DHS Grants and Contracts
Awarded through Other Than
Full and Open Competition,
FYs 2018 and 2019
February 1, 2021
OIG-21-17
OFFICE OF INSPECTOR GENERAL
Department of Homeland Security
Washington, DC 20528 / www.oig.dhs.gov
February 1, 2021
MEMORANDUM FOR: Soraya Correa
Chief Procurement Officer
Department of Homeland Security
Stacy Marcott
Acting Chief Financial Officer
Department of Homeland Security
FROM: Joseph V. Cuffari, Ph.D.
Digitally signed by
JOSEPH V
JOSEPH V CUFFARI
Inspector General
Date: 2021.01.29
CUFFARI
18:25:56 -05'00'
SUBJECT: DHS Grants and Contracts Awarded through Other
Than Full and Open Competition, FYs 2018 and 2019
For your action is our final report, DHS Grants and Contracts Awarded through
Other Than Full and Open Competition, FYs 2018 and 2019. We incorporated the
formal comments provided by your office.
The report contains two recommendations aimed at improving the Department’s
procedures to ensure future reporting submissions are accurate. Your office
concurred with the two recommendations. Based on information provided in
your response, we consider the two recommendations open and resolved. Once
your office has fully implemented the recommendations, please submit a formal
closeout letter to us within 30 days so that we may close the recommendations.
The memorandum should be accompanied by evidence of completion of agreed-
upon corrective actions. Please send your response or closure request to
Consistent with our responsibility under the Inspector General Act of 1978, as
amended, we will provide copies of our report to congressional committees with
oversight and appropriation responsibility over the Department of Homeland
Security. We will post the report on our website for public dissemination.
Please call me with any questions, or your staff may contact Thomas Kait,
Acting Assistant Inspector General for Audits, at (202) 981-6000.
Attachment
www.oig.dhs.gov
DHS OIG HIGHLIGHTS
DHS Grants and Contracts Awarded through Other
Than Full and Open Competition, FYs 2018 and 2019
February 1, 2021
Why We Did
This Audit
The Department of
Homeland Security
Appropriations Act, 2019
required DHS to submit a
report to the Office of
Inspector General listing
all grants and contracts
awarded by any means
other than full and open
competition (OTFOC)
during fiscal years 2018
and 2019. We reviewed
the report to assess DHS’
compliance with
applicable laws and
regulations.
What We
Recommend
This report contains two
recommendations aimed
at improving DHS’ future
reporting submissions.
For Further Information:
Contact our Office of Public Affairs at
(202) 981-6000, or email us at
DHS-OIG.OfficePublicAffairs@oig.dhs.gov
What We Found
Based on our review of 45 judgmentally sampled awards
(15 non-competitive grants and 30 OTFOC contracts), we
found DHS complied with applicable laws and regulations.
DHS officials supported award decisions with the required
planning, market research, justification, and approval
documentation to ensure effective stewardship of taxpayer
dollars. We identified no systemic instances of noncompliance.
However, we determined the Department’s report was
inaccurate because DHS did not sufficiently identify, review,
and validate the award information. Rather, DHS officials
included competitive contract awards and other contract
awards not subject to competition requirements in the report.
In addition, the report included competitive grant awards and
was missing non-competitive grant awards, because officials
did not verify the award information with DHS financial
assistance offices prior to finalizing the report. Although we
worked with DHS officials to ensure we had an accurate
population for our testing purposes, inaccurate data in the
report could hinder our ability to assess the Department’s
compliance with applicable laws and regulations in future
reporting submissions.
DHS Response
DHS concurred with the two recommendations. Appendix B
contains the Department’s management response in its
entirety. All recommendations will remain open pending
evidence to support completion of the corrective actions.
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OFFICE OF INSPECTOR GENERAL
Department of Homeland Security
Table of Contents
Background .................................................................................................... 2
Results of Audit .............................................................................................. 4
DHS Complied with Applicable Laws and Regulations for Sampled
Non-Competitive Grants and OTFOC Contracts ...................................... 5
DHS Did Not Accurately Report to OIG All Non-Competitive Grants and
OTFOC Contracts Awarded in FYs 2018 and 2019 .................................. 9
Recommendations ......................................................................................... 14
Appendixes
Appendix A: Objective, Scope, and Methodology ................................. 16
Appendix B: DHS Response to the Draft Report ................................... 18
Appendix C: Report Distribution .......................................................... 20
Abbreviations
C.F.R. Code of Federal Regulations
FAO financial assistance office
FAPO Financial Assistance Policy and Oversight Division
FAR Federal Acquisition Regulation
FEMA Federal Emergency Management Agency
FPDS-NG Federal Procurement Data System-Next Generation
HSAM Homeland Security Acquisition Manual
NOFO notice of funding opportunity
OCPO Office of the Chief Procurement Officer
OTFOC other than full and open competition
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OFFICE OF INSPECTOR GENERAL
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Background
On February 15, 2019, Congress enacted the Department of Homeland Security
Appropriations Act, 2019. The Act required the Secretary of Homeland Security
to submit a report to the DHS Office of Inspector General listing all grants and
contracts awarded by any means other than full and open competition (OTFOC)
1
during fiscal years 2018 and 2019. The Act also required OIG to review DHS’
report to assess departmental compliance with applicable laws and regulations
and to report the results of that review to the Committees on Appropriations of
the Senate and House of Representatives.
