Review of the Drug Enforcement Administrationís Use of the Diversion Control Fee Account

Evaluation and Inspections Report I-2008-002
February 2008
Office of the Inspector General


Results of the Review

We did not substantiate the allegations that the DEA misused Fee Account funds for non-diversion control activities between FY 2004 and FY 2007.

We based our determination on our review of obligations of $500 and under in three field divisions, obligations exceeding $500, interviews with diversion control personnel at headquarters and in the field, and various DEA documents concerning diversion control. The following is a discussion of what we found.

Obligations of $500 and Under

Our review found that obligations of $500 and under in the three field offices we visited were for diversion control-related activities. During our site visits to DEA field divisions in Chicago, Detroit, and St. Louis, we reviewed a random sample of 265 obligation documents for expenses of $500 and under. The Diversion Program Manager or other senior diversion control personnel in the field is supposed to approve these obligations to ensure that the commitment requests are for diversion control activities before they are obligated. We reviewed these obligations to confirm that they were in fact made for legitimate diversion control activities.

We concluded that an obligation was diversion control-related if we could confirm from information on the obligation documents that the expense fell into one of the following categories:

We found that 247 (93 percent) of the 265 obligations were clearly for diversion control activities because they were expenses that fell into one of the categories above. The remaining 18 obligations were for office supply orders that were approved and signed by the Diversion Program Manager. We concluded that these 18 (7 percent) obligations were valid diversion control expenses because they were approved by the highest-ranking diversion control employee in the field division as part of the DEA’s process for ensuring that Fee Account expenses of $500 and under are legitimate diversion control expenses. Table 2 summarizes the results of our analysis.

Table 2: Criteria for Determining if Obligations Were Related to
Diversion Control and Number of Obligations Determined to Be Related

Criteria Obligations
that fit criteria
Supplies or services were for diversion control personnel 105
Expense supported an investigation with a diversion case number or substance identifier 95
Traveler was a diversion control employee or the travel was related to a diversion control activity 23
Training was for a diversion control employee 14
Expense was related to a Diversion Control Program vehicle 10
Diversion Program Manager signed the obligation form 18
Total 265
Source: OIG analysis

Obligations Exceeding $500

We found that all of the obligations exceeding $500 that we reviewed were valid diversion control expenses. We examined a sample of 50 obligations exceeding $500, which the DEA requires the Validation Unit to validate. Table 3 shows the number of obligation documents we reviewed for each of the fiscal years in our review period.

Table 3: Obligations Exceeding $500
Reviewed by OIG

Fiscal year Obligations reviewed
FY 2004 10
FY 2005 13
FY 2006 16
FY 2007 11
Total 50
Source: OIG analysis

We determined that 46 of the obligations were diversion control-related because the requisition form or a related document contained a written justification explaining how the expense was related to diversion control. We discussed the four obligations that did not contain written justifications with the Unit Chief of the Validation Unit. Three of these obligations were for expenses related to training, but nothing on the documentation indicated why the expenses were diversion control-related. The Validation Unit Chief said the training expenses were fee-fundable because in each case the trainee was in a fee-funded position. The fourth obligation was for remodeling office space for a field division office. In this case, the obligation document we reviewed was for additional work on a project that had been previously validated under a different document number. The Validation Unit Chief provided us with documentation from the original validation that showed the number of Diversion Investigators in the office. We verified that the share of the remodeling costs charged to the Fee Account was correctly based on the share of all employees in the office who were Diversion Investigators. Three other obligation documents had not been validated as required, but we were able to determine from the corresponding written justifications how the expenses were related to diversion control. Two of these obligation documents were from FY 2005, and one was from FY 2004.

Allegations Regarding the Use of Fee Account Funds

We categorized the allegations into three general categories:

In interviewing DEA Diversion Investigators in field divisions about the use of Fee Account funds, we learned more about perceptions that funds had been spent on non-diversion control activities.31 The interviews, along with a review of diversion control documents, further substantiated that the DEA did not spend Fee Account funds on non-diversion control activities between FY 2004 and FY 2007. We interviewed Diversion Investigators in the three field divisions we visited to determine if they had any knowledge of current use of Fee Account funds for non‑diversion control activities.

In the interviews, we asked Diversion Investigators assigned to field divisions about these three categories of allegations to determine if they had any direct knowledge of misuse that had occurred since 2004 and also asked them to share any specific examples with us. We also asked them if Fee Account funding was adequate for their diversion control investigations. The results of our interviews are discussed below.

