Department of Homeland Security:

Billions Invested in Major Programs Lack Appropriate Oversight

GAO-09-29: Published: Nov 18, 2008. Publicly Released: Nov 20, 2008.

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In fiscal year 2007, the Department of Homeland Security (DHS) obligated about $12 billion for acquisitions to support homeland security missions. DHS's major investments include Coast Guard ships and aircraft; border surveillance and screening equipment; nuclear detection equipment; and systems to track finances and human resources. In part to provide insight into the cost, schedule, and performance of these acquisitions, DHS established an investment review process in 2003. However, concerns have been raised about how well the process has been implemented--particularly for large investments. GAO was asked to (1) evaluate DHS's implementation of the investment review process, and (2) assess DHS's integration of the investment review and budget processes to ensure major investments fulfill mission needs. GAO reviewed relevant documents, including those for 57 DHS major investments (investments with a value of at least $50 million)--48 of which required department-level review through the second quarter of fiscal year 2008; and interviewed DHS headquarters and component officials.

While DHS's investment review process calls for executive decision making at key points in an investment's life cycle--including program authorization--the process has not provided the oversight needed to identify and address cost, schedule, and performance problems in its major investments. Poor implementation of the process is evidenced by the number of investments that did not adhere to the department's investment review policy--of DHS's 48 major investments requiring milestone and annual reviews, 45 were not assessed in accordance with this policy. At least 14 of these investments have reported cost growth, schedule slips, or performance shortfalls. Poor implementation is largely the result of DHS's failure to ensure that its Investment Review Board (IRB) and Joint Requirements Council (JRC)--the department's major acquisition decision-making bodies--effectively carried out their oversight responsibilities and had the resources to do so. Regardless, when oversight boards met, DHS could not enforce IRB and JRC decisions because it did not track whether components took actions called for in these decisions. In addition, many major investments lacked basic acquisition documents necessary to inform the investment review process, such as program baselines, and two out of nine components--which manage a total of 8 major investments--do not have required component-level processes in place. DHS has begun several efforts to address these shortcomings, including issuing an interim directive, to improve the investment review process. The investment review framework also integrates the budget process; however, budget decisions have been made in the absence of required oversight reviews and, as a result, DHS cannot ensure that annual funding decisions for its major investments make the best use of resources and address mission needs. GAO found almost a third of DHS's major investments received funding without having validated mission needs and requirements--which confirm a need is justified--and two-thirds did not have required life- cycle cost estimates. At the same time, DHS has not conducted regular reviews of its investment portfolios--broad categories of investments that are linked by similar missions--to ensure effective performance and minimize unintended duplication of effort for investments. Without validated requirements, life-cycle cost estimates, and regular portfolio reviews, DHS cannot ensure that its investment decisions are appropriate and will ultimately address capability gaps. In July 2008, 15 of the 57 DHS major investments reviewed by GAO were designated by the Office of Management and Budget as poorly planned and by DHS as poorly performing.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: DHS concurred with this recommendation and has taken action to implement it. In the department's letter to OMB and Congress, DHS stated that it had created and piloted a Next Generation Periodic Reporting System to regularly track key program information including, cost, schedule, and performance information, contract awards, and program risks. The database became fully operational in September, 2009 and as of November, 2009, DHS reported to us that 108 major and nonmajor programs were reporting into the database. DHS also established an internal process and has been tracking the results of acquisition review board decisions and required action items.

    Recommendation: To better ensure the investment review process is fully implemented and adhered to, the Secretary of Homeland Security should direct the Undersecretary for Management to establish a mechanism to identify and track on a regular basis new and ongoing major investments and ensure compliance with actions called for by investment oversight boards.

    Agency Affected: Department of Homeland Security

  2. Status: Open

    Comments: In January 2010, DHS issued an acquisition management directive that provides for re-establishment of the Joint Requirements Council to review program requirements across the Department. In January 2011, DHS reported that it planned to create a Capabilities and Requirements Council (CRC) which would serve in a similar role as the Joint Requirements Council. DHS originally reported that it would form the new council in the fourth quarter of 2011, but the effort has experienced delays. DHS held its first pilot CRC in June 2013 for its cybersecurity functional portfolio but also acknowledged that the CRC is the least mature part of its integrated investment life cycle management model. We support DHS's efforts to develop the CRC, but it is not yet clear how the CRC will perform its functions or whether it will meet the intent of this recommendation, improve coordination between the Department and its components, and continue to function effectively over time.

