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36–612 PDF 2008

S. Hrg. 110–240

DHS’S ACQUISITION ORGANIZATION: WHO IS

REALLY IN CHARGE?

HEARING

BEFORE THE

OVERSIGHT OF GOVERNMENT MANAGEMENT, 

THE FEDERAL WORKFORCE, AND THE 

DISTRICT OF COLUMBIA SUBCOMMITTEE

OF THE

COMMITTEE ON 

HOMELAND SECURITY AND 

GOVERNMENTAL AFFAIRS 

UNITED STATES SENATE

ONE HUNDRED TENTH CONGRESS

FIRST SESSION

JUNE 7, 2007

Available via http://www.access.gpo.gov/congress/senate

Printed for the use of the Committee on Homeland Security 

and Governmental Affairs

(

(II)

COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS 

JOSEPH I. LIEBERMAN, Connecticut, Chairman 

CARL LEVIN, Michigan 

DANIEL K. AKAKA, Hawaii 

THOMAS R. CARPER, Delaware 

MARK L. PRYOR, Arkansas 

MARY L. LANDRIEU, Louisiana 

BARACK OBAMA, Illinois 

CLAIRE McCASKILL, Missouri 

JON TESTER, Montana 

SUSAN M. COLLINS, Maine 

TED STEVENS, Alaska 

GEORGE V. VOINOVICH, Ohio 

NORM COLEMAN, Minnesota 

TOM COBURN, Oklahoma 

PETE V. DOMENICI, New Mexico 

JOHN WARNER, Virginia 

JOHN E. SUNUNU, New Hampshire

MICHAEL L. ALEXANDER, Staff Director 

BRANDON L. MILHORN, Minority Staff Director and Chief Counsel 

TRINA DRIESSNACK TYRER, Chief Clerk 

OVERSIGHT OF GOVERNMENT MANAGEMENT, THE FEDERAL 

WORKFORCE, AND THE DISTRICT OF COLUMBIA SUBCOMMITTEE 

DANIEL K. AKAKA, Hawaii, Chairman 

CARL LEVIN, Michigan 

THOMAS R. CARPER, Delaware 

MARK L. PRYOR, Arkansas 

MARY L. LANDRIEU, Louisiana 

GEORGE V. VOINOVICH, Ohio 

TED STEVENS, Alaska 

TOM COBURN, Oklahoma 

JOHN WARNER, Virginia

RICHARD J. KESSLER, Staff Director 

JENNIFER A. HEMINGWAY, Minority Staff Director 

EMILY MARTHALER, Chief Clerk 

(III)

C O N T E N T S 

Opening statements: Page 

Senator Akaka .................................................................................................. 1

Senator Voinovich ............................................................................................. 3

WITNESSES 

THURSDAY, JUNE 7, 2007

Hon. Paul A. Schneider, Under Secretary for Management, U.S. Department 

of Homeland Security .......................................................................................... 5

Admiral John P. Currier, Assistant Commandant for Acquisition, U.S. Coast 

Guard .................................................................................................................... 7

John P. Hutton, Director of Acquisition and Sourcing Management, U.S. 

Government Accountability Office ...................................................................... 9

ALPHABETICAL LIST OF WITNESSES

Currier, Admiral John P.: 

Testimony .......................................................................................................... 7

Prepared statement .......................................................................................... 36

Hutton, John P.: 

Testimony .......................................................................................................... 9

Prepared statement .......................................................................................... 41

Schneider, Hon. Paul A.: 

Testimony .......................................................................................................... 5

Prepared statement .......................................................................................... 27

APPENDIX 

Background .............................................................................................................. 53

Response from Mr. Schneider to specific questions regarding the number 

of new acquisition staff the Department has hired ........................................... 59

‘‘Defense Acquisition University Quick Look Study,’’ United States Coast 

Guard Deepwater Program, February 2007 ...................................................... 61

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DHS’S ACQUISITION ORGANIZATION: WHO IS 

REALLY IN CHARGE? 

THURSDAY, JUNE 7, 2007

U.S. SENATE,

SUBCOMMITTEE ON OVERSIGHT OF GOVERNMENT

MANAGEMENT, THE FEDERAL WORKFORCE,

AND THE DISTRICT OF COLUMBIA,

OF THE COMMITTEE ON HOMELAND SECURITY

AND GOVERNMENTAL AFFAIRS,

Washington, DC.

