Homeland Security Grants: FY2003-FY2006 Evolution of Program Guidance and Grant Allocation Methods

Homeland Security Grants: FY2003 - FY2006
Evolution of Program Guidance and Grant
Allocation Methods
Updated March 8, 2007
Shawn Reese
Analyst in American National Government
Government and Finance Division



Homeland Security Grants: FY2003 - FY2006 Evolution
of Program Guidance and Grant Allocation Methods
Summary
On May 31, 2006, the U.S. Department of Homeland Security (DHS) announced
FY2006 allocations of federal homeland security assistance to states and urban areas.
That assistance is made available through the following three programs:
!the State Homeland Security Grant Program (SHSGP), which is
designed to fund state homeland security strategy activities to build
first responder and emergency management capabilities to prevent,
protect against, respond to, and recover from acts of terrorism and
catastrophic events;
!the Law Enforcement Terrorism Prevention Program (LETPP),
which focuses on law enforcement and public safety activities to
prevent terrorist attacks through such activities as intelligence
gathering, information sharing, and target hardening; and
!the Urban Area Security Initiative (UASI), which is designed to
fund designated high-threat, high-risk urban-area activities to
prevent, protect against, and respond to terrorist attacks and
catastrophic events.
The programs provide funds to address planning, operations, equipment, training, and
exercise needs of states and high-threat, high-density urban areas. The purpose of the
set of programs is to help recipients build and sustain first responder and emergency
management capabilities to prevent, protect against, respond to, and recover from
terrorist attacks and catastrophic events. The USA PATRIOT Act guarantees each
state an amount of 0.75% of total SHSGP and LETPP appropriations. The remaining
appropriation and the appropriation for UASI grants are allocated at the discretion
of the Department of Homeland Security.
This CRS report explains the FY2003 through FY2006 administrative guidance
that governed the three homeland security assistance programs, discusses the changes
in DHS requirements for grant applications and subsequent reporting by recipients,
describes the DHS grant allocation methods, and identifies pertinent oversight
questions that may be of interest to Congress. For information on FY2007 homeland
security grant guidance, see CRS Report RL33859, Fiscal Year 2007 Homeland
Security Grant Program Guidance, H.R. 1, and S. 4: Description and Analysis, by
Shawn Reese and Steven Maguire.



Contents
In troduction ..................................................1
Administration Guidance........................................2
National Preparedness Goal..................................3
National Preparedness Guidance..............................4
Planning Scenarios.....................................5
Universal Task List....................................6
Target Capabilities List.................................7
State and Urban Area Reporting and Application Requirements.........8
State and Urban Area Homeland Security Strategies..............9
Program and Capability Enhancement Plan......................9
Investment Justification.....................................9
Categorical Assistance Progress Report.......................10
Allocation Methods...........................................11
Risk ...................................................11
Effectiveness ............................................15
Appendix A. FY2003-FY2006 DHS Grant Allocation Methodologies.......22
List of Tables
Table 1. DHS Reporting Requirements, FY2006.........................8
Table 2. Asset Types Used in Asset-Based Risk Calculations..............12
Table 3. DHS’s Risk Calculation Geographic Attributes..................14



Homeland Security Grants: FY2003 -
FY2006 Evolution of Program Guidance and
Grant Allocation Methods
Introduction
On May 31, 2006, the U.S. Department of Homeland Security (DHS) announced
FY2006 allocations of federal homeland security assistance to states and urban
areas.1 That assistance was made available through the following three programs:
!the State Homeland Security Grant Program (SHSGP), which is
designed to fund state homeland security strategy activities to build
first responder and emergency management capabilities to prevent,
protect against, respond to, and recover from acts of terrorism and
catastrophic events;
!the Law Enforcement Terrorism Prevention Program (LETPP),
which focuses on law enforcement and public safety activities to
prevent terrorist attacks through such activities as intelligence
gathering, information sharing, and target hardening; and
!the Urban Area Security Initiative (UASI), which is designed to
fund designated high-threat, high-risk urban-area activities to
prevent, protect against, and respond to terrorist attacks and
catastrophic events.
The programs provided funds to address planning, operations, equipment, training,
and exercise needs of states and high-threat, high-density urban areas. The purpose
of the set of programs was to help recipients build and sustain first responder and
emergency management capabilities to prevent, protect against, respond to, and
recover from terrorist attacks and catastrophic events. The USA PATRIOT Act
guarantees each state an amount of 0.75% of total SHSGP and LETPP
appropriations.2 The remaining appropriation and the appropriation for UASI grants3
were allocated at the discretion of the Department of Homeland Security.
This CRS report explains the FY2003 through FY2006 administrative guidance
that governed the three homeland security assistance programs, discusses the changes
to DHS requirements for grant applications and subsequent reporting by recipients,


1 U.S. Department of Homeland Security, FY2006 State and Local Homeland Security Grant
Awards, [http://www.dhs.gov/interweb/assetlibrary/grants_st-local_fy2006.pdf], p. 2.
2 P.L. 107-56, Sec. 1014.
3 P.L. 109-90 (FY2006 DHS appropriations), Title III.

describes the DHS grant allocation methods, and identifies pertinent oversight
questions that may be of interest to Congress.
Almost immediately after DHS announced the FY2006 allocations, some states
and urban areas, and their congressional delegations pointed out reductions in grants
as compared to FY2005.4 Some Members of Congress raised questions about the
suitability of the methods DHS used to allocate the grants, and they pursued those
questions in congressional oversight hearings.5
The DHS method for allocating the discretionary SHSGP and LETPP amounts
has evolved since the department’s inception in March 2003. Before FY2006, the
department allocated the SHSGP and LETPP remainders in direct proportion to state
population. It allocated UASI grants, however, using the following indicators of risk:
credible threat, presence of critical infrastructure, vulnerability, population,
population density, law enforcement investigative and enforcement activity, and the
existence of formal mutual aid agreements among jurisdictions. Beginning in
FY2006, however, DHS allocated the discretionary amounts available through all
three programs based on departmental assessments of risk and the effectiveness of the
recipients’ proposed solutions to their identified homeland security needs.6 (See
Appendix A for time lines for each of the three programs.)
Administration Guidance7
The three programs that provide homeland security assistance to states and
urban areas are governed by law and by an evolving framework of administrative
documents. The administrative guidance is embodied in Homeland Security
Presidential Directives 5 (February 28, 2003), 7 (December 17, 2003), and 8
(December 17, 2003); the National Strategy for Homeland Security; the National
Preparedness Goal; Capabilities-Based Planning Tools (December 17, 2004);
National Preparedness Guidance (December 2005); and annual Homeland Security
Grant Program Guidance and Application Kits (November 2002; November 2003;
December 2004; December 2005), which detail federal, state, local, and non-federal
entities’ responsibilities to prevent, protect against, respond to, and recover from
terrorist attacks and catastrophic events. The annual program guidance requires
applicant states and urban areas to describe their homeland security objectives, goals,
first responder and emergency management capabilities, and need for federal


