and has achieved a reputation for having few reportable problems.  When rare instances of waste, fraud, or abuse are reported, OJP quickly responds with direct technical assistance to the recipients to correct serious problems or to the investigators in bringing about appropriate criminal prosecutions.  Financial monitoring provides our financial auditors assurance with regard to safeguarding agency assets and the accuracy of recipient-reported expenditures and related expenditure accrual, one of the largest components of OJP’s audited financial statements.  Following financial review, OJP’s staff provides technical assistance on the recommendations made until all recommendations have been implemented.  Once it has been determined that the grantee has sufficiently addressed all issues, the review is officially closed in writing.

D

The COPS monitoring program has several elements that assess how grantees are using federal funds, determine to what extent grantees are implementing community policing, and identify potential compliance issues.  COPS develops and then shares its site visit monitoring plan with the Office of the Inspector General (OIG), which also selects a number of COPS grantees for review.  Site visits yield detailed documentation of how COPS funds are being used, allow COPS to observe the implementation of COPS grants, and reveal the level to which individual jurisdictions have adopted the community policing philosophy in field activities.  The agency complements site visits with office-based grant reviews, which begin with an internal review of grant documentation followed by direct contact with the grantee and the collection of additional and/or supporting documentation demonstrating compliance with grant requirements.  The COPS Office has centralized its compliance resolution process and developed the Issue Resolution Module, a COPS-wide automated system that allows for the identification and status tracking of specific grantee issues.

Performance Measure:  Number of Financial Reviews Conducted [OJP]
            FY 2002 Target:  990
            FY 2002 Actual:  1,020Discussion: OJP exceeded the target conducting a combination of 456 on-site reviews and 564 in-house financial reviews.

ANALYSIS OF SYSTEMS, CONTROLS, AND LEGAL COMPLIANCE

The Federal Managers’ Financial Integrity Act (Integrity Act) requires federal agencies to conduct on-going evaluations of the adequacy of the systems of internal accounting and administrative control, and to report yearly to the President all material weaknesses and nonconformances found through these evaluations.  The Integrity Act also requires the heads of agencies to provide the President with yearly assurance that obligations and costs are in compliance with applicable law; funds, property, and other assets are safeguarded against waste, loss, unauthorized use, or misappropriation; and revenues and expenditures are properly recorded and accounted for to maintain accountability over the assets.

Management Controls Program in the Department of Justice

The Department is committed to using its financial resources properly and ensuring that its financial operations are both secure and efficient.  Managers must conform to specific management accountability and improvement policies when designing, planning, organizing, and carrying out their responsibilities in order to ensure the most efficient and effective operation of their programs.  Briefly, these policies address written guidance, delegation of authority and responsibility, hierarchical reporting of emerging management problems, personal integrity, quality data, separation of key duties and responsibilities, periodic comparisons of actual with recorded accountability of resources, routine assessment of programs with a high potential for risk, systematic review strategy to assess the effectiveness of program operations, and prompt management actions to correct significant problems or improve operations.

Annually, Department components must review their financial operations, systems, and controls, and report significant results to the Attorney General.  At the same time, the heads of components must assure the Attorney General that their management systems incorporate at least the minimum control standards described in Department guidance.  In addition, any inspection, audit, evaluation, peer or program review process, self-assessment, or equivalent, used by component management to keep informed about needs and opportunities for improvement must incorporate these same standards into its methodology.  Management accountability systems in all organizations must assure basic compliance with the objectives of the Integrity Act and the management control standards set by the General Accounting Office (GAO).

Integrity Act Material Weaknesses and Nonconformances Reported to the President for FY 2002

Summary of Status of Weaknesses

See Appendix C for Corrective Action Reports for all material weaknesses and nonconformances reported by the Department for FY 2002.

Financial Systems: The Department of Justice components are supported by seven different core financial management systems.  Four systems, including the Department’s main Financial Management Information System and the core systems at the OJP, DEA, and USMS, are substantially compliant with federal systems standards.  The systems at FBI, INS, and FPI have material weaknesses in accounting system standards, general system controls, or application controls, and are cited as being noncompliant with elements of the Federal Financial Management Improvement Act (FFMIA).   To address the immediate noncompliance issues, and to improve the long-term financial management infrastructure in the Department, we are committed to moving away from the fragmented multi-system environment we operate in today, and will adopt a single unified financial management system. While the Department reduced the system-related material weaknesses in this year's audit reports, and we can provide reasonable assurance that our financial systems, taken as a whole, meet the systems objectives in Section 4 of the Integrity Act, we are again reporting a separate material nonconformance specifically on financial systems compliance in our Section 4 certification.

