Panel Finds Homeland Security Waste

DAVID LIGHTMAN
The Hartford Courant

The Coast Guard wanted a way to make people relax, to bring together cadets and top officials. So it spent $227 for a beer-brewing kit so the academy could make its own "quality product for official parties."

Congressional investigators didn't buy that explanation, saying the agency "wasted government resources by brewing alcohol while on duty" -- one of several examples of waste, misuse and possible fraud in the spending of federal homeland security money that will be laid out for a Senate committee today.

Among the other examples: The Federal Emergency Management Agency spent $68,000 on dog booties that have not been used. The Secret Service bought 54 iPods for more than $7,000. The government's customs and immigration agencies spent nearly $5,000 to take employees to training seminars and "leadership conferences" at golf and tennis resorts.

Then there was the $208,000 -- twice the retail price -- emergency officials paid for 20 flat-bottom boats for operations in New Orleans. The agency is still unable to locate 12 of the boats, and "the vendor walked away with over $150,000," government investigators found.

The congressional investigators, in a 33-page statement to the Senate Governmental Affairs and Homeland Security Committee, say that these and other examples illustrate instances where some Department of Homeland Security officials engaged in "potentially fraudulent activity related to items acquired with DHS purchase cards."

The Government Accountability Office, Congress' investigative arm, looked at spending from June to October 2005, before and after Katrina hit the Gulf Coast, and found a system that let questionable expenses flourish.

Clearly, the department "has inadequate procedures for keeping track of goods purchased with these cards and has no formal guidance in place to instruct employees on proper card use. This is hard to believe," said Sen. Joseph I. Lieberman, D-Conn., top committee Democrat.

DHS spokesman Russ Knocke said Tuesday the agency is working hard to fix the system and should have strict guidelines in place in a few weeks.

He also insisted the agency is being run smoothly. "Last year there were 1.1 million purchase card transactions," Knocke said. "We are talking about a couple of handfuls of instances where there ought to be some questions."

The cards are given to government officials so they can buy items, particularly emergency material, quickly. To expedite the Hurricane Katrina relief effort, Congress in September increased the amount that could be bought with a card from $2,500 to $250,000. Lieberman had fought against raising the limit, which was sharply cut back in November.

Knocke said the department is reviewing each transaction cited by the GAO. DHS has taken administrative or disciplinary action in 70 cases so far.

The GAO found few controls in DHS' purchasing card system. The agency's Purchase Card Manual, which was supposed to guide spending with the cards, was not finished because top officials could not resolve disagreements over how to implement procedures.

When people did get cards, the investigators found "inadequate staffing, insufficient training and ineffective monitoring."

Knocke said a new system has been developed slowly because the department is only about 3 years old and "we are a very large department, a very young department." A collection of agencies spread across the government, the department has had to standardize an array of purchasing systems.

The GAO found that some 45 percent of all DHS purchase card transactions were not properly authorized in the period studied last year, and in 63 percent there was no evidence that goods and services were even received.

Even when it could account for items bought, the GAO had serious questions.

Besides the dog booties and the Secret Service iPods, for example, the investigators wondered about a Samsung 63-inch plasma screen television set FEMA bought for $8,000, "lacking a government need." They found that six months after it was purchased, the set was still in a box, unused.

One of the golf and tennis resort trips was to the Sea Palms Resort and Conference Center in St. Simons Island in Georgia, whose website boasts "a perfect blend of Southern hospitality with … unspoiled natural beauty," to train 32 newly hired attorneys, even though there was a Federal Law Enforcement Training Center nearby.

The investigators also took a long look at the beer-brewing equipment, bought by a Coast Guard cardholder. The Coast Guard explained that its beer, with "custom Coast Guard themed labels," was "an icebreaker for discussion at these official parties."

Not only that, the Coast Guard said, but the do-it-yourself project saved the service money. In fact, the GAO calculated, each six-pack of the home brew cost $13.

"The purchase of the kit and the brewing activity fall short of prudent use of taxpayer dollars and represent abusive use of a purchase card," the GAO said. Coast Guard Academy officials had no further comment Tuesday. Knocke said the DHS is working with authorities and "we're going to go and take a look at it."

Among the biggest possible frauds the GAO detected was the incident with the boats. The Federal Emergency Management Agency paid a vendor $208,000, or 100 percent above retail price, for 20 flat-bottom boats for operations in New Orleans. GAO found the vendor, who did not have the boats, used the FEMA purchase card to pay for the boats, billed FEMA for all 20 boats and then "failed to pay one retailer who provided 11 of the 20 boats."

FEMA now has eight boats, and "could not provide the location for the other 12 boats."

The investigators estimate the vendor, who is not named in the report, "walked away with over $150,000, including the profit he made on the 11 boats that the vendor obtained without payment," and they are continuing to probe the matter along with local law enforcement and FBI officials.

Also questioned by the GAO was the purchase of 107 laptops, 22 printers and two GPS units, all missing and presumed stolen from FEMA, with a total value of about $170,000.

To find some of the equipment, investigators in March went to New Orleans, and were told the laptops were in a conference room at a French Quarter hotel that was serving as a joint command post.

But when they went to the conference room, "it was vacant and the laptops and printers were missing," the report said. Investigators were able to account for some of the equipment, but not all, because FEMA "failed to accurately record who was in possession of the laptops." The GAO called the absence of effective controls "potential fraud."

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