2
Competition in Federal Contracts
The Competition in Contracting Act of 1984 generally requires full and open
competition in Federal contracting. The Federal Acquisition Regulation (FAR)
requires contracting officers to provide for full and open competition to ensure
all responsible sources are permitted to compete for contract awards.
3
Certain
acquisitions are not subject to competition requirements in FAR Part 6 such as
simplified acquisitions under FAR Part 13, contract modifications evaluated as
part of the original competition, task or delivery orders awarded under FAR
Part 16, and orders or blanket purchase agreements awarded under FAR Part 8.
Additionally, FAR § 6.302 recognizes that full and open competition is not always
feasible and authorizes agencies to use OTFOC exceptions that permit
contracting without full and open competition. Examples of exceptions include
when the contractor is the only responsible source and no other supplies or
services will satisfy agency requirements, and when disclosure of the agency’s
need would compromise national security.
The FAR and Homeland Security Acquisition Manual (HSAM) require DHS
officials to take a number of actions before awarding OTFOC contracts, such as
conducting market research, acquisition planning, and preparing justifications.
Market research helps determine the most suitable approach to acquire,
distribute, and manage supplies and services to support the agency’s mission.
Acquisition planning helps ensure the Government is meeting its needs in the
most effective, economical, and timely manner. Agencies must also support
OTFOC contract awards with written justifications
4
that provide sufficient facts
and rationale to justify use of the specific exception to competition.
1
Hereafter, we will refer to OTFOC as non-competitive grants and OTFOC contracts.
2
Public Law 116-6, Division A, Title I §§ 102(a), 102(b).
3
FAR Subpart 2.1 and § 6.101.
4
According to FAR § 6.303, written justifications are not required in certain circumstances
such as sole source 8(a) awards less than or equal to $22 million.
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OFFICE OF INSPECTOR GENERAL
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FAR § 4.603 requires agencies to report unclassified contract actions exceeding
the micro-purchase threshold to the Federal Procurement Data System-Next
Generation (FPDS-NG). The Government uses the data in FPDS-NG to measure
and assess the impact of Federal procurement on the Nation’s economy. The
system includes information on funds obligated, total contract value, the extent
of competition, and the authority used to award OTFOC contracts.
Competition in Federal Financial Assistance
5
The Federal Grant and Cooperative Agreement Act encourages competition in
grant programs to identify and fund the best possible projects to achieve
program objectives. Federal grants provide financial assistance to non-Federal
entities such as states, local governments, and certain nonprofit organizations
to carry out a public purpose authorized by law. Guidance governing grants is
contained in Title 2 of the Code of Federal Regulations (C.F.R),
6
the DHS
Financial Management Policy Manual,
7
and DHS component standard operating
procedures. Grant programs are either non-discretionary or discretionary:
In non-discretionary programs, Congress directs Federal agencies to
award grants to specific recipients in accordance with statutory,
eligibility, and compliance requirements. Agencies cannot exercise
discretion in selecting the recipients due to the mandatory nature of the
award requirements.
In discretionary programs, Federal agencies may award grants on a
competitive or a non-competitive basis. Continuation grants renew
program funding for additional budget periods on multiyear projects,
on a non-competitive basis. Agencies typically restrict continuations to
current recipients based on successful performance.
Within DHS, the Office of the Chief Financial Officer’s Financial Assistance Policy
and Oversight Division (FAPO) provides technical assistance and oversight to
DHS’ financial assistance offices (FAO) to ensure compliance with grant
requirements. DHS FAOs are responsible for the planning, implementation,
and/or oversight for financial assistance programs, and ensuring that recipients
comply with the Federal financial assistance award terms and conditions and
approved program activities. The Federal Emergency Management Agency
5
Federal financial assistance includes grants, cooperative agreements, and other forms of
assistance. We limited our review to grants and cooperative agreements and, for simplicity,
refer to them hereafter as grants.
6
2 C.F.R. Part 200, Uniform Administrative Requirements, Cost Principles, and Audit
Requirements for Federal Awards.