Alleged Lack of Fee Account Funds for Overtime, Travel, and Investigative Expenses. One area of concern for the Diversion Investigators was their belief that Diversion Investigators could not work overtime, initiate needed travel, or have access to certain essentials such as investigative equipment because of a lack of Fee Account funds. During our site visits, we asked Diversion Investigators about these specific areas for which Fee Account funds were alleged to be unavailable. Our review found that overtime, travel, and equipment had indeed been limited during our review period, but DEA managers provided two explanations for the limitations.

First, managers in the Diversion Control Program restricted spending in many areas after the DEA was unable to begin to collect higher registration fees for a year after it proposed the fee increase in November 2005. Although the DEA had anticipated collecting $238 million in registration fees in FY 2006, it collected $163 million, roughly $75 million less than expected. In response, the Deputy Assistant Administrator Office of Diversion Control sent a memorandum in July 2006 to all office heads explaining that the Office of Diversion Control had projected a funding shortfall for the rest of FY 2006 and that funding for overtime, travel (unrelated to investigations), and equipment was limited. Specifically, the memorandum stated:

Until the new [Fee Account] fee structure is collected, the following additional [Fee Account] program changes are required:

The memorandum stated that if diversion control employees needed to work more hours of overtime than allotted to the field division or need to travel or purchase equipment, their supervisors would need to receive approval from the Deputy Assistant Administrator of the Office of Diversion Control in advance and that each request would be decided on a case-by-case basis.

During our site visits, some Diversion Investigators stated to us that they were hesitant to request overtime because of these restrictions. However, we determined that, when actually requested, most requests that were submitted to the Office of Diversion Control for overtime, travel, and equipment were approved. From July 2006 through September 2007, the Office of Diversion Control recorded 327 requests to use Fee Account funds in areas that had been restricted, and approved 311 (95 percent) of those requests. Specifically regarding requests personnel submitted for equipment purchases, travel expenses, and additional overtime from July 2006 through September 2007, we found that the DEA had approved 120 (97 percent) of the 124 requests. We recognize that other requests may not have actually been submitted to the Office of Diversion Control by Diversion Program Managers.

A second restriction on Fee Account expenditures resulted from the settlement of a lawsuit brought by Diversion Investigators regarding how much compensation they would receive for overtime.32 Previously, Diversion Investigators at the GS-12 and 13 level were exempt from the Fair Labor Standards Act, meaning their overtime was paid at less than 1.5 times their regular rate of pay. In early 2007, the DEA settled the lawsuit and as a result increased the overtime rate for all current Diversion Investigators at the affected grade levels. Due to the substantially higher costs for overtime and concerns about exceeding the budgeted amount of Fee Account funds for overtime, the Office of Diversion Control managers strictly limited the cumulative number of hours of overtime worked in the field divisions to 3,072 hours in May 2007. The DEA continued this restriction through May until it could ensure that enough Fee Account funds were available to pay for overtime for the rest of FY 2007. Starting in June 2007, the number of authorized hours of overtime per month increased. Table 4 shows the overtime hours authorized for use by field divisions in FY 2007.

Table 4: Authorized Hours of Overtime
for All DEA Field Divisions by Month, FY 2007

Month and year Authorized hours of overtime
October 2006 4,323
November 2006 3,660
December 2006 3,660
January 2007 3,676
February 2007 3,720
March 2007 3,785
April 2007 3,676
May 2007 3,072
June 2007 3,872
July 2007 3,989
August 2007 3,660
September 2007 3,908
Source: DEA data

Finally, during our site visits we asked the Diversion Investigators we interviewed about the adequacy of Fee Account funding for their investigations and overall diversion control operations. We found that 25 out of 27 (93 percent) of the respondents stated that Fee Account funds were adequate for their field divisions’ diversion control activities and operations. Table 5 shows the Diversion Investigators’ responses to our questions.

Table 5: Diversion Investigator Responses to OIG Questions

Question Respondents
who answered
“Yes”
Respondents
who answered
“No”
Are funds allocated through the Fee Account adequate for the field division’s diversion control activities and operations? 25 2
Have you been able to get the investigative equipment that you needed? 27 4
Are operational funds for investigation expenses adequate? 27 2
Has funding always allowed you to open investigations? 26 1

Note: Response totals do not equal 34 because some respondents did not answer all questions.

