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Review of the Port Security Grant Program
Department of Homeland Security ^
| January 2005
| DHS Office of Inspector General
Posted on 02/23/2006 7:12:14 PM PST by snowsislander
Review of the
Port Security Grant Program
DEPARTMENT OF HOMELAND SECURITY
Office of Inspector General
Office of Inspections, Evaluations, & Special Reviews
OIG-05-10
January 2005
Office of Inspector General
U.S. Department of Homeland Security
Washington, DC 20528
Preface
The Department of Homeland Security (DHS) Office of Inspector General (OIG) was established
by the Homeland Security Act of 2002 (Public Law 107-296) by amendment to the Inspector
General Act of 1978. This is one of a series of audit, inspection, and special reports prepared
by the OIG as part of its DHS oversight responsibility to promote economy, effectiveness, and
efficiency within the department.
This report assesses the strengths and weaknesses of the department’s port security grant
program. It is based on interviews with employees and officials of relevant agencies and
institutions, direct observations, and a review of applicable documents.
The recommendations herein have been developed to the best knowledge available to the OIG,
and have been discussed in draft with those responsible for implementation. It is my hope that
this report will result in more effective, efficient, and economical operations. I express my
appreciation to all of those who contributed to the preparation of this report.
Richard L. Skinner
Acting Inspector General
Review of the Port Security Grant Program
Page 1
Contents
Introduction......................................................................................................................................3
Results in Brief ................................................................................................................................3
Background......................................................................................................................................7
Purpose, Scope, and Methodology.................................................................................................12
Findings .........................................................................................................................................13
Port Security Grants and National Strategic Considerations................................................13
Project Evaluation and Selection Process.............................................................................20
Funding Private Sector Projects............................................................................................33
Status of Funds and Project Monitoring ...............................................................................38
Dichotomy Between TSA and ODPApproaches..................................................................40
Figures
Figure 1:
Summary of Port Security Grant Programs...........................................................10
Figure 2:
Total Projects and Funding Requested vs. Awarded .............................................11
Figure 3:
Comparison of TSAAppropriation Authority and MTSA Grant Authority..........14
Figure 4:
Sample Scoring Matrix .........................................................................................22
Figure 5:
Allocation of Funds...............................................................................................34
Figure 6:
Status of Funds......................................................................................................39
Appendices
Appendix A: Summary Tables of TSA Port Security Grants......................................................46
Appendix B: Management Comments........................................................................................48
Appendix C: OIG Evaluation of Management Comments.........................................................57
Appendix D: Recommendations .................................................................................................66
Appendix E: Major Contributors to this Report .........................................................................68
Appendix F: Report Distribution................................................................................................69
Review of the Port Security Grant Program
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Contents
Abbreviations
CFR
Code of Federal Regulations
COTP
Captain of the Port
DOD
Department of Defense
ERB
Executive Review Board
FMSC
Federal Maritime Security Coordinator
FY
Fiscal Year
GAO
Government Accountability Office
IAIP
Information Analysis and Infrastructure Protection
MARAD Maritime Administration, Department of Transportation
MTSA
Maritime Transportation Security Act of 2002
NIPP
National Infrastructure Protection Plan
NRB
National Review Board
ODP
Office for Domestic Preparedness
OIG
Office of Inspector General
P.L.
Public Law
PSRAT
Port Security Risk Assessment Tool
SLGCP
Office of State and Local Government Coordination and Preparedness
SRB
Selection Review Board
TSA
Transportation Security Administration
UASI
Urban Area Security Initiative
USCG
United States Coast Guard
Review of the Port Security Grant Program
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OIG
Department of Homeland Security
Office of Inspector General
Introduction
The terrorist attacks of September 11, 2001, against the United States resulted
in a renewed focus on protecting the country’s transportation systems, including
seaports and port facilities. In 2002, Congress provided funding to the
Transportation Security Administration (TSA), then under the Department of
Transportation, to enhance the security of ports and other facilities. TSA, along
with the Maritime Administration (MARAD) and the U.S. Coast Guard (USCG),
developed the Port Security Grant Program. The purpose of this program is
to reduce the vulnerability of American ports to potential terrorist attacks by
enhancing facility and operational security. To date, the program has awarded
over $560 million for over 1,200 projects.
1
We reviewed the design and goals of the program, potential duplication of other
programs, the roles and responsibilities of participating agencies, and the grant
evaluation and selection process. We conducted our review between December
2003 and May 2004.
Results in Brief
The Port Security Grant Program provided funds for security within the maritime
industry, generated additional investments, and significantly increased awareness
of security needs. With no shortage of potential projects to choose from and
limited funding, the program strove to award funds to projects that best matched
its eligibility criteria. We observed good, respectful, working relationships among
TSA, USCG, and MARAD, who collaborated to stand up a competitive grant
program and leverage their expertise throughout multiple rounds of grant awards.
However, the program’s strategic impact is less apparent and its purpose and goals
require refinement to support national priorities effectively. Specifically:
1
This includes $75 million made available by the Department of Homeland Security’s Office for Domestic Preparedness.
Review of the Port Security Grant Program
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• While the program’s eligibility criteria are directed broadly at national
critical seaports, the current design of the program compromises
the program’s ability to direct resources toward the nation’s highest
priorities.
• The program is attempting to reconcile the goals of the Maritime
Transportation Security Act of 2002 (MTSA),
2
the competitive grant
program mandated by Congress, and risk based direction of grant
monies. MTSA is a nationwide security mandate that widely affects the
maritime industry. The program is faced with the competing pressures
of offsetting MTSA related costs while making competitive and risk
based grant decisions to protect the nation’s most critical ports and port
facilities.
• The program did not have the benefit of national key asset and critical
infrastructure protection information now being developed by the
Information Analysis and Infrastructure Protection (IAIP) directorate.
Program administrators and IAIP, which is responsible for developing
strategies for protecting the nation’s critical infrastructure, did not
collaborate to integrate the program with broader national security
initiatives.
• Grant award decisions are made with the intent of expending all available
funding and spreading funds to as many applicants as possible. The
program funded projects despite dubious scores by its evaluators against
key criteria, raising questions about the merits of several hundred
projects. Frequently, headquarters and field reviewers did not agree about
the eligibility or merit of projects and did not consistently document their
rationale for recommending or not recommending funding.
• The question of where the private sector’s responsibility for preventing
terrorism ends and where the federal government’s responsibility begins
poses a dilemma for the Port Security Grant Program. DHS does not
have a formal policy to provide financial assistance to private entities, a
group that includes those that own and operate high risk facilities. Private
entities have applied for and received substantial funding. Some of that
funding went to projects that reviewers scored below average or worse
during the evaluation process.
2
P.L. 107-295.
Review of the Port Security Grant Program
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• At each level of the application review process, reviewers were
challenged to meet short deadlines to evaluate, rate, and rank projects.
This affected the ability of reviewers to document thoroughly their
decisions and made subsequent levels of review more difficult.
• After three rounds of the Port Security Grant Program, recipients spent
only a small portion of the entire amount awarded. Of the $515 million
awarded between June 2002 and December 2003, including $75 million
provided under the Office for Domestic Preparedness’s (ODP’s) Urban
Area Security Initiative (UASI), grant recipients had expended only
$106.9 million, or 21% of total program awards as of September 30,
2004. As a result, the majority of projects have not been completed and
the program has not yet achieved its intended results in the form of actual
improvements to port security.
• Following TSA’s second round of grant awards in 2003, ODP made $75
million available for port security grants under the UASI. The UASI
is distinct from TSA’s program and had not been used for port security
grants previously. ODP, in consultation with TSA and the Office of State
and Local Government Coordination,
3
utilized a risk based approach,
4
which differed from the program’s original competitive process, to select
14 eligible port areas and the corresponding funding amounts for each
area. TSA then provided unfunded applications from its second round of
grants to ODP, which in turn, funded 86 projects. The TSA, USCG, and
MARAD National Review Board had reviewed these projects before they
were submitted to ODP and determined that 82 did not merit funding.
• Secretary Ridge moved TSA’s Port Security Grant Program into the
Office of State and Local Government Coordination and Preparedness
(SLGCP). SLGCP officials would like to combine elements of ODP’s
discretionary risk based approach with TSA’s competitive program
that relies on USCG and MARAD expertise for making grant award
decisions. It is not clear how SLGCP will combine the elements of these
programs.
3
The Office of State and Local Government Coordination and the ODP were moved into the Office of State and Local Government
Coordination and Preparedness on May 17, 2004.
4
The UASI Port Security Grant Program is distinct from the primary UASI grant program. The primary UASI grant program identified and
awarded formula grants to 50 high threat urban areas. The program utilized a different methodology to derive the funding amounts for the
14 selected port areas.
Review of the Port Security Grant Program
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• Port security grants were awarded through two different statutory
authorities, TSA’s appropriation and ODP’s UASI program, which have
different award processes and eligibility requirements. A third authority,
MTSA, mandates security requirements for port facilities and vessels
and contains another grant authority intended to offset the costs of the
security mandates. The consolidation of ODP’s UASI program and TSA’s
Port Security Grant Program into SLGCP and the impact of MTSA cloud
the statutory intent and future direction of port security grants.
We are recommending that the Executive Director, Office of State and Local
Government Coordination and Preparedness:
Recommendation #1: Determine to what extent the program should incorporate
MTSA requirements.
Recommendation #2: Incorporate critical infrastructure and key asset data from
IAIP into the evaluation of proposed port security projects. Among the changes to
consider:
• The addition of an IAIP official on the Executive Review Board;
• Use of the IAIP national asset database to identify critical facilities in
need of mitigation with a view toward soliciting proposals from these
facilities; and
• Collaborating with IAIP in an outreach program to improve the quality of
vulnerability assessments and proposals.
Recommendation #3: Consider changing the weighting of the evaluation criteria,
with greater emphasis placed on the criteria that reduce critical vulnerabilities.
Recommendation #4: Cease the practice of funding projects that do not meet the
definition of a Priority I project. Consider implementing a scoring threshold that
ensures that projects not meeting that threshold are not funded. Consider seeking
a change in appropriations language to have these grant funds designated as “no-
year monies” to reduce the impetus to fund doubtful projects.
Recommendation #5: Require reviewers to document their decisions in
the grants management system, particularly when they are inconsistent with
recommendations from a lower level of review.
Recommendation #6: Develop parameters that define applicant eligibility under
the “nationally important economic port or terminal,” “responsible for movement
Review of the Port Security Grant Program
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of a high number of passengers,” and “responsible for the movement of hazardous
cargo” criteria.
Recommendation #7: Communicate information to field reviewers to educate
them on eligibility. Improve dissemination of “lessons learned” at all levels of
review.
Recommendation #8: Evaluate timeframes for reviewing applications with an
emphasis on providing more time for review in the field and by the ERB.
Recommendation #9: Clarify department policy on funding private sector
projects. In the absence of such policy, and if funding private sector projects is
continued: (1) examine private sector projects to preclude the funding of cost of
business expenses; (2) develop financial eligibility criteria, including an income
test or cost-benefit analysis; and (3) consider giving greater preference to projects
that are submitted jointly by private and public entities.
Recommendation #10: Accelerate the acquisition of more information from
applicants about the scope of their projects.
Recommendation #11: Ensure that the program has sufficient operational
expertise to administer the program after the award is made.
Recommendation #12: Seek clarification on the legislative intent for the program
(sector-specific vs. larger infrastructure protection initiatives) and construct a
unified program (policy, purpose, process, and eligibility) to comply with that
intent.
Background
TSA, originally part of the Department of Transportation, was created by the
Aviation and Transportation Security Act of 2001,
5
which was signed into law on
November 19, 2001. Shortly thereafter, on January 10, 2002, Congress passed
the Department of Defense (DOD) Appropriations Act of Fiscal Year (FY)
2002,
6
which included funding for port security grants. Congress made over $93
million available to the Under Secretary of Transportation for Security to award
5
P.L. 107-71.
6
P.L. 107-117.
Review of the Port Security Grant Program
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competitive grants to critical national seaports. These grants were to finance the
cost of enhancing facility and operational security as determined by the Under
Secretary of Transportation for Security, the Administrator of MARAD, and the
Commandant of USCG. The grants could be used for security assessments and
for implementation of measures once assessments had been performed. Congress
did not intend for the funding to displace current security funding and activities
either provided by the ports or by federal agencies, but rather that it be used for
additional security activities that were not being performed at the ports at that
time.
7
On February 28, 2002, MARAD, on behalf of TSA, requested applications
for the first round of port security grants based on the DOD provisions. Four
months later, it awarded the initial round of grants, which totaled $92 million and
funded 24 security assessment projects, 14 proof-of-concept projects, and 106
facility and operational security enhancement projects.
8
On November 25, 2002, President Bush signed MTSA. MTSA is designed to
protect the nation’s ports and waterways from a terrorist attack. MTSA was based,
in part, on recommendations from the Interagency Commission on Crime and
Security in U.S. Seaports. In its Fall 2000 report, the Commission concluded that
the state of security at U.S. seaports generally ranged from poor to fair, control
of access to seaports or sensitive areas within seaports was often lacking, and the
vulnerability of American ports to potential terrorist attacks was high.
Section 70107 of MTSA authorized the Secretary of Transportation, acting
through the MARAD Administrator, to establish a grant program for making a fair
and equitable allocation among port authorities, facility operators, and state and
local agencies. However, Congress did not appropriate funds toward MARAD’s
grant authority. Rather, Congress appropriated additional grant funds to TSA and
required that the grants be awarded under the terms and conditions of the earlier
DOD Appropriations Act of FY 2002.
Capitalizing on progress made during the initial round, TSA conducted three
more rounds of port security grants. On January 14, 2003, the Under Secretary of
Transportation invited applications for the second round of port security grants.
Four and one-half months later, TSA awarded $169 million to 199 applicants for
392 projects.
9
On June 21, 2003, TSA invited applications for the third round of
7
House of Representatives Conference Report 107-350, Division B, Chapter 11, Department of Transportation, Transportation Security
Administration.
8
Data obtained from MARAD’s grant management system. MARAD developed the original web-based grant management system and
administered the first round of grants on behalf of TSA.
9
TSA became part of the Department of Homeland Security on March 1, 2003.
Review of the Port Security Grant Program
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grants; five and one-half months later it awarded $179 million to 235 applicants
for 442 projects.