Unified Financial Management System Project: The Attorney General has made improving our financial systems and performance one of the Department’s strategic goals.  The ability to improve the Department’s financial management performance is directly related to our capacity to rely on core systems, and the Department is committed to implementing a Joint Financial Management Improvement Program (JFMIP) certified core financial system.  The new system will be a commercial off-the-shelf (COTS) core product.  The effort is known as the Unified Financial Management System Project, and the new system is planned for implementation at DOJ components between FY 2004 and FY 2007.  During FY 2002, the Department established a formal Project Management Office, completed core requirements, timeline, and acquisition documents, and met with core software providers.  Contract award for the core financial software is planned for May 2003, and award of a software integration contract to assist with system implementation, training, business process re-engineering, and system configuration is planned for summer 2003.

Financial Controls: The Department’s Integrity Act Section 4 certification for FY 2002 reported four financial management material nonconformances.  One significant finding relates to the status of the Department's financial systems and the need to adopt a unified financial system.     Another significant finding is noncompliance with federal accounting standards.  In particular, components were cited for material weaknesses with accrual accounting, property, and revenue issues.  Material nonconformances covering INS’s accounting for deferred revenue and FPI’s accounting practices and systems were also reported.  DEA's nonconformance reported in FY 2001 with its accounting practices and systems was substantially remedied and the DEA issues are no longer considered as a nonconformance.  In addition to the control issues reported as Integrity Act nonconformances, the FBI auditors reported internal control weaknesses in accounting for property, recording accruals, compliance with generally accepted accounting principles, related financial statement preparation issues, and systems.

Corrective Actions:  Each Department component has developed corrective action plans designed to eliminate its Integrity Act material nonconformances and the internal control weaknesses reported in the financial audits.  These plans are reviewed by the Chief Financial Officer, and are subject to the Chief Financial Officer’s direction and guidance.  The plans resulted in a reduction of component level material weaknesses from thirteen in FY 2001 to nine in FY 2002.  The major focus of the Department’s FY 2003 corrective action process will be to eliminate component procedural weaknesses in business practices and financial operations, eliminate remaining financial statement preparation weaknesses, and diminish the general controls findings related to legacy systems.  The Attorney General’s financial management improvement goal for FY 2003 clearly articulates this expectation.

Accomplishments:  While the Department has not yet received a “green” rating in financial management on the President's Management Agenda scorecard, Department components have continued to make improvements to their financial operations and controls.   Notably, DEA was able to eliminate or diminish all four material weaknesses reported by the independent auditors in FY 2001.  Federal Prison Industries was able to make measurable improvements towards eliminating or diminishing the inventory and accounts receivable findings reported by auditors in prior years.  And, importantly, the Department continues to improve its overall financial statement preparation guidance and the process for effecting detailed elimination reconciliations between Department components and external agency trading partners.  

Integrity Act Section 2 – Material Weaknesses

Prison Crowding.  As of September 30, 2002, BOP’s systemwide crowding rate was 33% over rated capacity, and likely will continue as a material weakness.  This rate reflects the cumulative average for all security levels, including minimum, low, medium, and high security, as well as administrative and other special population housing.  The most crucial crowding is at the medium and high security level facilities, which house some of the most dangerous and predatory inmates.   BOP relies on funding for contract beds and to build and acquire additional facilities to help it manage its growing inmate population and reduce the crowding rate.  As of September 30, 2002, BOP’s total prison population was 163,436, reflecting an increase of 6,864 for FY 2002.  The Department projects continued growth in the prison population, which should reach 192,941 by September 30, 2007.  Through the construction of new facilities and expansion projects at existing institutions, BOP’s Long Range Capacity Plan projects a rated capacity of 127,920 beds by September 30, 2007.  Should new construction and expansion plans continue through FY 2007 as planned, crowding is projected to be 33% over the projected rated capacity.

Detention Space and Infrastructure.  The Department’s need for detention space continues to grow rapidly and, likely, will increase as the Department uses all means available to combat and prevent terrorism.  This growth has placed an increased demand on the infrastructure of the INS and the USMS as it pertains to detention, including transportation, communications, buildings, equipment, and staff.  To obtain sufficient detention space, the Department relies upon outside contractors (including state and local governments and private entities) to supplement existing federal detention space.  In FY 2001, the Department established a Federal Detention Trustee with broad responsibilities related to managing detention needs throughout the Department.   In FY 2002, the Trustee conducted a needs assessment of detention and detainee handling requirements and developed a baseline report for the present efficiency and effectiveness of the aspects of detention and detainee handling.  Beginning with the FY 2003 budget, both INS and USMS resources related to the detention function are consolidated within the Office of the Detention Trustee.   This centralizes the majority of the Department’s detention activities, allowing for a coordinated Department effort when obtaining detention space and ensuring the Trustee has the authority necessary to direct detention policy and manage detention resources.

