Auditor faults NY homeland security spending

WASHINGTON - An auditor faulted New York State for several aspects of its handling of $565 million in federal homeland security funds from 2006 to 2008, and questioned how New York City spent $4.3 million in grants, according to a report obtained by Newsday.

The long-awaited audit by the U.S. Department of Homeland Security inspector general, to be released Friday, said the New York Division of Homeland Security and Emergency Services generally did "an effective and efficient job" in administering DHS grants to local agencies in the state.

But the 50-page report said that "some improvements are needed," and it listed five areas that raised concerns and made 14 recommendations.

State Homeland Security director James Sherry, in a letter included in the report, rejected half of the recommendations, expressed disappointment in the audit and defended his agency in 10 pages of rebuttal. Sherry could not be reached for comment.

Issues the audit cited included:

State red tape delayed local agencies' grant spending by as long as a year, echoing a complaint by DHS Secretary Janet Napolitano last year.

The state has no good way to measure progress in meeting homeland security goals.

State and local agencies have no plans for alternative funding if federal funds dry up.

Some local agencies didn't keep adequate inventories of grant-purchased equipment.

The audit questioned the New York Police Department's use of $4.1 million to buy 145 homeland security products costing more than $10,000 each through a "confidential," noncompetitive system. The audit said that broke federal and state procurement rules.

And the audit called for disallowing $143,436 in grant money that the New York Fire Department paid to personnel to fill in for staff in training sessions because it based payments on a formula instead of actual costs.

Sherry disagreed with the police finding, saying New York City sets a threshold for bidding at $100,000, not $10,000.

And he disagreed with the fire salary finding. He said determining specific overtime costs is an "extremely difficult challenge," and that federal code allows the formula used.

DHS hired Foxx & Co., a Cincinnati CPA firm, to conduct the audit.