The Homeland Security Department is creating a new oversight office to manage its troubled grant programs, which account for nearly $2 billion in annual spending and are plagued by weak oversight and poor financial controls.

DHS plans to staff the office with 20 people, and is more than halfway to that goal, said Elaine Duke, the department's undersecretary for management, in an interview. Staffers will review reports on grant programs from the department's inspector general to look for problematic trends; they'll also work with managers to improve the quality of data collected about grant programs.

"We have a senior executive that's been hired and leading it. All the grants will still be executed through the components," Duke said. "The role [of this office] is governance … it's important that we look collectively [to see] what are the trends."

The department has issued some $20 billion in grants — mostly by the Federal Emergency Management Agency — since it was created six years ago. Grant programs at DHS have been frequent targets for the department's inspector general and the Government Accountability Office. For example, in June, the GAO found that FEMA and the Transportation Security Administration hadn't established useful milestones for measuring the success of a transit security grant program, which issued $755 million in grants between 2006 and 2008. A 2008 study found DHS grant programs often duplicated one another and wasted money on low-priority goals.

GAO identified the grant programs as one of roughly four dozen "major cost-saving opportunities" for Congress and the Obama administration.

DHS officials expect their budget to remain flat for the next few years, so they're focusing on a few key management areas, including grants, Duke said. Others include reducing the number of facility leases — DHS has more than 40 leases in the Washington area alone — and consolidating information technology systems.

Duke's office is also working to finish the quadrennial homeland security review (QHSR), which is undergoing an interagency review. The document is due to Congress by Dec. 31. It will be the first-ever QHSR, and it's expected to take a high-level look at the department's role.

"It really lays out our mission sectors, if you will, and the next logical step that we're working on is, what's going to be our performance in those mission areas?" Duke said. "We're now looking [at] … how do we start aligning [these missions] with the budget and delivering performance outcomes?"

Duke said the department hopes to unveil a new set of "granular" performance metrics in the middle of 2010.

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