Texas Grossly Mismanages Federal Homeland and Border Security Funding

(Second in a new series on the outsourcing of Operation Border Star in Texas.)

The Texas State Auditor recently raised new questions and concerns about the unprofessional DPS management of federal funds and about the agency’s dubious contracting practices under the stewardship of Steven McCraw.

The independent report, which was commissioned by the state auditor and released in February 2012, found, among other violations, cases of stunning material weaknesses in DPS accounting, a pattern of noncompliance in following federal procedures, and an array of alarming deficiencies in reporting and monitoring federal funds.

The report highlights a pervasive and systemic mismanagement of federal funds by DPS, including eight duplicate payments to contractors, sloppy accounting, failure to open contracts to competitive bidding (while in at least one other case bypassing low bidder for a preferred one), routine reliance on emergency contracts to avoid contract renewal and bidding processes, and a persistent failure to communicate accounting and reporting guidelines to subrecipients of more than federal funds managed by DPS. 

(In 2010 DPS administered $397 million in federal revenues for subgrants and contracts.)

The audit reviewed a representative selection of cases among the $265.9 million in federal grants and subgrants to DPS -- in the areas of homeland security, border security, emergency management, and law enforcement interoperability.

Among the findings of negligence and incompetence were these startling instances:

• A draw down of $755,509 in federal funds to issue a duplicate payment to one subgrantee.
• Five of the six procurements (83%) examined by the auditor in the cluster of federal grants for homeland and border security were not bid competitively as required.
• DPS categorized four of the five procurements examined by the auditor as “emergency procurements,” and in three of those four DPS was unable to document why they were processed as “emergency” contracts.
• DPS has no system to track, administer, monitor federal subgrants – as federal guidelines require, leading to routine occurrences of duplicate payments, dipping into one federal fund to pay for unrelated programs, and failure to submit required reports and audits.
• Complete failure to track interest rates on unused federal funds and to remit those funds, as required by federal grant guidelines.
• Access to law-enforcement databases by contract programmers who lacked proper authorization or clearance.

Texas officials – including the governor, DPS chief, attorney general, and agriculture commissioner – frequently charge that the federal government has failed in its responsibility to control the Texas-Mexico border.

It is rarely acknowledged, however, how by these same critics how dependent Texas law enforcement and criminal justice agencies – including state’s homeland security department, DPS, governor’s criminal justice division, border sheriffs, agriculture department, and state prosecutors and courts – are on the continuing flow federal funds into Texas.

In fiscal year 2011 Texas received $57.5 billion in federal funding. That same year DPS relied on federal funding for approximately half its annual budget -- down from the 60% funding in 2010 when federal stimulus funds were still flowing.

The audit did not include the names of the private and local government recipients of DPS contracting and subgranting funds that were reviewed in the audit.

However, DHS and DOJ funding for homeland security, border security, and law enforcement interoperability have all been used to prop up the Texas model of border security – and to pay for the outsourcing of the building of the model and its implementation. It’s likely that the DPS contracts with ALIS, being one of the top-ranking DPS contractors, came under the scrutiny of the auditor.

The audit, which occurred during 2010, underscored problems with the type of DPS emergency contracting that benefited ALIS. The audit and its alarming findings have contributed to mounting cynicism and criticism about the Texas border security model and its outsourcing.

The audit raises fresh questions about McCraw’s ability to manage the large state agency. The shocking findings of DPS management of DHS and DOJ funding to support Texas homeland and border security programs also underscores rising skepticism about the “go-it-alone” and “can-do” boasting of the Texas border hawks critical of the Obama administration.