The Subcommittee met, pursuant to notice, at 2:33 p.m., in Room 

342, Dirksen Senate Office Building, Hon. Daniel K. Akaka, Chairman of the Subcommittee, presiding. 

Present: Senators Akaka and Voinovich. 

OPENING STATEMENT OF SENATOR AKAKA 

Senator AKAKA. Good afternoon. This hearing of the Homeland 

Security and Governmental Affairs Subcommittee on Oversight of 

Government Management, the Federal Workforce, and the District 

of Columbia is called to order. 

I want to welcome our witnesses and offer my special thanks to 

Under Secretary Schneider for taking time out of his busy schedule 

once again for this Subcommittee. Last month, this Subcommittee 

held its first hearing to examine the Department’s management 

challenges, where we touched on several issues vital to integrating 

DHS successfully. In today’s hearing, we hope to explore one of the 

most critical issues facing DHS, and that is acquisition management. 

Four years ago, the Federal Government started a monumental 

task bringing together 22 agencies and offices from across the Federal Government to form the new Department of Homeland Security. This reorganization combined 180,000 employees as well as a 

massive procurement portfolio. DHS has become the third-largest 

spender on contracts behind the Departments of Defense and Energy, spending more than $15 billion in fiscal year 2006. 

While DHS is still a young agency, it has experienced its share 

of contracting woes. Since its creation in 2003, DHS has found 

itself on the Government Accountability Office’s high-risk list. This 

has been due in large part to the challenges that existed in many 

of DHS’s component agencies before the reorganization as well as 

the complexity and critical importance of a successful reorganization. 

2

In particular contract management has posed a difficult problem 

throughout DHS’s short history. The Department is already engaged in several large-scale procurement projects. Some were poorly executed and managed. Poor contract management leaves DHS 

vulnerable to waste, fraud, and abuse. Most importantly, it exposes 

the Nation to unacceptable security risks. 

When the Department was created, a total of seven component 

agencies brought their own contracting shops to DHS. Those who 

did not have their own existing organization before coming to DHS 

now utilize the Office of Procurement Operations under the Chief 

Procurement Officer. While DHS does have a Chief Procurement 

Officer, the acquisition organizational structure at DHS gives the 

position little formal authority outside of the Office of Procurement 

Operations. A 2004 Management Directive at DHS gave the CPO 

oversight and auditing roles agency-wide, but limited its authority 

over the Secret Service and the Coast Guard. The CPO and DHS’s 

other contracting shops share dual authority over contracting matters. This decentralized acquisition organization has proven problematic for the agency, according to GAO. 

In addition to the acquisition structure at DHS, the Department 

has an inadequate contracting workforce. The shortage of qualified 

procurement professionals seriously hinders the Department’s ability to oversee contracts effectively after they have been awarded. 

DHS has made some progress in improving recruitment, training, 

and retention of qualified acquisition professionals, notably with its 

new internship program. 

However, more needs to be done. Without the experienced workforce the Department requires, I fear it will have to rely increasingly on large single-source contracts that it cannot effectively 

manage, leading to increased waste and fraud. 

Last year, problems with the Coast Guard’s Deepwater contract 

came to a head when costs soared and deliverables did not meet 

specifications required under the contract. I understand that over 

the last several months, the Coast Guard has reevaluated its Deepwater contract and implemented reforms, which I hope Admiral 

Currier will detail in his testimony, but it is most important to 

hear what lessons have been learned both by the Coast Guard and 

the Department that can be applied to future acquisition programs. 

The Department is now in the process of implementing the Customs and Border Protection contract to secure our borders, known 

as the Secure Border Initiative, or SBInet. This will be a multiyear, multi-faceted project of a tremendous scale that would 

present a great procurement management challenge to even the 

most experienced, highest-functioning organization. However, as 

the DHS Inspector General pointed out in a November 2006 report, 

there are already early warning signs that the Department may 

not have the resources available to manage SBInet properly. According to that report, DHS lacks the appropriate workforce, business processes, and management controls to plan and execute it. I 

am greatly concerned by this. I hope that Under Secretary Schneider will lay out how DHS intends to mitigate the problems highlighted in the Inspector General’s report. 

