Implementation of a risk analysis model to calculate scores for states  and urban areas, defining relative Risk, as the product of Threat,  Vulnerability, and Consequences. DHS Has Used an Evolving Risk-Based Methodology to Allocate Federal Grant Funds

DHS has used an evolving risk-based methodology to identify the states  and urban areas eligible for HSGP grants and the amount of funds they  receive. Given the uncertainties inherent in risk assessment, the  methodology uses a combination of empirical data (e.g., population, asset  location) and policy judgment (e.g., the nature of the threat for specific  areas and the weights to be assigned to specific variables in the model  such as critical infrastructure, and population and population density). Figure 2 provides an overview of the factors included in the risk  analysis model for fiscal year 2007 and, according to our ongoing work, for  fiscal year 2008 and their relative weights. Information on these inputs comes from the Department of  Defense and DHS. DHS Has a Variety of Mechanisms in Place to Communicate with States and Localities about Grant Allocation Decisions

According to DHS officials and HSGP grant assistance documents we  reviewed, DHS communicates with its state and local stakeholders by: (1)  providing to each state and urban area the individual threat assessments  that DHS is using to calculate the risk analysis model’s Threat Index; (2)  validating the nonpublic, critical infrastructure assets that comprise the  risk analysis model’s National Infrastructure Index; (3) providing midpoint  reviews of states’ and urban areas’ draft investment justification proposals  that are later reviewed during DHS’s effectiveness assessment process; (4)  providing technical assistance as states and urban areas prepare the  documentation for their grant applications; and (5) convening conferences  to solicit stakeholder feedback. 3). We concluded that the ability of states and localities to spend grant funds  expeditiously was complicated by the need to fulfill state and local legal  and procurement requirements, which in some cases added months to the  purchasing process. We reported a variety  of steps that had been taken by states, DHS, and the Congress to  streamline the expenditure of grant funds. In  addition, we found that reporting categories were not consistent across  fiscal years. As part of our ongoing work in reviewing DHS grant allocation and  management efforts, we plan to determine whether the data FEMA  maintains on grant expenditures across fiscal years allows FEMA to  analyze trends in grant obligations and expenditures. DHS Does Not Yet Have a Means to Measure Program Outcomes to Further the Nation’s Homeland Security Preparedness Goals

While DHS has distributed over $19 billion in federal emergency  preparedness funding to states, localities, and territories since fiscal year  2002, and taken steps to gather information, establish goals and measures,  and measure progress, we still know little about how states have used  federal funds to build their capabilities or reduce risks. Nor do we know  how effective this national investment has been because DHS’s monitoring  of homeland security grant expenditures does not provide a means to  measure the achievement of desired program outcomes to strengthen the  nation’s homeland security capabilities. Related GAO Products

Department of Homeland Security: Progress Report on Implementation of  Mission and Management Functions. Homeland Security Grants: Observations on Process DHS Used to Allocate  Funds to Selected Urban Areas. Homeland Security: Management of First Responder Grant Programs and  Efforts to Improve Accountability Continue to Evolve.
Why GAO Did This Study

Since 2002, the Department of Homeland Security (DHS) has distributed over $19 billion in homeland security grants to enhance the nation's preparedness and response capabilities. The Federal Emergency Management Agency (FEMA) is responsible for all preparedness efforts including allocating and managing these grants. This testimony examines (1) the process and methods to allocate homeland security grants to state and local governments, (2) how DHS communicates with states and localities in making grant allocation decisions, (3) what challenges affect the expeditious spending of DHS grant funds by states and localities; and (4) the extent that DHS measured program outcomes as part of its efforts to monitor the expenditure of grant dollars. GAO's testimony is based on products issued from April 2005 through July 2007 on DHS's grant management system, and on GAO's ongoing mandated work related to FEMA's risk-based grant distribution processes for fiscal years 2007 and 2008. To conduct this work, GAO reviewed relevant documents on FEMA's risk analysis model and interviewed agency officials.

What GAO Found

DHS uses an evolving risk-based methodology to identify the urban areas eligible for homeland security grants and the amount of funds states and urban areas receive. DHS designed the methodology to measure the relative risk of a given state or urban area using a risk analysis model that defined Risk as the product of Threat times Vulnerability and Consequences (R = T * (V & C)). Given the uncertainties inherent in risk assessment, the methodology uses a combination of empirical data (e.g., population, asset location) and policy judgment (e.g., the nature of the threat for specific areas and the weights to be assigned to specific variables in the model such as critical infrastructure, population, and population density). According to FEMA officials and GAO's review of homeland security grant assistance documents, FEMA communicates with its state and local stakeholders by (1) providing individual threat assessments that DHS is using for its risk analysis model to each state and urban area, (2) validating the nonpublic national infrastructure data that are also part of the risk analysis model, (3) reviewing states' and urban areas' draft investment proposals that are later submitted and rated during DHS's effectiveness assessment process, (4) providing technical assistance as states and urban areas prepare grant applications, and (5) holding post-award conferences to solicit stakeholder feedback. In April 2005, GAO reported that the ability of states and localities to spend grant funds expeditiously was complicated by the need to fulfill legal and procurement requirements, which in some cases added months to the purchasing process. GAO also reported a variety of steps that had been taken by states, DHS, and the Congress to streamline the expenditure of grant funds. However, GAO was unable to examine trends in obligations and expenditures for grant programs across fiscal years because the budget data FEMA provided did not specify grant expenditures by fiscal year and reporting categories were not consistent across fiscal years. Although DHS has taken some steps to establish goals, gather information, and measure progress, its monitoring of homeland security grant expenditures does not provide a means to measure the achievement of desired program outcomes. FEMA's current efforts do not provide information on the effectiveness of those funds in improving the nation's capabilities or reducing risk. DHS leadership has identified this issue as a high priority, and is trying to develop a more quantitative approach to accomplish the goal of using this information for the more strategic purpose of monitoring the achievement of program goals, according to FEMA officials.