4 See as examples “Lieberman Assails Homeland Security Grant Distribution,” States News
Service, May 31, 2006; and Lara Jakes Jordan, “N.Y., D.C. Get Less Counterterror Funds,”
Associated Press, May 31, 2006.
5 Two hearings have been held since DHS announced state and urban area grant allocations
on May 31, 2006 — the House Committee on Government Reform hearing on grants for the
National Capital Region, June 15, 2006; and the House Committee on Homeland Security
hearing on DHS grants, June 21, 2006.
6 U.S. Department of Homeland Security, Office for Grants and Training, FY2006
Homeland Security Grant Program Fact Sheet: Overview (Washington: May 2006), p. 2.
7 The majority of information found in this section is from CRS Report RL32803, The
National Preparedness System: Issues for the 109th Congress, by Keith Bea.

homeland security assistance. The most immediately pertinent guidance is discussed
below.
National Preparedness Goal. Homeland Security Presidential Directive
8 (HSPD-8) requires the DHS Secretary to develop a National Preparedness Goal
(NPG) to improve the nation’s capabilities and practices to ensure that adequate
resources exist to respond to a catastrophe. The directive sets forth the following
specific task:
The national preparedness goal will establish measurable readiness priorities and
targets that appropriately balance the potential threat and magnitude of terrorist
attacks, major disasters, and other emergencies with the resources required to
prevent, respond to, and recover from them. It will also include readiness
metrics and elements that support the national preparedness goal including
standards for preparedness assessments and strategies, and a system for assessing
the nation’s overall preparedness to respond to major events, especially those8
involving acts of terrorism.
DHS has issued several versions of draft preparedness goals in accordance with
the statutory mandate in the FY2005 and FY2006 DHS appropriations acts, as well
as HSPD-8. The most recent, issued in December 2005, supersedes its predecessors.
The National Preparedness Goal:
!aims at engaging federal, non-federal, non-governmental entities,
and the public in efforts to enhance their capability for preventing,
responding to, and recovering from attacks, disasters, and
emergencies;
!uses and supports the National Response Plan and the National
Incident Management System (NIMS) and the National
Infrastructure Protection Plan;
!incorporates an all-hazards, risk-based approach that encourages
officials to strengthen capabilities, and establishes national priorities
in emergency preparedness; and
!seeks to clarify the roles and responsibilities of federal and non-9
federal entities.
The document emphasized that preparedness is a shared responsibility of all
units of government, it declared the Administration’s intent to publish additional
guidelines in 2005, and it presented seven national preparedness priorities:
!Implement the National Incident Management System and the
National Response Plan;


8 U.S. President (Bush), “National Preparedness,” Homeland Security Presidential Directive

8, Dec. 17, 2003, Sec. 6.


9 U.S. Department of Homeland Security, National Preparedness Goal [draft], Dec. 2005,
pp. 1-12.

!Expand regional collaboration;
!Implement the National Infrastructure Protection Plan;
!Strengthen information sharing and collaboration capabilities;
!Strengthen interoperable communications capability;
!Strengthen Chemical, Biological, Radiological, Nuclear, and
Explosives (CBRNE) detection capabilities; and
!Strengthen medical surge capabilities.10
Possible Oversight Issues. The NPG is to “guide the nation in achieving its
vision for preparedness.”11 Arguably, the NPG is one of the more important DHS
documents issued to create an effective system that integrates federal, state, and local
preparedness efforts. In FY2006, state and urban areas were required to submit
Homeland Security Strategies, Program and Capability Enhancement Plans, and
Investment Justifications (discussed elsewhere in this report) to be eligible for federal
homeland security assistance. Some critics assert that states and urban areas have
prepared these documents without necessary federal guidance. For example, a study
released by the Government Accountability Office (GAO) concluded that the lack of
preparedness standards presented a “challenge,” and that “efforts by state and local
jurisdictions to prioritize expenditures to enhance first responder preparedness have
been hindered by the lack of clear guidance in defining the appropriate level of
preparedness and setting priorities to achieve it.”12
!Issue: What role have state and local officials played in the NPG
development process? Were they given the opportunity to provide
feedback on the NPG while it was in development?
!Issue: How were state and local homeland security priorities taken
into account in the NPG development? How were federal, and state
and local priorities reconciled?
!Issue: Will state and local homeland security concerns be given
lower priority if states and localities are to focus their preparedness
efforts on meeting NPG standards to receive federal assistance?
National Preparedness Guidance. The National Preparedness Guidance,
issued as a companion document to the National Preparedness Goal, provides


10 Ibid., pp. 13-20.
11 Ibid., p. 2.
12 U.S. Government Accountability Office, Homeland Security: Management of First
Responder Grant Programs Has Improved, but Challenges Remain, GAO Report GAO-05-

121 (Washington: Feb. 2005), p. 18.



