Both the Department of Justice (Justice) and Department of the Treasury (Treasury) operate asset forfeiture programs that are designed to prevent and reduce crime through the seizure and forfeiture of assets that represent the proceeds of, or were used to facilitate, federal crimes. GAO reported in September 2012 that participating agencies within Justice and Treasury annually seize millions of dollars in assets from their law enforcement activities. Seized assets include cash and financial instruments, as well as noncash items such as real estate and vehicles.
In fiscal year 2011, the combined value of total assets in these two programs was about $9.4 billion, of which about $6.9 billion and $2.5 billion were assets under Justices and Treasurys management, respectively. Participating agencies of both programs also seize and hold illegal drugs, firearms, and counterfeit items that have no resale value to the government and are typically held by agencies until they are approved for destruction. Each department also maintains a separate forfeiture fund, where proceeds from forfeited assets are deposited. The Comprehensive Crime Control Act of 1984 established Justices Assets Forfeiture Fund and the Treasury Forfeiture Fund Act of 1992 established the Treasury Forfeiture Fund In addition, a series of laws have been enacted expanding forfeiture from drug offenses to money laundering, financial crimes, and terrorism-related offenses. These statutes authorize seizure and fund management activities, but do not prohibit coordination or consolidation of asset forfeiture property management activities.
In January 1990, GAO identified both the Justice and Treasury forfeiture programs as high-risk areas due in part to the potential for cost reduction through administrative improvements and consolidation of the programs management and disposition of noncash seized property. In 2003, GAO removed both programs from the high-risk list because Justice and Treasury had (1) made improvements in the management of and accountability for seized and forfeited property, and (2) demonstrated the commitment to communicate and coordinate where joint efforts could help reduce costs and eliminate potentially duplicative activities. For example, Justice and Treasury were moving toward better coordination of property management activities such as sharing website locations for Internet sales, sharing selected vehicle storage and warehouse facilities, and exploring opportunities to jointly contract for services in high-volume areas.
Within the context of the Justice and Treasury asset forfeiture programs, asset forfeiture is the transfer of title in property to the federal government by execution of a legal process that can be administrative, civil judicial, or criminal forfeiture. In a broader context, forfeiture means the involuntary relinquishment of money or property without compensation as a consequence of a breach or nonperformance of some legal obligation or the commission of a crime.
Total assets include cash and noncash assets, net investments, and fund balances.
Pub. L. No. 98-473, tit. II, §§ 310, 2303 (codified as amended at 28 U.S.C. § 524(c)). Monies deposited in the Assets Forfeiture Fund pay for the costs of operating the Justice Forfeiture Program.
Pub. L. No. 102-393, § 638 (codified as amended at 31 U.S.C. § 9703). The Treasury Forfeiture Fund is a successor to what was then the Customs Forfeiture Fund. Monies deposited in the Treasury Forfeiture Fund pay for the costs of operating the Treasury Forfeiture Program.
In determining whether a government program is high risk, GAO considers whether it involves national significance or a management function that is key to performance and accountability. GAO considers whether the risk is an inherent or systemic problem and qualitative factors, such as public health or safety, or whether the risk results in significantly impaired service. In addition, GAO also considers the exposure to loss in monetary or other quantitative terms.
In September 2012, GAO reported that since 2003, Justice and Treasury have taken some steps to explore coordinating forfeiture program efforts, including sharing a website for posting notifications and pursuing a contract for seizure efforts abroad. However, since 2003, Justice and Treasury have made limited progress in sharing storage facilities or contracts, and have not fully explored the possibility of coordinating the management of their assets that could be consolidated to achieve efficiencies, effectiveness, and cost savings. As a result, each department maintains separate information technology (IT) asset tracking systems, separate contracts for the management of real property and personal property, and separate storage facilities.