Source: OIG analysis

We also asked Diversion Investigators who stated that they were not able to get investigative equipment they needed because of a lack of Fee Account funds for specific examples. In each of the three specific examples they reported to us, we determined that the issue had either since been resolved by the Office of Diversion Control or a constraint on funding had not been the underlying reason the equipment request was not met.33 One Diversion Investigator described the need for global positioning satellite (GPS) systems for the government vehicles Diversion Investigators use to travel to unfamiliar and sometimes unsafe areas to conduct investigations. When we asked the Office of Diversion Control managers about this, they told us that they had purchased GPS systems for all diversion control vehicles, but the systems had not been installed yet. Another Diversion Investigator stated that laptop computers were necessary to conduct Internet checks of registrants, a task that would be difficult if laptops were not upgraded or replaced every few years. The Office of Diversion Control managers told us that all Diversion Investigators had their own laptops and that they were last replaced in 2005. Finally, one Diversion Investigator stated that the cellular phones Diversion Investigators use did not always provide good coverage. But when we asked the Diversion Program Manager in this field division about this problem, he told us that because different cellular telephone companies provided better coverage in some parts of the field division’s territory than others, no one cellular phone service was the most reliable for the entire field division and that funding constraints were not a factor in the cell phones provided to Diversion Investigators.

In terms of operational funds for investigative expenses, we concluded that the lack of Fee Account funds had not impeded diversion control operations in the three field divisions we visited. Two Diversion Investigators stated that operational funds were inadequate. However, their responses to our follow-up questions indicated that their concern was that managers had increased the controls over obtaining funding and decreased the flexibility in how funds can be used rather than making funds unavailable when needed for a justifiable investigative expense.

Alleged Lack of Fee Account Funds for Hiring New Diversion Investigators. We determined that the DEA had not hired new Diversion Investigators since November 2005 and that, as of October 2007, the Diversion Control Program was 112 Diversion Investigators below its authorized number of positions. Office of Diversion Control managers told us that they had suspended the hiring of Diversion Investigators because they were awaiting a final decision regarding a request to reclassify the Diversion Investigator position to include law enforcement authority.

The Office of Diversion Control managers told us that the DEA intended to reclassify the Diversion Investigator position by creating a new law enforcement job series for Diversion Investigators, a change that required Office of Personnel Management (OPM) approval. The Office of Diversion Control managers stated that the DEA decided not to hire new Diversion Investigators until OPM approved or denied the request. In September 2007, OPM denied the request to reclassify the Diversion Investigator position. Office of Diversion Control managers stated that because the proposal is no longer pending they would begin hiring additional Special Agents dedicated to diversion control. Managers also stated that their decisions regarding the hiring of new Diversion Investigators will depend on the results of an ongoing staffing study to determine the optimal balance of Diversion Investigators and Special Agents in field divisions.

Alleged Use of Fee Account Funds to Pay for Salaries and Other Associated Costs of Special Agents and Intelligence Analysts. We did not find that the DEA used Fee Account funds inappropriately to pay the salaries and associated costs of Special Agents and Intelligence Analysts. The allegation was that Fee Account funds were being used to compensate Special Agents and Intelligence Analysts who did not always work on diversion control activities. As stated in the Background section, the DEA began assigning Special Agents and Intelligence Analysts to the Diversion Control Program in the past few years to conduct and assist with diversion control investigations. The allegations in the Chairman’s letter and interviews we conducted in the field indicated that Diversion Investigators did not believe that these Special Agents or Intelligence Analysts were always working on diversion control investigations.

Diversion Investigators complained that the Special Agents and Intelligence Analysts assigned to their groups still had responsibilities related to their previous assignments. For example, Diversion Investigators stated that in one field division the Special Agent assigned to the diversion group still had demand reduction responsibilities and, in another field division, the Special Agent assigned to the diversion group also served in the DEA’s Aviation Division approximately 1 day a month.34 Some Diversion Investigators also told us that the Special Agents assigned to their groups would “go missing”; did not appear to be dedicated only to diversion control investigations; and would initiate and work on their own diversion control cases instead of assisting Diversion Investigators with their cases. With regard to the Intelligence Analysts, the Diversion Investigators believed that the Intelligence Analysts assigned to assist diversion control still had responsibilities related to illicit drug investigations and were not dedicated full time to diversion control activities. The Diversion Investigators stated that having other responsibilities detracted from the Special Agents’ and Intelligence Analysts’ ability to fully support the Diversion Control Program.