instructions and guidance on how to implement the goal. The National Preparedness
Guidance is to evolve and be reissued as needed to reflect (1) changes in the National
Priorities and (2) further development of the Capabilities-Based Planning Process and
associated tools.13 The Guidance introduces the National Planning Scenarios,
Universal Task List (UTL), and Target Capabilities List (TCL), and reviews
assessment standards for preparedness efforts. Use of the Guidance, particularly
through the use of the assessment metrics, is intended to ensure that preparedness
resources are used effectively and that a better understanding is developed of the
emergency preparedness capabilities at all levels of government.
The assessment process set forth in the Guidance comprises the following four
elements:
!COMPLIANCE ASSESSMENT — a checklist of whether federal and
non-federal entities have accomplished specified requirements;
!CAPABILITY ASSESSMENT — initially based on a sampling of states
and sub-state regions;
!NEEDS ASSESSMENT — the identification of resource needs based on
capability assessments; and
!PERFORMANCE ASSESSMENT — measured through after-action
reports and documentation of performance in exercises and
emergencies.
Possible Oversight Issues. As the Guidance continues to evolve based on
capabilities review at the federal and state levels, first responder and emergency
management entities are to respond by adapting their plans accordingly.
!Issue: To what extent have state and local officials been part of the
Guidance development process?
!Issue: As DHS continues to conduct capability reviews and develop
the Guidance, to what extent will states and urban areas have
opportunities to provide input before they are expected to adjust
their plans following changes in the Guidance?
Planning Scenarios. DHS developed 15 scenarios to assess the emergency
response and preparedness capabilities of state, local, and tribal governments. The
scenarios were not developed to identify events that may occur. Instead, they are
intended to facilitate efforts by all government agencies to assess the full range of
needs that might be manifested were similar events actually to occur. Some of the
scenarios include nuclear detonation, biological attack, chemical attack, natural
disaster, radiological attack, explosive attack, or cyber attack. Each scenario is
accompanied by descriptions of impacts and consequences. Also, eight mission areas


13 U.S. Department of Homeland Security, National Preparedness Guidance (Washington:
Apr. 2005), p. 1.

are discussed for each scenario in order to outline the types of responses that might
be expected.14
According to NPG, “catastrophic WMD scenarios predominate since they
present the gravest threat to our national interests and generally require capabilities
for which the nation is currently the least prepared.”15 The scenarios depict events
that might require federal involvement and coordination; such events are referred to
as Incidents of National Significance.
Possible Oversight Issues. Some have questioned whether the emphasis by
DHS on terrorist attacks indicates that the NPG, the Guidance, and Planning
Scenarios are disproportionately oriented toward terrorist attacks and away from the
more frequently occurring catastrophes, natural disasters. Some might argue that the
terrorism focus of the DHS preparedness guidance and its associated grant programs
constitute a shift from the “all-hazards” approach.
!Issue: Is there a conflict between terrorism-focused preparedness
guidance and grants with all-hazards planning? Is “all-hazards”
planning dominated by terrorism concerns?
!Issue: Should federal preparedness guidance and assistance
programs be refocused to place greater emphasis on an all-hazards
approach?
!Issue: If a state or an urban area focuses its HSGP application on all-
hazards, will it receive less funding, even if the state or urban area
has a greater terrorism risk than other states or urban areas?
Universal Task List. State and local governments must be deemed able to
implement certain tasks involving the delivery of services, needs assessments,
organizational requirements, and other requirements in order to receive federal
homeland security assistance in FY2006. The Universal Task List (UTL) identifies
the operations and tasks expected to be performed were events similar to those set out
in the planning scenarios to occur. Five categories organize the tasks in the UTL —
National Strategic Tasks; Planning; Coordination and Support; Incident
Management; and Incident Prevention and Response.
Possible Oversight Issues. Not all jurisdictions are expected to accomplish
every UTL task. Terrorist attacks and catastrophic events require coordinated
intergovernmental and interjurisdictional responses. The UTL identifies the range
of tasks that responding agencies and entities, in mutual aid agreements, are expected
to accomplish. Training and exercise programs (funded through SHSGP, LETPP,


14 The eight mission areas are: Prevention/Deterrence/Protection; Emergency
Assessment/Diagnosis; Emergency Management/Response; Incident/Hazard Mitigation;
Public Protection; Victim Care; Investigation/Apprehension; and Recovery/Remediation.
15 U.S. President (Bush), “National Preparedness,” Homeland Security Presidential Directive

8, Dec. 17, 2003.



and UASI) are expected to be based upon the UTL and related mission
requirements.16
!Issue: If DHS does not expect individual jurisdictions to accomplish
all of the tasks and if they do not have to meet every UTL standard,
how are those jurisdictions and states to be judged “capable”? Will
the inability to meet every UTL standard affect their grant
allocations?
!Issue: Will DHS or states have primary responsibility for identifying
the UTL task areas that require priority in training efforts? Will
DHS prioritize funding, from its homeland security assistance
programs, to states that are determined to be in need of the training?
Target Capabilities List. The Target Capabilities List (TCL) identifies and
describes the “critical” capabilities that must be performed during Incidents of
National Significance in order to reduce losses and successfully respond to a disaster,
regardless of cause.17 Like the UTL, the TCL is based upon the 15 planning
scenarios; but the capabilities are expected to be used for all catastrophes, not just
those identified in the scenarios. The TCL identifies 36 target capabilities, each of
which is associated with the tasks set out in the UTL. Among the capabilities
identified in the TCL are all hazards planning, criminal investigation and
intervention, critical infrastructure protection and risk management, and emergency
response communications.18
Possible Oversight Issues. The TCL establishes expected qualifications to
be possessed by state and local governments. It also notes that the “UTL and TCL
will be enhanced, revised, and strengthened with periodic input from all levels of19
government....” This might indicate that the expected levels of TCL proficiency
may shift and be subject to negotiation. The TCL also states that a “detailed training20
analysis for the target capabilities” will be conducted.
!Issue: To what extent will jurisdictions be expected to be competent
in specific capabilities, considering that a state or an urban area’s
grant application is partially scored on its effectiveness to enhance
targeted capabilities?
!Issue: If expected TCL proficiency may shift, how is a state or
urban area to show TCL effectiveness in its grant application?


16 U.S. Department of Homeland Security, Office for Domestic Preparedness, Universal
Task List 2.0 (Washington: 2005), p. iv.
17 U.S. Department of Homeland Security, Office for State and Local Government
Coordination and Preparedness, Target Capabilities List: Version 1.0 (Washington: 2005).
18 Ibid.
19 Ibid., p. 5.
20 Ibid., p. 6.

