[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]



 
                       TOP MANAGEMENT CHALLENGES:
                          GRANT MANAGEMENT AT
                     THE U.S. DEPARTMENT OF JUSTICE

=======================================================================

                                HEARING

                               BEFORE THE

                   SUBCOMMITTEE ON CRIME, TERRORISM,
                 HOMELAND SECURITY, AND INVESTIGATIONS

                                 OF THE

                       COMMITTEE ON THE JUDICIARY
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED THIRTEENTH CONGRESS

                             SECOND SESSION

                               __________

                            JANUARY 28, 2014

                               __________

                           Serial No. 113-64

                               __________

         Printed for the use of the Committee on the Judiciary


      Available via the World Wide Web: http://judiciary.house.gov


                                 ______

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                       COMMITTEE ON THE JUDICIARY

                   BOB GOODLATTE, Virginia, Chairman
F. JAMES SENSENBRENNER, Jr.,         JOHN CONYERS, Jr., Michigan
    Wisconsin                        JERROLD NADLER, New York
HOWARD COBLE, North Carolina         ROBERT C. ``BOBBY'' SCOTT, 
LAMAR SMITH, Texas                       Virginia
STEVE CHABOT, Ohio                   ZOE LOFGREN, California
SPENCER BACHUS, Alabama              SHEILA JACKSON LEE, Texas
DARRELL E. ISSA, California          STEVE COHEN, Tennessee
J. RANDY FORBES, Virginia            HENRY C. ``HANK'' JOHNSON, Jr.,
STEVE KING, Iowa                       Georgia
TRENT FRANKS, Arizona                PEDRO R. PIERLUISI, Puerto Rico
LOUIE GOHMERT, Texas                 JUDY CHU, California
JIM JORDAN, Ohio                     TED DEUTCH, Florida
TED POE, Texas                       LUIS V. GUTIERREZ, Illinois
JASON CHAFFETZ, Utah                 KAREN BASS, California
TOM MARINO, Pennsylvania             CEDRIC RICHMOND, Louisiana
TREY GOWDY, South Carolina           SUZAN DelBENE, Washington
RAUL LABRADOR, Idaho                 JOE GARCIA, Florida
BLAKE FARENTHOLD, Texas              HAKEEM JEFFRIES, New York
GEORGE HOLDING, North Carolina       DAVID N. CICILLINE, Rhode Island
DOUG COLLINS, Georgia
RON DeSANTIS, Florida
JASON T. SMITH, Missouri
[Vacant]

           Shelley Husband, Chief of Staff & General Counsel
        Perry Apelbaum, Minority Staff Director & Chief Counsel
                                 ------                                

Subcommittee on Crime, Terrorism, Homeland Security, and Investigations

            F. JAMES SENSENBRENNER, Jr., Wisconsin, Chairman

                  LOUIE GOHMERT, Texas, Vice-Chairman

HOWARD COBLE, North Carolina         ROBERT C. ``BOBBY'' SCOTT, 
SPENCER BACHUS, Alabama              Virginia
J. RANDY FORBES, Virginia            PEDRO R. PIERLUISI, Puerto Rico
TRENT FRANKS, Arizona                JUDY CHU, California
JASON CHAFFETZ, Utah                 LUIS V. GUTIERREZ, Illinois
TREY GOWDY, South Carolina           KAREN BASS, California
RAUL LABRADOR, Idaho                 CEDRIC RICHMOND, Louisiana

                     Caroline Lynch, Chief Counsel


                            C O N T E N T S

                              ----------                              

                            JANUARY 28, 2014

                                                                   Page

                           OPENING STATEMENTS

The Honorable F. James Sensenbrenner, Jr., a Representative in 
  Congress from the State of Wisconsin, and Chairman, 
  Subcommittee on Crime, Terrorism, Homeland Security, and 
  Investigations.................................................     1
The Honorable Robert C. ``Bobby'' Scott, a Representative in 
  Congress from the State of Virginia, and Ranking Member, 
  Subcommittee on Crime, Terrorism, Homeland Security, and 
  Investigations.................................................     3
The Honorable Bob Goodlatte, a Representative in Congress from 
  the State of Virginia, and Chairman, Committee on the Judiciary     4

                                WITNESS

The Honorable Michael E. Horowitz, Inspector General, U.S. 
  Department of Justice
  Oral Testimony.................................................     6
  Prepared Statement.............................................     8


                       TOP MANAGEMENT CHALLENGES:
                          GRANT MANAGEMENT AT
                     THE U.S. DEPARTMENT OF JUSTICE

                              ----------                              


                       TUESDAY, JANUARY 28, 2014

                        House of Representatives

                   Subcommittee on Crime, Terrorism, 
                 Homeland Security, and Investigations

                       Committee on the Judiciary

                            Washington, DC.