10
In total, the first three rounds combined to fund 978 projects at
a cost in excess of $440 million. Most grant awards were for access controls and
physical enhancements (see Appendix A).
In addition to the $169 million awarded by TSA in round two, ODP provided $75
million under the UASI program to 49 applicants for 86 port security projects,
bringing total awards for the first three rounds to approximately $515 million.
11
The UASI program, separate and distinct from TSA’s competitive grant program,
provides discretionary grants for high-density and high-threat urban areas. UASI
grants typically address the equipment, training, planning, and exercise needs
of these areas. Prior to this, the UASI had not been used for port security grants.
Unlike TSA, ODP did not use a competitive grant award process. Rather, in
working with TSA and the Office of State and Local Government Coordination,
ODP utilized a risk based process to identify eligible port areas and grant award
amounts even before applications were submitted. While ODP did not use the
same type of grant award process, ODP did rely on TSA to forward unfunded
project applications from TSA’s second round of grants. ODP then made grant
awards for its projects from these applications.
On May 5, 2004, TSA requested applications for round four of the program.
On September 13, 2004, TSA awarded $49.4 million for 154 projects to 120
recipients.
12
10
Funding
for round two was a combination of $150 million in FY 2003 Consolidated Appropriations (P.L. 108-7) and $20 million from
the FY 2003 Wartime Supplemental Appropriations Act (P.L.108-11). Funding for round three was a combination of $104 million in FY
2002 Supplemental Appropriations Act for Further Recovery From and Response to Terrorist Attacks on the US (P.L. 107-206) and $75
million of the $125 million set aside from the FY 2004 Homeland Security Appropriations Act (P.L. 108-90).
11
The UASI derives its program and spending authorities from the USA PATRIOT Act, P.L. 107-56 § 1014; the Emergency Wartime
Supplemental Appropriations Act of 2003 (P.L. 108-11), Title I, Chapter 6 ($700 million, of which $75 million was obligated for round
two); and the Department of Homeland Security Appropriations Act of 2004, P.L. 108-90, Title III ($725 million). See page 40 for further
information on ODP and the UASI.
12
The source of round four funds is the FY 2004 Homeland Security Appropriations Act (P.L. 108-90).
Review of the Port Security Grant Program
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Figure 1. Summary of Port Security Grant Programs
Program
Lead
Agency
Amount
Awarded
Characteristics
Port Security
Grant
Program
TSA
(USCG
and
MARAD
participate
also)
FY 2002:
1
st
round - $92 million
FY 2003:
2
nd
round - $169 million
FY 2004:
3
rd
round - $179 million
4
th
round - $49.4 million
Competitive grant award process.
Intended for enhanced operational and facility
security at ports, port facilities and vessels.
Urban Area
Security
Initiative
ODP
FY 2003:
$75 million
Discretionary for large high-threat urban areas.
Separate from its basic UASI program which
provided formula grants to 50 urban areas
for equipment, training, planning, exercise,
operational needs, and critical infrastructure
protection, ODP awarded port security grants
to 14 high risk port areas. ODP collaborated
with TSA and the Office of State and Local
Government Coordination to identify the
eligible port areas. TSA provided ODP with
applications from its previously reviewed pool of
applications.
MTSA Grant
Program
(unfunded)
MARAD
$0
Fair and equitable allocation of grants.
Intended to offset the cost of implementing
MTSA mandated facility and area maritime
security plans including equipment,
personnel, and other security related costs.
Applicant interest in TSA’s program has been strong and applicant requests have
far exceeded available funds. Although the program has increased the number of
projects funded each year, program funding continues to fall far short of demand.
Review of the Port Security Grant Program
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Figure 2. Total Projects and Funding Requested vs. Awarded
To be eligible for grant funding under TSA’s program, applicants must be
deemed to be a critical national seaport/terminal as defined by one or more of the
following attributes:
• One of the 14 designated “strategic ports,” as designated by a MARAD
port planning order.
• Controlled Port – Ports that have access controls for vessels from certain
countries due to national security issues.
13
• A nationally important economic port responsible for a large volume of
cargo movement or for movement of products vital to U.S. economic
interests as required for national security.
• Port or terminal responsible for the movement of a high volume of
passengers.
• Port or terminal responsible for the movement of hazardous cargo.
There are 361 seaports in the United States and they vary considerably by their
size, type of commerce, and amount of cargo. Public seaports are generally
owned and operated by local governments through a port authority; however,
large portions of seaport real estate are often leased to the private sector by the
local government operating as a landlord. In addition, many privately owned and
operated terminals exist within seaports independent of the local port authority.
13
Controlled Ports are: New London/Groton, CT; Portsmouth, NH (including Kittery, ME, and Dover, NH, on the Piscataqua River);
Hampton Roads, VA (including Norfolk, Newport News, Jamestown, Yorktown, and Portsmouth, VA); Charleston, SC; Kings Bay, GA;
Port Canaveral, FL; Panama City, FL; Pensacola, FL; Port St. Joe, FL; Port Hueneme, CA; San Diego, CA; and Honolulu, HI.
Review of the Port Security Grant Program
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Businesses operating in the seaport include terminal operators, ocean carriers,
trucking companies, freight forwarders, brokers, and food servicing companies.
14
Port facilities and vessels are eligible to receive grant funding if they meet any
of the “critical national seaport/terminal” criteria cited above. This is determined
during the application review process.
On January 23, 2004, Secretary Ridge announced DHS’intention to consolidate
ODP, then within the Directorate for Border and Transportation Security, with the
Office of State and Local Government Coordination, which reports directly to the
Secretary, to create the SLGCP. This action became effective on May 17, 2004.
As a part of this action, TSA’s Port Security Grant Program and ODP’s UASI Port
Security Grant Program were consolidated into SLGCP.
Purpose, Scope, and Methodology
We reviewed the design and goals of the Port Security Grant Program, the roles
and responsibilities of agencies participating in the grants process, and the project
selection and evaluation process. We looked for possible duplication between
TSA’s and ODP’s grant programs. We assessed coordination between the
program offices and DHS’IAIP directorate, and how the grants strengthen critical
infrastructure within the United States. We did not review TSA’s Operation Safe
Commerce once we determined that it does not duplicate the Port Security Grant
Program.
We interviewed management, program, and grant officials at several DHS
organizations including TSA, USCG, IAIP, ODP, and SLGCP. We also
interviewed officials at the Department of Transportation’s MARAD. These
interviews included agency representatives on the National Review Board and
Executive Review Board, which are responsible for reviewing grant applications
at the headquarters level. We also interviewed an official at the Defense Threat
Reduction Agency.
We visited ports in Maryland, Virginia, Texas, and California. As part of our
site visits, we interviewed numerous people representing port authorities,
private entities, USCG’s Marine Safety Units, and state and local emergency
management/security offices. We also interviewed all five of MARAD’s Regional
Directors and the Commander of the U.S. Army’s 842nd Transportation Battalion,
14
Interagency Commission on Crime and Security in U.S. Seaports, Fall 2000.
Review of the Port Security Grant Program
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Surface Deployment and Distribution Command, who oversees military cargo
transportation operations at the Port of Beaumont, TX.
We reviewed documentation pertinent to the design and implementation of
both TSA’s and ODP’s Port Security Grant Programs including authorization
and appropriation language, “Requests For Applications,” and guidance used
by applicants and project evaluators. We analyzed the grant award information
and project data for the second and third round of grants awarded between May
and December 2003. We did not analyze data from the fourth round of grants
awarded on September 13, 2004. We also reviewed the Report of the Interagency
Commission on Crime and Security in U.S. Seaports, the National Strategy
for Physical Protection of Critical Infrastructure and Key Assets, the National
Strategy for Homeland Security, and other reports relating to port security and
critical infrastructure protection.
We conducted our review between December 2003 and May 2004 under the
authority of the Inspector General Act of 1978, as amended, and according to the
Quality Standards for Inspections issued by the President’s Council on Integrity
and Efficiency.
Findings
Port Security Grants and National Strategic Considerations
TSA, USCG, and MARAD created and implemented a Port Security Grant
Program, as Congress intended. Congress intended for the program to help port
authorities and private entities harden their ports, facilities, and vessels. Over
$560 million has been awarded under the program for security improvements.
However, the current design of the program compromises DHS’ability to direct
resources toward the nation’s highest priorities. The program needs to improve its
use of national strategic data.
Balancing TSA’s Program with MTSA
The 2002 DOD Appropriations Law authorizing TSA’s program stipulated that
TSA was to award competitive grants to critical national seaports to finance the
costs of facility and operational security enhancements. On November 25, 2002,
less than a year after the first appropriation to TSA and just five months after
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Page 14
the first round of grants, MTSA was enacted into law. MTSA is a nationwide
security mandate that widely affects the maritime industry. MTSA created, but did
not fund, a grant authority that differed in purpose from the TSA appropriation.
Congress continued to fund the TSA program and did not require TSA to alter its
program to adhere to the MTSA grant authority. The current program attempts
to reconcile the competitive program set forth in TSA’s appropriation and the
“equitable” program authorized by MTSA. The program is faced with the
competing pressures of offsetting MTSA related costs while making competitive
and risk based grant decisions to protect the nation’s most critical ports and port
facilities.
Figure 3. Comparison of TSAAppropriation Authority
and MTSA Grant Authority
Responsible
Agency
Grant Award
Process
Eligible
Entities
Eligible Costs
Cost Share
TSA
Appropriation
Authority
TSA in
coordination
with USCG
and MARAD
Competitive
Critical
National
Seaports
• Facility and
operational security
enhancements
• Security
assessments
No cost share
requirement
MTSA Grant
Authority
(not funded)
MARAD
Fair and
equitable
allocation
• Port
Authorities
• Facility
operators
• State and
local
agencies
required
to provide
security
• Recurring costs for
security personnel
• Acquisition,
operation, and
maintenance of
security equipment
• Screening
equipment for
explosives and
WMD
• Vulnerability
assessments
• 75% federal
funding
• No cost
share for
projects
$25,000 or
less
• Discretion
to approve
a lower
non-federal
cost-share
MTSA’s authority was intended to authorize the costs of implementing area
maritime security plans and facility security plans. MTSA required a fair and
equitable allocation of funds to port authorities, facility operators, and state
and local agencies that are responsible for security services, while taking into
account national economic and strategic defense considerations. In addition,
MTSA limited federal funding to a 75% cost share for projects costing greater
Review of the Port Security Grant Program
Page 15
than $25,000. MTSA did not require a competitive program for funding grant
proposals. As noted earlier, MTSA was not funded.
In a September 9, 2003, report, the Government Accountability Office (GAO)
noted the differences in eligibility between TSA’s program and MTSA’s grant
authority.
15
TSA officials said that the appropriation language limited TSA’s
ability to meet MTSA requirements. GAO asserted that continued deviation from
MTSA’s cost share requirement would keep federal dollars from reaching as many
projects as possible and that the current program does not take into account the
applicant’s ability to participate in funding. Therefore, federal dollars were not
leveraging as many projects as possible.
In response to GAO, rather than create a new grant program to accommodate
MTSA, TSA adapted its existing program to meet MTSA requirements. TSA
made an effort to observe MTSA provisions in rounds three and four. In the
third round, TSA gave preference to MTSA regulated facilities and vessels
located at eligible “critical national seaports/terminals.”
16
TSA also required
a security assessment as a prerequisite for enhanced facility and operational
security projects.
17
In the fourth round, TSA limited eligibility to MTSA regulated
facilities and vessels. However, TSA did not alter the program to reflect the
MTSA mandate for cost sharing, nor did it allow for the funding of recurring
costs such as salaries, benefits, and overtime of mandated security personnel and
maintenance of security equipment.
MTSA requirements increased the demand for grant funding. USCG determined
that approximately 12,300 facilities and vessels will have to absorb the cost of
implementing MTSA required security plans at an estimated cost of $7.3 billion
over 10 years.
18
TSA’s program assisted regulated entities in a limited way in
defraying some MTSA related costs by funding facility and operational security
projects.
19
Program officials asserted that it is important to ensure first that the
15
Testimony report dated September 9, 2003, to the Senate Committee on Commerce, Science, and Transportation on Maritime Security,
Progress Made in Implementing Maritime Transportation Security Act, but Concerns Remain, (GAO-03-1155T).
16
USCG implemented MTSA security requirements for facilities and vessels through regulations located at 33 CFR Parts 101, 103, 104,
105, and 106.
17
On October 22, 2003, USCG published final MTSA regulations, requiring facility and vessel owners and operators to develop security
plans and submit them to USCG by December 31, 2003. Facilities and vessels must comply with other MTSA security requirements and
were to begin implementation of the approved security plans by July 1, 2004.
18
GAO reported that the accuracy of this estimate is uncertain due to the complexity of the estimate, the variation due to assumptions, and
the limited amount of time for USCG to complete the estimate. See GAO’s report, Substantial Work Remains to Translate New Planning
Requirements into Effective Port Security, (GAO-04-838), dated June 2004.
19
In the first and second rounds of grants, security assessments and proof of concept projects also were eligible for funding.
Review of the Port Security Grant Program
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security infrastructure, e.g., fences, cameras, access controls, etc., is in place.
Such grants meet MTSA goals as well as TSA’s. However, once these needs are
met, TSA’s limited program with its governing provisions will not be suitable to
meet the needs of regulated port facilities and vessels, especially when personnel
and other recurring costs become the predominant cost for the maritime industry.
Legislative guidance may be necessary to clarify the purpose of the funds. At
issue is whether the program should continue to fund only regulated facilities
and vessels for facility and operational security projects, or whether it should
extend eligibility according to MTSA. The two mandates differ on other issues
also, including the treatment of eligible costs, cost-share requirements, and
participation by state and local entities that provide security at port facilities.
Possibly the most significant issue is whether grants should be awarded through
TSA’s competitive process, through an equitable process as mandated by MTSA,
or through a risk based approach as discussed later (see page 41).
Without clarification of these basic provisions, the direction of the program will
remain disparate and unclear.
Program Design Hinders Strategic Effectiveness
TSA designed a broad and flexible Port Security Grant Program to achieve its
goal of hardening ports, facilities, and vessels. It developed eligibility criteria that
required applicants to be or operate near militarily strategic ports, controlled ports,
or ports of significant economic importance. Vessels carrying high volumes of
passengers and vehicles or vessels and facilities that handle hazardous materials
also were eligible.
