Appropriators probe Federal Protective Service budget 'crisis'

Congressional appropriators are seeking explanations of how the Homeland Security Department agency that helps guard federal buildings developed a multimillion-dollar budget shortfall in fiscal 2006, and how similar problems can be avoided this fiscal year.

The conference report accompanying the final version of the fiscal 2007 Homeland Security spending bill (H.R. 5441), passed by the House and Senate late Friday night and signed by President Bush Wednesday, instructs DHS Secretary Michael Chertoff and Office of Management and Budget officials to detail "the extent and cause of any budgetary shortfall" at FPS for the just-ended fiscal year in a report submitted by Nov. 1. The report also must address "how [DHS] will fix FPS financial, procurement and accounting processes and policies," and must be updated by April 30, 2007.

DHS "failed to evaluate and properly set fees for fiscal year 2006, allowing a festering funding imbalance to explode into full-blown crisis, forcing reductions in other homeland security priorities," appropriators said.

The forecast from DHS for the coming fiscal year is not any better, the conference report hinted: "[DHS] has indicated FPS could face even larger shortfalls in fiscal year 2007."

Multiple sources within FPS management have told Government Executive that the agency will need to increase what it charges other agencies for security services by as much as 63 percent to accommodate rising costs.

One senior management source at FPS said the increased attention to its budget in recent months is "good news, for a change." The source said FPS made oft-ignored pleas to its parent agency -- the Immigration and Customs Enforcement bureau -- in an attempt to resolve shortfalls, which were expected to exceed $42 million for fiscal 2006.

Other sources at ICE and FPS said the cash-strapped agency has fallen far behind on its debts to the security companies with which it holds contracts. One source, who asked to remain anonymous, said the only remaining funds the agency has are those needed to pay employees. This situation occurred in part because so many federal departments and agencies have failed to make timely payments for the security FPS provides, the source said.

In San Francisco, FPS' vehicle fleet was evicted from a parking garage because the agency was months behind on payments, the source said. Officials said they now have to park on the streets, leaving government vehicles as targets for vandalism.

Another source noted that the spending legislation projects that FPS will collect $567 million during fiscal 2007, which started Oct. 1. But that estimate reflects what other agencies and departments will owe, and not necessarily what actually will be paid. If agencies and departments continue to make late payments, FPS may collect as little as half of the projected amount, which would exacerbate shortfalls, the source said.

Appropriators also warned DHS "to ensure no [funding] transfers are used to cover basic FPS operations, activities and investment." The department has suggested transfers to remedy previous shortfalls. Instead, the agency is expected to cover its "2007 costs by the fees [it] assesses and collects from the federal agencies whose facilities it protects."

ICE in August hired auditors to look into the protective service's finances, and last month FPS offered buyouts to an unspecified number of employees. One source familiar with the agency's operations said that fewer employees than expected have accepted the buyouts, citing inadequate incentives.

DHS officials acknowledged the appropriators' requests and said they already are preparing the report.

"ICE is working actively with Congress, the administration and [DHS] to ensure a long-term funding solution for FPS," spokesman Ronald Boyd said. "Furthermore, ICE is actively engaged and working closely with DHS on the report."