7
DHS Financial Management Policy Manual, Chapter 6, Financial Assistance Performance
Management.
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OFFICE OF INSPECTOR GENERAL
Department of Homeland Security
(FEMA), United States Coast Guard, and the DHS Office of the Chief Procurement
Officer’s (OCPO) Grants and Financial Assistance Division each have a FAO. The
Grants and Financial Assistance Division is the FAO for Countering Weapons of
Mass Destruction, Cybersecurity and Infrastructure Security Agency, Science
and Technology Directorate, U.S. Citizenship and Immigration Services, and
U.S. Immigration and Customs Enforcement.
Public announcements, merit reviews, and risk assessments are required for
competitive grant awards. Competition occurs in the pre-award phase when
Federal agencies publicly announce notices of funding opportunities (NOFO) on
Grants.gov,
8
design and execute a merit review process for proposals submitted
in response to announcements, assess risk posed by applicants, and select the
applicants most likely to successfully deliver results based on the program
objectives. Public announcements, merit reviews, and risk assessments are
optional for non-competitive grant awards.
The Federal Funding Accountability and Transparency Act of 2006, as amended
by the Digital Accountability and Transparency Act of 2014, requires Federal
agencies to report grant award information to USAspending.gov.
9
Classified
awards and awards less than $25,000 are exempt from the reporting
requirement. Award information reported to USAspending.gov includes the
award recipient, the Assistance Listings
10
under which the agency made the
award, the period of performance, and the obligation amount.
Results of Audit
Pursuant to the Department of Homeland Security Appropriations Act, 2019,
DHS submitted a report to us listing all non-competitive grants and OTFOC
contracts awarded in FYs 2018 and 2019. Based on our review of
45 judgmentally sampled awards (15 non-competitive grants and 30 OTFOC
contracts), we found DHS complied with applicable laws and regulations.
DHS officials supported award decisions with the required planning, market
research, justification, and approval documentation to ensure effective
stewardship of taxpayer dollars. We identified no systemic instances of
noncompliance.
8
Grants.gov is the central repository for finding and applying for Federal grant opportunities.
9
USAspending.gov is a searchable database for Federal contract and grant awards.
10
The Assistance Listings, formerly known as the Catalog of Federal Domestic Assistance,
describes the legal authority and purpose of Federal programs that provide financial assistance
to the American public. Agencies generally may not award a Federal grant without assigning
the award to an Assistance Listings program.
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However, we determined the Department’s report was inaccurate because DHS
did not sufficiently identify, review, and validate the award information.
Rather, DHS officials included competitive contract awards and other contract
awards not subject to competition requirements in the report. Also, the report
included competitive grant awards and was missing non-competitive grant
awards, because officials did not verify the award information with DHS FAOs
prior to finalizing the report. Although we worked with DHS officials to ensure
we had an accurate population for our testing purposes, inaccurate data in the
report could hinder our ability to assess the Department’s compliance with
applicable laws and regulations in future reporting submissions.
DHS Complied with Applicable Laws and Regulations for
Sampled Non-Competitive Grants and OTFOC Contracts
Based on our review of 45 judgmentally sampled awards (15 non-competitive
grants and 30 OTFOC contracts) in FYs 2018 and 2019, we found DHS
complied with applicable laws and regulations. DHS officials supported award
decisions with the required planning, market research, justification, and
approval documentation to ensure effective stewardship of taxpayer dollars.
We found no systemic instances of noncompliance.
DHS Supported Award Decisions for Sampled OTFOC Contracts
The FAR and HSAM require DHS officials to take a number of actions before
awarding contracts without full and open competition. These pre-award actions
include conducting market research, acquisition planning, and preparing
justification and approval forms to ensure acquisitions are properly planned,
award decisions are justified, and prices are fair and reasonable.
From a universe of 789 OTFOC contracts that DHS awarded in FYs 2018 and
2019, with a total estimated value about $4.4 billion, we selected a judgmental
sample of 30 contracts with a total estimated value of about $2.1 billion.
We tested the sample by obtaining supporting documentation, such as the
contracts, justification and approval forms, market research reports, and
evidence of a review process. Based on our review, we determined DHS
complied with key requirements in the FAR and HSAM for the 30 sampled
OTFOC contract awards. Specifically, DHS contracting personnel:
conducted proper acquisition planning and market research to establish
the most suitable approach to satisfy the Department’s needs, obtain
competition to the maximum extent practicable, and determine the
anticipated price was fair and reasonable prior to contract award;
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developed written justification and approval forms with sufficient facts
and rationale to justify use of the specific exception to competition; and
obtained appropriate reviews and approvals.