    Recommendation: To better ensure the investment review process is fully implemented and adhered to, the Secretary of Homeland Security should direct the Undersecretary for Management to reinstate the JRC or establish another departmental joint requirements oversight board to review and approve acquisition requirements and assess potential duplication of effort.

    Agency Affected: Department of Homeland Security

  3. Status: Closed - Implemented

    Comments: DHS concurred with this recommendation and has taken action to implement it through issuance of the November 2008 interim acquisition management directive 102-01, which requires that acquisition decisions reached at acquisition decision events are documented through an acquisition decision memorandum. These memos are approved by the appropriate acquisition decision authority and have been consistently completed for acquisition decision events occurring through the third quarter of fiscal year 2009.

    Recommendation: To better ensure the investment review process is fully implemented and adhered to, the Secretary of Homeland Security should direct the Undersecretary for Management to ensure investment decisions are transparent and documented as required.

    Agency Affected: Department of Homeland Security

  4. Status: Open

    Comments: In January 2011, the Department of Homeland Security (DHS) issued its Integrated Strategy for High Risk Management, which outlined in part the department's approach to responding to past GAO recommendations. In particular, our previous work has found weaknesses in DHS's ability to link budget decisions to the results of the acquisition review process to make informed decisions. The DHS strategy describes an integrated investment life cycle management model and strategic planning phase intended to better ensure that mission needs drive budget submissions instead of budget submissions driving mission needs. For example, the strategy states that in the intermediate phase between strategy and operations, the Department's Program Review Board will provide input into resource allocation decisions, and that resources will be allocated to meet the prioritized mission needs within projected budget ceilings. However, DHS has not yet implemented this strategy. Additionally, according to DHS, only 15 percent of the department's major acquisition programs have reliable cost estimates, and the department's major acquisition portfolio may not be affordable.

    Recommendation: To better ensure the investment review process is fully implemented and adhered to, the Secretary of Homeland Security should direct the Undersecretary for Management to ensure that budget decisions are informed by the results of investment reviews including IRB approved acquisition information and life cycle cost estimates.

    Agency Affected: Department of Homeland Security

  5. Status: Closed - Implemented

    Comments: In response to this recommendation, DHS indicated that its Office of the Chief Procurement Officer (OCPO) has identified and aligned management resources to implement oversight reviews by establishing a Senior-executive led Acquisition Program Management Division as well as a Cost Analysis Division within the OCPO, and that staffing would eventually increase to a total of 58 personnel. Toward this goal, DHS increased staff from 8 to 22 government employees at the end of fiscal year 2009. In 2011, DHS combined the two divisions into the newly established Office of Program Accountability and Risk Management (PARM). In February 2012, PARM officials told GAO that they had 46 positions available, and that they expected to gain another 10 positions during fiscal year 2012. PARM officials also told GAO that they had enough resources to hold oversight reviews when components request them. This accomplishment should allow DHS to implement its knowledge-based acquisition policy more consistently in the future, and reduce the risk that major acquisitions will perform poorly.

    Recommendation: To better ensure the investment review process is fully implemented and adhered to, the Secretary of Homeland Security should direct the Undersecretary for Management to identify and align sufficient management resources to implement oversight reviews in a timely manner throughout the investment life cycle.

    Agency Affected: Department of Homeland Security

  6. Status: Closed - Implemented

    Comments: DHS has implemented this recommendation. In its response to OMB and the Congress, DHS noted that the November 2008 DHS acquisition management directive 102-01, required components to align their internal policies and procedures with DHS standards within six months. In addition, the DHS Undersecretary for Management issued a January 2009 memo to Component Heads requiring them to create a Component Acquisition Executive position in their organizations responsible for the implementation of management and oversight of component acquisition processes.

    Recommendation: To improve investment management, the Secretary of Homeland Security should direct component heads to ensure that components have established processes to manage major investments consistent with departmental policies.

    Agency Affected: Department of Homeland Security

  7. Status: Closed - Implemented

    Comments: DHS concurred with this recommendation, and in January 2009, the DHS Under Secretary for Management issued a memorandum outlining the designation and implementation process for component acquisition executive (CAE) positions. In June 2012, DHS reported that all components had CAEs in place. This accomplishment should allow DHS to implement its knowledge-based acquisition policy more consistently in the future, and reduce the risk that major acquisitions will perform poorly.

    Recommendation: To improve investment management, the Secretary of Homeland Security should direct component heads to establish a mechanism to ensure major investments comply with established component and departmental investment review policy standards.

    Agency Affected: Department of Homeland Security

 

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