Department of Homeland Security
Billions Invested in Major Programs Lack Appropriate Oversight
GAO-09-29, 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.
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Recommendations for Executive Action
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
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 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
Status: Open
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. To support these functions, the CPO is seeking an eventual increase in staffing to a total of 58 for acquisition oversight. Toward this goal, the Division increased its staff from 8 to 22 government employees at the end of fiscal year 2009 and planned to hire another 11 government employees in 2010. However, budget documentation suggests this staffing level will not provide the capacity needed to support the 50 to 60 annual Acquisition Review Board meetings that would be needed to oversee all of the Department's major acquisitions.
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
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 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, it is unclear how decisions will be informed by validated mission needs statements and cost estimates. Further, it is not clear how billions invested in legacy programs are to be integrated into the new strategic review process.
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
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 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
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 June 2011, DHS reported that it planned to create a Capabilities and Requirements Council which would serve in a similar role as the Joint Requirements Council. DHS reported that it will form the new council in the fourth quarter of 2011, but it is unclear when it is expected to become fully operational. While we support DHS's efforts to develop councils responsible for overseeing requirements department-wide and coordinating programs, it is not yet clear how the new DHS councils will perform their functions. It is too early to tell 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 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
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 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
Status: Open
Comments: DHS concurred with this recommendation and has made some progress in implementing it. In January 2009, the DHS Under Secretary for Management issued a memorandum outlining the designation and implementation process for component acquisition executive positions. By the end of fiscal year 2011, DHS plans to solidify the Component Acquisition Executive (CAE) structure by identifying functional disciplines needed to support the CAE and plans to delegate oversight for some critical programs to CAEs. To fully implement this recommendation, the component acquisition executives will need to successfully establish and ensure compliance with the new DHS acquisition processes.