State and Urban Area Reporting and
Application Requirements
When DHS was established and its initial assistance programs for state and
urban area governments were created, only two documents were required to support
assistance applications — a State Homeland Security Strategy and a follow-up
Categorical Assistance Progress Report. Criteria for the Strategy were established
by the new department, but the progress report was carried over from the Department
of Justice (DOJ) along with programs that were transferred from DOJ into the new
Department of Homeland Security. In FY2003, DHS required states and urban areas
to submit an equipment budget worksheet with their grant applications. The
worksheet was to list the equipment to be purchased, the number of items, the
estimated total cost, and the first responder entity that would receive the equipment.21
In FY2004, however, DHS stopped requiring the equipment budget worksheet. In
the DHS appropriations act of FY2006, approved on October 18, 2005, Congress
gave the DHS Secretary the discretion to require additional reports from assistance
reci pi ent s . 22
Table 1. DHS Reporting Requirements, FY2006
DocumentsRequired Contents
As part of the application process
Homeland Security StrategyHomeland security goals and objectives
Program and Capability EnhancementPlans to achieve or enhance first
Planresponder and emergency management
capabilities
Investment JustificationHomeland security needs based on
strategies and Enhancement plans
Plans to address homeland security
needs, and goals and objectives
Accountability following assistance
allocation
Categorical Assistance Progress ReportSemiannual progress toward meeting
homeland security goals and objectives
Source: U.S. Department of Homeland Security, Office for Grants and Training, Fiscal Year 2006
Homeland Security Grant Program: Program Guidance and Application Kit.


21 U.S. Department of Homeland Security, Office for Domestic Preparedness, Fiscal Year
2003 State Homeland Security Grant Program: Program Guidance and Application Kit
(Washington: Dec. 2002), p. 9.
22 P.L. 109-90 (FY2006 DHS appropriations), Title III.

Pursuant to that discretionary authority, DHS currently requires the following
documents from states and urban areas: a State Homeland Security Strategy; a
Program and Capability Enhancement Plan; an Investment Justification; and a
Categorical Assistance Progress Report. The required contents of each of these four
documents are shown in Table 1, and they are discussed below.
State and Urban Area Homeland Security Strategies. The homeland
security strategies required for homeland security grant applications from states and
urban areas are roadmaps that identify state and urban area homeland security goals
and objectives for the fiscal year. The goals and objectives are based on the
applicants’ self-assessments of their homeland security risks, threats, and needs.
Within the strategy, states and urban areas are to provide information on how
they plan to use federal assistance to meet their goals and objectives. The strategy
is not required to include a list of specific equipment, training, plans, and exercises
the applicant proposes. The strategy matches federal assistance with a state or urban
area homeland security goal or objective. As a condition for FY2006 funding, DHS
required states and urban areas to update the homeland security strategies they
prepared for previous grant applications.23
Program and Capability Enhancement Plan. The Enhancement plan is
to outline how states and urban areas intend to achieve or enhance their first
responder and emergency management capabilities identified on the Target
Capabilities List (TCL). The TCL, which is part of the National Preparedness
Guidance,24 is a list of activities and abilities that state and urban area first responder
and emergency management entities need to be able to perform in the event of a
terrorist attack or disaster. Among the needed TCL capabilities are community
preparedness, risk management, law enforcement operations, information sharing,
critical infrastructure protection, and emergency operations center management.
The plan must be provided to DHS prior to the department’s determination of
the applicant’s federal assistance allocation. The plan does not list specific
equipment, training, plans, or exercises. The plan identifies TCL capabilities that
states and urban areas intend to achieve or enhance with federal homeland security
assistance.
Investment Justification. Another document DHS requires prior to
allocating state and urban area federal assistance is the Investment Justification. The
justification lists state and urban area homeland security needs that are identified
during the development of the Program and Capability Enhancement Plan. The
justification outlines implementation plans that will assist states and urban areas to


23 U.S. Department of Homeland Security, Office for Grants and Training, Fiscal Year 2006
Homeland Security Grant Program: Program Guidance and Application Kit (Washington:
Dec. 2005), p. 52.
24 U.S. Department of Homeland Security, Office for Grants and Training, National
Preparedness Goal (Washington: Mar. 2005).

enhance and develop their homeland security capabilities.25 As with the Strategy and
Enhancement plan, the justification is not required to include specific information on
state and urban area expenditures, but identifies need for federal assistance, and how
assistance will be used to meet homeland security goals, objectives, and capabilities.
These three documents — the State Homeland Security Strategy, the Program
and Capability Enhancement Plan, and Investment Justification — are part of the
assistance application and are considered by DHS when determining funding
allocations.
Categorical Assistance Progress Report. Following allocation of
federal assistance, DHS requires states and urban areas to report twice a year on how
they used their federal assistance allocations to meet their homeland security goals
and objectives, as identified in each one’s Strategy.26 The reports are to present
information on the state’s or urban area’s progress in achieving its homeland security
goals and objectives, but it is are not required to list specific homeland security
expenditures.
Possible Oversight Issues. During the early years of federal homeland
security assistance, DHS required recipients to report expenditures for homeland
security equipment, plans, training, or exercises. Those expenditure reports are no
longer required. Some critics could argue that this absence of information on state
and urban area expenditures might result in DHS being incompletely apprised of state
and local homeland security activities, and such a lack of information would impede
the department’s determination of whether the nation’s homeland security needs were
being met effectively and efficiently. For example, GAO’s Director of Homeland
Security and Justice Issues, William O. Jenkins, Jr., made the following statement27
before California’s Little Hoover Commission:
In the last several years, the federal government has awarded some $11 billion
in grants to federal, state, and local authorities to improve emergency
preparedness, response, and recovery capabilities. What is remarkable about the
whole area of emergency preparedness and homeland security is how little we
know about how states and localities (1) finance their efforts in this area, (2)
have used their federal funds, and (3) are assessing the effectiveness with which28


they spend those funds.
25 U.S. Department of Homeland Security, Office for Grants and Training, Fiscal Year 2006
Homeland Security Grant Program: Program Guidance and Application Kit, p. 52.
26 Ibid., p. 65.
27 The Little Hoover Commission is a bipartisan, independent California commission that
promotes efficiency and effectiveness of state programs. For more information, see
[ h t t p : / / www.l h c . c a . go v/ l h c .ht ml ] .
28 U.S. Government Accountability Office, Center for Homeland Security and Justice Issues,
Director, William O. Jenkins, Jr., “Emergency Preparedness and Response: Some Issues and
Challenges Associated with Major Emergency Incidents,” GAO Report GAO-06-467T
(Washington: GAO, Feb. 2006), p. 13.