Additionally, for each sampled contract, we tested the quality of key data
elements DHS reported in FPDS-NG — award identification number, contract
date signed, OTFOC authority, and total contract value. FAR Subpart 4.6
requires agencies to report unclassified Federal award data in FPDS-NG. The
data must also be complete and accurate. Based on our review of supporting
documents from the contract file, we concluded DHS complied with reporting
standards and these data elements were complete and generally accurate.
During our sample review, we noted the following minor instances of
noncompliance:
Four justification and approval forms were not made publicly available
on the government-wide website within the required timeframe after
contract award.
11
Two forms were not posted until 5 to 6 days after the
required timeframe. For the other two forms, DHS officials could not
provide documentary evidence of publicly posting the forms after award.
One contract file did not include required documentation
12
showing the
contracting officer reviewed the Federal Awardee Performance and
Integrity Information System before contract award to ensure the offeror
had no criminal, civil, or administrative proceedings in connection with
previous contracts. The contracting officer recalled checking the system,
but could not locate the information in the file. We verified there were no
past performance issues noted in the system.
One market research report did not fully address two of the four elements
required by HSAM § 3010.001(f). The report identified the methods used
and the outcome of the market research, but did not include the names
of all participants involved in the market research effort or the specific
timeframes when participants conducted the market research.
11
FAR § 6.305 generally requires justifications for other than full and open competition to be
made publicly available within 14 days after award. In the case of justifications for unusual
and compelling urgency needs, the justification shall be posted within 30 days after award.
12
FAR § 9.104-6 requires the contracting officer to document the contract file, for each
contract exceeding the simplified acquisition threshold, indicating how he or she considered
information in the Federal Awardee Performance and Integrity Information System, as well as
any action taken as a result of the information.
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Six data elements (5 percent) were not accurately reported in FPDS-NG,
including OTFOC authority on three contracts, the signed date on two
contracts, and the total contract value for one contract. As of August 30,
2020, DHS officials had corrected the errors.
As highlighted previously, the instances of noncompliance were not systemic.
Therefore, we are not making any related recommendations. Overall, the
Department supported its decisions to award these sampled contracts without
full and open competition, thereby ensuring effective stewardship of taxpayer
dollars.
DHS Complied with Standards for Sampled Non-Competitive Grants
Federal and departmental regulations
13
require DHS FAOs to notify the public of
grant programs established through legislation. After Congress passes an
appropriation providing for financial assistance, DHS officials use NOFOs to
inform the public that funding is available for award under a grant program.
FAPO review and approval is required for all NOFOs. Other pre-award actions,
such as publicly posting the NOFOs on Grants.gov, conducting merit reviews of
proposals, and performing risk assessments of applicants, are optional for
non-competitive grant awards, unless required by Federal statute.
From a universe of 259 non-competitive grants that DHS awarded in FYs 2018
and 2019, with a total estimated value of about $303 million, we selected a
judgmental sample of 15 grants with a total estimated value of about
$45 million. We tested the sample by obtaining supporting documentation,
such as Assistance Listings, NOFOs, sole source justifications, grant awards,
and evidence of a review process, as applicable. Based on our review, we
determined DHS complied with applicable Federal and departmental regulations
for the sampled non-competitive grant awards.
Specifically, DHS FAOs:
notified the public of grant programs established through legislation in
the Federal Assistance Listings
14
by describing the statutory and regulatory
basis for the programs, intended outcomes, general applicant eligibility
requirements, and projected total amount of funds available;
13
2 C.F.R. § 200.202(a) and DHS Financial Management Policy Manual.
14
The official source for Federal Assistance Listings is https://beta.sam.gov. Federal awarding
agencies must create, update, and manage Assistance Listings entries based on the authorizing
statute for each program.
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provided the NOFOs to FAPO for review, approval, and coordination with
DHS’ Office of General Counsel and the Office of Management and
Budget. This process ensured the NOFOs included required elements
and were consistent with the program’s authorizing statute;
posted NOFOs on Grants.gov, as applicable, with a description of how the
award contributed to achievement of program goals and objectives, as
well as other relevant information including the Assistance Listings
number, total amount of funding, eligibility criteria, submission dates
and times, evaluation criteria for selection, required components of an
application, and how to submit the application;
evaluated proposals as required by the applicable NOFO to assess
eligibility and select the recipients most likely to be successful in
delivering results based on the program objectives; and
developed written sole source justifications, as applicable, with sufficient
facts and rationale regarding the unique capabilities of the proposed
recipients and why competition was not practical for the grant awards.
