Homeland Security Acquisitions:

DHS Could Better Manage Its Portfolio to Address Funding Gaps and Improve Communications with Congress

GAO-14-332: Published: Apr 17, 2014. Publicly Released: Apr 29, 2014.

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What GAO Found

GAO found that the funding plans for all 35 of the Department of Homeland Security (DHS) acquisition programs it reviewed changed to some degree from fiscal years 2012 to 2014, though the instability affected some programs more than others. Program officials reported that funding instability negatively affected 17 of the 35 programs, contributing to schedule slips, cost growth, and capability reductions. DHS officials at headquarters, components, and program offices identified internal and external factors that contributed to funding instability. These included changes in department-wide priorities and congressional funding decisions. Going forward, DHS's largest acquisition programs will likely experience more funding instability because the department's plans for its acquisition portfolio are not currently affordable. In December 2012, DHS issued an internal memo stating that the department's aggregate 5-year funding requirements for its major acquisition programs exceeded expected resources by 30 percent. This acknowledgement was a positive step toward addressing the department's funding gap, and DHS has established a full-funding certification requirement to help address it. Nevertheless, the department has not approved most of its major acquisition programs' cost estimates. As a result, DHS's understanding of its major acquisition programs' funding requirements is limited, and the funding gap may be greater than the department has suggested.

DHS has not consistently developed its multi-year funding plans in accordance with key portfolio management practices that would help the department optimize the return on its acquisition investments. DHS's resource allocation guidance reflects some but not all of these key practices, and the department is working to address the shortfalls. In addition, the 30 percent funding gap indicates that DHS leadership has not effectively prioritized its acquisition needs, even though the department's resource allocation guidance fully reflects this key practice. To help address its funding issues, the department is piloting a four-pronged portfolio management initiative intended to provide a framework for information to flow between four key councils and boards. As identified in the table below, there are opportunities for DHS leadership to improve governance in each of these four management areas, but senior DHS officials do not expect the initiative will be fully implemented in the near term, so it is too soon to tell how effective it will be.

Opportunities for DHS Leadership to Improve Governance in Four Management Areas

Strategic Direction

Requirements Reviews

Resource Allocation

Program Governance

Provide planning guidance each year

Establish priorities across functional portfolios

Recommend tradeoffs across DHS's major acquisition portfolio

Assess program-specific affordability tradeoffs

Source: GAO analysis of DHS information.

DHS has met statutory reporting requirements for its major acquisition programs' multi-year funding plans through its annual Future Years Homeland Security Program reports. However, the department has opportunities to improve how it communicates its acquisition funding needs to Congress in the future. Most notably, DHS does not currently link its major acquisition programs to the homeland security strategy, and its annual report does not identify acquisition programs' funding gaps. Adding this information would provide Congress valuable insights into DHS's acquisition funding needs.

Why GAO Did This Study

Each year, DHS invests billions of dollars in major acquisition programs. In fiscal year 2013 alone, DHS reported it was investing more than $9.6 billion in its major acquisition portfolio. In the past, GAO has identified shortcomings in DHS's ability to manage its major acquisitions. In September 2012, GAO reported that the most prevalent challenge facing DHS's major acquisition programs was funding instability—changes in programs' funding plans over time. Funding instability increases the risk of cost growth, schedule slips, and capability shortfalls.

In response to congressional requests, this report addresses (1) the prevalence of funding instability at DHS and its effects on major acquisition programs, if any; (2) the extent to which DHS develops multi-year funding plans in accordance with key portfolio management practices; and (3) the extent to which DHS has complied with reporting requirements for major acquisition programs' multi-year funding plans. GAO reviewed DHS's three most recent annual funding plans and funding and acquisition decisions, interviewed headquarters and component officials, and solicited input from 35 of DHS's largest acquisition program offices.

What GAO Recommends

GAO recommends DHS take nine actions to better manage its portfolio and improve communications with Congress. DHS concurred with GAO's recommendations and stated that it addressed one in March 2014. DHS presented plans to address the other eight, but GAO does not believe the plan for one of them is fully responsive.

For more information, contact Michele Mackin at (202) 512-4841 or mackinm@gao.gov.

 

Recommendations for Executive Action

  1. Status: Open

    Comments: In providing comments on this report, the Department of Homeland Security (DHS) concurred with this recommendation, and stated that it will update its guidance to incorporate standard assessment criteria to ensure transparency and comparability across alternatives. DHS estimated that it would complete this effort by December 31, 2014.

    Recommendation: To enhance DHS's resource allocation guidance, the Secretary of Homeland Security should update the guidance to fully reflect the portfolio management practices by establishing standard assessment criteria to ensure transparency and comparability across alternatives.

    Agency Affected: Department of Homeland Security

  2. Status: Open

    Comments: In providing comments on this report, the Department of Homeland Security (DHS) concurred with this recommendation and said that it issued Integrated Planning Guidance in March 2014. Because DHS had not issued this guidance for one year only and rectified the situation the following year, we agreed that the action met the intent of this recommendation. However, DHS has not yet provided the documentation demonstrating that it issued Integrated Planning Guidance and so this recommendation will remain open.

    Recommendation: To better prioritize investments in an integrated manner and allocate resources accordingly, as DHS continues to develop, pilot, and implement the Integrated Investment Life Cycle Management (IILCM), the Secretary of Homeland Security should require the Department Strategy Council, or another body responsible for strategic direction, to issue Integrated Planning Guidance annually, in accordance with DHS guidance.

