somebody doing something

The Wheelings and Dealings of the NFSTC (And Friends)

Founded in 1995 by the American Society of Crime Lab Directors (ASCLD) with a mandate to “do good things”, the National Forensic Science Technology Center (NFSTC) sounded like a good idea: develop quality services for all and deliver them for free or at low cost to public crime labs, all funded by the federal government. However, like other ASCLD endeavors, it quickly proved to be yet another opportunity for a few to hoard power and cash.

Some might argue that all that grant money had to go somewhere, and the NFSTC was just really good at networking.

But, as the recently-passed CJS Appropriations Bill pointed out, the money was supposed to go to crime labs to keep criminalists working to keep backlogs down. The money was not supposed to go to a special interest group of the crime lab managers to create a place for them to hoard money and power for themselves in a way that kept money out of their own crime labs.

And the NFSTC didn’t just become good at networking.

The NFSTC was allowed to put their own people in the National Institutes of Justice [NIJ] grant office where money was being sent back to the NFSTC. People who were still being paid by the NFSTC.

But the NFSTC wasn’t the only organization with friends at the NIJ, nor was it the only organization benefiting from those relationships.

How the Process is Supposed to Work

There are two basic types of awards made by the NIJ (and all government grant-making agencies, really): grants and cooperative agreements. The difference is, with a cooperative agreement, the NIJ expects to have more involvement with the awardee in the execution of the program that is funded by the award.

With both grants and cooperative agreements, the award can be funded through a competitive process or a non-competitive process.

In a competitive process there is an announcement or solicitation for applications, groups apply to have their projects funded, and awards are made.

When making competitive awards, the NIJ is supposed to follow this process:

  1. NIJ program managers (grant managers) review applications for completeness and to make sure the application is relevant to the award solicitation.
  2. A panel of peer reviewers reviews the applications. These peer reviewers are “subject matter experts” selected from a field relevant to the applications they will be reviewing. The peer reviewers are supposed to be screened to make sure that they don’t have conflicts of interest with the applicants (e.g., that they don’t work for one of the applicants). The panel reviews the applications and makes recommendations as to which applications should be funded
  3. The Division Chief of the program office, the program manager of that award, and other NIJ personnel review the peer review recommendations, then make their own recommendations to the NIJ Director.
  4. The NIJ Director makes the final award selections.

With the non-competitive process, there are a couple of ways awards are made.

Sometimes non-competitive awards are distributed through formula funding. With formula funding, a certain amount of funding is appropriated for a given purpose and for a specified group. The amount of each award is based on a formula that involves some statistic such as population size or number of juvenile arrests over a given period of time or any other statistic relevant to that award. Only organizations that are part of the specified group can apply, but they still have to submit applications in order to provide the necessary statistics that the formula award is based upon.

Then there are non-competitive awards that are simply given to certain organizations. These are awards that could be announced competitively, but, for some reason, the awarding agency (in this case, the NIJ) decides to just give the award to a single organization without competing the award. In these cases, there is supposed to be a very strong, well documented justification from the NIJ stating why the award is being given directly to one organization without competition. This is also known as sole-sourcing. This is how the NFSTC gets most, if not all, of its money.

The Old News

This stuff might be news to a lot of people, but it’s not to Congress. That’s why Congress is so angry with the NIJ, the NFSTC, and others who have been getting money that was supposed to be going to crime labs all these years.

There have been all sorts of congressionally-directed inspections and inquiries into the money-distribution practices of the NIJ aimed at putting a stop to this stuff. But the various stewards of funding at the NIJ have persisted in finding ways to make sure that the cash that was supposed to go to crime labs and case work just kept flowing to their friends.

One of the best examples of a congressionally-mandated inquiry into the NIJ’s money-funneling practices was an audit conducted by the DOJ Office of the Inspector General [OIG] that was published in September 2009 (Audit Report 09-38). That report was the result of the 2008 Appropriations Bill that, according to the report, directed the OIG to

(1) evaluate whether competitive NIJ grants and contracts awarded in fiscal years (FY) 2005 through 2007 were awarded based on fair and open processes;

(2) determine whether non-competitive NIJ grants and contracts awarded in those fiscal years were properly justified; and

(3) identify costs related to NIJ grants and contracts that were administrative in nature and explain how those costs were determined.

The OIG found that the NIJ was not handling its fiduciary duties appropriately, to say the least.