Consistent with 2 C.F.R. § 200.205, we also reviewed the Federal Awardee
Performance and Integrity Information System to confirm that the award
recipients had a satisfactory record of executing Federal grants and procurement
awards, as well as integrity and business ethics. Additionally, for the sampled
grants, we tested the quality of key data elements DHS reported to
USAspending.gov — award number, recipient, Assistance Listings number,
period of performance, and dollars obligated. Based on our review of
supporting documentation from the grant file, we concluded DHS complied
with the reporting standards and that these data elements were complete and
generally accurate.
During our sample review, we noted two minor instances of noncompliance:
One grant was competitively awarded under a discretionary program.
DHS officials confirmed they should not have included the award in the
Department’s report.
15
The other sampled awards had sufficient support
in the files for restricting competition to prior applicants or recipients
consistent with each program’s authorizing statute.
15
Although DHS included the competitive award in error on the Department’s report, we
evaluated the award, rather than replacing it, to determine the adequacy of support for the
competitive selection.
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One grant had an inaccurate Assistance Listings number reported to
USAspending.gov. Although the number was correctly referenced on the
NOFO and award documentation, the reporting error associated the
award with the wrong grant program on USAspending.gov. DHS officials
corrected the error during the audit in May 2020.
As highlighted previously, the instances of noncompliance were not systemic.
Therefore, we are not making any related recommendations. Overall, the
Department’s award decisions for the sampled grants were consistent with the
program’s authorizing statute, and complied with applicable laws and
regulations to ensure effective stewardship of taxpayer dollars.
DHS Did Not Accurately Report to OIG All Non-Competitive
Grants and OTFOC Contracts Awarded in FYs 2018 and 2019
The Department’s report was inaccurate because DHS OCPO and FAPO did not
sufficiently identify, review, and validate the award information. Rather, DHS
officials included competitive contract awards and other contract awards not
subject to competition requirements in the report. Also, the report included
competitive grant awards and was missing non-competitive grants. Although
we worked with DHS officials to mitigate this risk, inaccurate information in
the report could hinder our ability to assess the Department’s compliance with
applicable laws and regulations in future reporting submissions.
DHS Report on OTFOC Contracts Was Inaccurate
According to FAR § 6.001, certain acquisitions are not subject to competition
requirements in FAR Part 6. Such acquisitions include simplified acquisitions
awarded under FAR Part 13, contract modifications evaluated as part of the
original competition, orders awarded under FAR Part 16, and contracts
awarded under FAR Part 8. Therefore, the Department should not include
these types of contract actions as part of the OTFOC reporting mandate. DHS
acquisition guidance requires contracting officials to select the appropriate
statutory exceptions when reporting OTFOC awards in FPDS-NG.
16
Based on FAR Part 6 requirements, we determined that the Department’s
report on OTFOC contracts awarded in FYs 2018 and 2019 significantly
overstated the number of contract actions, total obligation actions, and total
value of contracts. We compared DHS contract award data reported to
FPDS-NG for FYs 2018 and 2019 to information in the Department’s report.
16
DHS Acquisition Alert 10-01 (October 1, 2009) requires DHS contracting activities to
complete the “Other Than Full and Open Competition” field (formerly called “Reason Not
Competed”) even though it is not a mandatory field in FPDS-NG.
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Table 1 shows our analysis of information from DHS’ report on OTFOC
contracts and data from FPDS-NG.
Table 1. DHS OIG Analysis of DHS’ Report on OTFOC Contracts and Data
from FPDS-NG
Department’s Report to OIG
Fiscal Year
Number of
OTFOC
Contracts
Total Value of
Action Obligations
Total Value of
Contracts
2018 77,647 $18,256,511,428 $75,484,014,613
2019 16,681 $3,824,111,274 $5,991,799,323
Total 94,328 $22,080,622,702 $81,475,813,936
DHS OIG’s Analysis of FPDS-NG Data
Fiscal Year
Number of
OTFOC
Contracts
Total Value of
Action Obligations
Total Value of
Contracts
2018 406 $522,287,353 $2,552,047,751
2019 383 $314,126,417 $1,859,122,944
Total 789 $836,413,770 $4,411,170,695
Overstatement 93,539 $21,244,208,932 $77,064,643,241
Source: DHS OIG analysis of information in DHS’ report and FPDS-NG data
This occurred because, when downloading OTFOC contract award information
from FPDS-NG, OCPO officials did not always follow instructions, made errors
in consolidating data, and did not have sufficient direction on which contracts
to remove. Specifically, although OCPO developed instructions for downloading
the OTFOC contract data from FPDS-NG:
OCPO officials did not follow the instructions in FY 2018 to remove all
contract actions with blank OTFOC fields in FPDS-NG. Therefore, DHS
included all competitively awarded contracts in FY 2018.
