Audit Faults U.S. for Its Spending on Port Defense

By ERIC LIPTON

New York Times

February 19, 2005

WASHINGTON, Feb. 18 - The Department of Homeland Security has given hundreds of millions of dollars to protect ports since Sept. 11 without focusing on those ports that are most vulnerable, compromising the ability to defend against attacks, the department's inspector general has concluded.

The department distributed $517 million in grants for port security between June 2002 and December 2003, but less than a quarter of the money had been spent as of September 2004, the inspector general found in an audit. Despite the big price tag, "the program has not yet achieved its intended results in the form of actual improvement in port security," according to the audit.

The findings, released earlier this week, were the latest to criticize the Homeland Security Department's antiterrorism grant program, which has come under attack as setting poor priorities. For example, Wyoming has received four times as much antiterrorism money per capita than has New York, according to a Congressional report.

A Department of Homeland Security spokesman, citing the department's defense of the port grants that was included in the audit, declined requests for further comment.

Ninety-five percent of all international commerce enters the United States through the nation's approximately 360 public and private ports. But nearly 80 percent of that trade moves through only 10 ports, with the biggest loads passing through Los Angeles, Long Beach, New York and Oakland. That is why the nation's biggest ports are seen as particularly attractive as terrorist targets; severely damaging one of them would not only cause deaths and injuries and property damage, but could also disrupt the flow of basic goods into and out of the country, officials say.

However, the audit found that a number of questionable grants were made. Among these were awards to small ports, to inland ports and to projects that appeared to be more economic- than security-related.

The grant program was intended to limit awards to what were considered strategic ports, meaning terminals that handle a large volume of cargo, a high number of passengers, or that are next to military facilities or handle hazardous cargo.

After examining four separate rounds of port grants, the inspector general found that the department appeared to be intentionally distributing the money as widely as possible, instead of focusing it on the biggest ports or other locations that intelligence reports suggested were most likely to be future targets.

Major ports like New York, Los Angeles, Long Beach and Oakland received large allocations. But smaller grants went to ports in places like St. Croix in the Virgin Islands, Martha's Vineyard, Mass., Ludington, Mich., and six locations in Arkansas, none of which the audit said appeared to meet eligibility requirements. The department, as a result, "had no assurance that the program is protecting the nation's most critical and vulnerable port infrastructure and assets," the audit said.

Grants to ports are just a small piece in the more than $2.5 billion given out last year by Homeland Security to local and state governments, as well as private enterprises. The money is to be used to help prevent attacks and to help equip rescue and public safety personnel to respond to an attack.

The audit results appear to support criticism voiced last September by Senator Frank Lautenberg, Democrat of New Jersey, who complained in a letter to President Bush that the methods used to grant the awards did not make sense.

"Your administration awarded port security grants in the states of Oklahoma, Kentucky, New Hampshire and Tennessee," Mr. Lautenberg wrote. "While there may be some form of maritime facilities in these locations, I question whether, of the nation's 361 maritime ports, these locations are truly the front lines on the war on terror."

In California and New York, officials have repeatedly expressed frustration at what they have called a lack of sufficient federal financing for their port security projects. Senator Dianne Feinstein, Democrat of California, predicted in 2003 that with nearly half of all port trade going through her state, "there is an almost a one-in-two chance" that any radiological explosive device, known as a "dirty bomb" sent to the United States in a ship container would pass through California.

"Clearly, we need to allocate a considerable portions of seaport security resources to California ports to prevent or respond to such an attack," Ms. Feinstein wrote to the Department of Homeland Security.

In objecting to the findings, an administrator at Homeland Security, Anna F. Dixon, wrote that the grant program "continues to enhance security and address real or potential vulnerabilities in our nation's ports and waterways." She said the grants were given "where they are needed most to improve security in U.S. ports." But Ms. Dixon, who works for the department's chief financial officer, also stated that the department intended to adopt several of the recommendations to allocate the money in the future to the highest-risk ports.

Part of the problem, the audit found, is that the annual grants were given out based on applications submitted by individual ports and then awarded even when department staff members found that many of the submissions lacked merit. Instead of withholding money because of a shortage of viable projects, the department disbursed the money to finance dubious security initiatives, many of which are in the 70-page report. The grants are described in some detail, but the names of the winners and losers are not disclosed.

The questionable projects that were financed include:

¶$130,000 for a closed-circuit television system at one port, awarded even after the department ranked the project 27th of 29 applications and stated in its internal review documents that "these initiatives would be redundant to what the port authority has in place."

¶$180,000 to install security lights at a port that the department noted is a "small, remote facility that receives less than 20 ships per year."

¶$10,000 to one port for encrypted radios that field staff concluded were not needed and perhaps not compatible with federal and state radios.

Grants were also given to private projects that "appeared to be for a purpose other than security against an act of terrorism," the audit said, or to replace existing security.

At one port - next to which stood a entertainment pavilion that included restaurants, a hotel and spa - a $25,000 grant was given to install surveillance equipment and alarms, a project that the department had ranked last among the applications and that the auditors concluded "appears to support the normal course of business," and was unrelated to any potential terrorist threat.

In another case, a $935,000 grant was awarded for general security improvements to a port where an industrial park was being built, leading department staff members to question if the money was in fact an economic development grant, instead of antiterrorism financing.

The Department of Homeland Security requires that the grant money be spent within a year of the award, but few of the recipients met this provision, the report says. The auditors found that few of the projects were ready to start construction at the time of the award, despite the one-year requirement.