20
All applicants were required to link their proposals to a
security assessment.
21
While the program displays tendencies toward addressing national priorities,
such as applying the above criteria and using the USCG’s Port Security Risk
Assessment Tool (PSRAT), its design hinders it from consistently valuing projects
that address national priorities:
22
20
The top 50 ports in the United States account for about 90% of all cargo tonnage. Cruise ships and ferries are eligible for funding due to
the millions of passengers and vehicles they transport each year.
21
This requirement began in the second round of grants and only applied to enhanced facility and operational security projects. It did not
apply to proof-of-concept projects.
22
USCG utilized the PSRAT during the field review of the applications. The PSRAT was used to assess the existing risk to the subject
facility/vessel and to determine the reduction in risk that would result from the implementation of the measures proposed in each
application.
Review of the Port Security Grant Program
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• TSA made grant award decisions based on the universe of applications
received in each round. As a result, the criticality of an applicant’s
facility or vessel and the risk reduction value of the proposed projects
were of relative importance; they were compared only to the applications
submitted in a given round. Therefore, TSA had no assurance that the
program is protecting the nation’s most critical and vulnerable port
infrastructure and assets.
• The amount of available funds directly influenced the decision process
behind the grant awards. TSA did not withhold funds in any round due to
a shortage of viable projects, despite rankings that suggested otherwise
(see page 23).
• Τhe evaluation and selection process focused on awarding funds to as
many applicants as possible. Selecting officials capped funding per entity
and per award in the third round in order to reach more applicants and
projects. TSA officials said that these considerations caused the program
to move away from funding large and more expensive projects toward
funding a multitude of smaller, less costly projects.
• The program led to competition between businesses and port authorities
within the same port complexes. While preference is given to port-wide
projects, the program does not reinforce the cooperative efforts that are
required to develop an integrated approach to security.
• Selected projects are not based on a national risk assessment because a
mechanism to perform a national level risk reduction analysis does not
yet exist within the department. The USCG uses its PSRAT analysis to
assess risk, but the results of the risk reduction analysis are not shared
with MARAD field reviewers or used extensively by headquarters level
review boards that ultimately make the grant award decisions.
• Threshold levels used to establish a project’s criticality are not fixed.
What evaluators determine to be a significant level of criticality in one
round may not be considered significant in another round.
• Applicants have increasingly turned to professional grant proposal
writers. There is a perception among applicants that sound proposals with
higher intrinsic value are passed over in favor of well-written proposals.
Review of the Port Security Grant Program
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Better Use of National Strategic Information Needed
Administrators designed and operated the Port Security Grant Program as a
sector-specific grant program and conducted three rounds of grants without the
aid of a government-produced list of national critical infrastructure and key
assets. Such a list could have guided the evaluation of security enhancements
and grant award decisions. However, TSA, MARAD, and USCG launched the
program while DHS was just forming and the IAIP directorate was just beginning
operations. IAIP did not complete the list until 2004.
In general, IAIP officials said they do not like the design and direction of the
program because, as a sector-specific program operating independently of IAIP,
its policies and funding are not integrated with other national security interests.
They said that program officials did not seek their assistance in designing the
program or subsequently discuss how the program would help support critical
infrastructure protection goals. Meanwhile, IAIP was developing a prioritized list
of critical infrastructure and assets to serve as a baseline for making decisions on
which critical infrastructure and key assets to safeguard first.
23
In May 2004, IAIP
completed its initial Protective Measure Target List, a condensed list of assets that
appear in the National Asset Database. Some assets on the list are located within
port complexes.
In counterpoint, program officials believe that the current program is the most
appropriate way to enhance port security and that they have the expertise to
run it. Program officials insisted that they consulted IAIP on the design of the
program, but IAIP did not provide any substantive feedback or guidance and
would have added little value to the process because it lacked knowledge about
port systems. They said that IAIP did not participate in the project evaluation
process and asserted that it was unrealistic to expect IAIP to compare facilities
and vessels from port to port and prioritize risk reduction proposals. One senior
program official asserted that IAIP could not appropriately support the Port
Security Grant Program, because IAIP was focusing on the “crown jewels” of
critical infrastructure; whereas the grant program included assets that did not
rise to an obvious level of criticality. Program officials also expressed skepticism
concerning IAIP’s expertise in securing port assets.
DHS plans to harmonize its infrastructure protection activities. It is pursuing
a mechanism for identifying vulnerabilities, assessing risk, comparing critical
23
IAIP analyzes and integrates terrorist threat information, mapping those threats against vulnerabilities to critical infrastructure and key
assets.
Review of the Port Security Grant Program
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infrastructure and key assets throughout the country, and is consolidating risk
management activities and various grant programs. IAIP is overseeing the
implementation of the National Infrastructure Protection Plan (NIPP), the key
strategic plan for identifying and protecting key assets and critical infrastructure.
24
IAIP delegated key responsibilities to agencies, including TSA and USCG,
which have primary responsibility for implementing sector-specific plans in
support of the NIPP. They are to identify assets, assess vulnerabilities, prioritize
assets, develop sustainable programs, and use metrics to measure effectiveness.
On behalf of IAIP, TSA and USCG are then to develop guidelines to identify
unacceptable levels of risk to transportation assets and recommend strategies to
manage those risks.
25
To date, grant reviewers have relied on project information provided by the
applicants, including the applicants’own vulnerability assessments, the PSRAT
analysis within the USCG, and the reviewers’expertise to judge the merits of the
projects and potential for risk reduction. Without national risk data, DHS cannot
ensure that its grant resources are being directed toward the nation’s highest
priorities. When IAIP data becomes available to program managers, they should
work closely with IAIP to ensure that initiatives to protect the transportation
sector are aligned with efforts to secure other critical infrastructure sectors.
We recommend that Executive Director, Office of State and Local Government
Coordination and Preparedness:
Recommendation #1: Determine to what extent the program should incorporate
MTSA requirements.
Recommendation #2: Incorporate critical infrastructure and key asset data from
IAIP into the evaluation of proposed port security projects. Among the changes to
consider:
24
The Homeland Security Act of 2002 requires DHS to develop a comprehensive national plan for securing the key resources and critical
infrastructure of the United States (P.L. 107-296, sec.201 (d)(5)). The National Infrastructure Protection Plan is to include among other
things: (1) a strategy to identify, prioritize, and coordinate the protection of critical infrastructure and key resources, including how the
department intends to work with federal departments and agencies, state and local governments, the private sector, and foreign countries
and international organizations, and (2) a summary of activities to be undertaken in order to define and prioritize, reduce the vulnerability
of, and coordinate the protection of critical infrastructure and key resources.
25
TSA has the Transportation Sector Specific responsibility for managing the risk of terrorist attacks to the transportation system, including
maritime, aviation, highway, rail, pipelines, and mass transit. MTSA gives USCG primary responsibility for maritime security. Operational
considerations for the maritime sub-sector fall within the scope of the comprehensive system of maritime security plans required by MTSA
and managed by USCG. As such, USCG is working with TSA to develop the maritime sub-sector section of the Transportation SSP.
Review of the Port Security Grant Program
Page 20
• The addition of an IAIP official on the Executive Review Board;
• Use of the IAIP national asset database to identify critical facilities in
need of mitigation with a view toward soliciting proposals from these
facilities; and
• Collaborating with IAIP in an outreach program to improve the quality of
vulnerability assessments and proposals.
Project Evaluation and Selection Process
Based on our analysis of the evaluation, selection, and award process, we
determined that: (1) TSA’s program funded several hundred projects despite
dubious marks by its evaluators against key criteria; (2) field and headquarters
reviewers did not document their rationale for recommending or not
recommending funding some projects sufficiently; (3) field reviewers claimed
to be hindered by a lack of direction concerning how to evaluate eligibility
requirements; and (4) reviewers were forced to meet short deadlines to evaluate,
rate, and rank projects, which diminished the quality of the review process.
Overview of the Process
The Port Security Grant Program, including the application and award process, is
carried out via an electronic, web-based system. Once applications are received,
they are grouped corresponding to the USCG’s Captain of the Port (COTP)
zones.
26
USCG representatives from each COTP zone and MARAD regional officials
jointly perform what is known as a “field review.” The teams attempt to visit each
entity, conduct a site evaluation of each port, and prioritize the projects within
that zone in the order that they would fund them. This is important because the
application evaluation process relies heavily on the USCG’s and MARAD’s
familiarity with the port’s surroundings and each entity’s location and security
needs. The teams spend up to four weeks evaluating the applicants’proposed
projects, entering comments on each project in the system, and reaching a
consensus ranking of them. Field reviewers arrive at a consensus ranking of all
of the proposed projects in their respective COTP zones. The field review is also
26
There are 45 COTP zones within USCG. A zone is a specific geographic area where the COTP has law enforcement responsibility for
certain activities within the Coast Guard’s authority. The COTP enforces regulations for the protection and security of vessels, harbors, and
waterfront facilities; anchorages; bridges; safety and security zones; and ports and waterways.
Review of the Port Security Grant Program
Page 21
significant because its rankings lay the foundation for the next level of review, the
National Review Board (NRB).
The NRB consists of up to 12 representatives from TSA, USCG, and MARAD.
27
The NRB relies on information provided by the applicant and the field review
teams that explains how a project will reduce risk. The NRB spends two to
three weeks reviewing the project applications and the corresponding comments
and rankings provided by the field review. The NRB reviews all of the projects
submitted into the web-based system and places them in one of three “priorities”
based on the following guidelines:
Priority I Applications
• Meet the mandatory requirement of being a Critical National Seaport
28
• Security assessments and measures have already been conducted/implemented
• Proposed approach addresses a critical security area
• Proposed approach is comprehensive and detailed with a high degree of
likelihood of successful implementation
Priority II Applications
• Meet the mandatory requirement of being a Critical National Seaport
• Although some security assessments and measures have been conducted/
implemented, further assessments/measures are needed to assess the level of
potential improvement
• Proposed approach is acceptable, but further detail may be needed to assess the
success of implementation
Priority III Applications
• Meet the mandatory requirement of being a Critical National Seaport
• Minimal security assessments and measures have been conducted/implemented,
requiring more extensive future assessments
• Proposed approach is lacking in detail and the likelihood of success is not
evident
After the NRB sorts the Priority II and III projects, from highest to lowest field
ranking, it conducts a more meticulous review of the Priority I projects.
29
The
27
In round four, ODP and Customs and Border Patrol representatives were added to the NRB.
28
As described on page 11, the program defines a critical national seaport/terminal by one or more of the following attributes: (1) it is one
of the 13 designated “strategic ports,” as designated by a MARAD port planning order; (2) it is a controlled port, which has access controls
for vessels from certain countries due to national security issues; (3) it is a nationally important economic port responsible for a large
volume of cargo movement or for movement of products vital to U.S. economic interests as required for national security; (4) it is a port or
terminal responsible for movement of high volume of passengers; and (5) it is a port or terminal responsible for the movement of hazardous
cargo.
29
As a precaution, the NRB also includes in the more detailed review a handful of the top-ranked Priority II projects. If there are not
enough Priority I projects to exhaust the grant money, the NRB will elevate Priority II projects to Priority I until the grant money is
depleted.
Review of the Port Security Grant Program
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NRB completes a scoring matrix for these projects and rates each project against
six criteria:
1. Proposed project falls in the highest risk category due to location, nature of
operations, national need, type/volume of commodity or number of passengers
2. Proposed approach addresses a critical security need/vulnerability
(complements state or national efforts to improve port security)
3. Mitigation approach provides high risk reduction of identified vulnerability
4. Extent of actions taken thus far by the local and state entities and
appropriateness of federal government in the security partnership
5. Proposed approach is comprehensive and detailed (consider personnel
qualifications, schedule realism, methodology realism, highest degree of
success)
6. Cost-effectiveness (consider partnering, cost sharing, innovative
methodologies)
On behalf of the NRB, one evaluator reviews each application against one of the
above selection criteria. Each application is rated excellent, good, satisfactory,
marginal, or unsatisfactory, and given a score of one to five respectively (see
figure 4) for each criterion. The NRB tallies the score for each criterion to produce
an overall score for the project. The NRB then ranks all of the projects from
highest to lowest based on the overall score for each project.
Figure 4. Sample Scoring Matrix
Selection Criteria
Unsatisfactory
(1pt.)
Marginal
(2pts.)
Satisfactory
(3pts.)
Good
(4 pts.)
Excellent
(5 pts.)
Score
1. Highest risk category
X
3
2. Addresses a critical security
need
X
3
3. Provides high risk reduction
X
3
4. Extent of actions taken thus far
X
3
5. Approach is comprehensive and
detailed
X
3
6. Cost effectiveness
X
3
Total Score
18
An Executive Review Board (ERB) review follows the NRB review. The ERB is
made up of three executives, one each from TSA, USCG, and MARAD. The ERB
reviews the NRB rankings and recommendations and makes any adjustments it
Review of the Port Security Grant Program
Page 23
deems necessary. Finally, the Selection Review Board (SRB), consisting of a top-
ranking official from TSA, USCG, and MARAD, conducts a final review of the
rankings.
30
Analysis of Grant Awards
We reviewed the NRB’s individual scores and overall rankings of 200 Priority I
projects from both rounds two and three to confirm that the rankings accurately
represented each project’s overall score. Our results were consistent with the
NRB’s rankings. The NRB’s rankings generally corresponded with the criteria
scores: the higher the combined score from the six categories, the higher the
project ranked overall and vice versa. However, there were instances where a
project’s overall score did not support its ranking.
31
The NRB Gave Many Projects Poor Ratings
In rounds two and three, the program funded several hundred questionable
projects. In rounds two and three combined, the NRB rated 258 out of 811
projects (32%) below average or worse during its evaluation process and awarded
grants totaling $67 million for the 258 below average projects.
32
One official
very knowledgeable about the deliberations remarked that one-third to perhaps
two-thirds of the projects in each round did not meet the NRB’s expectations as
meaningful projects.
The NRB scored 29 out of 369 projects (8%) in round two below average or
worse. In round three, the NRB scored 229 out of 442 projects (52%) below
average or worse. In addition to these scores, many of the projects received
marginal or unsatisfactory ratings in the first three selection criteria: (1) falls in
the highest risk category; (2) addresses a critical security need/vulnerability; and
(3) provides high-risk reduction. Of the 29 below average round two projects,
20 were rated marginal or unsatisfactory in at least one of these three criteria.
