The D.C. Department of Health has failed to properly track $3.6 million in federal grants awarded since 2002 to prepare local hospitals for a bioterrorism attack, and nearly half of the money has gone unspent, a federal audit reported.

District health officials did not upgrade accounting systems to track the funds as required. They blamed personnel, contracting and budgeting delays for the spending bottleneck, according to a report released Thursday by the inspector general's office of the U.S. Department of Health and Human Services.

Eighteen hospitals that are members of the D.C. Hospital Association have received $15,000 to $150,000 each under the program, according to the association. The money is earmarked for 15 priorities, mainly "surge capacity" -- spare hospital beds to handle mass casualties. However, the capital region has acquired only 444 beds toward a federal target of 3,000, based on its population of about 6 million people, the association said.

The report echoes a series of findings by U.S. agencies, Congress and independent investigators. In June, the inspector general's office found that the D.C. Health Department had failed to spend about half of $24.5 million in federal grants awarded to the city since 1999 for public health preparedness and had improperly charged $238,000.

In April, a House panel found that the District, Maryland and Virginia spent only 17 percent of $145 million in U.S. homeland security grants awarded to the capital region over the past three years, ranking at the bottom of the 50 states. Authorities blamed an administrative lapse in 2003 and the burden of coordinating plans among many jurisdictions.

HHS officials said yesterday that the audit of the D.C. grant was part of a nationwide review of bioterrorism preparedness spending. The inspector general's office said it was too soon to say how the District's results compared with the rest of the country. The office reported recently that Massachusetts has not spent 65 percent of $13.4 million of its hospital preparedness funds.

Glenn Baly, spokesman for Inspector General Daniel R. Levinson, said auditors focused solely on the department's Health Resources and Services Administration grant program and not the structure or management of the troubled District agency, which has had five directors in four years.

"Without accurate and complete accounting of program funds by priority area, HRSA does not have a means to measure the extent that program objectives are being met," concluded the report, dated June 28 and made public last week.

In an interview, D.C. Health Director Gregg A. Pane acknowledged the problems, called their solution a priority and said the District has not lost any federal aid as a result.

"I am committed to getting us back on track next year," Pane said. "The criticisms were legitimate. I think we've made progress and I'm optimistic about the future, catching up and moving responsibly to take the steps we need to."

Pane said his agency fell behind because it was focused on spending another $20 million in U.S. homeland security aid approved for the Washington area immediately after the September 2001 terrorist attacks. He said the department just yesterday hired a bioterrorism coordinator under the HHS grant program, which was announced in February 2002.

Robert A. Malson, president of the D.C. Hospital Association, said that given the relatively small nature of the grants, member hospitals "are well along our way and to the extent the money has been released, we've been spending it appropriately" for hospital beds.

People familiar with the hospital grant management program noted that there has been infighting between District, U.S. and private hospital officials over federal guidelines and restrictions and that normal bureaucratic wrangling has been made worse by turnover at the D.C. agency.

The federal department has limited or frozen the District's ability to spend 2005 funds pending improvements, Pane said.

"There have been five different Department of Health directors," said one official familiar with the program, who spoke on condition of anonymity to preserve relationships with partners, "and five different philosophical views of emergency preparedness."