Justice and Treasury maintain four separate IT asset tracking systemsone for Justice and three for Treasuryto support their respective asset forfeiture programs. GAO found that all systems perform similar functions that are duplicative across federal agencies overseeing asset forfeiture programs. Treasury had intended to use the Justice asset tracking system and participated for 2 years in the design, development, and implementation of the system, but then withdrew to develop its own IT asset tracking system. Treasury officials said their own system was necessary to satisfy federal financial requirements. However, GAOs prior work shows that technology solutions can be used to consolidate IT systems that are common and duplicative, but information is needed to help effectively evaluate consolidation proposals and activities. For example, from 2001 to 2009, the federal payroll consolidation initiative consolidated 26 payroll systems to four shared-service centers. The Office of Personnel Management (OPM) estimated this consolidation would save the federal government $1.1 billion over 10 years. Further, in 1996, GAO reported that Treasury recognized that the Justice IT asset tracking system could be modified to meet the Treasury financial reporting requirements, but believed that developing a new system to meet the requirements was preferable. Justice and Treasury data show that the cost of developing, maintaining, and overseeing their four asset tracking systems in fiscal year 2011 totaled $16.2 million for the Justice asset tracking system and $10.4 million combined for the three Treasury asset tracking systems. While consolidation is beneficial in some situations, it is not in others. For example, consolidation initiatives can be complex, costly, and difficult to achieve. Thus, it is helpful to answer basic questions when considering consolidation. As a result, a case-by-case analysis is necessaryevaluating the goals of the consolidation against the realistic possibility of the extent to which those goals would be achievedto ensure effective stewardship of government resources in a constrained budget environment.
Justice and Treasury have made limited progress in consolidating their contracts for the management of real property and personal property. For example, the U.S. Marshals Service (Marshals)the primary custodian of Justices seized assetsreported using one national contract for the management of real property in all but three Marshals districts in fiscal year 2011. Similarly, Treasury uses one national contract, which includes maintaining and eventually disposing of the real property. Marshals and Treasury use different national contractors for the management of their real property. Additionally, for the management of personal property, Marshals takes a decentralized approach involving multiple contracts, while Treasury uses a centralized approach to manage personal property. In fiscal year 2011, Marshals multiple contracts for the management, storage, and disposal of personal and real property cost about $19 million, while the two nationwide contracts used by Treasuryone for the management of real property and one for the management of personal propertyprovided custodial services either directly or through subcontracts at a cost of about $49 million for fiscal year 2011. Marshals and Treasury have not evaluated the feasibility of consolidating these contracts and do not know if there could be improved effectiveness, efficiency gains, or cost savings realized because of economies of scale.
Justice and Treasury continue to separately store assets seized under their respective programs. Officials from both departments stated that the volume and types of properties seized by the participating agencies of each department vary. However, both departments seize similar assets such as vehicles, vessels, and aircraft, and in some cases, store these assets in the same geographic area. GAOs analysis of contracted asset storage facilitiesfor the storage of vehicles, vessels, and aircraftshowed that about 23 to 40 percent of Marshals and Treasurys contracted facilities for these three categories are within 20 miles or less of one another. For example, 40 percent of Treasury contracted vehicle storage facilities are located 20 miles or less from a Marshals contracted vehicle storage facility. This includes 4 facilities, managed by the same vendor, which Treasury shares with Marshals under separate contracts. GAOs prior work has shown that physical infrastructure consolidations can be achieved between two different departments in order to achieve cost savings. For example, the Department of Veterans Affairs (VA) and the Department of Defense (DOD) Federal Health Care Center began integrating VA and DOD medical care into a joint facility, resulting in savings of $11.2 million during the first two phases of the initiative.
Marshals and Treasury officials stated that they had not considered analyzing consolidation of their separate contracted storage facilities because of (1) the unique security requirements for their stored assets; (2) the variations in the types of assets that may create unique storage needs; (3) the different contracting rules and requirements for each agency; (4) the inability to accurately predict the combined storage needs of both agencies, which affects their ability to contract for these services; and (5) the overall lack of assurance that combining contracts will result in cost savings. However, as these officials said, the departments have not analyzed the similarities or differences in their security requirements, storage needs, or contracting rules. Thus, the extent to which variations in these factors actually hinder consolidation efforts is not known; and, as we have previously reported, agencies have benefited from studying the costs and benefits of consolidation. For example, when VA and DOD were determining whether to consolidate their facilities, they used a cost-benefit analysis to determine that the fully integrated facility would lead to an annual recurring savings of approximately $19.7 million.
Real property includes single-family homes, multifamily homes, businesses, and land.
Two of the three IT asset tracking systems used in the Treasury Forfeiture Program are owned and operated by the Department of Homeland Security.