The Executive Summary of the report states:

Overall, for the grant awards we tested, deficiencies in administrative practices and controls did not allow [Office of Justice Programs] and the NIJ to demonstrate that grant award practices were based on fair and open competition. The NIJ did not maintain adequate pre-award records to document that its grant award process ensured a fair and open competition. In addition, we identified instances where NIJ staff involved in the grant award process had potential conflicts of interest with grantees receiving awards, but nevertheless participated in the approval process for the grants in question. We also found that the NIJ’s grant application review process, including initial program office reviews, peer reviews, documentation of program office recommendations, and documentation of NIJ Director selections, raised concerns about the fairness and openness of the competition process. In addition, we found that the NIJ did not have knowledge of grantees’ lobbying activities when making the award decisions because NIJ grantees and sub-grantees did not fully disclose lobbying activities that were potentially related to the NIJ grants or sub-grants.

For the non-competitive grants we tested, the NIJ usually did not document the basis for non-competitively awarding discretionary grant funds. We also found instances where the NIJ improperly directed a grantee to use a specific organization to perform sub-grantee work without documenting the basis for directing that the work be non-competitively awarded to the organization.

Basically, the OIG found that, when NIJ officials decide to send money to organizations in a way that appears to be outside the bounds of “fair and open”, there usually ends up being no record of how or why those decisions were made.

For competitive awards, the peer reviewers’ records disappeared. In particular, forms certifying that peer reviewers had no conflicts of interest could not be found. The peer reviewers’ comments documenting if they agreed or disagreed with the recorded recommendation of the panel disappeared, too.

For non-competitive, sole-sourced awards, the required documentation justifying those awards was often missing. When the OIG asked NIJ officials for the required documentation justifying the sole-sourced awards, NIJ officials told OIG auditors that there was none. The NIJ officials’ excuses were that the decisions were based on verbal conversations and weren’t documented.

“We believe the NIJ has created a strong appearance of a conflict of interest.”

The NFSTC is one of the organizations in the report that gets called out a lot because

  • They receive a lot of unjustified, sole-sourced funding from the NIJ, and
  • There are a lot of conflicts of interest between the NIJ officials who decide to send money to the NFSTC and the NFSTC.

In the detailed section of the report, the OIG cites several examples where NIJ employees approved grants where they had some relationship that caused a potential conflict of interest with the awardee. Usually, these conflicts were that the NIJ official was a former employee of the awardee or that their spouse worked for the awardee.

The report then lists six specific examples where NIJ officials approved grant awards to organizations where they had one of these conflicts of interest. In five of these examples, the grant award totals are $362K (University of Maryland), $365K (Montgomery County, MD Police Department), $503K (UC-San Diego), $1.9M (Urban Institute), and $3.7M (Lockheed Martin).

Then there is a sixth example (actually, the first in the set) in which an NIJ official has been approving grants to the NFSTC, even though his wife is an employee at NFSTC. In that example, the grant award total is $33.4 million. Even Lockheed Martin couldn’t pull that much.

But what the OIG drew special attention to was the practice of allowing the NFSTC to staff the NIJ’s Office of Investigative and Forensic Sciences (AKA Mike Sheppo’s Office) through Intergovernmental Personnel Act (IPA) assignments. This included a period when the NFSTC’s CEO, Kevin Lothridge, was appointed the acting chief of the Now-Mike Sheppo-run grant office at NIJ (the place where the NFSTC gets its money).

Yes. That’s right. Lothridge went from heading the NFSTC to head the grant office that the NFSTC gets money from, and then went back to heading the NFSTC. Through an Intergovernmental Personnel Act assignment with the NFSTC. I just wonder who at the NFSTC made the choice to send Lothridge to NIJ.

The report notes that Lothridge’s duties included “managing all aspects of the Division’s strategic initiatives and programmatic operations, to include planning, implementing, and evaluating the development, application and dissemination of scientific and technological research in the field of criminal investigation and forensic sciences.” In other words, aligning the NIJ funding policies in forensic science to whatever he thought they should be.

Lothridge told the OIG that he was “‘walled off’ from activities involving the NFSTC.” But the OIG found that wasn’t true.

In the NIJ’s own computerized tracking system, the OIG found that Lothridge listed himself as the official point of contact for the NFSTC and as the NIJ point of contact on a grant application for the NFSTC. If Lothridge was this blatant in his involvement in funding NFSTC projects, how “walled off” was he from other funding and policy decisions involving the NFSTC?