    The Subcommittee met, pursuant to call, at 10 a.m., in room 
2141, Rayburn Office Building, the Honorable F. James 
Sensenbrenner, Jr. (Chairman of the Subcommittee) presiding.
    Present: Representatives Sensenbrenner, Goodlatte, Gohmert, 
Coble, Scott, and Richmond.
    Staff present: (Majority) Allison Halataei, Parliamentarian 
and General Counsel; Sarah Allen, Counsel; and (Minority) Ron 
Le
Grand, Counsel.
    Mr. Sensenbrenner. The Subcommittee will come to order.
    Without objection, the Chair is authorized to declare 
recesses of the Subcommittee at any time.
    Last year, the Subcommittee held a hearing on waste, 
duplicative spending and inefficient operations at the 
Department of Justice. At that hearing, we questioned why the 
Department had spent $165 million on a prison in Illinois 
despite opposition from Members of this Committee and the House 
Appropriations Committee, a prison which remains largely empty.
    We also questioned the Department's exorbitant conference-
related expenses, including $600,000 for event planners.
    Unfortunately, these are only two examples of the 
Department's inability to act as a responsible steward of 
taxpayer dollars.
    Today's hearing continues the Subcommittee's focus on 
wasteful and unnecessary spending at the Department by focusing 
on one important aspect of the problem, how the Department 
manages its grant programs. Since 1998, the Justice 
Department's Inspector General has compiled an annual list of 
the top management and performance challenges facing the 
Department every year since 1999. The issue of grant management 
has been included. The IG's most recent list, released in 
December 2013, is no different. This means that for over a 
decade the Department has recognized that the effective grant 
oversight is a major challenge and, despite that, has been 
unable to resolve the problems repeatedly outlined by the IG.
    We are honored to have Inspector General Horowitz here 
today to help us understand why an issue as important as grant 
oversight remains a challenge for the Department. From Fiscal 
Years 2009 to 2013, the Department awarded approximately $17 
billion of grant funding to state, local, and non-governmental 
recipients. In Fiscal Year 2014 alone, the Department's three 
grant-making offices received $2.2 billion in funding, which is 
a $32 million increase over 2013 levels.
    No doubt, the large number of grant programs created by 
Congress and administered by the Department only exacerbates 
this problem. The Justice Department administers over 200 grant 
programs and other forms of direct Federal assistance through 
three separate offices: the Office of Justice Programs, OJP; 
the Office of Violence Against Women, OVW; and the COPS Office. 
As the IG and the Government Accountability Office have noted, 
there is a significant amount of overlap between these offices 
and their many grant programs. Most of these grants are used to 
support important law enforcement needs across the country, 
including assistance to states to develop more robust sex 
offender registry systems, improve the recidivism and 
rehabilitation of convicted felons, and address the crisis of 
the mentally ill in our criminal justice systems.
    These programs are all laudable and worthwhile. However, in 
light of the current economic environment in which our Nation 
faces a national debt of $17 trillion, it is critical that 
Congress and the Department closely scrutinize how every dollar 
is spent.
    A number of developments over the past year have given me 
great concern about how the Department is managing grant 
programs. For example, the Office on Violence Against Women 
recently announced that for its current grant solicitation 
period, only previous grant recipients will be allowed to apply 
for certain competitive grants, and some of these programs will 
not actually be competitive. This is in direct conflict of 
Congress' intent when it created competitive grants, not to 
mention the Department's stated commitment to promoting new and 
innovative programs. This sort of special treatment for those 
grantees already on the Department's ``preferred list'' also 
opens these programs up to potential corruption and 
malfeasance.
    I look forward to hearing Mr. Horowitz's view on this and 
whether his office is looking into these changes.
    I am also greatly concerned by recent changes to the Public 
Safety Officer's Benefit Program which provides a $330,000 lump 
sum payment to survivors of fallen law enforcement officers, 
fire fighters and other first responders, and disability 
benefits to officers catastrophically injured in the line of 
duty.
    Through the history of PSOB, the OJP General Counsel has 
always been required to review each case to ascertain whether 
the claimant is legally entitled to benefits. However, last 
summer the Department announced it would stop requiring the 
General Counsel's Office to individually review all approvals 
or denials of PSOB claims. I sent a letter to the Department on 
June 4 of last year asking for clarification on these changes, 
including whether every payment would continue to receive 
individual legal concurrence under the new system, and I have 
yet to receive a response.
    It is my understanding that the IG's office is currently 
reviewing the PSOB program, and I look forward to hearing his 
views on this change.
    Finally, I hope to hear Mr. Horowitz's suggestions for ways 
that the Department and Congress, if necessary, can help 
streamline the bureaucratic operations at the Justice 
Department. It goes without saying that every dollar that is 
wasted in Washington due to unnecessary waste and duplication 
of resources is a dollar that could be better spent in the 
field or returned to taxpayers.
    It is now my pleasure to recognize for his opening 
statement the gentleman from Virginia, Mr. Scott, the Ranking 
Member of the Subcommittee.
    Mr. Scott. Thank you, Mr. Chairman, and I welcome this 
hearing and discussion about spending at the Department of 
Justice and ways of ensuring that taxpayer dollars are being 
spent in a manner that is both efficient and effective.
    Each of us on this panel, regardless of party, is committed 
to eliminating wasteful spending and unnecessary duplication or 
overlapping funding. In the last 13 years, the Department of 
Justice Office of the Inspector General has issued its 
memorandum entitled, ``Top Management Challenges.'' In 12 of 
those memos, grant management has consistently been cited as 
one of those challenges. The 2013 memo cites protecting 
taxpayer funds from mismanagement and abuse as a challenge and 
addresses the risks for mismanagement of taxpayer funds that 
are distributed to grant recipients and contractors.
    Last year alone, the Department's three major grant-
awarding agencies mentioned by the Chairman awarded over $2.2 
billion in grants to state, local, and tribal private 
organizations to conduct research, law enforcement activities, 
provide training and technical assistance, and implement 
criminal justice-related programs. To put it another way, the 
grants awarded by these three major grant-making agencies 
within the Department constitute a very significant part of the 
budget of the Department of Justice.
    The distribution of such large sums of taxpayer dollars 
necessitates constant scrutiny in order to identify areas of 
waste, fraud and abuse, and unnecessary duplication. Then we 