DHS needs a comprehensive acquisition structure in which all 

components with procurement authority work together, do not duVerDate 0ct 09 2002 09:36 Jan 17, 2008 Jkt 036612 PO 00000 Frm 00006 Fmt 6633 Sfmt 6633 P:\DOCS\36612.TXT SAFFAIRS PsN: PAT
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plicate efforts, and do not unnecessarily compete for resources. This 

is essential for the Department to perform its mission. 

As Benjamin Franklin once famously said, ‘‘For want of a nail, 

the shoe was lost. For want of a shoe, the horse was lost. And for 

want of a horse, the rider was lost.’’ Acquisition management is a 

fancy term for making certain that our first responders and homeland security professionals have the tools they need to accomplish 

their mission. I intend to keep a close watch on how well DHS is 

managing acquisition and look forward to supporting Mr. Schneider’s efforts at reform. 

Now, I would like to call on Senator Voinovich for his statement. 

OPENING STATEMENT OF SENATOR VOINOVICH 

Senator VOINOVICH. Thank you, Senator Akaka. I want to thank 

all of you for being here today. This is the second hearing we have 

had on management issues facing the Department of Homeland Security. I am very worried about the current state of the Department and where it is going. I don’t think the public understands 

what a gigantic task it is to take 22 agencies, 200,000 people, and 

bring them together and come up with an organization that really 

gets the job done. 

Senator Akaka and I are going to stay committed to the Department’s management issues. We want to make sure that this gets 

off the GAO high-risk list, but more important than that, that it 

does the job that the people of this country expect it to do, which 

is to protect the homeland. 

I think too often Congress fails to recognize the link between 

agency management and operational success. With a finite amount 

of resources and an ever-growing demand for homeland security 

services, it is imperative that the Department employ an effective 

acquisition management strategy to ensure taxpayer dollars are 

spent in a cost-effective manner. 

In 2005, the GAO began reporting on the challenges inherent in 

the Department’s acquisition process. The 2007 GAO high-risk report found the Department lacks a unified acquisition organization 

and faces a shortage of experienced acquisition personnel to manage its $15.7 billion procurement budget. 

Senator Akaka and I have spent a considerable amount of time 

in the Senate focusing on human capital management and improving the effectiveness of agency programs deemed to be high risk. 

We understand how critical it is for DHS to have a highly-trained, 

appropriately staffed acquisition workforce to properly manage its 

acquisition process. We expect that individuals supporting the acquisition structure will know who is in charge. Mr. Schneider, I am 

pleased that you recognize these core needs and look forward to 

learning more about your plan to ensure that they are met. 

One deficiency that continues to plague the Department’s ability 

to accomplish its mission is the lack of a Chief Management Officer. The CMO position will become even more important if the immigration bill currently being debated in the Senate becomes law. 

The Department’s plan to achieve the benchmarks in the immigration bill currently being debated by the Senate will require the 

dedication of top-level leadership and considerable resources. I 

think that our colleagues have no idea of what a gigantic task it 

4

is going to be to implement this legislation, assuming it gets 

passed. That is why I am working on an amendment to ensure the 

Department consults with this Committee if the immigration bill 

becomes law. This will provide for greater oversight and more 

acountability. 

Mr. Schneider, I remain convinced that elevating your current 

position to Deputy Secretary for Management and requiring a term 

appointment will provide the top-level leadership and continuity 

necessary to meet the current and future management challenges 

facing the Department. I recently read a National Journal article. 

You have 360 political appointees in the Department of Homeland 

Security, as contrasted to the Veterans Administration, which has 

235,000 employees and only 64 appointees. The Defense Department has 283 political appointees, but they have 2.1 million employees. 

I was talking to Senator Collins today and we agreed that we 

need to look at the number of political appointees and evaluate 

which can be eliminated and those positions that can be put into 

the civil service. We are going to see lots of people leave that are 

in strategic positions in the Department and then the issue is who 

is going to run the Department? It seems to me that we need a 

CMO. Senator Akaka, we have to really push to see if we can’t get 

this legislation passed so we have some kind of decent transition 

over there, or God only knows what will happen in the interim period. 

As the Department moves forward with major acquisition 

projects such as SBInet, a key component of our efforts to secure 

the border, I want to be assured DHS has a clear governance structure in place. This structure must clearly define how and when decisions will be made, who will make them, require performance 

metrics to measure success. Are we doing any good? And while 

these characteristics might seem basic to some, a cursory view of 

the Federal Government’s acquisition initiative shows they are too 

often forgotten. 