FY 2006 Special Agent Salary Expenses Charged to the Fee Account

In FY 2006, Congress authorized that 70 FTEs for Special Agents could be paid through the Fee Account. Through examination of the Special Agent timesheets for FY 2006, the DEA determined that Special Agents spent 95 FTEs on criminal diversion control investigations. However, since Congress authorized only 70 FTEs for Special Agents to be fee-funded in FY 2006, the Fee Account paid only for the salary equivalent of the 70 FTEs for Special Agents, and appropriated funds were used to pay for the remaining 25 FTEs spent conducting criminal diversion control investigations.

We found that the DEA’s method for calculating fee-fundable salary costs accounts for time that Special Agents spend on criminal diversion investigations versus criminal investigations of illicit drugs, and charges the Fee Account only for the cumulative number of hours that Special Agents spend on criminal diversion investigations. The DEA requires all Special Agents and Intelligence Analysts to complete biweekly timesheets that show the number of hours they worked on specific investigations and other activities, including criminal diversion investigations. Each year, the DEA calculates the number of Special Agent and Intelligence Analyst full-time equivalents (FTE) spent on criminal diversion investigations.35 The DEA does not charge the Fee Account for more FTEs than have been cumulatively recorded by Special Agents and Intelligence Analysts as time spent on criminal diversion investigations. In addition, the DEA compares the number of FTEs worked on criminal diversion investigations to the number of agents or analysts that were congressionally authorized in a given fiscal year. It uses Fee Account funds to pay for FTEs within the congressional authorization and uses its appropriated funds to pay for any FTEs worked beyond the congressional authorization. (See the example in the text box.)

Therefore, even if a Special Agent or Intelligence Analyst assigned to the Diversion Control Program had other responsibilities, DEA’s method of calculating fee-fundable salary costs accounts for any time that fee-funded Special Agents and Intelligence Analysts do not spend on criminal diversion investigations. The DEA only charges the Fee Account for salary costs associated with fee-fundable investigations.

Additionally, at the three field divisions we visited we asked the Special Agents in Charge and Diversion Program Managers about their field divisions’ expectations for how much time the Special Agents and Intelligence Analysts should work on diversion investigations versus illegal drug investigations. They told us that the Special Agents and Intelligence Analysts should only be conducting diversion investigations; however, it is still appropriate for them to assist in non-diversion matters when the division needs additional Special Agents or Intelligence Analysts (such as for large operations or emergencies) and to conduct collateral duties as needed by the field division. Five of the seven Group Supervisors in field divisions we visited had Special Agents or Intelligence Analysts assigned to their group. We asked them whether the Special Agents and Intelligence Analysts assigned to their groups actually worked only on diversion control matters. They stated that the time spent on other duties was minimal and did not interfere with their support of the diversion group.

Diversion Investigator Perceptions

Because we found that many of the allegations were unsupported, we also examined how Diversion Investigators came to the perception that the DEA had used the Fee Account inappropriately. Fourteen of 34 (41 percent) Diversion Investigators we interviewed in field divisions told us that they thought the DEA was using Fee Account funds inappropriately. In the allegations referred to us by the Chairman and in our interviews with Diversion Investigators, we found that Diversion Investigators’ primary concern was based on two perceptions regarding the DEA’s use of Fee Account funds. First, Diversion Investigators questioned whether the increased use of Fee Account funds for Special Agent and Intelligence Analyst salaries was worth the additional costs to the Diversion Control Program. Second, diversion control personnel had misperceptions about whether the DEA was allowed to use Fee Account funds for certain diversion control activities. Based on our discussions with diversion control personnel and our review of DEA’s management of the Diversion Control Program, we believe that DEA’s recent policy of using more Special Agents and Intelligence Analysts within the Diversion Control Program, combined with an inaccurate understanding of how the DEA can use the Fee Account, contributed to the Diversion Investigators’ perception that the DEA used Fee Account funds inappropriately.

In addition, 13 of 34 (38 percent) Diversion Investigators we interviewed questioned whether fee-funded Special Agents and Intelligence Analysts are worth the additional costs to the Diversion Control Program. According to one supervisor, from the Diversion Investigators’ perspective fee-funded Special Agents cost more in terms of salary and benefits compared with Diversion Investigators, but do not generally perform all Diversion Investigator duties such as regulatory investigations. The following excerpt from a document that we received during our field visits explains the concerns of the Diversion Investigators about fee-funded Special Agents:

In addition to having their salaries paid by the Diversion Fee Account, the [Occupational Series] 1811 Special Agents... continue to receive an enhanced salary which incorporates an increased law enforcement locality pay, a 25% law enforcement availability pay (LEAP) and a higher retirement cost to be paid out of the Fee Account.36 Not a single Diversion Investigator receives any of the previously listed enhancements. Therefore, the Fee Account will compensate a Special Agent, who almost in every instance is not as qualified as a Diversion Investigator, more compensation.... Numerous Diversion offices nationally reported that Special Agents have been assigned into their Diversion groups spontaneously. Despite the amount of support offered towards Diversion related activities, their salaries are paid by the Fee Account. In addition, the Agents are directed to authorize Diversion credit cards for fuel, vehicle repairs and to purchase equipment to be funded by the Fee Account.