Computer Security Implementation .  Financial and Security Act audits and reviews conducted by the Department’s Inspector General and independent verification and validation (IV&V) reviews, penetration testing, self assessments, and certifications and accreditations continue to identify weaknesses in both classified systems and sensitive but unclassified systems.  Specific concerns include issues with management, operational, and technical controls that protect each system and the data stored on it from unauthorized use, loss, or modification.  In the past year, the Department has made significant progress in strengthening the Department’s Information Technology (IT) Security Program and in implementing the requirements of the Security Act.  These accomplishments include:  appointing a Chief Information Officer (CIO) with a broad mandate to provide Department-wide leadership in the IT arena, including security; developing an IT Strategic Plan that sets forth a vision and specific initiatives for enhancing information security; continuing implementation and refinement of a departmental system for tracking all IT security weaknesses and corrective actions; fully integrating security into other IT management processes, such as capital planning; developing the Department’s Security Act Report, which included individual assessments of over 150 systems; awarding a contract for IV&V of component IT system security controls and initiating several tasks against the contract; initiating a project to define requirements for a Department-wide public key infrastructure program; and initiating a project to define requirements for a Department-wide security architecture. 

Monitoring of Alien Overstays.  Foreign visitors who legally enter the United States and then do not leave comprise a significant percentage of the illegal alien population.  In a 1997 inspection report, the OIG found that the INS had insufficient systems to compile information on the overstay population and lacked an enforcement policy that targeted that population.  In April 2002, the OIG issued a follow-up report on INS’ efforts to improve the control of nonimmigrant overstays (# I-2002-006).  Focusing on the security concerns of the earlier report, the April report concluded that INS had made little progress in addressing the issue.  Since then, the INS has implemented the Visa Waiver Program Entry-Exit System (VWP EES), which will be used in parallel with the Nonimmigrant Information System (NIIS) while an evaluation of the viability of the VWP EES is completed.  The Arrival/Departure Information System (ADIS) will be used as the repository for the information.

Organizational and Management Issues.  In 1997, GAO found that the INS needed to take steps to resolve management problems, including clarifying lines of communication and disseminating organizational policies and guidelines through manuals.  Since then, the INS has evaluated roles and responsibilities of organizational entities and reassigned duties where necessary; provided written guidance on appropriate relationships, communication methods, and coordination among the INS programs and offices; reviewed staff levels; issued comprehensive policy manuals; and reviewed the new deployment planning process.  However, conversion of documentation from older formats into the new field manual format has been slower than anticipated, and updating “completed manuals” involves more resources than anticipated.  Nevertheless, based on progress to date, the INS plans to release all operations field manuals by FY 2003.

Management of Automation Programs.  The INS’ Office of Information Resources Management (OIRM) has experienced longstanding difficulty in providing timely and consistent information about its activities.  The OIG has cited the OIRM for the lack of adequate management controls and repeatable business processes to efficiently and effectively manage IT.  Although INS has completed the milestones established for this issue and has provided its response to the OIG, INS is still awaiting a formal response from the OIG in order to close this material weakness.

Efforts to Identify and Remove Criminal Aliens.  In July 1997, GAO issued a report on the INS Institutional Hearing Program (IHP), noting that the INS: (1) failed to identify many deportable criminal aliens, including aggravated felons, and to initiate IHP proceedings for them before they were released from prison; (2) did not complete the IHP by the time of prison release for the majority of criminal aliens it did identify; and (3) had not realized intended enhancements to the IHP.  Since then, the INS Institutional Removal Program (IRP, formerly IHP) has exceeded its removal goals annually.  The IRP has focused more attention on up-front processing to ensure that criminal aliens are not released into INS’ custody without removal orders, and the INS has created a mechanism to finalize unfinished removal proceedings within 1 day of release from federal, state, or local incarceration.  INS continues to finalize the IRP transition plan from Investigation to the Detention and Removal Program and deploy the IRP Criminal Alien Information System (CAIS) to all federal sites.  INS also is exploring the possibility of deploying CAIS to state IRP programs and/or using functionality already in the INS ENFORCE system to track and manage IRP cases.  Eventually, all IRP case management and tracking functions will be incorporated into ENFORCE Apprehension and Removal modules.  INS’ reclassification of Immigration Agents and Detention Enforcement Officers into one job series to provide greater authority to more officers to work IRP cases and to lower the attrition rate, has been delayed until March 2003, pending the transition of positions into the new Department of Homeland Security.