OCPO officials made errors when downloading the FY 2018 data. Due to a
system limitation, FPDS-NG users had to download and consolidate
reports for different time periods in FY 2018. OCPO selected the same
time period in multiple reports, resulting in about 3,100 duplicate
contracts.
OCPO’s instructions did not include the necessary steps to remove all
contract actions not subject to competition requirements, including
simplified acquisitions awarded under FAR Part 13, contract modifications
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evaluated as part of the original competition, orders awarded under FAR
Part 16, and contracts awarded under FAR Part 8.
Inaccurate information in DHS’ report on OTFOC contract awards could hinder
our ability to assess the Department’s compliance with applicable laws and
regulations. We mitigated this risk by working with OCPO officials and
conducting data reliability tests to ensure we had an accurate population for our
testing purposes. Nonetheless, DHS OCPO should revise its documented
procedures to address the errors just discussed so it provides accurate
information in future reporting submissions.
DHS Report on Non-Competitive Grants Was Inaccurate
Guidance governing grants is contained in 2 C.F.R. Part 200, the
DHS Financial Management Policy Manual, and DHS component standard
operating procedures. Grant programs are either non-discretionary
(mandatory) or discretionary. In non-discretionary programs, agencies award
non-competitive grants to specific recipients, often on the basis of statutory
formulas. Agencies cannot exercise discretion in selecting grant recipients due
to award requirements. In discretionary programs, agencies may award
competitive or non-competitive grants.
To generate the Department’s report on non-competitive grants awarded in
FYs 2018 and 2019, DHS officials stated they took the following steps:
1. FAPO provided FAOs with a list of NOFOs issued in FYs 2018 and 2019.
NOFOs inform the public of funding available for grant awards under
specific programs.
2. FAOs informed FAPO about any NOFOs associated with non-competitive
grant programs.
3. FAPO used the Assistance Listings numbers for the non-competitive
grant programs to download the associated award data from
USAspending.gov.
Using the Assistance Listings numbers for the non-competitive grant programs,
we compared DHS grant award data reported to USAspending.gov for FYs 2018
and 2019 to information in the Department’s report. We also interviewed FAPO
and FAO officials to assess the accuracy of DHS’ report. Based on our analysis
and discussions with DHS officials, we determined that the Department’s
report on non-competitive grants awarded in FYs 2018 and 2019 was
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inaccurate. Table 2 provides our analysis of DHS’ report on non-competitive
grants and data from USAspending.gov.
Table 2. DHS OIG Analysis of DHS’ Report on Non-Competitive Grants
and Data from USAspending.gov
17
Department’s Report to OIG
Fiscal Year
Number of Non-
Competitive Grants
Total Obligation
Amount
2018 95 $125,432,110
2019 176 $157,512,845
Total 271 $282,944,955
DHS OIG’s Analysis of USAspending.gov
Fiscal Year
Number of Non-
Competitive Grants
Total Obligation
Amount
2018 117 $151,299,839
2019 142 $151,567,609
Total 259 $302,867,448
Misstatement 12 ($19,922,493)
Source: DHS OIG analysis of DHS’ report and USAspending.gov data
As shown, for FYs 2018 and 2019, DHS both understated and overstated the
number of non-competitive grants. When added together, these misstatements
resulted in DHS overstating the total number of non-competitive grants and
understating the associated obligation amount for FYs 2018 and 2019. For
example, DHS officials:
understated the report by not including 31 non-competitive grant awards
totaling about $27 million in FY 2018 for a Countering Weapons of Mass
Destruction program;
overstated the report by including 67 competitive grant awards totaling
about $11 million in FYs 2018 and 2019 related to a Coast Guard
program; and
understated the report by not including 23 non-competitive grant awards
totaling about $4 million in FY 2018 for two FEMA programs.
17
Table 2 does not include FEMA grants awarded under the authority of the Robert T. Stafford
Disaster Relief and Emergency Assistance Act. Based on an October 2015 legal opinion, FEMA
stated it did not need to include these grants in DHS’ report because awards are limited to non-
Federal entities and programs to which a Presidential disaster declaration applies.
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The inaccurate reporting occurred because DHS did not sufficiently identify,
review, and validate the non-competitive grant award information. Starting in
FY 2018, the DHS Office of the Chief Financial Officer transferred responsibility
for compiling the report from the Departmental Liaison Office to FAPO. Although
the Departmental Liaison Office provided initial guidance to FAPO with examples
of report submissions from prior years, FAPO did not have formal, documented
procedures and FAPO officials did not always follow the same process for
preparing the report. For instance, in FY 2018, FAPO officials could not provide
evidence that they contacted FEMA to identify its non-competitive grant
programs. FAPO relied on FEMA’s response from the prior year, even though
DHS’ Office of General Counsel advised FAPO to review a few discretionary
FEMA programs for inclusion in the report. Additionally, FAPO did not ask the
FAOs to verify the non-competitive grant award data pulled from
USAspending.gov to ensure the data was accurate before finalizing the report.