The report also notes immediately after this revelation that

Subsequent to the beginning of [Lothridge's] NIJ assignment through July 2009, the NIJ awarded the NFSTC more than $45 million, much of which was awarded non-competitively and without the required sole-source justification, as previously discussed. By allowing [Lothridge] to manage the planning of scientific and technological research in the field of criminal investigation and forensic sciences, especially when such research involves the same type research activities for which the NFSTC receives grant funding from the NIJ, we believe the NIJ has created a strong appearance of a conflict of interest.

After Lothridge returned to NFSTC, the NFSTC sent Mark Nelson to the same NIJ grant office on another Intergovernmental Personnel Act assignment. Nelson is still there.

Mark Nelson is the super-duper human being who wrote the evidence withholding policy at the North Carolina State Bureau of Investigation that sent innocent people to prison and that Nelson is now being sued for by Gregory Taylor. Mark Nelson is THE Senior Program Manager (read: Senior Grant Manager) in the now-Mike Sheppo-run grant office at the NIJ.

There are two truly remarkable things about Mark Nelson’s assignment from the NFSTC to NIJ:

  1. How much Nelson was getting paid by the NFSTC to be at NIJ, and
  2. How much money started flowing back to the NFSTC when Nelson went to NIJ.

In 2006, the NFSTC paid Mark Nelson $92,690. Nelson worked at the NFSTC from January to September 2006, and at NIJ from October to December 2006. The NFSTC received about $6 million in grants that year.

In 2007, the NFSTC paid Mark Nelson’s salary of $115,809 while he was working at NIJ. That’s about a 25% increase in pay. The NFSTC didn’t see too big of an increase in their grant income that first year: they brought in about $6.8 million.

In 2008, the NFSTC was still paying Mark Nelson’s salary while he was at NIJ. By this time, Nelson was up to $124,875 and was the NFSTC’s highest paid employee other than their executive officers (CEO, CFO, etc.). In 2008, the NFSTC’s grant income more than doubled from the previous year to $14 million.

The IG’s report states that they could find no evidence in the NIJ’s computerized grant management system (the only place they looked, evidently) where Nelson “participated in any activities involving the NFSTC” during the first year of his assignment there (October 1, 2006 to September 30, 2007).

This means that Nelson did not officially assign himself as the NIJ point of contact on any NFSTC grant or contract. It does not appear that the IG’s office interviewed any other personnel to see if Nelson has had attempted to influence the flow of money to the NFSTC. Also, September 30, 2007 was the end of the IG’s audit period for this report, just before the NFSTC’s grant income more than doubled.

The IG’s report did state

However, like for [Lothridge], we believe that allowing key officials for the NFSTC to be temporarily assigned to the NIJ to perform planning activities and grant oversight work for the same NIJ office that awards and oversees grants to the NFSTC creates a strong appearance of a conflict of interest.

The OIG report failed to take note of the “visiting scientist” from the NFSTC who was lodged at the NIJ at the time: Michael Sheppo.

Sheppo sat on the Board of Directors of the NFSTC from from 1996 to 2006 and was President of the Board from 1997 to 2005. Sheppo was formerly the chief of the Illinois State Crime Lab system and was found to have improperly funneled a sole-source contract to the NFSTC during his time there. Sheppo was also recommended for disciplinary action for being a whole lot less than honest with the Illinois Inspector General’s Office when they were looking into that situation.

Shortly after the OIG audit period, Sheppo became the Director of the Office of Investigative and Forensic Sciences. That’s the same office Kevin Lothridge headed up a few years earlier during his stint from the NFSTC to the NIJ, the same office where Mark Nelson works, and the same office that sends unjustified sole-sourced money to the NFSTC.

With all their ducks in a row at the NIJ, the amount of funding going to the NFSTC has increased significantly.

The money that has flowed to the NFSTC was supposed to go for other things, like to keep crime labs operating at capacity and keep backlogs down.

But it’s hard to legally pull money out of a nonprofit. And what good is all that money and power if you can’t touch it?

Well, it looks like those in charge of the NFSTC might think they have found a way to do just that: by incorporating a for-profit consulting company with an address a few doors up from their own office.

Sound familiar?

Remember, Kevin Lothridge and Mike Sheppo are both ASCLD past-presidents. And the NFSTC is a membership corporation founded by ASCLD. They may be a different side of the coin (and fighting with some of their fellow ASCLD-ians), but we’re still talking about the same group of people here.

But there’s still lots going on with the formation of that for-profit corporation, the involvement of lobbyists and other organizations cited in the investigations by the OIG, and the complete breakdown of oversight of the NFSTC by its member organizations that makes this an even bigger mess.

That and more in the next few days.