Missing/Lost/Stolen Laptop Computers.  (INS)  INS’ quarterly laptop and firearm inventory report, dated October 18, 2002, indicated that, out of a total of 12,522 laptop computers (including palm pilots), 458 were reported missing or lost and 11 were reported stolen in INS’ Asset Management Information System (AMIS).  In July 2002, laptop computers became part of INS’ annual inventory, and all INS offices are in the process of accounting for their missing/lost laptops.  The Property Management Officer is regularly checking the status.

Property and Equipment.  (FBI) OIG Report No. 02-27, “The FBI’s Control Over Weapons and Laptop Computers,” released in August 2002, revealed significant problems with the FBI’s management of weapons and laptop computers.  Although the number of functional weapons reported missing during the review period amounted to less than one-half of one percent of the FBI’s inventory, the significance of these losses is measured in the sensitive nature of the missing property, not in numbers.  Similarly, the number of laptops reported missing during this same period equated to only approximately two percent of the FBI’s inventory.  However, because the security level of 70 percent of the lost or stolen laptops was “unknown,” this loss is potentially significant because the information contained on these laptops could compromise national security or jeopardize ongoing investigations.

Management of Information Technology.  (FBI)  A December 2002 OIG audit report entitled “FBI’s Management of Information Technology Investments” stated that in the past the FBI has not given sufficient management attention to IT investments.  As a result, the FBI has not fully implemented critical processes necessary for such management and has invested large sums of money on IT projects without assurance that these projects would meet intended goals.

Integrity Act Section 4–Material Nonconformances

DOJ Financial Systems Compliance.  The DOJ audit report on the FY 2000 consolidated financial statements identified the INS, FBI, DEA, USMS, and FPI as not meeting federal accounting standards or systems requirements and having material weaknesses in system controls/security.  The conditions were repeated in the FY 2001 audits.  In FY 2002, the INS, FBI, and FPI had the same material systems weaknesses in systems controls/security.  DEA and USMS were able to correct their material systems weakness, diminishing the findings to a reportable condition.  OJP, BOP, and OBD/U.S. Trustees also had reportable conditions related to systems.  The need to address weaknesses cited in the financial statement audits, nonconformances with OMB Circular No. A-127, technological changes, and the need to better support critical financial operations and agency programs contribute to the necessity to modernize DOJ financial systems and improve internal controls.  The Department identified a unified financial system as one of the ten goals for revamping the Department’s management.  The unified system will be a commercial, “off the shelf” (COTS) Financial Management System product(s) certified by the Joint Financial Management Improvement Program (JFMIP) as meeting core federal financial management system requirements.  The planning phase for this project was completed in August 2002 and the contract for the COTS is anticipated to be awarded in May 2003. 

DOJ Accounting Standards Compliance.   In the FY 2002 audit reports, the FBI, OBDs, INS, and WCF were reported as having material weaknesses in their compliance with certain federal accounting standards.  Included were findings related to accounts payable and general accrual accounting, general and seized property, and accounting for reimbursement and other revenue.   In several components, difficulties meeting federal accounting standards also impacted their financial statement preparation.  The affected components are updating their corrective action plans to eliminate or diminish the weaknesses in their accounting practices during FY 2003, and this area will be a heavy area of emphasis in the Department’s early 2003 financial management training efforts.      

INS Deferred Revenue.  Auditors report that systems and management controls used by INS to process applications for immigration and naturalization benefits do not ensure applications are adequately controlled or provide reliable data on the status of applications.  Without adequate control on the status of applications received and completed, INS is not able to accurately determine deferred and earned revenue without relying on a service-wide manual application count.  The INS will implement a system that will report accurate deferred and earned revenue by deploying the National File Tracking System with perpetual inventory functionality and data for tracking the applications by September 30, 2004.

FPI Adherence to Accounting Standards and Financial Management System Requirements.  In May 2000, the FPI implemented Millennium, an enterprise resource planning system that does not yet meet all the financial management requirements of OMB Circular No. A-127.  Weaknesses were identified in system security and controls over inventories, accounts receivables, and the financial statement preparation process.  The FPI will implement policies and procedures to improve risk assessment/system security management, including procedures for granting system access and providing employee security awareness training, by January 31, 2004.  The FPI, working with its contractors, corrected weaknesses in inventories, accounts receivables, and the financial statement reporting process.  