Officials stated the statutory deadline of October 15 for submitting the report to
OIG presents a challenge.
Inaccurate information in DHS’ report on non-competitive grant awards could
hinder the OIG’s ability to assess the Department’s compliance with applicable
laws and regulations. We mitigated this risk by working with FAPO officials
and conducting data reliability tests to ensure we had an accurate population
for our testing purposes. Nonetheless, FAPO needs to develop formal,
documented procedures to address the areas just discussed so that it provides
accurate information in future reporting submissions.
Conclusion
Pursuant to the Department of Homeland Security Appropriations Act, 2019,
DHS submitted a report to us listing all non-competitive grants and OTFOC
contracts awarded in FYs 2018 and 2019. Through our review of
45 judgmentally sampled awards (15 non-competitive grants and 30 OTFOC
contracts), we determined DHS complied with applicable laws and regulations.
Officials supported award decisions with the required planning, market
research, justification, and approval documentation to ensure effective
stewardship of taxpayer dollars. However, we determined the Department’s
report was not accurate. This occurred because DHS did not sufficiently
identify, review, and validate the award information, which DHS could address
by improving its written procedures.
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OFFICE OF INSPECTOR GENERAL
Department of Homeland Security
Recommendations
Recommendation 1: We recommend the DHS Chief Procurement Officer
improve its written procedures to ensure only those contracts awarded through
other than full and open competition are included in the required report.
Recommendation 2: We recommend the DHS Chief Financial Officer, with
advice from the Office of General Counsel, develop written procedures for
generating the required report to sufficiently identify, review, and validate non-
competitive grant award information.
Management Response and OIG Analysis
DHS concurred with the two recommendations. Appendix B contains a copy of
the Department’s management response in its entirety. We also received
technical comments and made changes where appropriate. A summary of the
Department’s responses and our analysis follows.
DHS Response to Recommendation 1: Concur. DHS OCPO will update its
internal processes to ensure, for future reporting submissions, only those
contracts awarded through OTFOC are included in the report required by DHS
Appropriations Acts. The estimated completion date is February 26, 2021.
OIG Analysis: The Department’s corrective action is responsive to the
recommendation. The recommendation will remain open and resolved until the
Department provides evidence showing that corrective actions are completed.
Specifically, DHS OCPO, with advice from the DHS Office of General Counsel as
needed, should update its procedures to ensure only those contracts awarded
through OTFOC are included in the report required by DHS Appropriations Acts.
The procedures should also address those types of contract awards that do not
need to be included in the OTFOC report, such as, but not limited to competitive
contracts, classified contracts, certain interagency acquisitions awarded by
DHS or awarded on behalf of DHS by non-DHS agencies, and contracts not
subject to competition requirements. Acquisitions not subject to competition
requirements in FAR Part 6 include simplified acquisitions under FAR Part 13,
contract modifications evaluated as part of the original competition, task or
delivery orders awarded under FAR Part 16, and orders or blanket purchase
agreements awarded under FAR Part 8.
DHS Response to Recommendation 2: Concur. The DHS Chief Financial
Officer, with the advice from the DHS Office of General Counsel, will develop a
standard operating procedure to provide a consistent method for generating the
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OFFICE OF INSPECTOR GENERAL
Department of Homeland Security
required report to sufficiently identify, review, and validate non-competitive grant
award information. This will include, but will not necessarily be limited to:
sufficiently identifying, reviewing, and validating all less than full and
open grant awards;
addressing types of grant awards to be included in the report as well as
types of grant awards that are not included;
describing the roles and responsibilities of stakeholders involved in
generating the report; and
including procedures for identifying, reviewing, and validating grant award
information.
In addition, the DHS Office of the Chief Financial Officer’s Financial Assistance
Policy and Oversight Division will seek advice from the DHS Office of General
Counsel to identify non-competitive grant awards that should be included in the
OTFOC report. The identification of reportable awards will include: 1) review of
program statutory authorities; 2) determination of whether to include limited
competitions; and 3) consideration of the revised guidance in 2 C.F.R. Part
200.
18
Pursuant to 2 C.F.R. § 200.205, agencies are required to extend the
merit review process to all discretionary Federal awards. The estimated
completion date is June 30, 2021.
OIG Analysis: The Department’s corrective action is responsive to the
recommendation. The recommendation will remain open and resolved until the
Department provides evidence showing that corrective actions are completed.