In consolidating 26 payroll systems to four shared-service centers, the federal payroll consolidation initiative standardized payroll policies and procedures, and resulted in achieving cost effectiveness through economies of scale and the elimination of duplicative systems. GAO-12-542.
In May 2012, we reported on nine key questions to consider when evaluating consolidation proposals. They are (1) what are the goals of the consolidation; (2) what opportunities will be addressed through the consolidation and what problems, if any, will be created; (3) what will be the likely costs and benefits of the consolidation; (4) are sufficiently reliable data available to support a business-case analysis or cost-benefit analysis; (5) how can the up-front costs associated with the consolidation be funded; (6) who are the consolidation stakeholders, and how will they be affected; (7) how have the stakeholders been involved in the decision, and how have their views been considered; (8) do stakeholders understand the rationale for consolidation; and (9) to what extent do plans show that change management practices will be used to implement the consolidation?
There are 94 U.S. Marshals districts. According to Marshals officials, the 3 remaining districts used multiple vendors for the management of real property. Since 2011, Marshals began to decentralize the management of real property and as of January 2013 had three national contracts in place. According to Marshals officials, the agency plans to procure additional regional property management contracts in fiscal year 2013.
According to Marshals, $19 million is the approximate amount paid to vendors between October 1, 2010, and September 30, 2011, that stored, maintained, or disposed of assets over the same period of time. The $19 million does not include salaries of Marshals staff that perform tasks associated with asset management; however, the $49 million for the Treasury contracts includes the cost of contract personnel that perform asset management tasks.
In fiscal year 2011, Justice and Treasury were responsible for separately managing personal and real property valued at about $232 million. The departments use different asset tracking systems and separate contracts for the management of real property and personal property, and maintain separate contracted storage facilities that are frequently within 20 miles of a similar facility. While the agencies have taken some steps to coordinate forfeiture program efforts, the current constrained fiscal environment and the millions of dollars of assets involved underscores the need for the departments to examine how consolidating operations might contribute to cost savings or effectiveness gains. By conducting a study that takes into account the costs, benefits, and key questions to consider when evaluating consolidation proposals, the departments could have critical information to better identify whether increased efficiencies, effectiveness, and cost savings can be realized.
GAO recommended in its September 2012 report that the Attorney General and the Secretary of the Treasury should take the following action:
While the potential for cost savings or efficiency gains in consolidating asset management activities cannot be known until a study is completed, GAOs prior work illustrates that consolidating physical infrastructure or management functions, such as IT services, could lead to cost savings and efficiency gains.
The information contained in this analysis is based on findings from the product in the related GAO product section. To determine the extent to which there may be areas of duplication between the programs, GAO reviewed the asset forfeiture process to determine the different activities undertaken within the programs. GAO focused on the postseizure activities of managing assetsin particular, the use of asset tracking systems and contracted storage facilities. With regard to IT asset tracking systems, GAO reviewed and analyzed technical information, observed a demonstration of each system, and interviewed agency officials responsible for operating each system. With regard to contracted storage facilities, GAO reviewed the total cost of department contracts for the management of real property and personal property. In addition, GAO analyzed data, as of June 2012, on contract vendors used by both Justice and Treasury to manage three categories of seized and forfeited personal property assetsvehicles, vessels, and aircraftand analyzed the addresses of these vendors to determine the geographic proximity of the two agencies facilities. Table 8 in appendix IV lists the programs GAO identified that might have similar or overlapping objectives, provide similar services, or be fragmented across government missions. Overlap and duplication might not necessarily lead to actual duplication, and some degree of overlap and duplication may be justified.
In commenting on the September 2012 report on which this analysis is based, Justice and Treasury both agreed with GAOs recommendation to conduct a study and stated that they will be taking actions to address it. Treasury also noted that the Department of Homeland Security (DHS) would need to be consulted as part of the study since DHS owns and operates two of the IT asset tracking systems used in the Treasury program. After the report was issued, Justice and Treasury formally notified Congress that they are actively working together and expect to conduct a joint study to assess the feasibility of consolidation in the areas of asset management and asset tracking systems. Justice and Treasury added that the study will take into account the costs, benefits, and key questions to consider in order to determine whether consolidation could result in increased efficiencies, effectiveness, and cost savings.
GAO provided a draft of this report section to Justice and Treasury for their review and comment. Justice provided technical comments, which were incorporated as appropriate.
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