On the other hand, one could argue that with all the other information that it requires,
DHS does not need to know specific state and urban area expenditures.
!Issue: Do the present state and urban area reporting and application
requirements provide sufficiently comprehensive information to
ensure that federal homeland security assistance is used in a manner
that contributes to homeland security?
!Issue: What are the advantages and disadvantages of requiring states
and urban areas to submit a detailed list of homeland security
expenditures?
Allocation Methods
In FY2006, DHS allocated the discretionary portions of SHSGP and LETPP
grants and all UASI grants on the basis of two factors: risk and effectiveness.
Risk. DHS defines risk as a function of three variables:
!THREAT — “the likelihood of a type of attack that might be
attempted”;
!VULNERABILITY — “the likelihood that a terrorist would succeed
with a particular type of attack”; and29
!CONSEQUENCE — “the potential impact of a particular attack.”
DHS calculates two kinds of risk: asset-based risk, which uses threat values
derived from the U.S. intelligence community’s assessment of threats to specific
critical infrastructure, and geographic-based risk, which uses values based on
inherent risks associated with geographic areas, taking into account such factors as
international borders, terrorism reports and investigations, and population density.
DHS describes its approach to asset-based risk as follows:
The asset-based approach uses strategic threat estimates from the Intelligence
Community of an adversary’s intent and capability to attack different types of
assets (such as chemical plants, stadiums, and commercial airports) using
different attack methods. DHS analyzes the vulnerability of each asset type
relative to each attack method to determine the form of attack most likely to be
successful.
Additionally, DHS estimates the consequences that successful attacks would
have on each asset type, including human health, economic, strategic mission,
and psychological impacts. This analysis yields a relative risk estimate for each
asset type, which DHS applies to a given geographic area, based on the number30


of each asset type present within that area.
29 U.S. Department of Homeland Security, Office for Grants and Training, FY2006 HSGP
Fact Sheet: Risk Analysis (Washington: May 2006), p. 2.
30 Ibid.

The department explains its complementary “geographic-based risk calculations” as
follows:
The geographic-based approach allows DHS to consider general characteristics
of a geographic area mostly independent of the assets that exist within that area.
First, DHS evaluates reported threats, law enforcement activity (using Federal
Bureau of Investigation and Immigration and Customs Enforcement terrorism
case data), and suspicious incidents reported during the evaluation period. Next,
DHS considers vulnerability factors for each geographic area, such as the area’s
proximity to international borders.
Lastly, DHS estimates the potential consequences of an attack on that area,
including human health (e.g., population, population density, transient
populations), economy (e.g., percentage of Gross Domestic Product, total
agriculture sales, international cargo value), strategic mission (e.g., defense31
industrial base), and psychological impacts.”
Table 2, below, presents state and urban area assets that DHS considered in the risk
model for its grant allocation method.
Table 2. Asset Types Used in Asset-Based Risk Calculations
Asset typesStateassetsUrbanarea assets
Chemical manufacturing facilities##
City road bridges##
Colleges and universities##
Commercial airports##
Commercial shipping facilities##
Convention centers##
Dams##
Electricity generation facilities##
Electrical substation##
Enclosed shopping malls##
Ferry terminals##
Financial facilities##
Hospitals##
Hotel casinos##
Levees##


31 Ibid.

Asset typesStateassetsUrbanarea assets
Liquefied natural gas terminals##
Maritime port facilities##
Mass transit commuter rail and subway stations##
National Health Stockpile sites##
National monuments and icons##
Natural gas compressor stations##
Non-power nuclear reactors##
Nuclear power plants##
Nuclear research labs##
Petroleum pumping stations##
Petroleum refineries##
Petroleum storage tanks##
Potable water treatment facilities##
Primary and secondary schools##
Railroad bridges##
Railroad passenger stations##
Railroad tunnels##
Road commuter tunnels##
Road interstate bridges#
Road interstate tunnels#
Stadiums##
Tall commercial buildings##
Telecommunication -Telephone trunking sites##
Theme parks##
Trans-oceanic cable landings##
Source: U.S. Department of Homeland Security, Office for Grants and Training, FY2006 HSGP Fact
Sheet: Risk Analysis.
As can clearly be seen in Table 2, all but two asset types — road interstate
bridges and road interstate tunnels — apply both to states and to urban areas.



Table 3, below, presents what DHS calls the “geographic attributes” that the
department uses in its geographically based risk analysis.
Table 3. DHS’s Risk Calculation Geographic Attributes
Urban
Risk Calculation Geographic AttributesStateattributesarea
attributes
Defense Industrial Base facilities##
Federal Bureau of Investigation Basic and Special cases##
Gross Domestic Product#
I-94 Visitors from countries of interest##
Intelligence community credible and less credible threat##
reports
Immigration and Customs Enforcement Basic and Special##
cases
Miles of international border#
Military bases##
Nuclear Waste Isolation Pilot Plan transportation routes##
Population##
Population density##
Port of Entry and Border crossings ##
(people from countries of interest and annual throughput)
Port population##
Port population density##
Ratio of law enforcement to population#
Special events##
State international export trade#
State total agriculture sales#
Sum of population density of urban areas#
Sum of population of urban areas#
Suspicious incidents (credible and less credible)##
Vessels of special interest##
Source: U.S. Department of Homeland Security, Office for Grants and Training, FY2006 HSGP Fact
Sheet: Risk Analysis.



In December 2003, President Bush issued HSPD-7, a directive on Critical
Infrastructure Identification, Prioritization, and Protection which established a
national policy for federal departments and agencies to identify and prioritize U.S.
critical infrastructure and key resources and to protect them from terrorist attacks.
DHS is responsible for establishing a risk management framework to coordinate the
federal effort. The framework is supported by a comprehensive, national asset
inventory — the National Asset Database (NADB).32
DHS’s Office for Infrastructure Protection (IP) is responsible for assessing the
risk to the nation’s critical infrastructure and key resources.33 In July 2004, IP
requested states to submit critical infrastructure and key resources information.
Between July 2004 and July 2005, states identified and provided IP with data for

48,701 assets.34 DHS used the NADB in its FY2006 grant allocation methods’ asset-


and geographic-based risk assessments; however the NADB was not the only list of
assets that DHS used in its assessments.35
Figure 1. National Asset Database Totals by Critical Infrastructure
and Key Resources Sectors


Source: U.S. Department of Homeland Security, Office of Inspector General, Progress in Developing
the National Asset Database, p. 5.
Effectiveness. State and urban area investment justifications (as part of their
HSGP grant applications) were evaluated on five effectiveness criteria:
32 U.S. Department of Homeland Security, Office of Inspector General, Progress in
Developing the National Asset Database (Washington: June 2006), p. 1.
33 P.L. 107-256 (Homeland Security Act), Sec. 201(d)(2).
34 U.S. Department of Homeland Security, Office of Inspector General, Progress in
Developing the National Asset Database, p. 6.
35 Ibid., p. 17.