have to take corrective action. It is only through such 
oversight that the Department of Justice will be assured that 
funds awarded to grantees are being managed appropriately and 
in compliance with established guidelines.
    That oversight reveals significant issues pertaining to 
grantees, one of which was Big Brothers Big Sisters had a 
significant portion of their grant questioned. But upon 
learning of these issues and while the audit was ongoing, it is 
my understanding that Big Brothers Big Sisters retained 
compliance counsel and a forensic accounting firm to begin 
bringing them back into accord with the grant requirements, and 
it has since submitted a corrective action plan to continue 
working with the Department of Justice to resolve the 
recommendations on questioned costs.
    We cannot turn a blind eye to the fact that despite these 
issues, Big Brothers Big Sisters actually exceeded their grant 
program goals by engaging 16,000 at-risk and tribal youth in 
their mentoring program, significantly more than was their 
original goal. Since the goals were achieved, we need to 
consider the taxpayer dollars saved. If Big Brothers Big 
Sisters targets their money and prevents 10,000 children from 
potentially going to jail, we could save hundreds of millions 
of dollars in terms of avoided incarceration costs.
    If the program just saves 10 percent of the 16,000 newly-
mentored youth from prison, that would save $50 million a year 
in incarceration costs. Remember, we are only talking about $20 
million in expenditures.
    So as we consider the possible impropriety of millions of 
dollars as currently and technically unallowed, we also need to 
measure the grants in terms of goals achieved and long-term 
savings that result. So let's include that as part of the 
discussion, the benefits of prevention that result from an 
organization such as Big Brothers Big Sisters using the money 
effectively and saving money.
    I am pleased to have the Department of Justice's Inspector 
General here to shed light on these issues and look forward to 
see what progress has been made, and I hope that he will also 
recommend what Congress can do to help.
    So, thank you, Mr. Chairman. I look forward to his 
testimony.
    Mr. Sensenbrenner. Thank you.
    The gentleman from Virginia, Mr. Goodlatte, the Chairman of 
the full Committee, is recognized for an opening statement.
    Mr. Goodlatte. Thank you, Chairman Sensenbrenner. I am 
pleased to take part in this hearing on oversight of the 
Justice Department grant programs. The Judiciary Committee 
plays an important role in examining how the Department spends 
taxpayer dollars, and this hearing is part of those efforts.
    Starting in 1999, the Office of the Inspector General has 
included grant management in its annual list of the 
Department's top management challenges. In 2013, grant 
management was again included in this list under ``Protecting 
Taxpayer Funds from Mismanagement and Misuse.'' The continued 
listing of grant management as a top management challenge 
reflects the size, scope, complexity, and associated risks of 
mismanagement of the numerous grant programs administered by 
the Department.
    A review of recent IG audits and reports reveals some of 
the challenges facing grant administrators at the Department. 
These include the identification and management of high-risk 
grantees, the implementation of appropriate training and 
testing methods for grantees, the establishment of procedures 
to verify information provided on grant applications, and 
improving coordination and thereby reducing duplication among 
the Department's many grant programs.
    In a recent and particularly noteworthy matter, the 
Inspector General audit last year questioned more than $19 
million of the $23 million in youth mentoring grants awarded to 
Big Brothers Big Sisters of America, and suggested that the 
remaining $4 million of unused funds should be put to better 
use. The Justice Department announced in response to this audit 
that it would freeze funds to Big Brothers Big Sisters, but I 
am concerned that a short-term freeze does not address the 
underlying problem. This is particularly true given that just 
weeks later, the IG issued a second report questioning another 
grantee's use of almost $1 million in youth mentoring grant 
money.
    I am greatly concerned that the problems with these 
grantees, and many others, went unnoticed by the Department for 
years, despite periodic audit reviews and oversight. I look 
forward to hearing today whether these IG reports are 
indicative of systemic issues within OJP's grant management 
procedures and what Congress can do to help solve the problem.
    America continues to face difficult fiscal times. Law 
enforcement agencies are not immune from this. There is little 
doubt that the financial support the Federal Government 
provides to state and local law enforcement agencies through 
Byrne JAG and other grants is oftentimes critical. As with many 
other aspects of government, these grant programs are not 
always designed or administered as efficiently as they should 
be, which means that less money is actually spent to help the 
boots on the ground.
    I am committed to finding ways to streamline these programs 
to minimize waste to ensure that they run as efficiently as 
possible and with less of an administrative burden on law 
enforcement agencies. I look forward to hearing from the 
Inspector General on ways in which we can address these 
challenges while maintaining an efficient process to provide 
needed support to law enforcement agencies around the country.
    Thank you, Mr. Chairman. I yield back.
    Mr. Sensenbrenner. Thank you very much.
    Without objection, all Members' opening statements will be 
placed in the record at this point.
    Let me now introduce the Inspector General, Michael E. 
Horowitz. He was sworn in as the fourth confirmed Inspector 
General on April 16, 2012. In this capacity, he oversees a 
nationwide workforce of approximately 450 special agents, 
auditors, inspectors, attorneys and support staff whose mission 
is to detect and deter waste, fraud, abuse and misconduct in 
DOJ programs and personnel, and to promote efficiency in 
Department of Operations.
    Mr. Horowitz most recently worked as a partner at 
Cadwalader, Wickersham and Taft, LLP, where he focused his 
practice on white-collar defense, internal investigations and 
regulatory compliance. He has also served as a commissioner on 
the U.S. Sentencing Commission, where he was instrumental in 
rewriting the guidelines for corporate compliance programs, and 
for fraud, anti-trust, intellectual property, and money 
laundering offenses.
    He previously worked for the DOJ in the Criminal Division 
of main Justice from 1999 to 2002, first as Deputy Assistant AG 
and then as Chief of Staff. Prior to joining the Criminal 
Division, he was an Assistant U.S. Attorney for the Southern 
District of New York from 1991 to 1999, and from 1997 to 1999 
he was the Chief of the Public Corruption Unit; then from 1995 
to 1997, Deputy Chief of the Criminal Division.
    He received a Bachelor of Arts degree from Brandeis and 
received his law degree from Harvard Law School.
    Without objection, your written statement will be entered 
into the record in its entirety, and I ask that you summarize 
your testimony within 5 minutes or less. I do have a canned 
script about red, yellow and green lights. I think you know all 
about them.
    So, Mr. Horowitz, proceed.