Some Diversion Investigators also viewed fee-funded Intelligence Analysts as an unnecessary cost to the Fee Account because Diversion Investigators were used to performing the investigative support tasks of Intelligence Analysts themselves. The Diversion Investigators we spoke with perceived that Intelligence Analysts were not needed to support diversion control and represented an unnecessary cost to the Fee Account. Several Diversion Investigators stated that they conducted their own intelligence analysis and that an Intelligence Analyst assigned full time to diversion would never have enough work to do. Some were unfamiliar with how Intelligence Analysts supported the Diversion Control Program and what their role and purpose was. Others stated that they believed the Fee Account was being used to pay for Intelligence Analysts who would not be working full time on diversion.

In addition to disagreeing with DEA’s new approach to staffing the Diversion Control Program, Diversion Investigators believed that the DEA misused the Fee Account because they had misconceptions about how the DEA could use Fee Account funds. We found that Diversion Program Managers did not necessarily know that the DEA could fund investigations from the Fee Account as long as the investigation s pertained to a controlled substance or listed chemical, even if no Diversion Investigator was involved in the investigation and the investigation was not labeled with a diversion case number.37 For example, one Diversion Program Manager sent an e-mail to all other Diversion Program Managers that stated:

I was not aware that diversion fee acct funds can be used to fund a criminal investigation... even if no diversion investigators are involved and no [case number indicating the case was initiated by a Diversion Investigator] is used.... If a “nexus” exists for a connection to a diversion case, then diversion fee acct funds can be used by the agents.

This Diversion Program Manager learned the Fee Account funds could be used in these instances from Office of Diversion Control managers. In addition, during our interviews, two Diversion Investigators stated that the Fee Account could be used to support Diversion Investigators only and not Special Agents.

The DEA’s use of Fee Account funds for Special Agents and Intelligence Analysts is allowed and authorized by Congress in DEA’s budget and DEA describes in notices in the Federal Register. For example, the August 2006 Final Rule published in the Federal Register states that Fee Account funds may be used to pay for Special Agents and Intelligence Analysts. It states that the Fee Account will pay for 52 additional Special Agent positions to support the Diversion Control Program “ by serving warrants, providing undercover support, making arrests, and providing other functions that Diversion Investigators are prohibited from executing but that are core elements of diversion control.” Further, it states that the FY 2006 cost of the Diversion Control Program includes “34 of the 67 field intelligence analysts to be phased in between Fiscal Year 2006-2007.”

Shifts in Use of Fee Account Funds. Diversion Investigators’ concerns about inappropriate use of Fee Account funds coincided with an increase in the number and associated salary costs of fee-funded Special Agents and Intelligence Analysts involved in the Diversion Control Program. Since the beginning of our review period, the DEA increased the number of Special Agents assigned to diversion control groups. The Special Agents were added to conduct and assist with diversion investigations because Diversion Investigators do not have law enforcement authority and cannot serve warrants, conduct surveillance, manage confidential informants, or work undercover.38 In FY 2006, the DEA also began assigning Intelligence Analysts to diversion investigations to analyze data, prepare background profiles on targets, and conduct database checks.

Overall, the number of employees paid through the Fee Account increased by 28 positions (from 796 in FY 2004 to 824 in FY 2007). However, the types of personnel being fee-funded shifted from traditional diversion control positions, such as Diversion Investigators, to personnel previously not supported by the Fee Account, such as Special Agents and Intelligence Analysts. In particular, the number of Special Agents and Intelligence Analysts increased by 79 positions (from 10 to 89). In contrast, the number of personnel in traditionally fee-funded positions – such as Diversion Investigators and personnel in professional/administrative and technical/clerical positions – decreased by 51 positions (from 786 to 735) during the same period. Table 6 shows the number of personnel by position that were paid for by the Fee Account from FY 2004 through FY 2007.39