!RELEVANCE — the relationship of the federal investment to the
working principles of the National Preparedness Goal. It is also
evaluated through the investment relationship to the National
Priorities, TCL, state and urban area homeland security goals and
objectives, and Program and Capability Enhancement Plan
initiatives.
!REGIONALIZATION — the investment’s ability to communicate, plan,
and collaborate across first responder and emergency management
disciplines and jurisdictions to use limited resources for regional
homeland security solutions. The investment encourages states and
urban areas to coordinate preparedness activities within and across
jurisdictional boundaries by sharing costs, pooling resources, sharing
risk, and increasing the value of their preparedness investments
through collaborative efforts.
!SUSTAINABILITY — the investment’s ability to sustain a target
capability once the goal of the investment is achieved through the
identification of funding sources beyond the current grant cycle.
!IMPLEMENTATION APPROACH — the investment’s demonstration of
the appropriate in-place combination of personnel, resources, and
tools to manage the investment. It addresses priorities and delivers
desirable results through appropriate expenditure of any requested
funding.
!IMPACT — the investment’s effect on risk, threat, vulnerability, and
consequences of catastrophic events the applicants might face.36
DHS used a peer review process to determine state and urban area Investment
Justification effectiveness. The department states:
In FY06, more than 100 peer reviewers read the Investment Justifications and
worked independently to determine a preliminary effectiveness score before
convening in panels to discuss the findings of their review, develop final scores,
and provide comments on each submission. The reviewers evaluated
submissions based on specific criteria, including relevance, regionalization,
sustainability, implementation approach, and impact. Each submission was
reviewed and scored in two different ways, resulting in an average score for the
Individual Investments and an overall score for the submission. DHS combined
the average score of the individual Investments with the overall submission
score, as determined by the peer review panel, to determine the final37


effectiveness score.
36 U.S. Department of Homeland Security, Office for Grants and Training, FY2006 HSGP
Fact Sheet: Effectiveness Analysis (Washington: May 2006).
37 U.S. Department of Homeland Security, Office for Grants and Training, FY2006 HSGP
Fact Sheet: Allocation Methodology (Washington: May 2006).

Combining of Risk and Effectiveness. In order to allocate federal homeland
security assistance based upon relative risk and anticipated effectiveness scores, DHS
grouped applicants into four categories: higher risk — higher effectiveness; higher
risk — lower effectiveness; lower risk — higher effectiveness; and lower risk —
lower effectiveness. DHS states that it targeted federal assistance to applicants with
the greatest risk, while still funding “significant efforts undertaken by applicants in
presenting effective solutions.”38 Each state’s and urban area’s final funding
allocation was determined by combining its risk and effectiveness scores, with two-
thirds weight applied to risk, and one-third weight applied to effectiveness.39
Possible Oversight Issues. Since DHS’s inception, Congress has given the
department complete discretion in determining the risk and effectiveness factors used
in allocating UASI funds. Additionally, Congress has given DHS discretion in
determining the factors used to allocate the remaining SHSGP and LETPP total
appropriations following the allocation of the guaranteed amount of 0.75% of total
appropriations. Oversight of DHS’ risk-based methodology and risk-based
distribution formulas may address the weights given to risk and effectiveness factors,
specific threats to key assets and critical infrastructure, and plausible consequences
to identified threats.
!Issue: Who should identify the risk and effectiveness factors to be
considered?
DHS has adopted allocation methodologies as explained above, and they may
be the most appropriate. DHS has opted to use two categories for risk factors, asset
types and geographic attributes (see Tables 2 and 3). There are other approaches
and factors. Examples of risk factors could include threats, homeland security
capabilities, population, critical infrastructure assets, and transportation assets. In
order to accurately assess the risk factors, one would need to evaluate the threats to
the population, critical infrastructure, transportation, and the like, and determine the
consequences of threats. Additionally, effectiveness factors such as the homeland
security capabilities to prevent, respond to, and recover from terrorist attacks, and
natural and technical disasters would need to be assessed. The methods of threat and
vulnerability assessment suggest a variety of factors that might be used in devising
risk-based funding approaches for allocating homeland security assistance to states
and urban areas.
The DHS Inspector General’s report on the NADB states that IP’s data request
to states generated an “abundance of unusual, or out-of-place, assets” whose
criticality is not readily apparent.40 Examples of “out-of-place” assets cited include
a psychiatry behavioral clinic, an ice cream parlor, a Sears Auto center, and an apple


38 Ibid.
39 Ibid.
40 U.S. Department of Homeland Security, Office of Inspector General, Progress in
Developing the National Asset Database, p. 9.

and pork festival.41 Additionally, the report identifies inconsistencies when
comparing state-by-state asset totals.42 The DHS Inspector General states:
Several of DHS’ protection programs utilize information from the NADB to help
allocate resources. However, in light of the variation in reporting between
various sectors and states as well as the lack of detailed information on sites, we
are not confident that the NADB can yet support effective grant decision-43
making.
!Issue: What risk and effectiveness factors are most appropriate?
!Issue: How did DHS determine what asset types and geographic
attributes to use, and how are these weighted in a state’s or an urban
area’s risk assessment?
!Issue: What weight did DHS give to NADB assets, and what other
sources did DHS use in determining asset risks?
In considering risk and effectiveness factors, a question arises of what criteria
to use when assessing potential risk-based formula variables. Risk factors include
threats, the entity threatened, and the consequences of the threat to the specified
entity. The agreement of potential risk and need factors is usually considered against
the following criteria: 44
!VALIDITY — Do the factors serve as measures or indicators of
threats, the vulnerability of the potential target, or potential
consequence if catastrophe strikes the target? For example, does
higher population density indicate greater vulnerability to an attack
involving a weapon of mass destruction? What attributes associated
with densely populated areas (e.g., numbers of law enforcement
personnel on duty, the presence of sensors, cameras, and other
technology) could reduce the validity of the factor?
!RELEVANCE — What is the relationship between the factors and the
identified items or characteristics? Is the relationship
straightforward, or is it murky? For example, the total number of
vehicles traveling through a mid-city tunnel would probably not be
pertinent to a consideration of the risk of a hazardous material
accident. The number of commercial trucks carrying hazardous
material, however, would be more relevant.