   TESTIMONY OF THE HONORABLE MICHAEL E. HOROWITZ, INSPECTOR 
              GENERAL, U.S. DEPARTMENT OF JUSTICE

    Mr. Horowitz. Thank you, Mr. Chairman, Chairman Goodlatte, 
Ranking Member Scott, Members of the Subcommittee. Thank you 
for inviting me to testify today.
    Grant management is one of the top management challenges 
facing the Department of Justice. Over the past 5 fiscal years, 
my office has issued more than 200 grant-related audit reports 
making about 1,000 recommendations and nearly $100 million in 
dollar-related findings. During that same period we opened 109 
grant-related investigations that resulted in 12 criminal 
convictions and over $1.6 million in recoveries.
    As noted in our recent Top Management Challenges report, 
the Department has reported taking important steps toward 
making improvements in its grant-management process, which are 
highlighted in my written statement. The Department needs to 
continue to aggressively identify high-risk grantees and place 
appropriate restrictions on their funds or halt their funding 
altogether.
    The Department's grant-making components also must ensure 
that their own operations are streamlined to ensure maximum 
value for the taxpayer. Reports by both my office and the GAO 
have found that savings could be realized by reducing 
duplication and improving coordination among the Department's 
three grant-making components.
    Further, the Department should ensure that grantees have 
the capability to use grant funds in an effective manner, seek 
to improve data reporting by grantees so that the Department 
can evaluate a grant's effectiveness, and enhance coordination 
between its grant-making components and those DOJ components 
whose operations could be affected by the grants.
    Our recent audit highlighting grants to local law 
enforcement to support the use of drones demonstrated the need 
for such efforts in each of these areas.
    While audits and investigations are vital to our oversight 
of grant management, the OIG has taken other substantial steps 
to help prevent and deter misconduct in this area. For example, 
we have conducted training sessions for grant managers and 
recipients regarding fraud prevention and deterrence. We 
published a report summarizing the ideas and best practices 
derived from the OIG's experiences in grant oversight, and we 
examined the Department's own efforts to monitor and oversee 
grants through the Office of Justice Programs, which we found 
had significantly improved.
    Additionally, I chair the Grant Fraud Committee of the 
Financial Fraud Enforcement Task Force. The committee played a 
key role in developing grant fraud training for special agents 
and auditors across the inspector general community.
    The committee also provided comments to the Office of 
Management and Budget on drafts of its proposed grant circular, 
which was issued this past December. One important and positive 
change in the new grant circular is the requirement mandating 
that grantees disclose to the awarding agency or pass-through 
entity any violations of Federal criminal law involving fraud, 
bribery, or gratuities.
    Finally, a recurring concern in the inspector general 
community is the lack of visibility absent in OIG audit or 
investigation as to how grant funds are used by recipients. 
While existing grant management processes involve detailed pre-
award review, and grantees are required to maintain detailed 
accounting records regarding their use of grant funds, the 
financial reports they file with the grant-making agencies do 
not include details on individual transactions that would 
provide transparency.
    Two audit reports we recently issued illustrate this point. 
Earlier this month, we issued an audit report on $800,000 in 
grants awarded to the Philadelphia Safety Net. We questioned 
nearly $480,000 of the awarded funds as being unallowable, 
unsupported or unreasonably spent, including $276,000 related 
to the executive director's salary. Last year we issued an 
audit report questioning more than $19 million awarded to Big 
Brothers Big Sisters of America. That recipient was in material 
non-compliance with the majority of the grant requirements and 
its management practices were inadequate to safeguard grant 
funds.
    Had my office not conducted these two audits, this misuse 
of grant funds likely would never have come to light because 
the reports they submitted to the Department did not, on their 
face, reveal the improper uses of grant funds that we later 
uncovered. This is an area where greater transparency is a 
necessity.
    The OIG will continue its efforts to prevent and detect the 
misuse of Department grant funds, and we appreciate the support 
of this Committee for our work.
    Thank you, and I would be pleased to answer any questions 
the Committee may have.
    [The prepared statement of Mr. Horowitz follows:]