Of the 229 below average round three projects, 167 were rated marginal or
unsatisfactory in at least one of the top three criteria. For all funded Priority I
projects, including those with average or better ratings, 87 of 369 (24%) round
30
In round four, a representative of SLGCP was added to the ERB and SRB.
31
Both the ERB and the SRB may alter the rankings of the board below it.
32
This analysis is based only on enhanced operational and facility security projects. We defined an “average” project as one that received
a total score of 18 or the equivalent of satisfactory for all six evaluation criteria. Hence a “below average” project scored 17 or less. See
Figure 4 for reference.
Review of the Port Security Grant Program
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two projects and 216 of 442 (49%) round three projects were rated marginal or
unsatisfactory in at least one of the first three criteria.
It is troubling that there was a pattern of funding lower ranked projects with
poor scores among the first three criteria. We consider these criteria key to the
viability of the project, and interpret the presence of single or multiple marginal
or unsatisfactory scores in these categories to mean the evaluators viewed
the project as flawed. In our opinion, if the NRB does not view a project as at
least satisfactory in each of these areas, then it should not fund the project. For
example, a rating of excellent in ‘high-risk category’but marginal in ‘addresses a
critical need’suggests the applicant may not be targeting the right vulnerability.
The program gives equal weight to the six selection criteria. This means that
projects with insignificant, low risk reduction outcomes could be rated well
enough, based on the last three criteria, to receive funding over projects with
greater risk reduction potential.
Projects Funded Despite Low Rankings by the Field Review
Field reviewers ranked all of the applications received in their respective COTP
zones. Based on our analysis of guidance for field reviewers as well as their
comments on hundreds of applications, we deduced that field reviewer rankings
reflected their highest priorities down to their lowest priorities in terms of the
projects’importance and risk reduction potential. Both the NRB and ERB
recommended funding for projects despite low rankings by the field reviewers. In
total, in round two, 112 of the 369 (30%) projects funded were ranked in the 50
th
percentile or lower by the field review.
33
In round three, 180 out of the 442 (41%)
projects funded were ranked in the 50
th
percentile or lower by the field review.
Program administrators should review this process, i.e., the process that permitted
the use of federal funds for projects found by subject matter experts with first-
hand knowledge of the criticality and vulnerability of the facilities and vessels to
be low priorities.
Projects Not Funded Despite Strong Support by the Field Review
In round three, the NRB did not recommend funding for 54 projects that were
ranked highly, i.e., in the top five of their respective COTP zones, by field
reviewers. We examined comments by the field, NRB, and ERB for all unfunded
33
This analysis was based on enhanced operational and facility security Priority I projects. It does not include assessments or proof of
concept projects.
Review of the Port Security Grant Program
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projects ranked by the field review as one of the top three projects in each COTP
zone. Our objective was to obtain a better understanding of why these projects
were not funded despite strong support from the field reviewers. Generally, the
NRB was thorough in justifying and documenting why it did not recommend
funding certain projects. The NRB denied projects for several reasons, namely
that they: (1) appeared to benefit a federal agency; (2) duplicated a national level
initiative, such as the Automatic Identification System; (3) were considered to be
in a relatively low risk category from a national perspective; (4) did not address
a vulnerability identified in the prerequisite security assessment; or (5) were
response focused, rather than prevention and detection oriented.
Threshold Needed to Identify Worthy Projects
The NRB did not apply a minimum score threshold that would separate worthy
from unworthy projects. The absence of such a threshold meant that the universe
of Priority I projects was defined not by the merits of the projects, but rather by
the amount of available funding for that round. Program officials did not dispute
that a number of projects originally categorized as Priority II projects by the NRB
were later re-categorized as Priority I projects and funded only because money
was available and there was pressure to spend it.
Insufficient Justifications for Funded Projects
The records did not always contain adequate explanations to support funding
decisions. Specifically, the records contained: (1) insufficient justification for the
NRB’s ratings and funding recommendations; (2) inconsistent evaluations by the
field review teams, NRB, and ERB; (3) inconsistency between the field review
comments and rankings; and, (4) insufficient justification for inclusion of grants
for applicants that are not located at strategic or controlled ports.
TSA grant policies did not require reviewers to document the results of their
evaluations beyond what is shown in the comment boxes. TSA officials said that
the NRB’s rankings of the projects were based on the NRB selection criteria
ratings, but that final award decisions need not adhere to the rankings. The NRB,
ERB, and SRB can deviate from the rankings to elevate a project or move a
project down. For this reason, scoring and ranking may be inconsistent.
To maintain system integrity, reviewers at all levels should be required to explain
and document their rationale for deviations from recommendations and rankings.
Review of the Port Security Grant Program
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Grant Recipient A, control gate/fencing/cameras/lighting, grant exceeds $250,000
The entity handles non-hazardous, bulk cargo. It is adjacent to a sulfuric acid plant with access
to six other chemical plants. Field reviewers noted, “Strongly recommend approval. Second
highest priority in the port.” Conversely, the NRB gave it five unsatisfactory ratings and one
satisfactory rating, and ranked the project 450 of 452 overall. The NRB comments do not
indicate how the NRB rationalized its unsatisfactory ratings and its decision to fund the project.
Grant Recipient B, fencing/lighting, grant exceeds $575,000
The field review team “strongly recommended” the project and ranked it 26out of 90. However,
the NRB rated the project as only marginal in each of the first three selection criteria. The NRB
did not explain its ratings or its recommendation to fund the project.
Grant Recipient C, communications, grant exceeds $10,000
The field review team said that encrypted radios were not needed for effective communications
and were not necessarily compatible with federal and state radios. The field ranked the project
34 out of 35. The NRB rated the project satisfactory in the first three criteria and ranked it 180
of 452 overall. The NRB did not explain its ratings or recommendation to fund the project.
Grant Recipient D, mobile maritime security enhancement, grant exceeds $750,000
The field review team had positive comments for this project. However, the NRB rated this
project unsatisfactory in all six selection criteria. The NRB did not reject any of the field
comments or provide their own explanations for awarding funds despite such poor ratings.
Grant Recipient E, closed circuit television (CCTV), grant exceeds $130,000
The field review team ranked the project 27 out of 29, stating, “…these initiatives would be
redundant to what the port authority has in place.” The NRB determined that it marginally
addressed a critical need, yet ranked the project 81 out of 452 overall. The NRB did not explain
why the project should be funded despite the field review team comments and its own marginal
rating. It stated only that the applicant should provide a more detailed cost breakdown and scope
of work. The project was funded.
- Continued on next page -
Examples of the records that did not contain adequate explanations to support
funding decisions follow.
1) Insufficient justification for project ratings and funding recommendations by
the NRB.
Review of the Port Security Grant Program
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2) Inconsistent evaluations by the field review teams, NRB, and ERB.
While the evaluation process is subjective based on the evaluators’knowledge of
the program’s requirements and eligibility criteria, there appear to be significant
differences in how each level interprets eligibility and what types of projects
should be funded, as demonstrated below:
Grant Recipient F, gate/cameras/lighting, etc., grant exceeds $150,000
The field review team strongly recommended approval of this project. The NRB rated the
project marginal in the first and third evaluation categories and unsatisfactory in the rest. The
project was ranked 451 out of 452 Priority I projects. The NRB comments do not explain why
this project received such low ratings and yet was recommended for full funding.
Grant Recipient G, security vessel, grant exceeds $115,000
The field review team ranked this project 59 out of 61, with the comment, “This project will not
significantly enhance the physical security measures or reduce the risk for the port area.” The
NRB rating of marginal in the first two criteria suggests that the NRB did not support the project
either. The NRB comments did not explain the rationale for recommending funding despite a
very low field review ranking, unsupportive field review team comments, and marginal NRB
ratings.
Grant Recipient H, lighting, grant exceeds $180,000
The field reviewers noted that this was a “small, remote facility that receives less than twenty
ships per year. Consequently, security improvements here would have minimal impact.” The
NRB gave the project four marginal ratings and two unsatisfactory ratings and ranked it 449
out of 452 overall. NRB comments do not indicate how the NRB rationalized the unsatisfactory
ratings or its decision to fund the project.
Grant Recipient I, hazardous chemical project site, grant exceeds $495,000
The field reviewers rated the project 61 out of 90 and noted, “Additions would improve soft
security, but are nice to haves rather than critical needs.” The application identifies needs, but
does not offer a detailed description of the project. The NRB rated the project unsatisfactory
in providing high-risk reduction. Again, the project received funding without the NRB’s
explanation of the ratings or why the project is worthy of funding in light of the field review
team comments.
Grant Recipient J, command and control center, grant exceeds $175,000
The field reviewers rated the project 49 of 61, noting, “While this is a critical port area and
increased security measures are vital, this project will not significantly enhance the physical
security measures or reduce the risk for the port area.” The NRB did not address this conclusion
in its comments. Instead, it called for a more detailed cost breakdown and scope of work. The
NRB ranked the project 114 out of 452 overall and the project was funded.
Review of the Port Security Grant Program
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Grant Applicant K, gate improvements, $0
The field review team did not recommend funding for this project and ranked it 12 out of
12 projects. The NRB rated it unsatisfactory in addressing a critical security need, but still
recommended full funding while ranking it 312 of 452. Again, there was no explanation for the
ratings, but the ERB agreed with the field review team in this case and ranked the project 443 of
452. The project was not funded.
Grant Applicant L, fencing, lighting, cameras, etc. $0
The field reviewers said the port is “not in high target area…” and a “low priority for fencing
and lighting,” but the NRB, without adding documentation, recommended the project for
funding in the full amount. The ERB cited the field review team comments and a lack of detail
in the application and denied funding for the project. The NRB ranked the project 383 of 452
while the ERB ranked the project down to 445 of 452.
Grant Applicant M, harbor police vessel transponders, $0
According to the field review, “this project addresses concerns identified in the USCG Security
Assessment.” The field reviewers ranked it 2 out of 37 projects. The NRB recommended full
funding. The ERB said it “concur(red) with National Review Team,” but also stated “AIS like
funding is not being funded at this time.” AIS is a USCG initiative, which explains why this
type of project was not eligible. However, this was apparently unknown to the field review team.
The NRB ranked the project 385 and the ERB ranked it 446 out of 452 overall.
Grant Recipient N, joint enforcement, grant exceeds $245,000
The field reviewers highly recommended the project based on its deterrence value and ranked
it 1 out of 4 projects. However, the NRB made strong negative comments questioning the
likelihood of success. The ERB recommended partial funding to “prove the feasibility.” This
project raises additional questions as to who will monitor the project’s feasibility and who will
provide future funding if it is successful.
Grant Recipient O, cameras, grant exceeds $20,000
The field reviewers did not offer a strong endorsement of the project, but ranked it 1 out of
3 projects. The NRB rejected the project since it was to repair/replace cameras. The ERB
recommended funding new cameras, which was not in the scope of work.
Grant Applicant P, security fencing, $0
The field reviewers did not recommend funding, because “existing security fencing is already
in place.” Despite this, the NRB rated this project good in addressing a critical security need
and satisfactory in providing high-risk reduction. The NRB ranked it 328 out of 452 and
recommended full funding. The ERB agreed with the field reviewers and did not recommend
funding.
- Continued on next page -
Review of the Port Security Grant Program
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3) Inconsistency between the field review comments and rankings
The field review comments were not consistent with the field rankings. This is
critical, because the local USCG and MARAD representatives have the greatest
understanding of how well the proposed project addresses local vulnerabilities
and reduces risk. Without a clear field assessment, it is much more difficult for
the NRB and ERB to evaluate projects. The level of detail in the field comments
varied considerably across the COTP zones. Some field review teams included
detailed explanations of the relative importance of the projects and the extent
to which the projects reduced risk. By contrast, others provided only a brief
statement, such as “recommend approval.” In several cases, it was unclear
whether the field review team was recommending the project for funding.
All applications were to be forwarded from the field review team to the NRB
regardless of whether funding was recommended.
4) Better justification needed for inclusion of applicants not located at strategic or
controlled ports.
An applicant must qualify as a “National Critical Seaport/Terminal” to be eligible
to participate in the program. Strategic and controlled ports are identified and
meet this criterion. However, the program does not clearly identify “National
Critical Seaport/Terminals” in the other three categories:
• Nationally important economic port or terminal;
Grant Recipient Q, access control and monitoring, grant exceeds $1,995,000
The field reviewers strongly supported the application, ranking it 1 out of 38 and described it
as a “well written proposal.” The NRB did not recommend any funding saying the statement
of work did not provide sufficient detail for evaluation. The ERB funded the project despite the
NRB’s comments. The ERB capped funding for any project at $3 million in round three, but
how it arrived at the funding amount was not documented.
Grant Recipient R, harbor patrol boat, grant exceeds $150,000
The field reviewers highly recommended the project and ranked it 1 out of 5 projects. The
NRB stated that the project did not address a need described in the applicant’s vulnerability
assessment and provides low risk reduction. Conversely, the ERB recommended funding for the
boat.
Grant Recipient S, security equipment program, grant exceeds $195,000
The field reviewers recommended funding for a patrol boat and ranked the project 1 out of 29.
The NRB said the project provided low risk reduction of the identified vulnerability and did not
recommend funding for the boat. The ERB concurred with the field review, but funded a smaller
boat than requested.
Review of the Port Security Grant Program
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• Facility or vessel responsible for high passenger volume; or
• Facility or vessel responsible for the movement of hazardous cargo.
Some entities that received funding were not located at strategic or controlled
ports, and yet application reviewers did not document how the applicant met
eligibility requirements under the economic, passenger, and hazardous cargo
criteria. Program guidelines do not stipulate when an entity is eligible under these
criteria.