41 Ibid., p. 13.
42 Ibid., p. 9.
43 Ibid., p. 17.
44 For a discussion of criteria for evaluating the suitability of quantitative indicators see, for
example, Raymond A. Bauer, Social Indicators (Cambridge, MA: MIT Press, 1966). See
also Anona Armstrong, “Difficulties of Developing and Using Social Indicators to Evaluate
Government Programs: A Critical Review,” paper presented at the 2002 Australasian
Evaluation Society Conference, Nov. 2002, Wollongong, Australia.

!RELIABILITY — The quality of the source of the information used in
a risk assessment process is relevant. For example, population data
from the U.S. Census Bureau are generally regarded as reliable and
are used in a variety of formulas for allocating aid grants.
!TIMELINESS — The currency of the data affects the quality of the
discussion on potential risks. For example, daily intelligence reports
that provide information on current terrorist threats would be
considered more timely than monthly or quarterly reports.
!AVAILABILITY — If the validity of a risk factor is to be widely
accepted, data used in a formula as a variable may need to be readily
and publicly available. Intelligence information that has been
classified by the federal government and not shared with state and
local officials would fail to satisfy this criterion.
Additionally, DHS requires states and urban areas to identify first responder and
emergency management capability enhancement and sustainment needs in the
Program and Capability Enhancement Plan. The plan is part of their HSGP
applications. As noted earlier, states and urban areas are required to submit
Investment Justifications that detail how federal assistance would address identified
homeland security needs and how the assistance would address state and urban area
counter-terrorism-related capabilities. The Investment Justifications are then
evaluated through a peer review process (administered by Booz Allen Hamilton).45
The peer review process, the justifications, and the identified effectiveness are not
publically available. Additionally, the effectiveness factors are not identified by
DHS; instead states and urban areas are required to determine their individual needs
and display how federal assistance would meet the needs. DHS also has to rely on
information from other agencies such as the Federal Bureau of Investigation (FBI)
and may not be able validate or confirm the information used in their state and urban
area risk assessments.
!Issue: How should the risk and effectiveness factors be evaluated?
!Issue: Is DHS able to validate and confirm the reliability of asset
types and geographic attributes it receives from other federal
entities?
DHS has elected not to use a 100% risk-based formula for allocating the
remainder of SHSGP and LETPP total appropriations, and not to use a 100% risk-
based allocation for UASI. Instead, DHS has developed a two-part approach to
determining state and urban area allocations. This approach consists of a DHS risk
assessment and the state’s and urban area’s justification of need for funding.


45 George Foresman, Under Secretary for Preparedness, U.S. Department of Homeland
Security, statement before the House Committee on Government Reform, “Regional
Insecurity: DHS Grants to the National Capital Region,” June 15, 2006.

Critics may argue that by not allocating strictly on risk and by including a needs
portion to the distribution method, DHS has not addressed criticisms, as from the
9/11 Commission, in its 2004 report, which advocate a purely risk-based allocation
of homeland security funding. In this viewpoint, by coupling effectiveness with risk,
DHS may be providing funding to states and urban areas that do not have a high risk
of terrorism. Conversely, by allocating funding based on both risk and effectiveness,
proponents could argue that DHS is addressing not only terrorism risks, but also a
state’s and an urban area’s capability to address those terrorism risks.
The issue of risk- and effectiveness-based funding is being raised in oversight
of FY2006 state allocations.
!Issue: Has DHS compared a 100% risk-based methodology against
a risk and effectiveness methodology? If, so how does it change
state and urban area allocations?
In the FY2006 DHS appropriations act (P.L. 109-90), Congress mandated that
GAO conduct an analysis of the threat and risk factors DHS used to allocate SHSGP,
LETPP, and UASI grant funds, and report on the findings by November 17, 2005,
which was prior to DHS’s completion of its FY2006 HSGP guidance.46 GAO, using
data and information available at the time, reviewed DHS allocation methodologies
to determine (1) how DHS measured risk, (2) what risk factors were included in the
methodologies and why, (3) how the risk factors were used for assessing risks for the
purposes of allocating FY2006 HSGP funds, and (4) how DHS determined which
risk factors had the greatest weight in the risk analysis portion of the methodologies.47
GAO determined that DHS’s risk analysis focused on terrorism, and briefed
congressional committees on the results of its analysis. GAO did not issue a public
report, however, due to security classification of the data used in the analysis.48 GAO
was not required to validate the methodologies, but to analyze them and report to
Congress on its findings.
In December 2004, the Office of Management and Budget (OMB) issued a
“Final Information Quality Bulletin for Peer Review.”49 The bulletin is applicable
to all federal departments and agencies and establishes government-wide guidance
on enhancing the practice of peer-review of government scientific information. OMB
states that peer review can increase the quality and credibility of the scientific


46 P.L. 109-90 (FY2006 DHS appropriations), Title III.
47 U.S. Government Accountability Office, William O. Jenkins, Jr., Director, Homeland
Security and Justice Issues, e-mail interview with author on July 7, 2006.
48 Ibid.
49 Executive Office of the President, Office of Management and Budget, “Final Information
Quality Bulletin for Peer Review” (Washington: Dec. 2004). Legal authority for issuing the
bulletin is under the Information Quality Act (P.L. 106-554, Sec. 515). For further
information on OMB’s bulletin on peer review, see CRS Report RL32680, Peer Review:
Proposed, Revised, and Final Bulletins, by Curtis Copeland.

information developed by the federal government.50 “Peer review” is characterized
as
...one of the most important procedures used to ensure that the quality of
published information meets the standards of scientific and technical community.
It is a form of deliberation involving an exchange of judgements about the
appropriateness of methods and the strength of the author’s inferences. Peer
review involves the review of a draft product for quality by specialists in the field51
who were not involved in producing the draft.
The bulletin defines “scientific information” as factual inputs, data, models, analyses,52
technical information, or scientific assessments.
OMB requires each federal agency to subject scientific information to peer
review prior to dissemination. The bulletin provides broad discretion in determining
what type of peer review is appropriate and what procedures should be employed to
select appropriate reviewers.53
If DHS’s FY2006 HSGP allocation methodologies were defined “scientific
assessments” of terrorism risks, GAO’s review of the methodologies could be
considered an independent peer review. Conversely, GAO’s review may not have
been complete if GAO was not given access to all the information used in DHS’s
allocation methodology or if DHS had not completed the assessment methods.
!Issue: Should DHS arrange an independent peer review of its
allocation methodologies prior to disseminating the grant application
guidance and determining state and urban area allocations?


