Homeland Security Acquisitions:

DHS Has Strengthened Management, but Execution and Affordability Concerns Endure

GAO-16-338SP: Published: Mar 31, 2016. Publicly Released: Mar 31, 2016.

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What GAO Found

During 2015, 11 of the 25 Department of Homeland Security (DHS) programs GAO reviewed remained on track to meet their current schedule and cost goals. Eight programs experienced schedule slips, cost growth, or both, including 5 programs with life-cycle cost estimates that increased by a total of 18 percent. For the remaining six programs, DHS leadership had not approved baselines establishing their schedule and cost goals as of December 15, 2015. DHS leadership has since approved baselines for four of these six programs (one of the six is being discontinued). This action should enhance DHS's management efforts going forward, but GAO could not assess whether the programs were on track during 2015 because the baselines were approved so late in the year.

GAO Review of 25 Major DHS Acquisition Programs during 2015

Total number of programs GAO reviewed

Programs on track to meet schedule and cost goals

Programs with schedule slips, cost growth, or both

Programs that lacked approved schedule and cost goals

25

11

8

6

Source: GAO analysis of DHS documentation and data. | GAO-16-338SP

Since 2008, 12 of the 25 programs changed their key performance parameters (KPP)—the requirements a system must meet to fulfill its purpose—after DHS leadership approved them. Programs most often changed KPPs because they were poorly defined or programs decided to pursue greater capabilities. Nine programs may change their KPPs in the future, including seven that changed KPPs before. There are valid reasons to change a KPP—such as responding to emerging threats—but changes often come with schedule slips and cost growth.

DHS leadership is taking steps to improve the affordability of its major acquisition portfolio, and 14 of the programs GAO reviewed currently have funding plans covering at least 93 percent of their estimated costs through fiscal year 2020. In June 2014, DHS leadership established that components must certify programs' funding levels and identify tradeoffs necessary to address any funding gaps prior to major decisions. These efforts have generally been effective, and components have identified specific actions they can take to close three programs' funding gaps in the future. But the guidance does not require components to quantify cost estimates, funding streams, and the monetary value of proposed tradeoffs; and, in one case, the Coast Guard did not provide DHS leadership information needed to assess the National Security Cutter program's funding gap. From June 2014 through December 2015, DHS leadership assessed 14 of the programs GAO reviewed through this process, but it is uncertain whether DHS leadership will assess the remaining programs in a timely manner because the assessments are not required until major decisions, which can occur infrequently. Without timely affordability assessments, the acquisition funding plans presented to Congress are less likely to be comprehensive. That said, components do not have to wait for DHS leadership to improve the affordability of their acquisition programs. For example, the Transportation Security Administration has a formal affordability review process. However, Customs and Border Protection and the Coast Guard do not. DHS could further improve the affordability of its major acquisitions by requiring all components to create formal processes for addressing affordability.

Why GAO Did This Study

In fiscal year 2015, DHS planned to invest about $7 billion in major acquisitions. DHS's acquisition activities are on GAO's High Risk List, in part due to program management, requirements, and funding issues.

Congress included a provision in statute for GAO to review DHS's major acquisitions. This report, GAO's second annual review, addresses the extent to which (1) DHS's major acquisition programs are on track to meet their schedule and cost goals, (2) these programs changed KPPs after initiation, and (3) DHS has addressed these programs' affordability issues.

GAO assessed DHS's 16 largest acquisition programs that were in the process of obtaining new capabilities as of June 2015, and 9 other programs that GAO or DHS identified were at risk of poor outcomes to provide additional insight into factors that lead to poor outcomes. For all 25 programs, GAO reviewed key acquisition documents and met with program officials. GAO reviewed 22 of these programs in an April 2015 report (GAO-15-171SP). GAO also met with senior acquisition and financial oversight officials, and assessed DHS's policies and practices against internal control standards and key program management practices.

