DPS improperly diverted money between contracts for border security firm, review finds

Agency overchaged stimulus grant nearly $1 million, but returned the money the following year

By Jeremy Schwartz

AMERICAN-STATESMAN STAFF

Published: 9:40 p.m. Thursday, March 29, 2012

To cover the cost of a private border security contract in 2010, the Department of Public Safety improperly diverted nearly 
$1 million in federal stimulus funds that had been earmarked for a similar but different contract, a state review has found.

The following year, DPS returned the $936,509 to the federal grant account.

Both of the contracts had been awarded to the Virginia-based Abrams Learning and Information Systems. Reviewers said that, while in the end, the appropriate amount of money was spent on both contracts, the situation exposed issues with how DPS oversees its contracts.

The American-Statesman received the March 12 review by the Compliance and Oversight Division of the governor's office as part of a Texas Public Information Act request.

Since 2006, DPS has paid ALIS about $20 million under a series of emergency and other no-bid contracts to help build the state's border security apparatus and develop its border security strategies, an effort that included creating informational materials and helping shape the state's public message about what has been called spillover violence from Mexico, the Statesman has reported.

On Thursday, DPS officials said that the department used fact sheets and briefing materials supplied by ALIS, but it decided not to use the firm's suggested themes and messages about border violence after concluding it was "not necessary."

Outside of law enforcement, few state and local leaders were aware of the firm's role in Texas, and several border officials have questioned what they call a lack of transparency and accountability regarding the contracts. State Sen. José Rodríguez, D-El Paso, has called for the Texas comptroller's office to investigate DPS' contracts with the firm, which was founded in 2004 by retired Army Gen. John Abrams.

Last year, the Compliance and Oversight Division reviewed DPS' handling of more than $27 million in stimulus funding grants it received through the governor's Criminal Justice Division. That money included more than $6 million for the TXMap project, a high-tech tool to map border-related crime. ALIS was given a $3.3 million contract to work on the project.

But reviewers found that DPS overcharged the grant to pay ALIS for its work on a different contract that was not paid for with federal stimulus money.

DPS "had two contracts with ALIS, each of which involved similar deliverables," the review says. "TXDPS charged $936,509 of ALIS expenditures to the grant-related contract that pertained to the non-grant related contract because they were having trouble obtaining funds from the non-grant related funding source."

The review noted that after the overpayment was discovered, DPS reversed the payment, using another source of funds, which was not identified.

The review, which didn't reveal details about the second contract, also found that DPS' grants department did not keep copies of contracts to vendors and "as a result, its personnel are unaware whenever a contract amount is exceeded."

The review called for DPS to establish a process to make sure it does not exceed contract amounts in the future, which DPS officials said they would have in place by September.

In addition, DPS failed to post ALIS's $3.3 million TXMap award on Electronic State Business Daily, a state website on which state contracts and solicitations are posted, the review found. The state requires that all information technology contracts greater than $25,000 be posted there, according to the review. DPS officials told reviewers that "the procurement step was overlooked by the individual making the procurement."

The review comes on the heels of recent state audits, which, while not specifically targeting the ALIS contracts, reprimand DPS for its frequent use of emergency contracts and failure to solicit bids as required by state and federal rules.

In October 2009, DPS created a contract review board for large contracts and now requires that contracts larger than $1 million be reviewed by the Public Safety Commission. And earlier this year, DPS gave its office of general counsel formal contract management powers to assist all DPS divisions with contracts, officials said Thursday.

DPS improperly diverted money between contracts for border security firm, review finds