50 Executive Office of the President, Office of Management and Budget, “Final Information
Quality Bulletin for Peer Review,” p. 1.
51 Ibid., p. 3.
52 Ibid., p. 10.
53 Ibid., p. 12.

CRS-22
Appendix A. FY2003-FY2006 DHS Grant Allocation Methodologies
SGP FY2003 FY2004 FY2005 FY2006
Guaranteed AmountGuaranteed AmountGuaranteed AmountGuaranteed Amount
Each state, DC, and Puerto RicoEach state, DC, and Puerto RicoEach state, DC, and Puerto RicoEach state, DC, and Puerto Rico
guaranteed 0.75% of total appropriations.guaranteed 0.75% of total appropriations.guaranteed 0.75% of total appropriations.guaranteed 0.75% of total appropriations.
[P.L. 107-56, Sec. 1014][P.L. 107-56, Sec. 1014][P.L. 107-56, Sec. 1014][P.L. 107-56, Sec. 1014]
Remainder of AppropriationsRemainder of AppropriationsRemainder of AppropriationsRemainder of Appropriations
Remainder of total appropriations at theRemainder of total appropriations at theCongress required DHS to allocate theRemainder of total appropriations at the
discretion of DHS. [P.L. 108-7, P.L. 108-discretion of DHS. [P.L. 108-90, Title III]remainder of total appropriations in thediscretion of DHS. [P.L. 109-90, Title III]
11]same manner as FY2004. [P.L. 108-334,
Title III]DHS ImplementationDHS ImplementationDHS Implementation
iki/CRS-RL33583DHS chose to allocate the remainder ofDHS chose to allocate the remainder ofDHS chose to allocate the remainder of
g/wtotal SHSGP appropriations in directtotal SHSGP appropriations in directtotal SHSGP appropriations based on risk
s.orproportion of the states percentage of theproportion of the states percentage of theand the effectiveness of the state’s
leaknation’s population. [FY2003 SHSGPnation’s population. [FY2004 SHSGPproposed solution to identified homeland
Program Guidance and Application Kit]Program Guidance and Application Kit]security needs. [FY2006 HSGP Program
://wikiGuidance and Application Kit]
httpTPPThe program was not authorized throughappropriations until FY2004.Guaranteed AmountEach state, DC, and Puerto RicoGuaranteed AmountEach state, DC, and Puerto RicoGuaranteed AmountEach state, DC, and Puerto Rico
guaranteed 0.75% of total appropriations.guaranteed 0.75% of total appropriations.guaranteed 0.75% of total appropriations.
[P.L. 107-56, Sec. 1014][P.L. 107-56, Sec. 1014][P.L. 107-56, Sec. 1014]
Remainder of AppropriationsRemainder of AppropriationsRemainder of Appropriations
Remainder of total apCongress required DHS to allocate theRemainder of total appropriations at the
propriations at the discretion of DHS. [P.L.remainder of total appropriations in thediscretion of DHS. [P.L. 109-90, Title III]
108-90, Title III]same manner as FY2004. [P.L. 108-334,
Title III]DHS ImplementationDHS Implementation
DHS chose to allocate the remainder ofDHS chose to allocate the remainder of
total LETPP appropriations in directtotal LETPP appropriations based on risk
proportion of the states percentage of theand the effectiveness of the state’s
nation’s population. [FY2004 SHSGPproposed solution to identified homeland
Program Guidance and Application Kit]security needs. [FY2006 HSGP Program
Guidance and Application Kit]



CRS-23
SGP FY2003 FY2004 FY2005 FY2006
SIGuaranteed AmountGuaranteed AmountGuaranteed AmountGuaranteed Amount
NA NA NA NA
Remainder of AppropriationsRemainder of AppropriationsRemainder of AppropriationsRemainder of Appropriations
Allocation of total appropriations at theAllocation of total appropriations at theAllocation of total appropriations at theAllocation of total appropriations at the
discretion of DHS. [P.L. 108-7, P.L. 108-discretion of DHS. [P.L. 108-90, Title III]discretion of DHS. [P.L. 108-334, Titlediscretion of DHS. [P.L. 109-90, Title III]
11] III]
DHS ImplementationDHS ImplementationDHS ImplementationDHS Implementation
DHS allocated UASI funds based on theDHS allocated UASI funds based on theDHS allocated UASI funds based on theDHS allocated UASI funds based on risk
following indicators of risk: crediblefollowing indicators of risk: crediblefollowing indicators of risk: credibleand effectiveness of urban areas proposed
threat, presence of critical infrastructure,threat, presence of critical infrastructure,threat, presence of critical infrastructure,solutions to identified homeland security
vulnerability, population, populationvulnerability, population, populationvulnerability, population, populationneeds. [FY2006 HSGP Program Guidance
density, law enforcement investigative anddensity, law enforcement investigative anddensity, law enforcement investigativeand Application Kit]


iki/CRS-RL33583enforcement activity, and the existence ofenforcement activity, and the existence ofand enforcement activity, and the
g/wformal mutual aid agreements amongformal mutual aid agreements amongexistence of formal mutual aid
s.orjurisdictions.[FY2003 UASI ProgramGuidance and Application Kit]jurisdictions.[FY2004 UASI ProgramGuidance and Application Kit]agreements among jurisdictions.[FY2005UASI Program Guidance and
leakApplication Kit]
://wiki
http