Reviewer comments did not reveal how funded projects in the following ports met
the three criteria:
Examples of funded ports not on the list of strategic or
controlled ports:
Port Fourchon, LA
Port of Port Lavaca/Point Comfort, TX
BASF Hannibal Site Barge Terminal,
Hannibal, MO
Port of Stockton, CA
Martinsville, WV
Global Revere, MA
Sewaren, NJ
Perth Amboy, NJ
Carteret, NJ
Port of Everett, MA
Christiansted, St. Croix, VI
Krum Bay, St. Thomas, VI
Woods Hole, Nantucket, Hyannis, and
Martha’s Vineyard, MA
Anacortes, WA
Port of Skagway, AK
Bridgeport, CT
Rochester, NY
Port of Ketchikan, AK
Destrehan, LA
Port of Victoria, TX
Ludington, MI
Manitoc, WI
Bellingham, WA
Venice, LA
Port of Brunswick, GA
Whittier, AK
Homer, AK
Haines, AK
Port of Seward, AK
Argo, IL
Tulsa Port of Catoosa, OK
These ports may have been nationally/economically important, responsible for
high passenger volume, or responsible for the movement of hazardous cargo, but
they were not established as such in the reviewer comments.
Interpreting Eligibility Criteria
While we anticipated some ranking adjustments by the NRB and ERB, the
volume of changes that occurred demonstrated to us that after three rounds of
grants, field reviewers and headquarters are not yet operating under commonly
understood goals and evaluation criteria. Some of this can be attributed to
Review of the Port Security Grant Program
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differing philosophies among program officials and evaluators. In particular, field
reviewers had many different opinions on what they considered important when
evaluating projects. It appeared that some reviewers preferred a purely risk based
approach, whereas others preferred distributing funds as widely as possible to help
applicants cover the cost of complying with MTSA. Some reviewers preferred
to fund entities with fewer resources over those with greater means. Others did
not take an entity’s revenue or profits into consideration. In terms of the types
of projects, some reviewers favored waterside security measures to maximize
risk reduction, whereas others favored perimeter security and access control or
communications equipment. Several COTPs expressed concerns that DHS was
not funding projects that offered the most benefit in vulnerability reduction.
In addition to these varying perceptions and preferences, differences in reviewer
comments and their recommendations often occurred due to the interpretation
of broad eligibility criteria. For example, a program official said that the
NRB’s interpretation of the “nationally important economic,” “high passenger
volume,” and “hazardous cargo” criteria varied from round to round, based on
the applications submitted in each round. In an after action review following the
second round of grants, program officials identified the need to tighten up the
grant requirements: “While it is nice to let everyone feel like they could receive
the grant money, using an all-encompassing approach wound up in resulting in
significant amounts of applicant (and reviewer) time for projects that had no
realistic chance of approval.”
34
Field reviewers claimed that program guidance was inadequate and unclear.
They were slowed by the lack of direction concerning how to interpret eligibility
criteria, evaluate proposed projects, identify eligible projects, and prioritize them.
Some reviewers argued that more guidance was needed to identify and rank
projects if the system is to improve. The inconsistencies in ratings and funding
decisions seem to support their claims.
Program officials contended that they have provided, and will continue to provide,
sufficient guidance to field reviewers. They cited their after action review of
the first two rounds of grants that they said led to improvements in the grant
announcement, applications, eligibility requirements, the review process, the
PSRAT, and the web-based grant system. They also cited teleconferences to
discuss lessons learned during the evaluation process, and asserted that the written
guidance to field reviewers improved in each round.
34
From document titled, “Lessons Learned,” and generated by TSA’s Office of Maritime and Land Security following round two.
Review of the Port Security Grant Program
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Program officials should be concerned that some confusion still exists among field
reviewers over evaluating grant proposals. The program has matured significantly,
but the lack of guidance for taking a systematic approach toward security within
the port areas needs attention. In general, the program would benefit by clarifying
eligibility criteria and describing the types of projects that best mitigate the
greatest risks.
Reviewers Pressured by Program’s Timeframes
Throughout the application review process, reviewers were forced to meet short
deadlines to evaluate, rate, and rank projects. Public and private entities submitted
more than 1,000 applications in both rounds two and three. Field reviewers in
each COTP zone, who could have up to 100 applications or more to review, had
four weeks to visit the project sites, interview applicants, and review related
documents. Following the field review, the NRB had three weeks to review
proposals. These tight timeframes contributed to the insufficient documentation
needed to support reviewer recommendations and decisions, particularly at the
NRB level, and placed an extra burden on the ERB to maintain the integrity of
the process. The ERB had two days to consider the NRB’s recommendations.
We question whether the ERB also had enough time to: (1) become familiar
with 452 round three Priority I projects given inconsistent explanations of
reviewer decisions; (2) thoughtfully consider increases or decreases in award
amounts; (3) add or remove projects from consideration, and (4) compile its final
recommendations to the Selection Review Board.
35
Program officials said that they were under pressure to award the grants quickly,
driving them to expedite the review process. Both field reviewers and NRB
participants complained to us that these timeframes were too compressed to
adequately review applications, particularly for round three. While the USCG had
sufficient resources to conduct field reviews, it appeared that MARAD did not.
Each round of grants taxed its regional operations by taking staff away from their
normal jobs to work full time on reviewing grant applications. MARAD reviewers
were not able to visit every applicant as intended.
We recommend that the Executive Director, Office of State and Local
Government Coordination and Preparedness:
35
In round three, the ERB reduced funding for 127 of the 442 funded projects.
Review of the Port Security Grant Program
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Recommendation #3: Consider changing the weighting of the evaluation criteria,
with greater emphasis placed on the criteria that reduce critical vulnerabilities.
Recommendation #4: Cease the practice of funding projects that do not meet the
definition of a Priority I project. Consider implementing a scoring threshold that
ensures that projects not meeting that threshold are not funded. Consider seeking
a change in appropriations language to have these grant funds designated as “no-
year monies” to reduce the impetus to fund doubtful projects.
Recommendation #5: Require reviewers to document their decisions in
the grants management system, particularly when they are inconsistent with
recommendations from a lower level of review.
Recommendation #6: Develop parameters that define applicant eligibility under
the “nationally important economic port or terminal,” “responsible for movement
of a high number of passengers,” and “responsible for the movement of hazardous
cargo” criteria.
Recommendation #7: Communicate information to field reviewers to educate
them on eligibility. Improve dissemination of “lessons learned” at all levels of
review.
Recommendation #8: Evaluate timeframes for reviewing applications with an
emphasis on providing more time for review in the field and by the ERB.
Funding Private Sector Projects
The question of where the local responsibility for preventing terrorism ends and
where the federal government’s responsibility begins poses a dilemma for the
Port Security Grant Program. DHS has not formulated a strategy or policy to set
forth circumstances under which it will or will not award grants to private entities.
The program does not: (1) apply an income test to applicants, (2) judge whether
the expenditure under consideration is a normal cost of doing business, and (3)
require a cost-share in order to receive a grant award.
Private entities have applied for, and received, substantial funding under the Port
Security Grant Program. Some of these funds went to projects that reviewers
rated overall as below average or worse during the evaluation process, calling into
question the merits of these projects. In rounds two and three, the NRB ranked 8
Review of the Port Security Grant Program
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36
By comparison, in rounds two and three the NRB ranked 21 ($6.4 million in awards) and 82 ($28.2 million in awards) public projects,
respectively, below average or worse. In total, over two rounds, $67 million went to projects rated below average or worse.
($1.3 million in awards) and 147 ($31 million in awards) private sector projects,
respectively, as below average or worse, totaling 155 projects that were funded at
a cost of $32.4 million.
36
Awards to private entities increased in rounds two and three (see Figure 5). In
the first round, the public sector received $83.1 million for 109 projects, while
the private sector received $9.2 million for 35 projects. In round two, the public
sector received $111.6 million for 206 projects, while the private sector received
$57.5 million for 189 projects. By round three, the public sector received less
funding than the private sector: $80.5 million for 154 public sector projects,
compared with $98.4 million for 288 private sector projects. In round four, the
public sector received $43.2 million for 94 projects, while the private sector
received $6.3 million for 60 projects.
Figure 5. Allocation of Funds
The government’s responsibility to protect the homeland, weighed against the
realization that it cannot assume the burden of the costs to protect the nation’s
entire critical infrastructure, of which 85% is estimated to be privately owned or
controlled, presents a major policy issue for the department. Further complicating
the matter is the question of the extent to which the government should pay for
the costs to comply with MTSA, a federal mandate to improve port security that
Congress has thus far not funded directly.
Review of the Port Security Grant Program
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National strategic policies suggest that the government and industry share this
burden. According to the National Strategy for Homeland Security, “The private
sector should conduct risk assessments on their holdings and invest in systems
to protect key assets. The internalization of these costs is not only a matter of
sound corporate governance and good corporate citizenship but also an essential
safeguard of economic assets for shareholders, employees, and the Nation.” The
Physical Protection of Critical Infrastructures and Key Assets identifies planning
and resource allocation as one of its five objectives and stresses the importance
of incentives for private organizations, and market solutions where appropriate.
According to the National Infrastructure Protection Plan, private owners and
operators are expected to bear the preponderance of protection and mitigation
costs for surface and maritime modes of transportation.
DHS officials have said publicly that the private sector has a financial
responsibility in the protection of its assets. In April 2004, referring to meeting
MTSA requirements, Secretary Ridge remarked that, “Private companies will
have to help foot the bill for the additional security measures needed to protect the
nation’s ports from terrorists.” He further noted that, “We can’t go around using
public money for every private sector need.” In June 2004, DHS’s Undersecretary
for Border and Transportation said, “I believe that if you’re going to enhance
security, you have to have investment by the private sector. I think the federal role
is that leadership role, that partnership role and helping to invest in technology.”
Thus, while these positions described above might seem clear, DHS made awards
to private sector projects that: (1) appeared to be for a purpose other than security
against an act of terrorism; (2) were required as a normal course of business; (3)
replaced existing security measures; or (4) were very low in cost and affordable.
These grants raise concerns that not all of the grant award decisions best
leveraged the government’s limited resources. To illustrate:
Review of the Port Security Grant Program
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Private Sector Projects
Grant Recipient T, additional video surveillance/alarm equipment, grant exceeds $25,000
Field reviewers rated this project 61 out of 61. The NRB elevated it to Priority I status, ranking
it 44 out of 452 projects, despite concluding that it marginally provided high-risk reduction. The
ERB concurred.
The project appears to support a normal course of business that should have been addressed in
this luxurious entertainment pavilion featuring gaming facilities, restaurants, a hotel, and spa.
The application stated that “regular access points” need monitoring, although it has existing
measures: “Video surveillance monitoring equipment along with alarm and telephone systems
have been installed.” But “present means are inadequate to protect and conduct effective
surveillance and monitoring of facility areas around the passenger vessel and within vulnerable
parts of the complex to prevent access [including the lack of] an immediate intruder alarm
system to security personnel.”
Grant Recipient U, security improvements, grant exceeds $935,000
The project scope is unclear from the summary. The applicant states, “The goal of this
application is to implement necessary security improvements while striving to maintain and
increase local industry.” The field reviewers commented, “A new industrial park is being built at
the port, causing some concern to the field review team that some of the proposed fencing would
really be economic development in nature.” The NRB rated the project marginal in addressing a
critical security need.
Grant Recipient V, CCTV monitor, grant exceeds $5,000
This builds on a grant provided in round one for the CCTV system. However, a project for an
additional surveillance monitor to a private terminal company is questionable, especially in
light of its existing security measures and the fact that a SWAT team and armed Coast Guard
presence is in place during transfer of cargo operations. The NRB rated this project marginal in
addressing a critical security need.
Grant Recipient W, access control, grant exceeds $2,000
The applicant justified the project by commenting on its application, “The facility is unable to
systematically and reliably account for and verify the identity of personnel entering the facility,
particularly at locations other than the main gate.” This appeared to be a security measure well
within the company’s financial reach. The field review ranked the project 54 out of 57, yet
recommended approval. The NRB rated this project unsatisfactory in the high-risk category and
ranked it 423 out of 452 overall. The ERB ranked it 414th overall, and funded the project.
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Review of the Port Security Grant Program
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The department needs to assess the goals of this program and reexamine
whether and, if so, to what extent, it will award grants to private companies. At a
minimum, it needs to develop guidelines that link awards to national interests.
DHS is learning that many private companies are unwilling to share security
information and collaborate on security projects with port authorities. Port
officials discussed the reluctance of private sector entities to share information
about their vulnerabilities for fear of reducing their competitive advantage. Port
authorities, while cognizant of this concern, want to establish integrated and port-
wide security plans and security systems. This requires greater cooperation and
increased information sharing on the part of private entities. While there were
occasional references to the program’s goal of giving preference to port-wide
projects, neither guidance nor reviewer comments indicated this was occurring.
The program does not adequately reinforce the cooperative efforts between public
and private entities that are required to develop an integrated approach to security.
Grant Recipient X, fencing with gates, grant exceeds $10,000
The terminal handles solvents. The application noted that the result of an event would be release
of solvents, which would present an environmental issue, not a security event. It is not clear why
the company has not taken these precautions already to prevent this from occurring. The NRB
rated the project marginal on critical security need/vulnerability and the extent of actions taken
thus far. The NRB asked for a more detailed scope of work, but recommended funding
.
Grant Recipient Y, badging, lighting, and cameras, grant exceeds $55,000
This project is to improve security for a liquefied petroleum gas storage facility. The NRB
thought the project “marginally” addressed a critical security need.
The company was for sale at the time of award. The parent company of grant recipient Y entered
into a definitive agreement to sell its gas division in December 2002 for $115 million and sold it
August 2003 for $119 million in cash. The company’s natural gas segment accounted for $216.5
million, or 8% of total company revenues in 2002. Round two began in January 2003, after the
definitive agreement that the gas division would be sold. The government’s award essentially
enhanced the financial position of the company.
In addition, considering the ramifications of a terrorist act described in the application, we
question why the company had no lighting around the facility.
Finally, there is a badging system in place and TSA refrains from funding “replacement”
projects, but funded it in this case.
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We recommend that the Executive Director, Office of State and Local
Government Coordination and Preparedness:
Recommendation #9: Clarify department policy on funding private sector
projects. In the absence of such policy, and if funding private sector projects is
continued: (1) examine private sector projects to preclude the funding of cost of
business expenses; (2) develop financial eligibility criteria, including an income
test or cost-benefit analysis; and (3) consider giving greater preference to projects
that are submitted jointly by private and public entities.
Status of Funds and Project Monitoring
After the first three rounds of grants under the Port Security Grant Program,
recipients have spent only a small portion of the entire amount awarded. Of the
$515 million awarded in the first three rounds since June 21, 2003, including $75
million provided under ODP’s Urban Area Security Initiative, grant recipients
have expended $106.9 million or 21% of total program funding. As a result,
the majority of projects have not been completed, and the program has not yet
achieved its intended results in the form of actual improvements to port security.
