Why Area Is Important

The Department of Homeland Security (DHS), established in 2003 through the consolidation of 22 agencies with disparate missions, has obligated billions of dollars annually to meet its expansive homeland security mission. DHS acquisitions represent hundreds of billions of dollars in lifecycle costs and support a wide range of missions and investments including Coast Guard ships and aircraft, border surveillance and screening equipment, nuclear detection equipment, and systems to track the department's financial and human resources. DHS has not effectively developed, acquired, and provided oversight of its complex investments, such as programs for securing the border and the nation's transportation systems, with many programs experiencing cost overruns and schedule and performance shortfalls.

What GAO Found

DHS faces significant challenges in managing its acquisitions, including programs not meeting their cost, schedule, and performance expectations. Strengthening its acquisition management process would help DHS to deliver critical mission capabilities that meet identified needs on time and within budget, including helping to reduce the cost overruns and schedule delays that DHS continues to experience in many of the major acquisition programs GAO has reviewed.

DHS acquisition spending has increased by 66 percent since fiscal year 2004—from $8.5 billion in fiscal year 2004 to $14.2 billion in fiscal year 2009—and DHS's portfolio of complex acquisitions continues to expand. DHS has made progress in strengthening its acquisition management by, for example, implementing a revised acquisition management directive that includes more detailed guidance for programs to use in informing component and departmental decision making. However, most acquisition programs GAO has reviewed at the department have not met cost, schedule, and performance expectations.[1] In particular, most DHS acquisition programs reported cost growth from initial estimates. Further, most programs GAO reviewed experienced estimated or actual schedule delays in delivery of initial operating capability of an average of 12 months. As GAO reported in June 2010, weaknesses in the department's acquisition management process continue to hinder the department's ability to provide needed capabilities on time and within budget. For example:

• DHS's senior-level Acquisition Review Board had not reviewed most of its major acquisition programs by the end of fiscal year 2009 and programs that had been reviewed had not consistently implemented action items identified as part of the review by established deadlines. GAO's prior work has shown that when these types of reviews are skipped or not fully implemented, programs move forward with little, if any, early department-level assessment of the programs' costs and feasibility, which contributes to poor cost, schedule, and performance outcomes. DHS acquisition oversight officials said that funding and staffing levels have limited the number of programs they can review. GAO recommended that DHS identify and align sufficient management resources to implement oversight reviews in a timely manner. DHS generally concurred with the recommendation, and, as of January 2011, has reported taking action to address it. For example, DHS reported that it has increased its acquisition management staffing, and plans to hire more staff to develop cost estimates. DHS also reported that it held 35 Acquisition Review Board meetings in fiscal year 2010 and plans to hold between 36 and 40 in fiscal year 2011. In addition, DHS reported making progress in tracking and closing action items. These planned actions are positive steps and, if implemented effectively, could help strengthen DHS's acquisition review process. However, it is too early to tell what impact these planned actions will have on the department's review process.
• DHS's acquisition review process has not informed DHS's annual budget process for funding major programs, and many major programs received funding without validation of mission needs and requirements, largely because department-level reviews were seldom conducted. DHS's Joint Requirements Council, which was responsible for validating program requirements, stopped meeting in 2006. GAO recommended that the department ensure that budget decisions are informed by the results of investment reviews including approved acquisition information and cost estimates and reinstate the Joint Requirements Council or establish another departmental oversight board to perform this function. DHS concurred with this recommendation and, as of January 2011, was planning to establish a council to analyze DHS mission and strategic requirements. DHS also reported it plans to better link the development of requirements to resource allocation and program management. Until these efforts are fully and effectively implemented, DHS may continue to experience difficulties in ensuring that resources are allocated to acquisition programs commensurate with their requirements.
• DHS has not developed accurate cost estimates for most of its major acquisition programs. For example, the Coast Guard's Rescue 21 search and rescue system has experienced significant cost growth—by 131 percent since the department's initial cost estimate in 2003—due to, among other things, underestimation of costs for program management, deployment, and operations and maintenance. GAO's work has shown that accurate cost estimates are critical to making funding decisions, evaluating resource requirements, and developing performance measurement baselines. DHS has reported that the department is working to address this concern by assisting programs in developing cost estimates and obtaining independent cost estimates for some high-risk programs. While these are positive steps, until accurate cost estimates are in place, DHS will be challenged in making informed funding decisions and assessing program performance.
• Over half of the 15 programs GAO reviewed awarded contracts to initiate acquisition activities without component or department approval of documents essential to planning acquisitions, setting operational requirements, and establishing acquisition program baselines. For example, the Secure Flight program for comparing air passengers' information to terrorist watch lists did not have an approved program baseline until over 4 years after initiation of the acquisition, and U.S. Customs and Border Protection's program to modernize its computer application for disseminating data to support port-of-entry inspections did not have a component or department-approved baseline after more than 6 years. Further, the Federal Emergency Management Agency has not yet approved an acquisition program baseline or other key program documents for its Integrated Public Alert and Warning System, which was initiated in 2004, and DHS did not develop its lifecycle cost estimates until 2009. GAO's prior work has noted that without the development, review, and approval of these key documents, agencies are at risk of having poorly defined requirements that can negatively affect program performance and contribute to increased costs. In January 2011, DHS reported that it has begun to implement an initiative to assist programs with completing departmental approval of acquisition program baselines. However, it is too early to fully assess the impact of this planned initiative.

Actions Needed

GAO's work has highlighted the need for the department to improve its acquisition portfolio management and adhere to key acquisition management processes to help improve the department's ability to deliver major acquisition programs to meet critical mission needs on time and within budget. Ensuring that requirements and cost estimates are well defined upfront could help DHS make sure there is a more accurate picture of the total costs and needs for a program. Further, establishing and measuring performance against department-approved baselines and indicators would help ensure that the acquisition program is on track with regard to performance, schedule, and cost. As GAO has recommended, DHS needs to ensure that its investment decisions are transparent and documented; ensure that budget decisions are informed by the results of acquisition investment reviews, including acquisition information and cost estimates; identify and align sufficient management resources, such as acquisition staff, to implement oversight reviews in a timely manner; and review and validate acquisition programs' requirements. These actions, if implemented effectively, should help DHS identify and avoid the cost overruns and schedule delays that DHS acquisition programs have experienced.

DHS is planning to address these challenges by, among other things, establishing an Investment Review Board to oversee activities of the Acquisition Review Board and the status of all acquisition investments; expanding its Acquisition Corps to provide trained procurement and program management professionals to manage DHS's most critical acquisition programs; and developing a tool to track programs' cost, schedule, and performance indicators. However, it is too early to tell what effect these planned changes will have on DHS's acquisition management. In addition, due to previously mentioned concerns about the accuracy of current cost estimates and DHS challenges in measuring against cost, schedule, and performance baselines, GAO is unable to quantify future savings at this time. Success in reducing acquisition cost overruns will depend on DHS's further implementation of key actions GAO has recommended for strengthening the department's acquisition management.

Framework for Analysis

The information contained in this analysis is based on the related GAO products listed under the "Related GAO Products" tab.

Area Contact

For additional information about this area, contact Diana Maurer at (202) 512-9627 or maurerd@gao.gov; John Hutton at (202) 512-7773 or huttonj@gao.gov; or David Powner at (202) 512-9286 or pownerd@gao.gov.

Related GAO Products