Table 6: Number of Positions/FTEs Paid by Fee Account, by Occupational Series

Occupational
series
FY 2004 FY 2005 FY 2006 FY 2007 Increase or
decrease
FY 04 - FY 07
Traditional diversion control personnel
Diversion Investigator 535 562 538 509 -26
Professional/ Administrative 97 93 96 103 +6
Technical/ Clerical 149 153 149 102 -47
Chemist 4 3 8 8 +4
Attorney 1 1 11 13 +12
Subtotal 786 812 802 735 -51 (-7%)
Non-traditional diversion control personnel
Special Agent 10 19 70 70 +60
Intelligence Analyst 0 0 10 19 +19
Subtotal 10 19 80 89 +79 (+790%)
All fee-funded staff 796 831 882 824 +28 (+4%)
Source: DEA data

Inaccurate Understanding of the Parameters for Using Fee Account Funds. We believe that an inaccurate understanding among Diversion Investigators of the scope of activities fundable through the Fee Account also contributed to a perception held by Diversion Investigators that the DEA used Fee Account funds inappropriately for Special Agent and Intelligence Analyst salaries. During our interviews at the three field divisions, we asked Diversion Investigators if what was and was not covered by the Fee Account was clear to them. Eight out of 24 Diversion Investigators (33 percent) stated that it was not clear and that the line between what could and could not be paid for with Fee Account funds was being blurred. For example, one Diversion Investigator stated that the Fee Account’s nickname was “the Free Account” because it was used to pay for things not clearly related to diversion control, such as law enforcement equipment including machine guns, ammunition, and flight equipment for Special Agent use. Other Diversion Investigators stated that they were “fuzzy” on the use of the Fee Account.

We discussed with DEA diversion control managers the misconceptions of their staff concerning the Fee Account. They told us that the DEA has conveyed some information pertaining to the appropriate use of Fee Account funds to diversion control employees through written policy and at conferences for Diversion Program Managers, but we found through interviews of Diversion Investigators that this information does not always reach them. The DEA has provided its employees with limited written guidance regarding the Fee Account. The Diversion Control Fee Account User’s Guide, which was last updated in October 2005, is available on the DEA’s Intranet site to all DEA employees. However, the guide primarily describes the Validation Unit’s role in Fee Account spending and does not give an overall description of the DEA’s parameters for using Fee Account funds.

In addition to the conference presentations and the Diversion Control Fee Account User’s Guide, Validation Unit managers stated that they provide information regarding the Fee Account to field division personnel when they conduct on-site reviews of headquarters offices and field divisions’ use of the Fee Account. However, from FY 2004 through FY 2007 these reviews included only seven field divisions and two offices. The DEA has a total of 21 divisions and 25 headquarters offices with allowance managers. Diversion control managers also told us that they regularly respond to questions by diversion control personnel about how the Fee Account can be used.

Office of Diversion Control and Validation Unit managers told us that they believe that more communication with diversion control personnel about the Fee Account would improve the process for validating and using Fee Account funds. In fact, when we asked the Section Chief of the Office of Diversion Control about weaknesses or areas that could be improved in the process for using Fee Account funds, she stated, “communication,” and added that she wanted “to get the word [about Fee Account use] out better.” The Section Chief of the Executive Policy and Strategic Planning Staff stated that the validation process could be improved if field personnel had more training in the use of the Fee Account. When we asked the Unit Chief of the Validation Unit whether field personnel were aware of the distinction between expenses covered by the Fee Account and those covered by appropriated funds, he stated that some employees were and some were not, but to have the field personnel better informed and to improve their understanding was a goal of the Validation Unit.

The DEA did not fully fund all diversion control salary costs with the Fee Account.

Our review determined that the DEA did not account for all salary costs associated with its Diversion Control Program and thus did not factor these costs into the program’s current budget. The DEA is required to recover the full costs of operating the various aspects of its Diversion Control Program through the fees charged to DEA registrants under 21 U.S.C. § 886a(1)(C). The DEA determines the level of fees to charge registrants based on the Diversion Control Program’s budget. To recover the full salary costs of Special Agents, Intelligence Analysts, and Chemists, the DEA would have to charge the Fee Account for the total number of FTEs that were expended on diversion control activities by these employees. The DEA funded these costs with appropriated funds because it is the DEA’s practice to not charge the Fee Account for more positions than congressionally authorized. As stated previously, Congress authorizes the number of Special Agent, Intelligence Analyst, and Chemist FTEs that the DEA can charge to the Fee Account each year.