I am pleased to see that SBInet is serving as a pilot for Acquisition Innovation Project, an effort launched by the Partnership for 

Public Service’s Private Sector Council to improve post-award contract management. I encourage the Department to continue to participate in this pilot to aid in the success of SBInet and future DHS 

acquisition projects. 

As governor, I know firsthand how important public-private partnerships can be in improving the functioning of our government. 

This Subcommittee has responsibility to ensure the Department 

has the ability to carry out its mission. Rest assured that we will 

continue to monitor the acquisition management at the Department. 

I look forward to your testimony, and thank you, Senator. 

Senator AKAKA. Thank you very much, Senator Voinovich. 

It is my pleasure to welcome back Paul Schneider, who is now 

Under Secretary for Management, Department of Homeland Security; also Rear Admiral John Currier, Assistant Commandant for 

Acquisition, U.S. Coast Guard; and John Hutton, Director of Acquisition and Sourcing Management, Government Accountability Office. 

5

1The prepared statement of Mr. Schneider appears in the Appendix on page 27. 

As you know, it is the custom of the Subcommittee to swear in 

all witnesses, so will you please stand and raise your right hand. 

Do you swear that the testimony you are about to give the Subcommittee is the truth, the whole truth, and nothing but the truth, 

so help you, God? 

Mr. SCHNEIDER. I do. 

Admiral CURRIER. I do. 

Mr. HUTTON. I do. 

Senator AKAKA. Thank you. Let the record note that the witnesses responded in the affirmative. 

I want to thank you again for being here. Although your statements are limited to 5 minutes, I want all of our witnesses to know 

that their entire statement will be included in the record. 

So Mr. Schneider, will you please proceed with your statement. 

TESTIMONY OF HON. PAUL A. SCHNEIDER,1 UNDER SECRETARY FOR MANAGEMENT, U.S. DEPARTMENT OF HOMELAND SECURITY 

Mr. SCHNEIDER. Thank you, Mr. Chairman, Senator Voinovich, 

and Members of the Subcommittee. It is a pleasure to appear before you again. I am here today to discuss acquisition and procurement issues and authorities. 

The Department of Homeland Security is in the midst of many 

crucial acquisitions that are vital to the success of DHS. Acquisition is the process that starts with identifying a mission need, developing the requirements and budget to meet that need, developing sound business strategies, contracting with industry to deliver the products and the services to fulfill that need, assessing 

trade-offs, managing program risks, and sustaining the delivered 

system through its life. Procurement is the actual transaction for 

goods or services and plays only a part in the overall acquisition 

process. 

The Coast Guard Deepwater program and SBInet are perhaps 

the two largest acquisition programs in the Department. The Deepwater program has been restructured with the role of the Coast 

Guard in managing this large-scale effort to be one of more handson control. The Coast Guard is also implementing a major organization restructuring to strengthen acquisition, which Admiral 

Currier will discuss in more detail. The major challenge the Coast 

Guard now faces in executing the Commandant’s Blueprint for Acquisition is hiring the experienced talent that it needs to manage 

complex acquisitions and to establish acquisition as a valued career 

field with appropriate career plans for both military and civilians. 

This will require several years to fully mature. 

I am frequently asked if SBInet will turn into a Deepwater problem. The answer is unequivocally no. SBInet is the Department’s 

multi-year plan to secure our borders and reduce illegal immigration. It is managed by one of the most experienced program managers in government, Kirk Evans. The program’s approach is comprehensive and includes risk mitigation factors. Project 28 will 

demonstrate SBInet’s system capabilities by deploying sensor towers, unattended ground systems, and upgrades to existing Border 

6

Patrol vehicles and communication systems. Upon completion of 

Project 28, which is set for this month, the Army will conduct an 

independent test and evaluation and provide an assessment of 

SBInet’s interim operating capabilities. 

Because this is a modular and scalable architecture, we will be 

in a position to make important trade-offs on performance, risk, 

and total system cost very early, all this in less than 1 year after 

this contract was awarded. In my personal opinion, this is a model 

for how spiral acquisition and risk reduction ought to be accomplished. 

People are the key for us to achieving acquisition excellence. We 

currently have a serious shortage of people who are experienced in 

program management and the related career fields. We have the 

funding to pursue aggressive hiring and are doing so. 