    Agency Affected: Department of Homeland Security

  3. Status: Open

    Comments: In providing comments on this report, the Department of Homeland Security (DHS) concurred with this recommendation, and acknowledged the need to develop repeatable management policy and doctrine for oversight of joint capabilities and requirements development and assessment. In June 2014, the Secretary of Homeland Security issued a memo establishing a Joint Requirements Council (JRC) to review cross-component requirements and develop recommendations for investments. According to the memo, the JRC will be supported by portfolio teams organized by the five homeland security mission areas identified in the Quadrennial Homeland Security Review. The establishment of the JRC is a significant step toward addressing this recommendation. However, DHS has not yet demonstrated how or whether the JRC will establish priorities across the portfolios, and until it does so, this recommendation will remain open.

    Recommendation: To better prioritize investments in an integrated manner and allocate resources accordingly, as DHS continues to develop, pilot, and implement the IILCM, the Secretary of Homeland Security should require the Capabilities and Requirements Council, or another body responsible for requirements reviews, to establish priorities across functional portfolios, such as cybersecurity, domain awareness, and law enforcement.

    Agency Affected: Department of Homeland Security

  4. Status: Open

    Comments: In providing comments on this report, the Department of Homeland Security (DHS) concurred with this recommendation, said that it would update its guidance accordingly, and that it would review tradeoff alternatives to address the affordability of relevant acquisitions. DHS estimated that it would complete this effort by December 31, 2014.

    Recommendation: To better prioritize investments in an integrated manner and allocate resources accordingly, as DHS continues to develop, pilot, and implement the IILCM, the Secretary of Homeland Security should establish that the Program Review Board should recommend tradeoffs across DHS's major acquisition portfolio to address its major acquisition funding gap.

    Agency Affected: Department of Homeland Security

  5. Status: Open

    Comments: In providing comments on this report, the Department of Homeland Security (DHS) concurred with this recommendation, and in June 2014, DHS's Acting Chief Financial Officer (CFO) issued a memo establishing that senior financial officers responsible for implementing the department's resource allocation process shall review and validate the affordability of acquisition programs at major milestones. The memo states that this certification will prepare the Acquisition Review Board (ARB) to discuss program-specific affordability tradeoffs at all meetings, and that the ARB will address affordability in any circumstance where funding projections do not cover the cost estimate. This memo presents an approach that would largely address this recommendation. However, it remains unclear whether the CFO, as opposed to DHS's Chief Acquisition Officer, has the authority to establish ARB requirements. Additionally, it remains unclear whether DHS will apply the funding certification requirement at all ARB meetings, or only those that are convened for major milestones.

    Recommendation: To better prioritize investments in an integrated manner and allocate resources accordingly, as DHS continues to develop, pilot, and implement the IILCM, the Secretary of Homeland Security should require the Acquisition Review Board to assess program-specific affordability tradeoffs at all of its meetings.

    Agency Affected: Department of Homeland Security

  6. Status: Open

    Comments: In providing comments on this report, the Department of Homeland Security (DHS) concurred with this recommendation, and stated that it provides Congress Comprehensive Acquisition Status Reports (CASR) on a quarterly basis that include cost estimates for all major acquisition programs. However, the CASRs do not disaggregate the cost estimates to identify how much the programs are expected to cost each year, and therefore do not allow Congress to identify funding gaps on an annual basis. DHS's approach does not address the intent of this recommendation, and it will remain open until DHS presents cost estimates and any anticipated funding gaps on an annual basis.

    Recommendation: To better communicate acquisition funding needs to Congress, the Secretary of Homeland Security should enhance the content of future Future Years Homeland Security Program (FYHSP) reports--for fiscal years 2016-20 and beyond--by presenting acquisition programs' annual cost estimates and any anticipated funding gaps.

    Agency Affected: Department of Homeland Security

  7. Status: Closed - Implemented

    Comments: In August 2014, DHS issued the fiscal years 2015-2019 FYHSP report, which clearly linked the department's major acquisition programs to the missions and goals from the 2014 Quadrennial Homeland Security Review, which outlines a strategic framework to guide homeland security activities. This accomplishment should help DHS provide Congress additional information about its major acquisition programs as the department works to address its major acquisition portfolio's funding gap.

    Recommendation: To better communicate acquisition funding needs to Congress, the Secretary of Homeland Security should enhance the content of future FYHSP reports--for fiscal years 2016-20 and beyond--by clearly linking major acquisition programs to the homeland security strategy.

    Agency Affected: Department of Homeland Security

  8. Status: Open

    Comments: In providing comments on this report, the Department of Homeland Security (DHS) concurred with this recommendation, and said that the fiscal years 2015-19 Future Years Homeland Security Program (FYHSP) would include all of the acquisition programs listed in DHS's 2013 major acquisition oversight list. However, the fiscal years 2015-19 FYHSP did not include all of the acquisition programs listed in DHS's 2013 major acquisition oversight list.

    Recommendation: To better communicate acquisition funding needs to Congress, the Secretary of Homeland Security should enhance the content of future FYHSP reports--for fiscal years 2016-20 and beyond--by including all of the programs on DHS's major acquisition oversight list.

    Agency Affected: Department of Homeland Security

  9. Status: Open

    Comments: In providing comments on this report, the Department of Homeland Security (DHS) concurred with this recommendation, and said that it will improve its resource allocation process by arranging acquisitions by portfolio, improving integration of annual portfolio reviews and budget decisions, and ensuring DHS leadership has visibility into tradeoffs available within funding constraints. DHS estimated that it would complete this effort by August 31, 2015.

    Recommendation: To enhance DHS's resource allocation guidance, the Secretary of Homeland Security should update the guidance to fully reflect the portfolio management practices by continually making go/no-go decisions to rebalance the portfolio.

    Agency Affected: Department of Homeland Security

 

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