Quantifiable Salary Costs Not Captured

We estimated that between FY 2006 and FY 2007, the DEA did not include in its Diversion Control Program budget or charge to the Fee Account an estimated $15.4 million in salary costs, representing 8 percent of the total salary costs ($188 million).40 The $15.4 million in salary costs consists of $14.1 million for Special Agents and $1.3 million for Chemists.41 Our analysis showed that the DEA funded all Intelligence Analyst salary costs attributable to criminal diversion investigations through the Fee Account in FY 2006 and FY 2007.

Under §886a, the DEA is required to recover “the full costs of operating the various aspects” of its Diversion Control Program (such as salaries for Special Agents, Chemists, and Intelligence Analysts involved in diversion investigations) through the fees charged to DEA registrants. The statute also provides the DEA with discretion to define the scope of fee‑fundable activities included in the Diversion Control Program and, in doing so, to control which of its activities must be funded from the Fee Account and which can be paid for out of appropriated funds.

To define diversion control activities and determine the fees to be collected to fund them, the DEA uses its authority under 21 U.S.C. § 821, to “promulgate rules and regulations and to charge reasonable fees relating to the registration and control of the manufacture, distribution, and dispensing of controlled substances and to listed chemicals.” In Final Rule notices published in the Federal Register, the DEA lists and explains the activities that it has determined are part of the Diversion Control Program (and that are therefore fee-fundable) and notifies registrants of the amount of fees they are required to pay. The most recent Final Rule was published on August 29, 2006.42

Prior to the August 2006 Final Rule, the DEA only fee-funded the actual number of Special Agents in designated fee-fundable positions. Starting in FY 2006, the DEA started charging the Fee Account salary costs of Special Agents in fee-funded positions, plus cumulative FTEs from other Special Agents not in fee-fundable positions but whose time was spent on criminal diversion investigations. The DEA used the congressionally authorized number of FTEs established in the DEA’s budget as the maximum number of FTEs the Fee Account could be charged. In both FY 2006 and FY 2007, the actual number of Special Agent and Chemist FTEs attributable to diversion investigations was higher than the congressionally authorized number.43

The Special Agent and Chemist costs that we identified are the salary costs associated with the difference between the congressionally authorized number of FTEs and the actual FTEs attributable to criminal diversion investigations. Although directly related to the Diversion Control Program, the $15.4 million in salary costs that we identified were above the authorized levels, and the DEA paid for these costs with appropriated funds. Because the DEA has defined the salary costs of Special Agents, Intelligence Analysts, and Chemists attributable to Diversion Control Program activities as fee-fundable and based on §886a and §821, we believe that the DEA should have included all Special Agent and Chemist FTEs attributable to criminal diversion investigations in FY 2006 and FY 2007 in the Diversion Control Program’s budget. Table 7 presents the number and estimated costs of the FTEs attributable to diversion investigations but not charged to the Fee Account for Special Agents and Chemists for FY 2006 and FY 2007.44

Table 7: Estimate of the Number and Costs of the FTEs Attributable to
Diversion Investigations but Not Charged to the Fee Account

  Special Agent Chemist
  Diversion control FTEs and costs not fee funded Diversion control FTEs and costs authorized by Congress Actual FTEs and costs attributable to diversion investigations Diversion control FTEs and costs not fee funded Diversion control FTEs and costs authorized by Congress Actual FTEs and costs attributable to diversion investigations
2006 25 70 95 9 4 13
$3,669,350     $960,498    
2007 67 70 137 3 4 7
$10,431,364     $321,933    
Total $14,100,714     $1,282,431    
Source: OIG analysis

We spoke with Office of Diversion Control managers about the Special Agent and Chemist FTEs attributable to diversion investigations but not charged to the Fee Account. The Deputy Assistant Administrator Office of Diversion Control was aware that the Special Agent FTEs exceeded the amount that had been congressionally authorized and therefore could be charged to the Fee Account. He stated that stopping Special Agents from continuing to investigate criminal diversion after the ceiling had been reached was not an acceptable option. When we asked ODA managers if they were aware that there were more Chemist FTEs attributable to criminal diversion investigations than were charged to the Fee Account, they stated that the Diversion Control Program should increase the number of fee‑funded Chemists and that, based on their analysis, the Fee Account should pay for 12 Chemist positions.

Impact of Omitting Some Salary Costs From the Diversion Control Program Budget

The Diversion Control Program budget does not reflect $15.4 million for Special Agent and Chemist salaries attributable to criminal diversion investigations. Consequently, the budget is not an accurate reflection of the true cost of the Diversion Control Program for FY 2006 and FY 2007. Because the DEA determines the amount of fees to charge registrants based on its estimate of the budget, the current budget does not allow the DEA to recover the full cost of the program as defined by the DEA.

