Follow-up Audit of the Department of Justice Counterterrorism Fund
Report No. 03-33
Office of the Inspector General
Following the events of September 11, 2001, the U.S. Government intensified its efforts to fight terrorism using many available tools, including diplomacy, intelligence gathering, military operations, and law enforcement. The Department of Justice (Department) plays a critical role in the counterterrorism mission. Specifically, the Department's counterterrorism mission is to: 1) prevent terrorism before it occurs; and 2) mount an immediate and overwhelming investigative response, should an act of terrorism occur. In order to accomplish this mission, the Attorney General announced that the Department would devote resources to disrupt, weaken, and eliminate terrorist networks; to prevent or thwart terrorist operations; and to bring to justice the perpetrators of terrorist attacks. The Department's Counterterrorism Fund (the Fund) has been one of the resources made available and utilized in pursuance of this counterterrorism mission.
Congress established the Fund in July 1995 in response to the bombing of the Alfred P. Murrah Federal Building in Oklahoma City, Oklahoma, and placed the Fund in the custody of the Attorney General. The purpose of the Fund is stated in the 1995 Emergency Supplemental Act:12
[The] Counterterrorism Fund is hereby established . . . to reimburse any Department of Justice organization for the costs incurred in reestablishing the operational capability of an office or facility which has been damaged or destroyed as a result of the bombing of the . . . federal building in Oklahoma City or any domestic or international terrorism event . . . funds . . . may also be used to reimburse the appropriation account of any Department of Justice agency engaged in, or providing support to, countering, investigating or prosecuting domestic or international terrorism, including payment of rewards . . . and to conduct a terrorism threat assessment of Federal agencies and their facilities. . . .
Congress initially provided $34.22 million for the Fund and has continued to appropriate money each year to the Fund. The following table provides the appropriations made to the Fund for fiscal years (FYs) 1995 through 2003.
COUNTERTERRORISM FUND APPROPRIATIONS
According to the initial legislation, the Fund was established to provide reimbursement to Department components only. Since 1996, however, Congress has allowed over $167 million to be passed through the Federal Bureau of Investigation (FBI), the Justice Management Division (JMD), and the Office of Justice Programs (OJP) to other federal, state, and local users outside the Department.
The congressional committee reports related to Public Law 104-019 established the following legislative guidelines on the type of expenditures reimbursable from the Fund:
The conference agreement allows for the payment of expenses of an extraordinary nature of Department of Justice agencies engaged in, or providing support to, countering, investigating, or prosecuting domestic or international terrorism. [Emphasis added.]
"Extraordinary" is interpreted by JMD to refer to the nature of the expenses rather than to the act of terrorism that caused the expenses. Prior to April 1, 2000, JMD had not issued formal policies or comprehensive guidelines concerning the proper uses of the Fund. Instead, JMD used the guidelines incorporated in the language of the initiating legislation documents that stated expenditures should be extraordinary in nature and related to the following purposes:
JMD provided additional guidance to the components regarding the use of the Fund in a memorandum dated April 1, 2000. The memorandum asserted that the Attorney General would use Fund monies only for extraordinary counterterrorism-related costs and included regular salaries for personnel who would normally be on duty as an example of costs that would not be appropriate. In addition, the memorandum reiterated that the Senate Appropriations Committee expected the "extraordinary costs to be incurred in response to an unexpected terrorist threat or act and not the cost incurred with day-to-day counterterrorism operations." In other words, the Fund should only be used to pay for expenses that are beyond what the agency's general appropriation could reasonably be expected to fund. Appropriate expenditures that have been reimbursed from the Fund include overtime, travel, and equipment costs pertaining to national events (e.g., the Olympics and political conventions) and the investigations and prosecutions related to large-scale acts of terrorism.
As the administrative arm of the Department, JMD manages the Fund for the Attorney General. As the Fund administrator, JMD's primary responsibility is to ensure that the Fund is used in a manner consistent with its intended purpose and not merely to replace the components' general appropriations. The JMD Budget Staff handles the Fund's day-to-day operations, including requesting appropriations from Congress, reviewing component requests for funding, submitting reimbursement recommendations to the Attorney General, and executing agreements with agencies for reimbursement from the Fund.
Federal regulations require the head of each agency to establish and maintain systems of accounting and internal controls for the safeguarding of assets and the assurance of reliable accounting records.14 The head of JMD is the Fund administrator and, therefore, is ultimately accountable for ensuring that Fund expenditures are reasonable, appropriate, adequately supported, and compliant with legislation.
Appropriation Requests - JMD compiles the Department's annual request for appropriations to the Fund. When compiling the request, JMD takes into account the needs of the components and the current available balance.15 The request is then submitted to Congress, which has ultimate control over the amount appropriated to the Fund.
Review Process - After appropriations have been made, the JMD Budget Staff can disseminate monies from the Fund to Department components. Prior to April 1, 2000, the Budget Staff informed the components on an annual basis that money was available for the reimbursement of certain counterterrorism expenses, and components would then submit requests for evaluation. However, the Budget Staff no longer annually solicits component requests for resources from the Fund. Instead, the balance remains available at all times. If a terrorist incident occurs, the Budget Staff immediately issues special instructions to address any extraordinary costs requiring the use of the Fund, and the components submit requests accordingly.
