Homeland Security Is Faulted in Audit
Inspector General Points to FEMA, Cites Mismanagement Among Problems

By Dan Eggen
Washington Post Staff Writer
Thursday, December 29, 2005

Nearly three years after it was formed, the immense Department of Homeland Security remains hampered by severe management and financial problems that contributed to the flawed response to Hurricane Katrina, according to an independent audit released yesterday.

The report by Homeland Security Inspector General Richard L. Skinner aimed some of its most pointed criticism at one of DHS's major entities, the Federal Emergency Management Agency. Katrina and a subsequent storm, Rita, increased the load on FEMA's "already overburdened resources and infrastructure," the report said.

In addition, the report found, "the circumstances created by Hurricanes Katrina and Rita provide an unprecedented opportunity for fraud, waste and abuse," primarily because FEMA's grant and contract programs are still not being managed properly.

"While DHS is taking several steps to manage and control spending under Katrina, the sheer size of the response and recovery efforts will create an unprecedented need for oversight," the report concludes.

The audit is the latest in a series of tough assessments of the beleaguered department, which has been widely criticized since it was formed in March 2003 by combining 22 disparate agencies. In a final "report card" issued earlier this month, for example, the former members of the Sept. 11 commission gave the DHS low or failing grades in many key areas, including airline passenger screening and border control.

Earlier this week, a group of House Democrats issued a report alleging that the department had failed to follow through on 33 promised improvements to border security, infrastructure protection and other programs.

In an 11-page response to the inspector general's findings, homeland security officials acknowledged problems but disputed some of the criticisms and offered explanations for others. For example, the department said it has created a special procurement office to oversee hurricane contracts and is using consultants to monitor the process.

Department spokesman William R. "Russ" Knocke said that "retooling FEMA is one of our greatest and most urgent priorities."

"We continue to make programs more efficient, effective and results-oriented," Knocke said, adding that "the department is making substantial progress in implementing several core management initiatives," including improvements in personnel policies and financial accountability.

Homeland Security Secretary Michael Chertoff, who took over the department this year, is in the midst of implementing a broad reorganization of the 180,000-employee department and has announced initiatives in border security and other areas.

But the department's bumbling after Katrina prompted widespread criticism -- along with the resignation of FEMA's director -- and many lawmakers have since questioned whether DHS is capable of handling recovery efforts along the Gulf Coast. White House homeland security adviser Frances Fragos Townsend is reviewing the hurricane response by DHS and other agencies.

Congress has approved more than $63 billion in disaster relief funding, and some estimate that the total federal recovery costs for New Orleans and other storm-ravaged areas could exceed $200 billion. As of last week, officials said, more than $4 billion in Katrina-related contracts had been awarded by the department.

Skinner's audit deals not only with the department's response to Katrina but also with an array of broader management challenges that have troubled DHS. The department brought together immigration and customs agencies, the Secret Service, the Coast Guard and the Transportation Security Administration, among others. Although there has been progress, "integrating its many separate components in a single, effective and economical department remains one of DHS' biggest challenges," the audit said.

The report found, among other things, that U.S. Immigration and Customs Enforcement has failed to maintain proper financial records; that much of the department's technology infrastructure remains fractured and ineffective; and that DHS faces "formidable challenges in securing the nation's borders."

Skinner also reiterated complaints about poor coordination between the border patrol and immigration investigators. Chertoff has rejected Skinner's recommendation that the agencies responsible for these employees be merged.

The audit followed a report Tuesday by 13 Democratic members of the House Homeland Security Committee, who alleged that the administration has failed to fulfill promises for improvements in areas such as border security and intelligence sharing. The report also noted that the department has missed deadlines to create a comprehensive database of critical infrastructure targets that face a high risk of terrorist attack.

"The findings of the report are significant because they uncover a number of unnecessary vulnerabilities to our homeland security that the American people deserve to know about," the committee's ranking Democrat, Rep. Bennie Thompson (Miss.), said in a statement with the report.

Knocke disputed many of the Democratic criticisms, arguing that they ignore many specific changes that are underway and do not take into account significant progress in homeland security since the Sept. 11, 2001, attacks.

"Virtually each of these claims fall short of reflecting the substantial work that has been done in securing America since 9/11," Knocke said.

Researcher Julie Tate contributed to this report.

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