The Office of the Inspector General, Audit Division has audited costs incurred in relation to the Intergovernmental Service Agreement (IGA) between the United States Marshals Service (USMS), and the Blount County, Tennessee, Sheriff’s Office. Under the agreement, the Blount County Jail houses adult male and female detainees at a jail day rate of $45. The Federal Bureau of Prisons (BOP) and Department of Homeland Security (DHS) also house detainees at the jail under the $45 rate IGA.1 The current IGA is effective until September 30, 2006.
Our audit objectives were to determine whether: (1) information in the Cost Sheet for Detention Services is accurate, complete, and supported by adequate documentation; and (2) the daily rate is supported by adequate documentation and is based on reasonable, allocable, and allowable costs in accordance with applicable laws, regulations, guidelines, terms and conditions of the IGA.
For the period July 1, 2002, through May 31, 2005, the USMS, the BOP, and the DHS paid or were billed a total of $6,088,909 to house federal detainees. We question $5,588,035 paid by and billed to the USMS and the BOP.2 We also recommend that $2,849,850 in future payments to Blount County be put to better use elsewhere unless the USMS and Blount County implement the recommendations outlined in our report. Details of the billings and payments are shown below.
- The USMS paid Blount County $1,397,230 for fiscal year (FY) 2003 and $1,990,845 for FY 2004 to house an average of 85 and 121 detainees per day. Blount County also billed the USMS $2,038, 680 during FY 2005 to house an average of 136 detainees per day. Housing payments for FY 2003, FY 2004, and billings for FY 2005 total $5,426,755. The USMS also paid Blount County $31,402 during FYs 2003 and 2004 for transportation guards, hospital guards, mileage for transporting detainees, medication, and x-rays.
- The BOP paid Blount County $50,085 for FY 2003 and $60,345 for FY 2004 to house an average of three and four detainees per day. Blount County also billed the BOP $50,850 during FY 2005 to house an average of three detainees per day. Housing payments for HY 2003, FY 2004, and billings for FY 2005 total $161,280.
- The DHS paid Blount County $217,554 for FY 2003 and $210,915 for FY 2004 to house an average of 13 detainees per day during both fiscal years. Blount County also billed the DHS $72,405 during FY 2005 to house an average of five detainees per day. Housing payments for FY 2003, FY 2004, and billings for FY 2005 total $500,874. 3
According to a Blount County official, the jail also housed adult detainees for the Federal Bureau of Investigations, the Drug Enforcement Administration, and the National Parks Service, but not during the period covered by our audit.
The USMS entered into the agreement with Blount County on September 24, 1999, for a temporary jail rate of $45. The temporary rate was made permanent effective October 1, 2004, and remains in effect until September 30, 2006.4 However, based on our audit of Blount County’s FY 2003 and FY 2004 records, the approved $45 rate is not supported. We categorized our findings into two broad areas related to the daily count records and jail costs. The details of our analysis are shown below.
Support for the Daily Count
The USMS’s instructions for preparing the Cost Sheet for Detention Services state that “Prisoner population data must be submitted for the same accounting period as the cost data submitted . . . . The average daily prisoner population data should be verifiable to daily count logs or similar control documents.” In addition, 28 Code of Federal Regulations (CFR), Part 66, requires that organizations participating in the agreement should retain all financial records, supporting documents, statistical records, and other records pertaining to contracts or sub-awards under the IGA for at least 3 years.
We requested Blount County’s records of the daily physical count of detainees for FYs 2003 and 2004; however, Blount County did not retain records of daily counts for FY 2003 and was not able to provide information to verify abnormally low counts reflected in its records for FY 2004. We also found that Blount County did not use the daily count records to calculate its average daily population. Instead, Blount County used information contained in its automated booking system. The booking system may not be a reliable source for the daily count because, according to Blount County officials, an arrestee who is booked and released on the same day is counted as a detainee for housing. Because Blount County’s daily counts are not supported in accordance with USMS requirements, we question $5,588,035, which represents all reimbursement received by Blount County from the USMS and the BOP for the period July 1, 2002, through May 31, 2005, as unsupported. We also question projected reimbursements of $2,849,850 for the period June 1, 2005, through September 30, 2006, as funds to be put to better use. 5 We recommend that the USMS update and clarify its requirements for daily count records to be maintained by Blount County and other jails.
The USMS may remedy the dollar-related findings associated with this finding by determining that the Blount County method for counting population is sufficient to meet the intent of the USMS criteria for counting population. Should the USMS take that action, it will then need to address our findings pertaining to unsupported and unallowable costs.
Unsupported and Unallowable Costs
We audited Blount County’s costs to operate the jail for FYs 2003 and 2004 and found that the jail day rate of $45 was overstated for both years. We determined the audited rate for FY 2003 was $36.11 and the audited rate for FY 2004 was $34.33. 6 These rates are lower than the awarded rate because we took exception to $1.6 million in Blount County costs for FY 2003 and $1.7 million in costs for FY 2004. The details of our exceptions are presented in the body of this report. The largest exceptions pertain to unsupported interest expense, unsupported depreciation expense, and unallowable medical expense.
Based on the audited rates, the USMS overpaid Blount County $276,028 for FY 2003, $472,080 for FY 2004, and $483,394 for FY 2005 through May 2005 (a total of $1,231,502). Similarly, the BOP overpaid Blount County $9,895 for FY 2003, $14,309 for FY 2004, and $12,057 for FY 2005 through May 2005 (a total of $36,261). In addition, if our audited rate for FY 2004 is used for remaining FY 2005 payments to Blount County, the USMS will have funds to be put to better use totaling $703,196 and the BOP will have funds to be put to better use totaling $17,584. 7
Our findings are described in detail in the Findings and Recommendations section of this report. Our audit scope and methodology appear in Appendix IV.
- For the purposes of this report, the word “detainee” is synonymous with the word inmate, offender, people incarcerated, or prisoner.
- We audited $3,926,974 paid to Blount County by the USMS, the BOP, and the DHS during FY 2003 and FY 2004, which covered the period July 1, 2002, through June 30, 2004. We reviewed an additional $2,161,935 that Blount billed the USMS, the BOP and the DHS during FY 2005, which covered July 1, 2004 through May 31, 2005.
- See page 2 of this report for a note about our concerns related to the payments related to housing detainees.
- Blount County has another agreement with the USMS to house juvenile detainees at a rate of $80 for the USMS, the BOP, and the DHS but we did not audit this agreement because Blount County received only $3,920 from the USMS under that agreement and the juveniles were housed in a facility separate from the adult detainees. Blount also houses adult detainees for the State of Tennessee at a jail rate that, by state law, may not exceed $32 regardless of Blount County’s costs.
- Since the DHS uses the same IGA, it is affected by this finding at $500,874 for costs we consider as questioned costs and $98,550 we consider as funds to be put to better use. Overall, we identified questioned costs totaling $6,088,909 and funds to be put to better use totaling $2,948,400 for the USMS, the BOP, and the DHS for the periods July 1, 2002, through May 31 2005, and June 1, 2005, through September 30, 2006, respectively.
- These audited rates assume that Blount’s population data is usable for purposes of calculating a rate, which it may not be as discussed previously.
- Since the DHS uses the same IGA, it is affected by this finding at $110,158 for costs we consider as questioned costs and $24,925 we consider as funds to be put to better use. Overall, we identified questioned costs totaling $1,377,921 and funds to be put to better use totaling $745,705 for the USMS, the BOP, and the DHS for the periods July 1, 2002, through May 31, 2005, and June 1, 2005, through September 30, 2006, respectively.