Including the total costs for the time that Special Agents and Chemists spent on diversion investigations as part of the Diversion Control Program budget would have produced a budget that was a more accurate reflection of the program’s true costs and would not have increased fees significantly. Adding these costs would increase the fees for all the registrants, but not significantly. For example, if the DEA computed the FY 2006 through FY 2008 fees based on the inclusion of the total salary costs for the time that Special Agents and Chemists spent on diversion investigations, the 3‑year registration fee for physicians, who make up 81 percent of all registrants, would have increased by $19 from $551 to $570, approximately $6 per year.45



Footnotes
  1. When discussing interview data, we use Diversion Investigators to mean Diversion Program Managers, Diversion Group Supervisors, and Diversion Investigators assigned to field divisions.

  2. Stephen S. Adams v. United States, 51 Fed. Cl. 57 (2001).

  3. A fourth respondent could not specify the investigative equipment that he was unable to get.

  4. Special Agents who serve as Demand Reduction Coordinators work with community coalitions, civic leaders, state and local drug prevention organizations, treatment experts, and the general public to reduce drug use. The DEA’s Aviation Division provides aviation support for drug investigations.

  5. An FTE is the number of total hours worked divided by the maximum number of compensable hours in a work year. The DEA defines 1 full-time work year as 2,080 hours (or 2,600 hours for Special Agents conducting criminal investigations). One worker occupying a full-time job all year would consume one FTE. Two employees working for 1,040 hours each would consume one FTE. Congress authorizes the number of Special Agent, Intelligence Analyst, and Chemist FTEs that the DEA can charge to the Fee Account each year.

  6. Availability pay is a type of premium pay that is paid to federal law enforcement officer who are criminal investigators. Due to the nature of their work, criminal investigators are required to work, or be available to work, substantial amounts of “unscheduled duty.”

  7. The Diversion Control Fee Account [Validation Unit] Standard Operating Procedure Number One: Validating [Fee Account] Chemical Investigative Cost, 8/15/05, states that Fee Account funding can only be used for investigations identified by one of the DEA’s fee-fundable substance identifiers and that the “case number does not have to being [sic] the Diversion Case Series (2000).” Every DEA investigation has a unique eight-digit case number that specifies the (1) field division where it was initiated, (2) the fiscal year when it was initiated, and (3) who initiated it. Cases initiated by Diversion Investigators are denoted as “2000 series” cases.

  8. See U.S. Department of Justice Office of the Inspector General, Follow-Up Review of the Drug Enforcement Administration's Efforts to Control the Diversion of Controlled Pharmaceuticals, Evaluation and Inspections Report I-2006-004 (July 2006), for a discussion on the Diversion Control Program’s need for Special Agents.

  9. On January 16, 2008, the DEA informed the OIG that on December 20, 2007, Congress approved the reprogramming of 108 vacant Diversion Investigator positions to Special Agent positions. This increased the number of authorized fee-funded Special Agent FTEs to 97 for FY 2007.

  10. The reprogramming of 108 vacant Diversion Investigator positions to Special Agent positions discussed in Footnote 39 increased the number of fee-funded authorized Special Agent FTEs by 27, from 70 to 97 for FY 2007. As a result, we estimate that the Special Agent and Chemist salary costs attributable to the Diversion Control Program but not funded with the Fee Account for FY 2006 and FY 2007 totaled $11.2 million.

  11. While there may be other costs attributable to the Diversion Control Program but not included in the budget, we only estimated the costs attributable to diversion control activities for Special Agents, Intelligence Analysts, and Chemists because they track their time on individual criminal investigations according to the primary substance involved in the investigation.

  12. The most recent fee rule was published at 71 Fed. Reg. 51105 (August 29, 2006).

  13. Prior to FY 2006, the DEA was acting within its authority to pay Special Agents engaged in diversion control activities out of appropriated funds. While we identified FTEs attributable to criminal diversion investigations in FY 2004 and FY 2005 that the DEA did not fund from the Fee Account or include in the Diversion Control Program’s budget, we did not include those FTEs in our analysis. Therefore, our analysis only pertained to the Special Agent FTEs attributable to criminal diversion investigations in FY 2006 and FY 2007.

  14. Table 7 does not reflect the reprogramming of 27 additional fee-funded Special Agent FTEs for FY 2007 approved by Congress on December 20, 2007.

  15. The DEA computed the current fees based on the estimated costs of operating the Diversion Control Program for FY 2006 through FY 2008. The current fees will be in place until the DEA next raises fees.



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