Most of the expended funds are from the first round.
The time available to obligate funds varied, depending on when DHS announced
the availability of funds. In round one, the appropriation language stated that the
funds should be expended no later than September 30, 2003. DHS had slightly
more than a year and a half to exhaust the funds. As of April 19, 2004, recipients
had not drawn down more than 40% of those funds.
DHS allowed 12 months to complete projects. Grant recipients said that one year
is inadequate because the period begins on the award date, and precedes the date
when the program office finally defines the scope of, and approves, the project.
The kind of project and the local entity’s acquisition processes also affect the
amount of time required to spend the grant funds.
37
Program officials said that
37
We
recently reported on similar problems confronting ODP in report #OIG-04-15, An Audit of Distributing and Spending “First
Responder” Grant Funds, March 2004.
Review of the Port Security Grant Program
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they granted extensions to the majority of grant recipients in round one.
38
They
also confronted this issue in later rounds.
The table below summarizes the status of TSA funds as of September 22, 2004
and ODP funds as of September 30, 2004.
39
Figure 6. Status of Funds
Round
Date
Announced
Total
Available
(Authorized)
Date
Funds
Awarded
Total
Awarded
Total
Obligated
Expended
Balance
1
02/28/02
$92,022,239
06/17/02
$92,033,239
$92,022,239
$56,012,075
$36,010,164
2
01/14/03
169,142,815
06/03/03
169,142,815
167,163,470
29,824,262
137,339,208
ODP
05/14/03
75,000,000
9/18-
12/10/03
75,000,000
16,646,150
13,843,476
2,802,674
3
06/21/03
178,925,255
12/10/03
178,860,070
178,489,664
7,239,342
171,250,322
4
05/05/04
49,500,000
09/13/04
49,429,867
Totals
$564,645,212
564,465,991 $454,321,523
$106,919,155 $347,402,368
We attributed the large amount of unspent funds to incomplete applications, the
award of hundreds of grants before the full scope and details of the projects were
known, and delays in performing work and executing contracts. Projects were
rarely ready to be initiated at the time of award. We counted numerous projects
where the NRB or ERB stipulated during its review that the applicant needed
to clarify the project. This in turn led to a lengthy negotiation process.
40
During
this process, the applicant and program office further negotiated the scope of the
project and the applicant subsequently submitted additional information.
Another matter relating to the status of funds is the program office’s ability
to monitor these projects properly to ensure, among other things, their timely
completion. MARAD had oversight responsibility for round one. TSA, which had
primary grant administration responsibilities for rounds two and three, dedicated
one full-time person to the operational oversight of port security grant projects.
Rounds two and three produced a total of 811 enhanced facility and operational
38
We did not assess the frequency of extensions granted to date. Barring a change in policy, the increasing complexity of projects and the
time needed to review them likely means that extensions will be necessary.
39
Round one information is accurate as of April 19, 2004. We requested, but did not receive, updated information for round one.
40
Negotiations are exchanges between the government and applicants that are undertaken with the intent of allowing the applicant to revise
its proposal. A warranted Contracting Officer or Grants Officer conducts negotiations. Recommendations by the evaluation teams to the
Grants Officer for negotiation may include items related to the technical scope, price, schedule, or any conditions the applicant may have
placed on the proposed approach.
Review of the Port Security Grant Program
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security projects. One person cannot provide adequate oversight for a program
of this size. DHS needs to take steps to ensure that it has adequate resources to
oversee program implementation effectively and to accommodate the increasing
workload of the program.
We recommend that the Executive Director, Office of State and Local
Government Coordination and Preparedness:
Recommendation #10: Accelerate the acquisition of more information from
applicants about the scope of their projects.
Recommendation #11: Ensure that the program has sufficient operational
expertise to administer the program after the award is made.
Dichotomy Between TSA and ODPApproaches
ODP is responsible for preparing the nation for acts of terrorism. Its mission is to
provide training, funds for the purchase of equipment, support for the planning
and execution of exercises, technical assistance, and other support to help states
and local jurisdictions prevent, plan for, and respond to acts of terrorism.
The 2003 Emergency Wartime Supplemental Appropriations Act
41
made $700
million available to ODP’s UASI program. It provided funds for discretionary
grants for use in high-density urban areas, high-threat areas, and for protection
of critical infrastructure. UASI grants typically address the equipment, training,
planning, and exercise needs of high threat urban areas. Following TSA’s second
round of grants, ODP announced a $75 million port security grant program
separate from the basic UASI.
ODP’s approach differed substantially from TSA’s process. It was discretionary
and more risk based in determining the port areas that were eligible for funding.
The dichotomy between the two approaches has implications for the future
design and administration of the program. The department recently consolidated
both programs under a new office, the Office of State and Local Government
Coordination and Preparedness (SLGCP). SLGCP faces a challenge in integrating
TSA’s competitive program with DHS’other grant programs, including the UASI,
which have varied statutory foundations and program requirements.
41
P.L. 108-11.
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ODPApproach is Discretionary and More Risk Based
ODP, in coordination with TSA and the Office of State and Local Government
Coordination, used a risk based approach which determined, even before
applications were received, which port areas would be eligible and how much
funding each would receive. ODP reported that it obtained threat and criticality
information from the Federal Bureau of Investigation, the Central Intelligence
Agency, and IAIP for port areas. However, ODP said that TSA ultimately
identified five passenger, container, liquid bulk, and cargo tonnage ports (in
volume) as the high threat areas that should be considered for grant funding.
Twelve port areas were selected and two others were added bringing the total to
14 port areas.
42
Some port areas were in the top five in more than one category.
ODP said that once TSA selected the eligible port areas and determined the
funding amounts for each, TSA provided ODP with project applications from the
selected ports that TSA, USCG, and MARAD had already reviewed and ranked.
ODP requested that the applicants for those projects re-apply to ODP. Since TSA
had already awarded its second round of grants, it selected project proposals
from among those that it did not fund. From among those projects, TSA provided
applications with funding requests that added up to the pre-determined funding
amount for each port area selected. Because of the requirement that the project
amounts total the pre-determined award amount for each port area, TSA had to
select some projects ranked lower by the field over more highly ranked projects.
ODP awarded 49 grants encompassing 86 projects. We noted that 39 (45%) of the
86 selected projects were in the bottom 25% of the field review rankings.
TSA officials expressed frustration over this process. One official asserted that
ODP considered the evaluation process to be secondary to the need to fund
projects. Furthermore, it ran counter to ODP’s own risk based approach by
funding a number of questionable projects, many of which both field reviewers
and the NRB previously determined did not substantially reduce risk and did not
merit funding. Specifically, 82 of the 86 projects that TSA passed on to ODP were
projects the NRB categorized as Priority II. Only four were Priority I projects. To
illustrate, below are a few of the projects:
42
Two port areas were added by ODP based on Operation Liberty Shield activities at those locations.
Review of the Port Security Grant Program
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ODP Projects
Grant Recipient Z, fireboat, grant exceeds $595,000
The NRB categorized the project as Priority II and the field review ranking is 31 of 38. This
project was selected over eighteen Priority II projects within the COTP zone with a higher
field ranking. The project does not refer to a vulnerability or security assessment. The COTP/
MARAD review comments state, “Although a fire boat within the port would be nice it does not
reduce the physical threat of the port to a terrorist attack.”
Grant Recipient A1, mobile command center, grant exceeds $315,000
This is a NRB Priority II project and the field review ranking was 51 of 57. This project was
selected over 26 Priority II projects within the COTP zone ranked higher by the field review
team. Field reviewers comments state, “Project is response based vice prevention based.
Proposed mobile command post would be used if primary fixed EOC (Emergency Operations
Center) were destroyed/compromised, yet there is no assurance that the mobile command post
wouldn’t be destroyed or would be able to be moved to the needed location. Port authority
facilities are pretty good – this appears to be a luxury item.”
Grant Recipient B1, trucker ID system, grant exceeds $1,000,000
This is another NRB Priority II project with a field review ranking of 39 of 57. This project
was selected over nineteen Priority II projects in the COTP zone with higher field rankings.
This privately owned terminal was awarded over $1 million for a project that the field review
team determined, “does not present any tangible port security value other than helping to instill
some integrity in the container movement business.” In addition, the application does not cite a
vulnerability or security assessment.
Grant Recipient C1, automotive patrol vehicles, grant exceeds $110,000
This is a Priority II project with the lowest possible field review ranking of 31 of 31. The
application for this project states that, “… facilities need to be improved to deter theft of goods
and property, and to protect against undetected human intrusion and machinery invasion.” It
appears this is an anti-theft project and this project was not a priority according to the field
review team.
Grant Recipient D1, fortified crash beams, grant exceeds $1,060,000
This is a Priority II project and the field review team ranked this 54 of 57. It was selected over
20 Priority II projects in the COTP zone with higher field rankings. The field reviewers believed
that this project was primarily anti-theft, not anti-terrorism, insofar as the port deals solely with
automobiles.
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In general, ODP required all of these applicants to adhere to their previously
submitted project proposals. However, construction and renovation of facilities
was a statutorily prohibited use of ODP funds. This prohibition, which does not
exist under TSA’s program, required eight ODP applicants to change their project
descriptions and submit new proposals that met UASI eligibility criteria. In effect,
TSA, USCG, and MARAD never had the opportunity to review these projects.
The additional time required to negotiate new projects has further delayed their
approval and completion. One applicant with whom we spoke found ODP’s
application process, which required re-submission through a different website and
grant negotiation with another agency, to be burdensome and confusing. They did
not understand why DHS had two separate Port Security Grant Programs, with
two separate application processes, and different eligibility and selection criteria.
Grant Recipient E1, enhanced video surveillance of ferry passengers, grant exceeds $5,000
The NRB ranked this a Priority II project and the field review team ranked it 18 of 26. It was
selected over seven Priority II projects in the COTP zone with higher field rankings. This private
company received a grant although the field reviewers said, “The proposed installation of CCTV
is not supported in their assessment and will not significantly decrease vulnerability of their
operations.”
Grant Recipient F1, terminal security enhancements, grant exceeds $210,000
The NRB categorized this project as a Priority II project and the field review team ranked it 16
of 18. The field reviewers concluded that, “proposed security enhancements do not yield any
great risk reductions when compared to the existing security. Organic security creates multiple
barriers that are difficult to defeat, coupled with the port’s contracted patrols makes (the)
proposal largely an inefficient use of PS (Port Security) Grant funds.” Despite these comments,
the company’s project still received a grant.
Grant Recipient G1, access control, grant exceeds $100,000
Ten unfunded Priority II projects in the COTP zone were higher ranked than this one that
received funding. The field review team ranked the project 21 of 26 and funding was not
recommended. Field reviewers noted, “The proposed implementation of physical access
controls, smart cards for employees, does not significantly reduce vulnerability at the terminal.”
Grant Recipient H1, CCTV/lighting/ID badges, etc. grant exceeds $565,000
This is a Priority II project with a field review ranking of 12 of 18. The portion of the terminal in
question deals with asphalt, which does not appear to be at risk of a terrorist threat.
Review of the Port Security Grant Program
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SLGCP to Administer Program
On January 23, 2004, Secretary Ridge announced the department’s intention to
consolidate ODP with the Office of State and Local Government Coordination
to create SLGCP. He said that this consolidation was “…not to shift or change
the use or purpose of any of the available funding, but rather to enhance overall
coordination between all programs.” On May 17, 2004, a number of DHS
grant programs were moved into SLGCP, including TSA’s Port Security Grant
Program.
43
According to SLGCP officials, the department’s grant programs will
follow national strategic and infrastructure protection policies.
The department’s FY 2005 appropriation includes $150 million for port security
grants to be administered by SLGCP. A senior program official in SLGCP
explained that SLGCP intends to maintain the “beneficial” qualities of TSA’s
program, but also add more strategic and risk based elements to the program.
In his letter, the Secretary also stated, “While responsibility for crafting policy
and guidelines for the Port Security Grant Program would reside within
SLGCP, program development will still have significant input from and access
to operational subject matter experts within the Border and Transportation
Security Directorate, including TSA, as well as other agencies such as
USCG, and MARAD. Moreover, the department will maintain those program
mechanisms that have proven beneficial, such as determination of eligibility and
evaluation criteria, solicitation and application review procedures, and selection
recommendations.” However, as SLGCP assumes ownership of the program, the
sector specific nature of the program, and the shared decision making authority
that currently exists among TSA, USCG, and MARAD are no longer ensured.
Moving the program to SLGCP has created other anxieties for stakeholders:
• It is not clear how SGLCP’s intention to create a more risk based model
will affect the administration of the program. While we support a greater
emphasis on risk based decision-making, attempts to more narrowly
direct funds to higher risk facilities may not be readily accepted by the
broader port/maritime industry that is faced with the cost of MTSA
compliance. Opponents to a more risk based approach may argue that it
43
SLGCP is now the single point of contact for facilitation and coordination of departmental programs that impact state, local, territorial,
and tribal governments. The office is charged with facilitating the coordination of DHS-wide programs that affect state, local, territorial,
and tribal governments; serving as the primary point-of-contact within DHS for exchanging information with state, local, territorial, and
tribal homeland security personnel; identifying homeland security-related activities, best practices, and processes that are most efficiently
accomplished at the federal, state, local or regional levels; and utilizing this information to ensure that opportunities for improvement are
provided to state, territorial, tribal and local counterparts.
Review of the Port Security Grant Program
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runs counter to the intent of MTSA by assisting the “critical” facilities
and vessels that are more likely to have the resources or the incentive to
absorb MTSA related costs.
• All MTSA regulated facilities and vessels are faced with new security
requirements, including recurring costs. MTSA’s grant authority, which
was unfunded, was intended to defray these costs and included a cost
share requirement. TSA’s program did not fund recurring costs or require
cost sharing. How SLGCP’s authority and appropriation will address
MTSA requirements is unclear.
• Port authorities and port entities are concerned that states may contribute
to delays and reductions in funding. Currently, port security grants flow
directly to the applicants. However, in other ODP grant programs, the
funds flow to the states and then to the applicants and the states may use
up to 20% of the grant before allocating funds to local applicants. Port
authorities and port entities are also concerned that they will be forced to
compete for grant funds against other local entities, such as firefighters
and police, and other infrastructure protection priorities. SLGCP said that
it intends to award FY 2005 grants directly to the applicants.