When component requests are submitted to JMD, budget analysts review them to determine if the expenditures would be an appropriate use of the Fund. The JMD Budget Staff reviews Department components' requests in detail for reasonableness, appropriateness, and applicability. These assessments also include a review of each agency's general appropriation funds to ensure that monies requested are for extraordinary expenses and not for expenditures already planned. Further, budget analysts work with agency representatives to resolve any concerns and obtain necessary additional information to complete each assessment. For FYs 1998 through 2002, JMD approved components' requests of about $100 million while denying requests totaling almost $25 million.
Approval Process - After completing its assessments of the components' requests, JMD issues a memorandum to the Attorney General detailing the Budget Staff's assessments and recommendations for the use of Fund monies in support of various counterterrorism initiatives. If approved by the Attorney General, the recommendation is forwarded to the Office of Management and Budget (OMB) for approval. If OMB approves the planned reimbursements, the recommendation is sent to the Appropriations Committees in both houses of Congress, which also must agree before any recipient can receive Fund monies.
Congress has earmarked some Fund monies for specific initiatives.16 During these instances, the usual approval process is bypassed. The recipient does not submit a funding request to JMD, and the Budget Staff does not conduct an assessment of the request.
Execution of Reimbursement Agreements - After Congress approves funding for certain initiatives, JMD enters into reimbursement agreements (RAs) with the requesting agencies.17 Generally, all funds are allotted to the components through an RA, which is a binding document between JMD and the recipient. The RA includes the Fund mission and the purpose of the agreement, including the counterterrorism initiative and the amount of funding to support that initiative.
In order to receive reimbursement from the Fund, components submit quarterly billings of their actual expenditures to the JMD Budget Staff. The Budget Staff is responsible for reviewing the billings and processing them for payment by the JMD Finance Staff.
In 1998, the OIG conducted an audit of the Fund that included a detailed review of funding provided to Department components during FYs 1995 through 1997.18 We reviewed funding used to support activities related to the Oklahoma City bombing; the 1996 Summer Olympics in Atlanta, Georgia; the 1996 political conventions; and combating and investigating Middle Eastern terrorism activities in the United States.19 Our audit found that although JMD maintained strong controls during the RA review and approval process, JMD needed to take a more proactive approach to its distribution of Fund monies, especially those passed through to non-DOJ users.20 We also found that non-DOJ users were not always required to submit supporting documentation for their expenditures prior to reimbursement, nor were they always made aware of the appropriate use of Fund monies.
In addition, JMD did not have a system to monitor Fund recipients to ensure that actual expenditures were allowable, supported, and used in accordance with authorized purposes. As a result, components were reimbursed for expenditures that were not allowed by the RA, were not related to counterterrorism, were not extraordinary in nature, or were not adequately supported. Further, some funds that were obligated to components were unused for extended periods of time. As a result of the weak controls, we identified over $4 million in dollar-related deficiencies out of the approximate $26 million reviewed, and more than $3 million was returned to the Fund.
We initiated this follow-up audit because of the significant deficiencies found during the prior audit, the considerable amount of funds appropriated subsequent to that audit, and the increased emphasis the Department has placed on countering terrorism. Our audit objectives were to determine if: 1) Fund expenditures were authorized, supported, and used in accordance with the intent of the law; and 2) JMD has taken appropriate efforts to close RAs in an expeditious manner.
We reviewed funding provided to components during FYs 1998 through 2002. During this period, the Fund has been used for a wide range of activities, including the investigation and prosecution of bombing incidents (e.g., the Oklahoma City bombing and the U.S. embassy bombings in Africa), preparations to combat terrorism (e.g., the development and implementation of a 5-year inter-departmental counterterrorism and technology crime plan, and security enhancements for the 2002 Winter Olympics in Utah), and responding to terrorist attacks (e.g., the terrorist attacks of September 11, 2001). From FY 1998 through 2002, a total of over $258 million was made available to the components, as shown in the following table.
SUMMARY OF REIMBURSEMENT AGREEMENTS
FISCAL YEARS 1998 THROUGH 2002
To review JMD's administration of the Fund and the Fund recipients' management of the reimbursed monies, we requested detailed transaction listings for Fund expenditures related to each of the RAs. Using the listings received, we selected a judgmental sample of transactions for testing to ensure that the items were reasonable, appropriate, adequately supported, and compliant with Fund legislation; details of our sampling methodology are presented in Appendix I.
From the sample of transactions selected, we conducted a thorough review of Fund activities and expenditures incurred by Department components. The results of this detailed review are presented in Finding 1. We also conducted an examination of Fund monies that were passed through Department components and used by non-DOJ agencies. The results of this review are contained in Finding 2. Finally, our analysis of JMD's monitoring and oversight of Fund activities is presented in Finding 3.