18
The Office of Management and Budget revised sections of the guidance for grants and
agreements contained in 2 C.F.R. Part 200. These revisions to the guidance are effective
November 12, 2020, except for the amendments to §§ 200.16 and 200.340, which are effective
as of August 13, 2020.
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OFFICE OF INSPECTOR GENERAL
Department of Homeland Security
Appendix A
Objective, Scope, and Methodology
DHS OIG was established by the Homeland Security Act of 2002 (Public Law
107-296) by amendment to the Inspector General Act of 1978.
We conducted this audit pursuant to the requirements in Public Law 116-6,
Title I, Division A (Department of Homeland Security Appropriations Act, 2019),
§§ 102(a) and 102(b). The objective of this audit was to review DHS’ report
listing all non-competitive grants and OTFOC contracts awarded in FYs 2018
and 2019 to assess departmental compliance with applicable laws and
regulations.
To accomplish our audit objective, we:
researched applicable laws and regulations to obtain an understanding
of the statutory authorities permitting the award of grants, and contracts
without full and open competition;
interviewed grant and contract officials from the DHS OCPO, Office of the
Chief Financial Officer, component FAOs, Transportation Security
Administration, and United States Secret Service to understand the
Department’s procedures for awarding and reporting non-competitive
grants and OTFOC contracts;
assessed the completeness and accuracy of the Department’s report by
obtaining and analyzing DHS’ grant and contract award data reported to
FPDS-NG and USAspending.gov for FYs 2018 and 2019, and comparing
our results to the information in the Department’s report;
selected a judgmental sample of 30 OTFOC contracts — based on cost,
complexity, component, and award date — with a total estimated value of
about $2.1 billion, from a universe of 789 OTFOC contracts, with a total
estimated value of about $4.4 billion, that DHS awarded in FYs 2018 and
2019;
selected a judgmental sample of 15 non-competitive grants — based on
cost, complexity, component, and award date — with a total estimated
value of about $45 million, from a universe of 259 non-competitive grants,
with a total estimated value of about $303 million, that DHS awarded in
FYs 2018 and 2019;
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OFFICE OF INSPECTOR GENERAL
Department of Homeland Security
reviewed supporting documentation for the sampled contracts, including
copies of the contracts, acquisition plans, market research reports,
justification and approval forms, and evidence of a review process to
assess departmental compliance with laws and regulations;
reviewed supporting documentation for the sampled non-competitive
grants, including Assistance Listings, NOFOs, sole source justifications,
grant awards, and evidence of a review process to assess departmental
compliance with laws and regulations; and
tested the reliability of computer-processed data obtained from FPDS-NG
and USAspending.gov by comparing key data elements to source contract
and grant files, and determining the data were sufficiently reliable for the
purposes of our audit.
We did not include certain types of non-competitive grants and OTFOC
contracts in the scope of this audit, such as classified contracts, interagency
acquisitions awarded by non-DHS agencies on behalf of DHS, disaster grants,
and grant sub-awards to subrecipients to carry out part of a Federal program.
We conducted this performance audit between February and September 2020
pursuant to the Inspector General Act of 1978, as amended, and according to
generally accepted government auditing standards. Those standards require
that we plan and perform the audit to obtain sufficient, appropriate evidence to
provide a reasonable basis for our findings and conclusions based upon our
audit objectives. We believe that the evidence obtained provides a reasonable
basis for our findings and conclusions based upon our audit objectives.
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OFFICE OF INSPECTOR GENERAL
Department of Homeland Security
Appendix C
Report Distribution
Department of Homeland Security
Secretary
Deputy Secretary
Chief of Staff
Deputy Chiefs of Staff
General Counsel
Executive Secretary
Director, GAO/OIG Liaison Office
Under Secretary, Office of Strategy, Policy, and Plans
Assistant Secretary for Office of Public Affairs
Assistant Secretary for Office of Legislative Affairs
Office of Management and Budget
Chief, Homeland Security Branch
DHS OIG Budget Examiner
Congress
Congressional Oversight and Appropriations Committees
www.oig.dhs.gov 20 OIG-21-17
Additional Information and Copies
To view this and any of our other reports, please visit our website at:
www.oig.dhs.gov.
For further information or questions, please contact Office of Inspector General
Public Affairs at: [email protected].
Follow us on Twitter at: @dhsoig.
OIG Hotline
To report fraud, waste, or abuse, visit our website at www.oig.dhs.gov and click
on the red "Hotline" tab. If you cannot access our website, call our hotline at
(800) 323-8603, fax our hotline at (202) 254-4297, or write to us at:
Department of Homeland Security
Office of Inspector General, Mail Stop 0305
Attention: Hotline
245 Murray Drive, SW
Washington, DC 20528-0305