• SLGCP faces a challenge in consolidating and analyzing infrastructure
vulnerability information to ensure that funds will be spent on projects
that maximize risk reduction at both the local and national levels.
We recommend that the Executive Director, Office of State and Local
Government Coordination and Preparedness:
Recommendation #12: Seek clarification on the legislative intent for the program
(sector-specific vs. larger infrastructure protection initiatives) and construct a
unified program (policy, purpose, process, and eligibility) to comply with that
intent.
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44
Information provided by TSA on December 19, 2003. Total projects and funding amounts may differ from amounts in award
announcements due to negotiation of grants. Aggregated amounts are based on the “not-to-exceed” amount for individual projects at the
time of the award. Assessment and Proof of Concept Projects were ineligible in round three.
Appendix A
Summary Tables of TSA Port Security Grants
Summary of Port Security Grant Projects
by Number of Projects and Proportion of
Funding
44
Round 1
Projects
Funding*
Project Type
No.
%
$
%
Assessment
25
17.36%
$6,515,000
6.94%
Proof of Concept
17
11.81%
$10,024,757
10.68%
Access Controls
21
14.58%
$21,867,672
23.29%
Communications
2
1.39%
$390,000
0.42%
Physical Enhancements
43
29.86%
$21,602,983
23.01%
Surveillance
29
20.14%
$29,129,389
31.03%
Vessel/Vehicle
7
4.86%
$4,343,947
4.63%
Totals:
144
100.00%
$93,873,748
100.00%
Round 2
Projects
Funding
Project Type
No.
%
$
%
Assessment
21
5.36%
$1,243,483
0.74%
Proof of Concept
2
0.51%
$1,469,294
0.87%
Access Controls
103
26.28%
$36,234,437
21.45%
Communications
8
2.04%
$10,711,330
6.34%
Physical Enhancements
127
32.40%
$80,144,671
47.44%
Surveillance
113
28.83%
$34,832,149
20.62%
Vessel/Vehicle
18
4.59%
$4,288,772
2.54%
Totals: 392
100.00%
$168,924,136
100.00%
Round 3
Projects
Funding
Project Type
No.
%
Funding
%
Assessment
0
0.00%
$0
0.00%
Proof of Concept
0
0.00%
$0
0.00%
Access Controls
84
19.00%
$46,229,529
25.82%
Communications
20
4.52%
$11,166,836
6.24%
Physical Enhancements
170
38.46%
$70,493,696
39.38%
Surveillance
151
34.16%
$47,238,899
26.39%
Vessel/Vehicle
17
3.85%
$3,896,940
2.18%
Totals:
442
100.00%
$179,025,900
100.00%
Review of the Port Security Grant Program
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Project Type Descriptions:
• An Assessment ascertains vulnerabilities of physical or operational
security of a port, multiple terminals, terminal or vessel (commuter or
ferry service), and identifies mitigation strategies.
• Proof of Concept projects are pilot security enhancement projects whose
feasibility or implementation has potential applicability across the
broadest possible range of facilities or operations.
• Access Controls include, but are not limited to, identification systems and
access gates.
• Communications include, but are not limited to, communication systems,
command and control systems, and computer systems.
• Physical Enhancements include, but are not limited to, fencing, physical
barriers, and screening and detection equipment.
• Surveillance includes, but is not limited to, cameras, closed circuit
television (CCTV), and lighting.
• Vessel/Vehicle funding was awarded for patrol-related activities. Funding
for vehicles was awarded in round one only.
Appendix A
Summary Tables of TSA Port Security Grants
Rounds 1, 2 & 3 Combined
Project Type
No. of Proj.
Percentage of
Proj.
Funding
Percentage of
Funding
Assessment
46
4.70%
$7,758,483
1.76%
Proof of Concept
19
1.94%
$11,494,051
2.60%
Access Controls
208
21.27%
$104,331,638
23.61%
Communications
30
3.07%
$22,268,166
5.04%
Physical Enhancements
340
34.76%
$172,241,350
38.98%
Surveillance
293
29.96%
$111,200,437
25.17%
Vessel/Vehicle
42
4.29%
$12,529,659
2.84%
Totals:
978
100.00%
$441,823,784
100.00%
Review of the Port Security Grant Program
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Appendix B
Management Comments
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Appendix B
Management Comments
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Appendix B
Management Comments
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Appendix B
Management Comments
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Appendix B
Management Comments
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Appendix B
Management Comments
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Appendix B
Management Comments
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Appendix B
Management Comments
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Appendix B
Management Comments
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Appendix C
OIG Evaluation of Management Comments
In its initial response, dated November 19, 2004, DHS agreed that opportunities exist to further improve
the program and said that it already is taking aggressive action to address many of the issues identified
by the OIG. However, it did not address each recommendation and we requested that DHS revise and
resubmit a more responsive document. In its second response, dated December 30, 2004, DHS concurred
with 11 of the 12 recommendations and did not concur with one recommendation. We consider 11 of the
12 recommendations resolved and one recommendation unresolved. All recommendations remain open.
To summarize our report, several practices hinder the program from achieving national strategic
priorities and, in fact, conflict with this goal. Program administrators and reviewers (1) attempted to
spread the grant funds to as many recipients as possible, (2) changed the definition of a ‘national critical
seaport’from round to round to widen eligibility, and (3) funded projects that lacked clear security-
related merit. Although the department response claimed that reviewers applied national security and
risk information, we did not find evidence to support the assertion. Moreover, there were numerous
instances of grants to ports/facilities not on the national strategic or controlled port list where the
grantee’s eligibility under the criteria could not be ascertained from the application documents. These
facts weaken the premise that the program is risk-based and cloud the meaning of “highest priorities.”
DHS did not agree that the program in its current state compromises DHS’ability to direct resources
toward the nation’s highest priorities.
The department objected to our statement that ODP undermined TSA’s evaluation process, replying that
ODP and TSA coordinated closely on how to allocate the $75 million and it was TSA that recommended
the 82 projects that ODP funded. Our concern is not with how well TSA and ODP worked together,
which they did, but whether the department funded 82 projects that it should not have awarded. SLGCP
believes that the problems noted with the FY 2003 process will not be repeated.
We obtained different views of how TSA represented and transferred the 82 projects to ODP. Regardless
of whether the projects were the “next best” projects available that met UASI criteria, TSA was not
going to fund them. ODP’s faith in the evaluation and selection process and belief that TSA, USCG, and
MARAD sufficiently evaluated those projects allows for the possibility that it did not know the quality
of the projects it received. As our report discusses, we took exception to funding many of these projects
based on their overall rankings and our analysis of reviewer comments.
SLGCP asserted that the funding allocation decisions for the 12 eligible urban areas, under which the
82 projects were selected, were not based on the same formulas used for basic UASI grants. We looked
only at port grants and did not examine the formulas used for basic UASI grants. We did not intend to
imply otherwise, and we modified our report accordingly.
We witnessed widespread support and enthusiasm for the port security grant. We observed good,
respectful, working relationships among all of the participating agencies, i.e., TSA, ODP, USCG,
and MARAD, that collaborated to stand up a competitive grant program and leverage their expertise
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Appendix C
OIG Evaluation of Management Comments
throughout multiple rounds of grant awards. Evaluators at all levels of review worked hard to reach
consensus on grant decisions. Program officials clearly desire to improve the program and the increasing
quality of applications and program administration is evident.
However, DHS’response to our recommendations revealed little about specific corrective actions
that will be taken. One of our most serious concerns is that our review revealed conflicting goals for
the program. The program should be more risk based, but we found statutory direction and actual
implementation that effects a distributive approach to the grants. DHS’comments did not acknowledge
the incompatibility of the approaches, and did not convincingly commit to establishing a clear goal
toward which grant funds can be directed. The Executive Director, SLGCP, or a more senior official
responsible for the program, did not sign either the first or second response to our draft report. Who will
oversee the corrective actions and redesign the program remains unclear.
DHS has now spent $560 million on port security grants and has been allocated $150 million for
fiscal year 2005. Because several of our recommendations are fundamental to the effectiveness of the
program, i.e., recommendations 1, 3-4, 6, and 9, we strongly encourage the DHS to fully implement our
recommendations before proceeding with the next round of port security grants.
Below are management comments and OIG analysis of management comments for each
recommendation.
Recommendation #1: Determine to what extent the program should incorporate MTSA requirements.
DHS Response: DHS concurred with this recommendation and will review the MTSA issue with the
goal of including updated guidance on this subject in the forthcoming FY 2005 Port Security Grant
Program. DHS said it has developed and implemented a strategy for the identification and protection
of the nation’s critical port infrastructure resulting from MTSA and subsequent regulations. This
has enhanced security through the completion of vulnerability assessments, security plans, and the
mitigation of security vulnerabilities for certain “high priority” facilities and vessels. DHS noted that
these “high priority” facilities and vessels were eligible to receive funds in the most recent round of
grants.
OIG Evaluation: The OIG agrees that DHS has made substantial progress in identifying and protecting
vulnerable port facilities and vessels, and these actions have, in turn, enhanced the grant application
review process. However, DHS failed to articulate how the department will resolve the discrepancies
that exist between TSA’s grant program, MTSA’s grant authority, and SLGCP’s intention to create
a more risk-based model. These represent three competing philosophies that not only relate to port
security, but also reflect the broader debate on how homeland security funds, in general, should be spent.
That debate consists of the extent DHS should broadly disperse funds to assist with nationwide security
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OIG Evaluation of Management Comments
needs and mandates such as MTSA, versus focusing funds on the nation’s most critical and vulnerable
infrastructure.
We concur with DHS’intent to examine MTSA requirements and consider the recommendation
resolved, but open, until DHS resolves the discrepancies between the intent and authority of MTSA and
the existing grant program.
Recommendation #2: Incorporate critical infrastructure and key asset data from IAIP into the
evaluation of proposed port security projects. Among the changes to consider:
• The addition of an IAIP official on the Executive Review Board;
• Use of the IAIP national asset database to identify critical facilities in need of mitigation with a
view toward soliciting proposals from these facilities; and
• Collaborating with IAIP in an outreach program to improve the quality of vulnerability
assessments and proposals.
DHS Response: DHS concurred with the recommendation. DHS agreed that the participation of
members from IAIP would be beneficial. SLGCP will work with IAIP to include critical infrastructure
and key asset data into the evaluation process for the next round of port security grants.
DHS pointed out that IAIP did not exist during the first round of grants and that detailed critical
infrastructure/key asset (CI/KA) lists had not been developed fully during the second and third rounds.
DHS asserted that our report implies national CI/KA information was available that the review boards
had not been aware of during the grant review process. In addition, DHS asserted that the Coast Guard
works very closely with the IAIP staff and is very aware of IAIP efforts, including the development of
CI/KA lists and strategies for protecting the nation’s CI/KA. It also asserted that some of the CI/KA
information developed by IAIP has been shared with Coast Guard, as well as with members of the
national review boards from other participating agencies.
DHS said that MTSA regulations require Coast Guard Federal Maritime Security Coordinators (FMSCs)
to conduct port assessments, identify critical infrastructure, and develop Area Maritime Security
Plans with established Area Maritime Security Committees. The knowledge acquired through these
activities is then applied during the local grant review process. Furthermore, the FMSCs have prioritized
critical infrastructure within their ports, and this information has been compiled into a classified
maritime critical infrastructure list for the nation and was available during the national review of grant
applications.
OIG Evaluation: DHS asserted that USCG, through MTSA implementation, was able to apply its
knowledge of maritime vulnerabilities to the field review and that this information was compiled into
a classified national list that was shared with national level review boards. We are aware of the USCG
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OIG Evaluation of Management Comments
efforts to compile maritime vulnerability information at the local and national levels, but it was not clear
that this information was vetted by IAIP or integrated with IAIP’s national CI/KA information. We did
not find any evidence that this information was provided to the personnel that participated in the national
level evaluation process. This may be the current practice, but this was not evident in our review of the
first three rounds of grants.
However, we concur with DHS’plans to work with IAIP and consider the recommendation resolved,
but open, until it explains how additional information will be incorporated into the evaluation process.
Specifically, DHS has not described what process, methodologies, or guidance that it will use in the
future to ensure that field and national level grant reviewers not only are knowledgeable of IAIP’s CI/
KA information, but also understand how it is to be applied in the context of the grant program.
Recommendation #3: Consider changing the weighting of the evaluation criteria, with greater
emphasis placed on the criteria that reduce critical vulnerabilities.
DHS Response: DHS concurred with the recommendation and will incorporate a weighted approach to
evaluating projects that places an increased emphasis on risk reduction as part of the forthcoming round
of port security grants.
DHS stated that the field level ranking is an important decision factor for the national review boards.
The field review evaluation leads to a risk-based recommendation only. The national review boards then
evaluate the application against other RFA published criteria, e.g., cost, schedule and qualification of key
personnel that are not considered at the field level review. Disqualifying factors during this review will
sometimes result in a national review board recommendation to fund a project in lieu of one that may
have been ranked higher during the risk-based field level review. DHS stated that the national review
board will not recommend funding for a project that does not have a high likelihood of successful
implementation within a reasonable timeframe.
OIG Evaluation: We concur with DHS’intention to incorporate a new weighted approach and consider
the recommendation resolved, but open, pending the development of this approach. DHS should explain
how the reviewing bodies will use criteria and weights to evaluate projects.
We did not underestimate the importance of the field review process; it lays the foundation for
the national level reviews. While the program guidance requires that the field review rankings be
based solely on risk, some field reviewers told us that other factors sometimes were considered. The
Coast Guard utilizes the PSRAT tool in the field review process to assist them in making risk-based
recommendations and rankings. The MARAD field reviewers, however, do not use the PSRAT tool.
Although the Coast Guard and MARAD frequently agreed on rankings, they were required to come to a
consensus and this process did not always lead to a purely risk-based recommendation.
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Our concern has been that DHS funded a large number of projects that received unsatisfactory or
marginal scores in the three risk and criticality criteria. First and foremost, the goal of the program must
be to reduce risk and protect critical facilities. To award grants that do not receive favorable evaluations
in these criteria does not appear to support these goals or the goal of good stewardship of federal funds.