Statistical Summary of Performance – FY 2002

Section 2: Internal Controls

Section 4: Financial Management Systems

Legal Compliance 

The Department is committed to ensuring its financial activities are carried out in full compliance with applicable laws and regulations.  To ensure this responsibility is carried out, senior Department financial managers direct annual reviews of financial operations and programs, and provide assurance to the Attorney General that Department activities are compliant with laws and regulations.  The JMD, under the direction of the Chief Financial Officer, directs an annual review of operations and controls pursuant to the Integrity Act.  In FY 2001, the independent auditors reported that the Department was noncompliant with the Federal Financial Management Improvement Act in the following instances: the FBI, INS, DEA, USMS, and FPI were not compliant with federal systems standards.  In FY 2002, DEA and USMS corrected their material systems issues while FBI, INS, and FPI were cited for noncompliance with systems standards.  Regarding accounting standards, in FY 2001 the auditors reported that FBI, INS, DEA, and FPI were noncompliant with certain federal standards.  In FY 2002, DEA and FPI successfully corrected their weaknesses in this area but FBI, INS, the OBDs, and the WCF had material weaknesses reported by the auditors and thus were not compliant with federal accounting standards.  Finally, FPI was cited for not accounting for debts with the public in accordance with the Debt Collection Act of 1996.

POSSIBLE EFFECTS OF EXISTING, CURRENTLY-KNOWN DEMANDS, RISKS, UNCERTAINTIES, EVENTS, CONDITIONS, AND TRENDS

FY 2002 Change in Strategic Goal Structure

As discussed previously, on November 8, 2001, the Attorney General announced major changes in the Department to support its counterterrorism role, and released the Strategic Plan for Fiscal Years 2001-2006.  The Department continues to enforce vigorously the broad spectrum of laws of the United States.  However, the fight against terrorism is now the first and overriding priority of the Department.  It is also the first of eight goals in the revised Strategic Plan.   Implementing these new goals has affected the many functions and responsibilities of the Department.

Establishment of the Department of Homeland Security and the Bureau of Alcohol, Tobacco, Firearms, and Explosives

On November 25, 2002, the President signed the Homeland Security Act of 2002, which creates a new Department of Homeland Security.  Agencies that will become part of the new department, including the Immigration and Naturalization Service and other selected functions of the Department, will be transferred some time during a one-year transition period.  In addition, the Act also transfers most of the functions of the Bureau of Alcohol, Tobacco, and Firearms from the Department of the Treasury to the Department of Justice, to create a new Bureau of Alcohol, Tobacco, Firearms, and Explosives. 

Other Factors and Future Trends Affecting Department of Justice Goal Achievement

Technology

• Advances in high speed telecommunications, computers, and other technologies are creating new opportunities for criminals, new classes of crimes, and new challenges for law enforcement.

Economy

• Possible increases in consumer debt may affect bankruptcy filings. 
  
• Deregulation, economic growth, and globalization are changing the volume and nature of anti-competitive behavior.
  
• The interconnected nature of the world’s economy is increasing opportunities for criminal activity, including money laundering, white collar crime, and alien smuggling.

Government

• Changes in the fiscal posture or policies of state and local governments could have dramatic effects on the capacity of state and local governments to remain effective law enforcement partners.

Globalization

• Issues of criminal and civil justice increasingly transcend national boundaries, require the cooperation of foreign governments, and involve treaty obligations, multinational environment and trade agreements, and other foreign policy concerns.

Social-Demographic

• The number of adolescents and young adults, now the most crime-prone segment of the population, is expected to grow rapidly over the next several years.

The Unpredictable

• Changes in federal laws may affect responsibilities and workload.
  
• Much of the litigation caseload is defensive.  The Department has little control over the number, size, and complexity of the civil lawsuits it must defend.

The Department’s leadership is committed to ensuring its programs and activities will continue to be targeted to meeting the dynamic demands of the changing legal, economic, and technological environments of the future.

LIMITATIONS OF THE FINANCIAL STATEMENTS

• The financial statements have been prepared to report the financial position and results of operations of the Department, pursuant to the requirements of 31 U.S.C. 3515(b).
  
• While the statements have been prepared from the books and records of the Department in accordance with generally accepted accounting principles for federal entities and the formats prescribed by OMB, the statements are in addition to the financial reports used to monitor and control budgetary resources which are prepared from the same books and records.
  
• The statements should be read with the realization that they are for a component of the U.S. Government, a sovereign entity.