    
    
    
    
    
    
    
    
    
    


                               __________
    Mr. Sensenbrenner. Thank you very much.
    I recognize myself for 5 minutes.
    Mr. Horowitz, I am very concerned about the change in 
policy by the Justice Department relative to public safety 
officers' benefits programs. Obviously, somebody who is killed 
or disabled in the line of duty should be given benefits. I 
think everybody around here supports that, and everybody around 
here following 9/11 has supported an expansion of those 
programs.
    But there is a change in how applications have been 
processed, and instead of an independent legal review, which is 
what people who apply for Social Security Disability end up 
having, there is kind of a blanket program that the DOJ has 
done. I sent a letter over 6 months ago to the DOJ asking for 
answers to some questions. They have not responded.
    Are you looking into this, and can you tell me how far you 
have gotten and if you have made any at least tentative 
conclusions?
    Mr. Horowitz. We are looking into it, Mr. Chairman. We have 
had an audit ongoing of the PSOB when this change occurred, and 
so this change has now become part of our review as well, and 
we hope in the coming months we will be finalizing and issuing 
our report. I do not have any preliminary conclusions to 
provide the Committee at this point, but I will certainly keep 
the Committee updated as we finalize our review.
    Mr. Sensenbrenner. Now, the second question I would like to 
ask you is we have heard instances from you and from Members of 
this Committee and others that people who have been nicked for 
misusing government grant programs seem to be able to go back 
to the government trough without any type of penalty.
    Have you looked into this, and have you any recommendations 
on whether we should raise the bar a little bit or raise the 
bar so high that they can not get any more government grants or 
have a moratorium, some kind of penalty for people who have 
been found misusing the government grants so that they can not 
keep on doing business as usual?
    Mr. Horowitz. I think there are a couple of things that are 
important to do in that regard. One is we are trying to make 
greater efforts to use the suspension and debarment tools that 
we have been given by the Congress. But I think one of the 
things that both the agencies need to do and IGs need to do is 
share information more effectively across agencies and across 
IGs, and that is perhaps one area where some ability needs to 
be given to the IGs, for example, in order to share data about 
grant recipients so that when we make a finding in our agency, 
that a grant recipient is not able to go to other agencies and 
not have them be aware of what we have done.
    Mr. Sensenbrenner. Finally, relative to the Office of 
Violence Against Women, I have always been a big supporter of 
the competitive grant program. When I was the Chair of the 
Science Committee, then Ranking Member George Brown and I 
really imposed competitive grants on the scientific agencies 
that help finance basic research. The Office of Violence 
Against Women, Congress created competitive grants, and the DOJ 
has been kind of going back on that. They said that new 
organizations that had not received competitive grants really 
can not apply for, I think, up to six of the programs, which I 
think stifles innovation and new ways to deal with this 
problem.
    What have you been able to find on that, and what can we do 
as a Congress to continue to urge the competitive grant program 
to stay in place?
    Mr. Horowitz. We are aware of that change and we are 
looking at that change for the reasons you indicate. There is 
an importance to making sure that grant giving is like contract 
giving, considered competitively, considered for a variety of 
reasons, done fairly, and that is something we are looking at. 
Again, I do not have anything immediately to report to the 
Committee, but I will certainly keep you and the Committee 
updated.
    Mr. Sensenbrenner. Thank you very much.
    I yield back.
    The gentleman from Virginia, Mr. Scott.
    Mr. Scott. Thank you, Mr. Chairman.
    Mr. Horowitz, you mentioned drones. What was the problem 
there?
    Mr. Horowitz. Well, among many issues that we found in the 
grant area, we identified two grants the Department had given 
to local law enforcement agencies, each for $150,000. The grant 
recipients did as they were expected to when they bought the 
drones, so there was no misuse of funds. But what we found was 
6 years later, the drones had not been used. So our concern was 
that the Department never followed up, never determined whether 
the use of the money was, in fact, effective.
    Mr. Scott. So what should happen to those grant funds?
    Mr. Horowitz. Well, in situations like that, the Department 
should not in the first instance be awarding grant funds to 
recipients who can not put them to good use. But it should 
certainly learn from its mistakes and go forward and understand 
what grants can be effective, what grants perhaps are not 
effective.
    Mr. Scott. Is there any evaluation of the programs for 
effect, whether or not the programs, say a mentoring program, 
actually addresses the problem it is seeking to solve?
    Mr. Horowitz. From my experience in the 20 months I have 
been here, I have seen inconsistent efforts at that, and 
generally when it is done it is at a higher level, not at a 
more detailed level, to determine whether there is truly a good 
return on investment.
    Mr. Scott. Well, you know that there are some prevention 
programs that can save three, four, five, even ten times the 
money spent. Other prevention programs do not work. Do you 