What GAO Recommends

GAO recommends DHS (1) quantify information when assessing programs' funding gaps, (2) conduct these assessments in a timely manner, (3) communicate results to Congress, and (4) require components to establish formal affordability review processes. DHS concurred with GAO's recommendations.

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

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: In providing comments on this report, the Department of Homeland Security (DHS) concurred with this recommendation, and identified that the DHS Chief Financial Officer updated the guidance for the funding certification memos in February 2016, adding a template that solicits detailed information about available funding and any associated shortfalls. We reviewed the guidance and template and determined that this action addressed the recommendation.

    Recommendation: To enhance DHS leadership's ongoing efforts to improve the affordability of the department's major acquisition portfolio, and to help ensure key information is communicated to management, the Secretary of the Department of Homeland Security should establish that components' senior financial officers explicitly quantify cost estimates, funding streams, and the monetary value of proposed tradeoffs in the funding certification memos they submit to DHS's Chief Financial Officer (CFO).

    Agency Affected: Department of Homeland Security

  2. Status: Closed - Implemented

    Comments: In providing comments on this report, DHS concurred with our recommendation and stated that it had initiated a requirement for components to submit key funding information for major acquisition programs as a part of its resource allocation process. Specifically, to initiate development of the fiscal year 2018 budget request in spring 2016, DHS required components to submit information on major acquisition programs' affordability, such as identifying all funding sources, a comparison to the program's most recent cost estimate, and the impact of any funding gaps on program schedule, cost, or performance. As a result, officials said that they were able to address any potential funding gaps for major acquisition programs through this process and determined in September 2016 that no programs required an ARB specifically to discuss affordability in response to our recommendation. GAO has determined that DHS's actions satisfy the intent of the recommendation. This accomplishment should improve DHS's ability to manage the affordability of the department's major acquisition portfolio.

    Recommendation: To enhance DHS leadership's ongoing efforts to improve the affordability of the department's major acquisition portfolio, and to ensure that acquisition affordability reviews are conducted in a timely manner, the Secretary of the Department of Homeland Security should require the components to submit to DHS's CFO funding certification memos for all major acquisition programs that have not been reviewed at an Acquisition Decision Event since the funding certification requirement was established; and convene Acquisition Review Boards to discuss affordability and make tradeoffs between cost, schedule, and performance, as necessary.

    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 stated that the fiscal year 2017 Future Years Homeland Security Program (FYHSP) report would reflect decisions made in response to our second recommendation. DHS expected to release the FYHSP report shortly after the President's fiscal year 2018 budget request in May 2017. However, the transition to a new administration delayed the release of the FYHSP report. Once available, GAO will evaluate the FYHSP report to determine whether DHS has met the intent of this recommendation.

    Recommendation: To enhance DHS leadership's ongoing efforts to improve the affordability of the department's major acquisition portfolio, and to ensure adequate communication with Congress, the Secretary of the Department of Homeland Security should ensure that the fiscal year 2017 Future Years Homeland Security Program report, which DHS must submit to Congress at or about the same time as the President's fiscal year 2018 budget request, reflects the results of any tradeoffs stemming from the acquisition affordability reviews recommended above.

    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, and stated that DHS headquarters would ensure all components are updating their cost estimates each year to inform the annual resource allocation process by March 31, 2017. However, DHS did not establish a requirement that components do so through formal, repeatable processes for addressing major acquisition affordability issues, similar to the process the Transportation Security Administration has established. As of August 2017, seven of DHS's components were in the process of establishing formal, repeatable processes for addressing affordability issues, but had not completed these efforts. GAO will continue to review the components' progress to determine whether the components' actions meet the intent of this recommendation.

    Recommendation: To enhance DHS leadership's ongoing efforts to improve the affordability of the department's major acquisition portfolio, and to help ensure programs secure stable funding that matches resources to requirements, the Secretary of the Department of Homeland Security should require components to establish formal, repeatable processes for addressing major acquisition affordability issues, similar to the process the Transportation Security Administration has established.

    Agency Affected: Department of Homeland Security

 

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