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In fiscal year 2006, the Department of Homeland Security (DHS) provided approximately $1.7 billion in federal funding to states, localities, and territories through its Homeland Security Grant Program (HSGP) to prevent, protect against, respond to, and recover from acts of terrorism or other catastrophic events. The Urban Areas Security Initiative (UASI) is a discretionary grant under this program, and since fiscal year 2003, Congress has directed DHS to target UASI funding to high-threat, high-density urban areas to assist in building capacity. To meet this requirement and inform funding decisions, DHS developed a method to estimate the relative risk of terrorist attacks to urban areas. From fiscal year 2003 through 2005, DHS used a number of risk indicators such as population density and threat to allocate UASI funds. UASI funding increased during this period from about $96 million to $830 million, while the number of urban areas that received grants grew from 7 to 43. In fiscal year 2006, DHS awarded approximately $711 million in UASI grants--a 14 percent reduction in funds from the previous year--while the number of eligible urban areas identified by the risk assessment decreased to 35. For fiscal year 2006, DHS made several changes to the grant allocation process, including modifying its risk assessment methodology, introducing an assessment of the anticipated effectiveness of investments, and combining the outcomes of these two assessments to inform funding decisions. The results of the UASI eligibility and funding allocations in fiscal year 2006 raised congressional questions and concerns about DHS's methods in making UASI determinations. Several congressional members requested that we examine aspects of DHS's UASI funding process, and the fiscal year 2007 DHS Appropriations Act directed us to examine the validity, relevance, reliability, timeliness, and availability of the risk factors (including threat, vulnerability, and consequence) used by the Secretary of Homeland Security for the purpose of allocating discretionary grants. On November 17, 2006, we responded to the mandate and the request by briefing congressional staff on the results of this review. We specifically examined (1) DHS's method of estimating relative risk of terrorism in fiscal year 2006; (2) DHS's process for assessing the effectiveness of the various risk mitigation investments submitted in UASI applications; (3) how DHS used estimated relative risk scores and assessments of effectiveness to allocate UASI grant funds in fiscal year 2006; and (4) what changes, if any, DHS plans to make in its UASI award determination process for fiscal year 2007.

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