evaluate which is which?
    Mr. Horowitz. When we do audits, what we do is go to the 
grant-making agency to see what data they have. So if they have 
collected the data, we can review that. We do not go out in our 
audits generally to the grant recipient and try to drill down 
on their documentation because in that instance we are 
primarily looking at the financial issues when we get to the 
grant.
    Mr. Scott. Do you audit whether or not they are targeting 
the most at-risk potential clients?
    Mr. Horowitz. We look, again, to what the Department has 
done in our audit and whether they have done what we think they 
should do, and then we report on, if the Department has failed 
to do it, where we think they have failed to do that.
    Mr. Scott. Do you calculate the cost savings generated by 
the program?
    Mr. Horowitz. Again, we do not undertake to calculate the 
cost savings. We are not getting that kind of data and getting 
that information primarily because the Department grant-making 
agency generally is not getting that kind of data.
    Mr. Scott. Should there be a requirement that we do 
significant evaluations of programs to see if they are 
effective and see if they are saving money?
    Mr. Horowitz. I personally think that is of value and 
importance, that when the government or, frankly, any 
organization gives out money, it understands not just was the 
money spent pursuant to rules but what was the value obtained, 
received from the program.
    Mr. Scott. And where should that take place? How do we 
ensure that happens?
    Mr. Horowitz. Well, I think it has to occur at the grant-
making agency or, if there is a component involved, say, at the 
Department of Justice, the component should be undertaking that 
effort.
    Mr. Scott. Now, with Big Brothers Big Sisters, are you 
aware that there was a private independent audit done over the 
years that found no difficulties?
    Mr. Horowitz. I am aware of that.
    Mr. Scott. Is there any suggestion that money was stolen?
    Mr. Horowitz. I do not believe we reported on anything like 
that.
    Mr. Scott. And you are aware that they are fixing whatever 
problems there are?
    Mr. Horowitz. They are in the remediation process is our 
understanding, and we will be doing a follow-up review.
    Mr. Scott. Okay, thank you.
    I yield back.
    Mr. Sensenbrenner. The gentleman from Virginia, Mr. 
Goodlatte.
    Mr. Goodlatte. Thank you, Mr. Chairman.
    Mr. Horowitz, welcome. We are glad to have you back. We 
value your work.
    Mr. Horowitz. Happy to be here.
    Mr. Goodlatte. Approximately what percentage of grant 
audits each year involve some finding that grant funds were 
used for unallowable expenses?
    Mr. Horowitz. I do not know off the top of my head in terms 
of the numbers, but just anecdotally from my 20 months on the 
job, many of the grants that we issue have some findings 
associated with them either with non-compliance of a serious 
nature or not keeping the records as required, which may or may 
not be serious.
    Mr. Goodlatte. My understanding is your office puts out 
dozens of audits each year in which the Department is entirely 
unaware that a grantee is misspending money, sometimes for 
years until your office discovers it. What else needs to be 
done by these various Department of Justice agencies to 
identify the problem sooner, and what additional review can 
Congress mandate to deal with this?
    Mr. Horowitz. I think a very important part of this is 
transparency around the expenditures that are going on with 
grant-making agencies, and we are not talking about additional 
burdens on the grant recipient because they are already 
required to keep those kinds of records internally.
    The reports to the Department--and I think if you had my 
colleagues up here in the IG community they would be saying the 
same thing for their agencies. Have the same kind of reporting 
that they are doing internally, not adding burdens to them 
because it is already being done, have that information going 
to the agencies, and I think consider whether it should be 
public on websites such as USSpending.gov.
    Mr. Goodlatte. And it is also my understanding that the 
Department of Justice does not always automatically cut off 
existing or future funding to grantees like they did freeze 
those funds for Big Brothers and Big Sisters, which is, of 
course, a very important organization and we welcome their good 
work. But that seems to be because it was highlighted an 
exception rather than a rule. I think most of our constituents 
would be surprised that an entity can be subject to a negative 
Inspector General's report and still be eligible for more 
taxpayer money.
    Can you speak to that? How do we address that problem?
    Mr. Horowitz. That is a significant concern again across 
the IG community. I think I can speak for my other Inspector 
General colleagues in this, which is the importance of making 
sure that, first of all, as we do, we put out our reports 
transparently, but also as we are doing our work, as agencies 
are learning of problems within their own grants, that other 
agencies also become aware of the issue so that there is the 
awareness of problems across the Federal Government, not just 
within, say, the Department of Justice.
    Mr. Goodlatte. This problem has been on the Department of 
Justice's list of management challenges for at least a dozen 
years, and it implies to me that the Department has not been 
taking the issue very seriously. What steps does the Department 
need to take to get this challenge under control so the issue 
can come off the list?
    Mr. Horowitz. Well, I think there are a number of issues. 
One is if those reports could go--the grant agencies, the grant 