Recommendation #4: Cease the practice of funding projects that do not meet the definition of a
Priority I project. Consider implementing a scoring threshold that ensures that projects not meeting that
threshold are not funded. Consider seeking a change in appropriations language to have these grant
funds designated as “no-year monies” to reduce the impetus to fund doubtful projects.
DHS Response: DHS did not concur with this recommendation, but only cited the collaborative TSA
and ODP process that resulted in grant awards for 82 Priority II projects in FY 2003 under the UASI port
security grants. DHS suggests that this problem will not recur since SLGCP is now administering the
program.
OIG Evaluation: We consider the recommendation unresolved. This issue extends beyond the process
that led to the funding of 82 Priority II projects cited in the management comments. DHS did not
address whether it will retain the Priority I, II, and III designations during the evaluation process or
whether it will implement a scoring threshold. DHS funded a number of projects that received marginal
or unsatisfactory rankings in the risk reduction and criticality evaluation criteria. Program officials told
us that there was pressure to expend available funds and to spread those funds to as many applicants as
possible. This suggests that risk reduction was not the primary consideration in awarding grants.
The NRB also elevated a limited number of projects in each round from their initial Priority II status to
Priority I. In the end, the program funded numerous projects that received below average scores overall.
Finally, DHS did not address our suggestion to seek a change in appropriations language to have these
grant funds designated as “no-year monies” as part of an effort to improve the quality of the grant
application, grant process, and overall mitigation of vulnerability. We continue to believe that a threshold
is required and that the “no-year monies” issue needs to be considered.
Recommendation #5: Require reviewers to document their decisions in the grants management system,
particularly when they are inconsistent with recommendations from a lower level of review.
DHS Response: DHS generally concurred that comments should be mandatory when there is
inconsistency between any of the review levels, and will implement this change by requiring reviewers
to document their decisions in the grants management system as part of the next round of grants. DHS
said that national review boards also utilized knowledge gained from working in the national policy
development arena and this may result in ranking projects differently from the field review. DHS said
that documentation for the rationale for recommending or not recommending funding has improved
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OIG Evaluation of Management Comments
during each subsequent round. During the most recent rounds, extensive efforts were made to document
thoroughly the decisions of the national review boards.
OIG Evaluation: We determined that the documentation to support decisions generally improved from
round to round. In general, when a project or a portion of the scope of a project was deemed ineligible
for funding, the documentation supported this decision. However, in round three, we found that
decisions that were inconsistent with a lower level of review generally were not documented sufficiently.
Contrary to DHS’view that “extensive efforts were made to thoroughly document the national review
board’s decisions,” national and executive reviewers did not sufficiently justify their changes. We
maintain that improvement in documenting funding decisions is necessary at all levels of review.
We concur with DHS’plans to add the mandatory requirement and consider the recommendation
resolved, but open. DHS should include in its action plan evidence that it has provided the above
instructions to evaluators through written guidance.
Recommendation #6: Develop parameters that define applicant eligibility under the “nationally
important economic port or terminal,” “responsible for movement of a high number of passengers,” and
“responsible for the movement of hazardous cargo” criteria.
DHS Response: DHS concurred that parameters need to be developed that focus on defining eligibility
based on asset criticality. DHS said that SLGCP will work with IAIP, the USCG, TSA, and MARAD to
develop and include these asset criticality criteria in the FY 2005 program. DHS also said that, although
the definition of “critical national seaport” was intentionally broad in an effort to encourage submittal of
applications, the Request For Applications criteria listed to meet the “critical national seaport” threshold
proved DHS has focused on addressing the highest priorities in the nation’s most critical ports and
critical activities within ports. DHS said merely providing a list of ports or list of port activities, e.g.,
passenger and hazardous cargo operations, that would have been eligible for grant funds is a simplistic
approach to a complex maritime environment and would have resulted in fewer grant applications of
merit and exclusion of projects that were worthy of funding.
OIG Evaluation: We concur with DHS’commitment and consider the recommendation resolved, but
open. DHS should include in its action plan the parameters that define applicant eligibility based on asset
criticality.
DHS’acknowledgement that it used a broad definition to encourage the submittal of applications, and
the lack of parameters for qualifying under the three above referenced criteria, brings into question DHS’
position that it is focused on the nation’s most critical ports and activities within ports. The program’s
interpretation of these criteria varied from round to round based on the universe of applications
submitted and we did not find any information to support how an entity would meet one or more of these
criteria for eligibility. We concur that the port/maritime environment is complex and that the program
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Appendix C
OIG Evaluation of Management Comments
requires flexibility to address the broad range of port/facility/vessel characteristics, vulnerabilities,
etc. However, not defining applicant eligibility effectively makes all entities eligible for funding and
limits the value of having any eligibility requirements at all. This, in turn, makes the evaluator’s job
of discerning which facilities or vessels rise to a level of criticality that merits federal funding more
difficult.
Recommendation #7: Communicate information to field reviewers to educate them on eligibility.
Improve dissemination of “lessons learned” at all levels of review.
DHS Response: DHS concurred with the recommendation. Program administrators will (1) continue
to share lessons learned with all levels of review, (2) seek ways to improve dissemination of useful
information to potential grant applicants and government reviewers, and (3) will ensure clear and
appropriate guidance and other relevant information is provided to those responsible for reviewing
applications as part of the next round of port security grants.
OIG Evaluation: We concur with DHS’response and consider the recommendation resolved, but
open. DHS should attach to its action plan additional documentation supporting the steps noted above.
We believe that program guidance and communication has improved. However, field reviewers, in
particular, expressed to us their concern that guidance was unclear. This is especially important in light
of the fact that the field review teams, specifically those in the Coast Guard, experience significant
turnover due to personnel rotation.
Recommendation #8: Evaluate timeframes for reviewing applications with an emphasis on providing
more time for review in the field and by the ERB.
DHS Response: DHS concurred with the recommendation and will explore ways to improve grant
procedures with a commitment to ensuring that future port security projects have been thoroughly
vetted. DHS also stated that it is sensitive to the OIG’s concerns regarding insufficient time for thorough
project reviews. DHS believes that its efforts to redesign the process in coordination with IAIP, the
Coast Guard, MARAD, and TSA will achieve timesavings through a more efficient process.
OIG Evaluation: We concur with DHS’commitment to improve grant procedures and consider the
recommendation resolved, but open. DHS should provide more information regarding the redesign of
the process as it becomes available.
Recommendation #9: Clarify department policy on funding private sector projects. In the absence of
such policy, and if funding private sector projects is continued: (1) examine private sector projects to
preclude the funding of cost of business expenses; (2) develop financial eligibility criteria, including
an income test or cost-benefit analysis; and (3) consider giving greater preference to projects that are
submitted jointly by private and public entities.
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DHS Response: DHS concurred that the department’s policy on funding private sector projects needs
to be clarified. In round four, departmental policy was not to fund any private sector entities that were
Fortune 500 companies. The department committed to develop a formal policy on funding for private
sector entities as part of the forthcoming FY 2005 program.
OIG Evaluation: We concur with DHS’response and consider the recommendation resolved, but open.
The private sector will continue to seek funding and the department must rigorously examine those
applications. To close the recommendation, DHS should provide a copy of the policy for funding private
sector projects when it becomes available. The policy should address cost of business criteria, financial
eligibility criteria issues, and how much preference should be given to joint private and public sector
projects.
Recommendation #10: Accelerate the acquisition of more information from applicants about the scope
of their projects.
DHS Response: DHS concurred with this recommendation and will ensure that appropriate guidance
on the submission of relevant information within specified timeframes is included in the application kit
for the next round of grants.
OIG Evaluation: We concur with DHS’response and consider the recommendation resolved, but open.
DHS should provide a copy of the application kit for the FY 2005 program.
Recommendation #11: Ensure that the program has sufficient operational expertise to administer the
program after the award is made.
DHS Response: DHS concurred with the recommendation. It has established the Transportation
Infrastructure Security Division within SLGCP to administer the FY 2005 grants. Six TSA personnel
have also been transferred to SLGCP to form the new division. They will be supplemented over the
coming months with additional experienced staff as the remaining vacancies in the new division are
filled.
OIG Evaluation: We concur with DHS’response and consider the recommendation resolved, but open.
To close the recommendation, DHS should provide an organization chart and information on the status
of current and planned full-time personnel for the new division.
Recommendation #12: Seek clarification on the legislative intent for the program (sector-specific vs.
larger infrastructure protection initiatives) and construct a unified program (policy, purpose, process, and
eligibility) to comply with that intent.
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DHS Response: DHS concurred with the recommendation and stated that it will reach out to the
appropriate congressional committees for clarification. In the interim, SLGCP is already working with
IAIP and the USCG to examine what national critical infrastructure lies within key seaports, and will
incorporate this information into the next round of the Port Security Grant Program.
OIG Evaluation: We concur with DHS’response and consider the recommendation resolved, but open.
DHS should include in its action plan the status of efforts to obtain congressional input, as well as any
related correspondence with congressional committees. This also is discussed in our analysis of the
department’s comments on Recommendation #1.
Appendix C
OIG Evaluation of Management Comments
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Appendix D
Recommendations
Recommendations
We recommend that the Executive Director, Office of State and Local
Government Coordination and Preparedness:
Recommendation #1: Determine to what extent the program should incorporate
MTSA requirements.
Recommendation #2: Incorporate critical infrastructure and key asset data from
IAIP into the evaluation of proposed port security projects. Among the changes to
consider:
• The addition of an IAIP official on the Executive Review Board;
• Use of the IAIP national asset database to identify critical facilities in
need of mitigation with a view toward soliciting proposals from these
facilities; and
• Collaborating with IAIP in an outreach program to improve the quality of
vulnerability assessments and proposals.
Recommendation #3: Consider changing the weighting of the evaluation criteria,
with greater emphasis placed on the criteria that reduce critical vulnerabilities.
Recommendation #4: Cease the practice of funding projects that do not meet the
definition of a Priority I project. Consider implementing a scoring threshold that
ensures that projects not meeting that threshold are not funded. Consider seeking
a change in appropriations language to have these grant funds designated as “no-
year monies” to reduce the impetus to fund doubtful projects.
Recommendation #5: Require reviewers to document their decisions in
the grants management system, particularly when they are inconsistent with
recommendations from a lower level of review.
Recommendation #6: Develop parameters that define applicant eligibility under
the “nationally important economic port or terminal,” “responsible for movement
of a high number of passengers,” and “responsible for the movement of hazardous
cargo” criteria.
Recommendation #7: Communicate information to field reviewers to educate
them on eligibility. Improve dissemination of lessons learned at all levels of
review.
Review of the Port Security Grant Program
Page 67
Appendix D
Recommendations
Recommendation #8: Evaluate timeframes for reviewing applications with an
emphasis on providing more time for review in the field and by the ERB.
Recommendation #9: Clarify department policy on funding private sector
projects. In the absence of such policy, and if funding private sector projects is
continued: (1) examine private sector projects to preclude the funding of cost of
business expenses; (2) develop financial eligibility criteria, including an income
test or cost-benefit analysis; and (3) consider giving greater preference to projects
that are submitted jointly by private and public entities.
Recommendation #10: Accelerate the acquisition of more information from
applicants about the scope of their projects.
Recommendation #11: Ensure that the program has sufficient operational
expertise to administer the program after the award is made.
Recommendation #12: Seek clarification on the legislative intent for the program
(sector-specific vs. larger infrastructure protection initiatives) and construct a
unified program (policy, purpose, process, and eligibility) to comply with that
intent.
Review of the Port Security Grant Program
Page 68
Appendix E
Major Contributors to this Report
Melissa M. Howard, Ph.D., Chief Inspector
William J. McCarron, Senior Inspector
Howard Stronach, Inspector
Melissa Keaster, Inspector
Review of the Port Security Grant Program
Page 69
Appendix F
Report Distribution
Department of Homeland Security
Secretary
Deputy Secretary
General Counsel
Chief of Staff
Under Secretary, Border and Transportation Security
Under Secretary, Information Analysis and Infrastructure Protection
Audit Liaison, Information Analysis and Infrastructure Protection
Executive Director, Office of State and Local Government Coordination and
Preparedness
DHS OIG Liaison
DHS Public Affairs
Deputy Security Officer, Office of Security
Transportation Security Administration
Assistant Secretary of Homeland Security for the Transportation Security
Administration
Audit Liaison, Transportation Security Administration
United States Coast Guard
Commandant, United States Coast Guard
Department of Transportation
Administrator, Maritime Administration
Inspector General, Department of Transportation
Office of Management and Budget
Chief, Homeland Security Branch
DHS OIG Program Examiner
Congress
Congressional Oversight and Appropriations Committees, as appropriate
Government Accountability Office
Western Regional Director
Review of the Port Security Grant Program
Page 70
Additional Information and Copies
To obtain additional copies of this report, call the Office of Inspector General (OIG)
at (202) 254-4100, fax your request to (202) 254-4285, or visit the OIG web site at
www.dhs.gov/oig.
OIG Hotline
To report alleged fraud, waste, abuse or mismanagement, or any other kind of criminal
or noncriminal misconduct relative to department programs or operations, call the OIG
Hotline at 1-800-323-8603; write to Department of Homeland Security, Washington, DC
20528, Attn: Office of Inspector General, Investigations Division – Hotline. The OIG
seeks to protect the identity of each writer and caller.
TOPICS: Business/Economy; Foreign Affairs
KEYWORDS: dubai; portbot; portsgate
The section on funding private sector port security projects was quite interesting; in particular, I thought this section on the security functions of private companies in our ports:
DHS is learning that many private companies are unwilling to share security information and collaborate on security projects with port authorities. Port officials discussed the reluctance of private sector entities to share information about their vulnerabilities for fear of reducing their competitive advantage. Port authorities, while cognizant of this concern, want to establish integrated and port-wide security plans and security systems. This requires greater cooperation and increased information sharing on the part of private entities. While there were occasional references to the program’s goal of giving preference to port-wide projects, neither guidance nor reviewer comments indicated this was occurring. The program does not adequately reinforce the cooperative efforts between public and private entities that are required to develop an integrated approach to security.
Related articles:
Statement of Rear Admiral Craig Bone on the Maritime Transportation Security Action Implementation
MARITIME SECURITY: Substantial Work Remains to Translate New Planning Into Effective Port Security
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