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The Homeland Security Department has been directed to reassess how it paid for shared services in 2006 to support the now defunct Preparedness Directorate after a Government Accountability Office review found that the directorate did not follow guidelines and might have violated the Antideficiency Act.

The department established the Preparedness Directorate in 2005 to coordinate efforts across federal, state and local agencies to prevent and respond to emergencies. The shared services transfers in question were drawn from a variety of DHS accounts and were used primarily to pay for infrastructure protection and information security programs. The exact amounts were not well-documented, but DHS reported about $60 million in shared services spending in 2006.

The appropriations process designates dollars for specific accounts for specific purposes. Agencies generally are not allowed to transfer funds among accounts, even to pay for services that cut across departments, component agencies or appropriations accounts. Agencies not given authority to pool funds for certain shared services still have some flexibility under the Economy Act or the account adjustment statute. The Economy Act allows agencies to place orders with other agencies if justified; the adjustment statute permits an agency to use funds from an account to cover the cost of a common service and then to charge all benefiting accounts for the service.

In a letter to GAO, Homeland Security said it relied on the principles of the Economy Act to allocate the cost of shared services across various appropriations under the Preparedness Directorate's control. "Care was taken to ensure that no [Programs, Projects and Activities account] augmented any other PPA," wrote Michael Russell, DHS' deputy associate general counsel.

But DHS did not properly justify, record or report pooling transactions, according to the report (B-308762), a concern especially for auditors. "People say, 'I satisfied the spirit of the statute,' but how do you know, particularly if you're an auditor?" GAO General Counsel Gary Kepplinger says. "My response is 'I can't see ghosts; I don't believe in ghosts.' " He believes the flexibility of the account adjustment statute would have made it the best option. "I think they were searching for an explanation of what they did and the Economy Act principles were what came to mind," he says.

GAO directed DHS to adjust its fiscal 2006 accounts so the value of all services received is deducted from the proper places. This essentially would be retroactive use of the account adjustment statute. If any accounts do not have enough unobligated funds, GAO instructs DHS to report an Antideficiency Act violation. The law prohibits agencies from making or authorizing expenditures in excess of the amount available.

If DHS' adjustments show an overobligation, the agency must file a violation report with the president, Congress and GAO, delineating where and why the violation occurred, the amount, who was responsible, and what steps have been taken to address the cause.

Homeland Security reorganized the Preparedness Directorate in March, moving many of its functions to the Federal Emergency Management Agency. "This directorate has modified the way they're doing things, so I'm not going to assume there is a continuing problem unless we have some indication of that," Kepplinger says.

In general, federal agencies do not seem to be struggling to fund shared services legally. According to Kepplinger, there have been very few violations reported during the last decade. "There is more than enough adequate authority out there to accomplish what they wanted to accomplish; they just need to be thoughtful in advance about what they are doing," he says.

While it will likely take DHS some time to re-examine all pooling transactions, Kepplinger is confident the agency will address the issues under the watchful eye of the DHS inspector general and the appropriations committees.

COMMENTS

• the trouble with the whole operation is one does not have to spend ones own money. they are spending mine! some folks hit and miss, and spend millions doing it. no problem! just do something else. it's not my money! the people in this country are tireing of the fiscal policies of government leaders, supervisors, etc. we want are money spent in a reasonable manner on something useful mike kelley Posted January 16, 2008 9:45 AM
• When I worked for the FAMS we started in the FAA,then went to the TSA, then moved to ICE, then back to TSA. I know when we transitioned to ICE the took earmarked money to fund there agency where they had huge shortfalls. I imagine that the other agencies took earmarked money from the FAMS also. There is no accountability in DHS. If they find a fault in the department, they anylize it until the administration ends there tour of duty and the next blames on the past department heads. I think if the SES ranks where held to a higher standard and you take their 20 and 30 thousand dollar annual bonuses away a couple years in a row things would change. JAJ Posted December 19, 2007 10:34 PM
• Once again, another indication of a lager problem, if the public could see what I have you would be mad. Like any thing will change or any one will be held responsible. Hey I know let the Border Patrol handle it, they have done such a great job of stopping illegal’s if they can’t do it no one can. ESG Posted December 19, 2007 1:04 PM