recipients are keeping about their individual expenditures 
would come to the Department, that would help immeasurably with 
oversight by the agency. The Justice Department and the Office 
of Justice Programs has made important steps, and Congress 
authorized in 2005 the Office of Audit Assessment and 
Management that has made a number of improvements that have 
occurred within the Office of Justice Programs.
    Having more rigorous oversight within the grant-making 
agency itself, were they obviously to do these audits, to do 
the independent reviews, but the agencies themselves need to 
police the grant recipients to make sure they are using the 
money wisely and, as Congressman Scott indicated, doing a 
better job evaluating what is the taxpayer benefit for the 
funds being given out so that they know going forward what is 
the best use of the money, particularly as the limits are 
coming now.
    Mr. Goodlatte. Let me get in one more question before my 
time expires to follow up on that. Have you made those 
recommendations to the Department in the past? And if so, how 
have they reacted to those recommendations?
    Mr. Horowitz. We have made certainly some of those, usually 
in the context of the individual grants. The Department has 
generally been responsive to our requests, but larger changes 
such as having information about individual expenditures going 
to the Department, that really cuts across. It is not just a 
Justice Department issue. So I think that is a bigger change 
that the IG community needs to think about, Congress needs to 
think about, and I think that is an important issue to 
consider. It is not just an OJP or an OVW or a COPS issue.
    Mr. Goodlatte. Thank you very much.
    Thank you, Mr. Chairman.
    Mr. Sensenbrenner. The gentleman's time has expired.
    The gentleman from Louisiana.
    Mr. Richmond. Thank you, Mr. Chairman.
    I guess I will start where Congressman Scott left off, and 
that is we do not do a return-on-investment, a cost/benefit 
analysis of grant performance at the end?
    Mr. Horowitz. There is a very high-level, in some 
instances, evaluation of that, but not what I think you 
probably have in mind.
    Mr. Richmond. So that does not happen in the beginning? I 
would assume it happens in the awarding process to make sure 
that we are giving them out to, at least on paper, the most 
effective and efficient of the applicants.
    Mr. Horowitz. Right. In the pre-award processes, we have 
generally found very rigorous.
    Mr. Richmond. But we do not have a back-end process, or you 
are not sure of that?
    Mr. Horowitz. We do not have what I would consider a 
rigorous back-end process. There is a general review of the 
performance metrics that have come in, but nothing much beyond 
that, beyond what the grant recipient sends in.
    Mr. Richmond. Now, if we had that performance metric on the 
back end, would you suggest that that should come from an 
independent office, or should it come from within the Justice 
Department to see if those metrics were met satisfactorily?
    Mr. Horowitz. I think probably every department is going to 
be different here. Given the Department gives out a lot of 
small-dollar grants, it probably is something that should be 
done within the grant-making agency itself, subject to our 
independent oversight, GAO's independent oversight at this 
point. Institutions with big-dollar grants, perhaps it is a 
different story. But the Department gives out so many grants, 
it is probably hard to have it done entirely outside and 
independently.
    Mr. Richmond. And I guess if my information is correct, it 
says that grant management has been a challenge, an articulated 
challenge within the Department for at least the last 12 years.
    Mr. Horowitz. Correct.
    Mr. Richmond. How do we get it off there? It is easy to 
give those recommendations and say that the agency is following 
them. What are they not doing? Why can not we get this off of 
center? I just do not understand why, if it is a focus, we can 
not get past this being one of our top 10 management 
challenges.
    Mr. Horowitz. Well, again, the recent examples we have on 
the drone report, the example I cited there, the Big Brothers 
Big Sisters of America, the Philadelphia Safety Net, a couple 
of others that I have referenced, you still see the problems 
where given the high-level reporting that comes back, for 
example, it is simply not possible for the grant-making 
agencies, without our audits, to know in detail how the money 
is being spent, and that is a primary problem.
    A secondary problem is--we have commented on this before 
and I think it needs to be done--merging back-office operations 
of the three grant-making agencies at the Justice Department. 
There are three grant-making agencies that were statutorily 
created by Congress, but that does not mean that they need 
different systems or different operations.
    Two examples. COPS has a different financial management 
reporting system than does OVW and OJP, which have one 
together. We do not see a reason why there would need to be two 
different systems. They have three different financial guides 
for grant recipients. So if you are a grant recipient from the 
Justice Department from the three agencies, you have three 
different guides to follow.
    Mr. Richmond. Now, you mentioned Congress played a part in 
that, at least setting up making sure that it is three 
different----
    Mr. Horowitz. Correct. And, in fact, within OJP, they have 
seven sub-entities that give out grants.
    Mr. Richmond. Now, have you issued to us in the same way--
and maybe you did and I just missed it--actions that Congress 
can take to help Justice Department simplify, streamline, and 
become more efficient and get closer to real-time monitoring so 
that we catch things a little bit earlier than we are doing it 
now?
    Mr. Horowitz. I would have to go back and look at my 
predecessor's testimony, but I believe it has been part of our 
prior reports to Congress.
    Mr. Richmond. Okay, and I would just quickly say can you 
give us a report specifically about what we can do in Congress 
to help? And with that, I would yield whatever I have left to 
Congressman Scott.
    Mr. Scott. You made, apparently, 1,000 recommendations?
    Mr. Horowitz. I'm sorry.
    Mr. Scott. You made about 1,000 recommendations?
    Mr. Horowitz. Yes.
    Mr. Scott. Could you inform us as to the status of those 
recommendations?
    Mr. Horowitz. Yes. About 700 or so have been met. We have 
about 300-plus still open, and what I have started doing is 
having every 6 months us compile our open reports and provide 
them to the Attorney General and the Deputy Attorney General so 
that they are aware and their staffs are aware--this is now 
across the Justice Department--of open recommendations so that 
they can be involved because, frankly, we in the past have sent 
them to components, but leadership would not necessarily see 
them, and that is what I am trying to do now and more 
centralize it.
    Mr. Scott. Can we get that report?
    Mr. Horowitz. Let me--I believe they are all public, so I 
do not think there is an issue with that, but let me just make 
sure. Some of them could be in classified or other contexts. I 
just need to double-check that.
    Mr. Sensenbrenner. The gentleman's time has expired.
    The gentleman from Texas, Mr. Gohmert.
    Mr. Gohmert. Thank you, Mr. Chairman.
    We sure appreciate your being here and even more appreciate 
your work, Mr. Horowitz.
    We do have--and I understand this has been mentioned 
earlier--different grant programs that do not necessarily 
communicate or communicate effectively. Do you have any 
recommendations for how we could go about making sure that 
there was better communication between the grant programs so 
that we do not overly fund something that needed one grant and 
got three, and then not fund something adequately that really 
needed more help?
    Mr. Horowitz. I think one of the key issues is 
transparency. The more there is public about the grants, what 
they are awarded for and how they are being spent, it gives 
multiple eyes on the grants. We are more likely to get 
whistleblower concerns or other concerns where there is 
misconduct going on. So I think that is an important part of 
it, and making sure that agencies are aware of what other 
agencies are awarding grants for, because that is another place 
for potential overlap, not just within our three components in 
the Justice Department.
    Mr. Gohmert. I understand, but it has been one of my 
concerns about other areas of grant programs, not just grant 
programs but actually where the government makes payments and 
then turns around later and says wait a minute, we did our 
review after we gave you the payment and it turns out we gave 
too much.
    It seems like it is better to know before a payment is made 
whether or not it is a good idea, and if all the agencies are 
doing is examining what another agency did after the fact, then 
that money is gone. You are not going to get it back because it 
has been received, it has been spent, and I am not a fan of 
going back and demanding communities give back after they have 
already spent.
    So I was looking for a way that we could foster better 
communications between grant programs so that they could see 
who had applied, or if there were a requirement on the forms or 
on applications to say what all else they had applied for, what 
they had received in the past so that they would not be 
penalized for applying to more than one, but if there were 
indications that they were likely to get another grant, then 
they would not have it tripled up.
    Mr. Horowitz. Yes, and I agree, Congressman. I think on 
grant applications, reporting where else you have gotten grants 
from across the Federal Government, whether you are under 
suspension or disbarment, whether you are under active 
investigation, whether criminal or otherwise. That kind of 
information--if one grant recipient is under investigation by 
the Justice Department, the components should know that that is 
occurring. So requiring that information up front under penalty 
of perjury I think is an important part of the process.
    Mr. Gohmert. So, yes, I would say that if law enforcement 
is after them, the other law enforcement ought to know that 
they are investigating the people they are about to give money 
to.
    But do you know, are there any requirements like that in 
the application process? Did you specifically look at the 
application process?
    Mr. Horowitz. I am not aware of any. We are actually 
looking at that question now.
    Mr. Gohmert. And would you agree, as you say you are 
looking at it, if you find it is not there, would you agree to 
make that part of your recommendations that they should make 
that part of the application process, to identify what grants 
they have received in the past and what others they have 
applied for?
    Mr. Horowitz. Yes.
    Mr. Gohmert. Okay. Thank you so much. I really appreciate 
it.
    Mr. Sensenbrenner. The gentleman's time has expired.
    Mr. Horowitz, when you come here, you always give us all 
kinds of good ideas on how to help you out. Please keep on 
doing it, and you will be back.
    Without objection, the Subcommittee is adjourned.
    [Whereupon, at 10:44 a.m., the Subcommittee was adjourned.]

                                 
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