Regarding our acquisition structure, given how the Department 

was formed and its current maturity, it is not surprising to me that 

we do not have a consistent organization structure throughout the 

Department. My written testimony covers this in some detail. 

While this may not be ideal for the long term, I think it is more 

important to focus on people, acquisition processes, and the individual program efforts rather than trying to develop the more perfect organization structure at this point in time. 

The two key positions in the Department with authorities related 

to procurement and acquisition are the Chief Procurement Officer 

and the Under Secretary for Management. In accordance with the 

Service Acquisition Reform Act, which was enacted as part of Title 

XIV of the National Defense Authorization Act for fiscal year 2004, 

I am the Chief Acquisition Officer, or CAO, of DHS, as that law 

requires, the CAO require to be a non-career employee. 

The Chief Procurement Officer, Ms. Elaine Duke, who is here 

with me today, is a career civil servant with nearly 25 years of government service. She serves as the Chief Procurement Officer and 

the Senior Procurement Executive of the Department. The Chief 

Procurement Officer has authority to exercise whatever oversight 

she determines to be proper over the execution of the procurement 

and contracting functions across the Department. 

As the Chief Acquisition Officer, my authorities include, and I 

will just summarize the big ones, monitoring the performance of acquisition activities and acquisition programs of the Department, 

evaluating the performance of these programs on the basis of applicable performance measurements, and advising the Secretary regarding the appropriate business strategy to achieve the mission of 

the Department, making acquisitions consistent with applicable 

laws and establishing clear lines of authority, accountability, and 

responsibility for acquisition decisionmaking in the Department. 

The major differences between the responsibilities of the Department of Homeland Security Chief Acquisition Officer, me, and the 

Under Secretary of Defense for Acquisition Technology and Logistics is that the Under Secretary of Defense for Acquisition Technology and Logistics has very specific authority granted by Title X 

to direct the service secretaries in acquisition matters. I think, 

however, it is important to recognize that this major change took 

place as a result of the Goldwater-Nichols legislation and a major 

restructuring of the entire Defense Department and that occurred 

7

1The prepared statement of Admiral Currier appears in the Appendix on page 36. 

roughly in 1986 with Goldwater-Nichols and the Defense Management Review, I think it was of 1989. 

DHS is still in the developing stages, and I strongly agree with 

the Secretary’s decision that as a result of his second-stage review, 

there would be no more major reorganizations during his administration. 

I would like to thank you for this opportunity to be here today 

and I would be pleased to respond to any questions you may have. 

Senator AKAKA. Thank you very much, Mr. Secretary. 

Now, Admiral, will you please proceed with your statement. 

TESTIMONY OF ADMIRAL JOHN P. CURRIER,1 ASSISTANT 

COMMANDANT FOR ACQUISITION, U.S. COAST GUARD 

Admiral CURRIER. Good afternoon, Chairman Akaka, Ranking 

Member Voinovich. Thank you for allowing my written testimony 

to be entered into the record, sir. I am grateful for this opportunity 

to come here today and discuss with you the acquisition policies, 

processes, and practices of the U.S. Coast Guard and also describe 

our relationship with the Department. 

Our acquisition portfolio now totals approximately $25.8 billion 

of critical investment, and that is about a $1.4 billion annual obligation across 16 major programs. When Admiral Thad Allen became Commandant in May 2006, his first order directed the consolidation of our previously disjointed acquisition activities into a 

single, comprehensive directorate with a goal of better supporting 

and enhancing mission execution by creating a responsive, competent, and efficient acquisition organization. 

Standing up on July 13 of this year, the Acquisition Directorate 

will include the Deepwater Program Executive Office and 15 other 

acquisition programs, the Office of Procurement Policy, the Research and Development Program, and the Head of Contracting Activity. The consolidated Acquisition Directorate will more effectively deliver the material solutions to maintain mission readiness 

for the operating forces of the Coast Guard. 

Also in support of the Commandant’s intent, we developed a 

blueprint for acquisition reform as a capstone strategy document 

defining our future state. We desire to become a model mid-sized 

Federal agency for acquisition and procurement. The blueprint 

shows the way through a number of improvements in organizational alignment and leadership, policies and processes, human 

capital, which we consider to be the most important, and knowledge and information management and the development of decisionmaking tools for program managers. We have selected or chosen to use the Government Accountability Office framework for 

evaluation of Federal acquisition as a framework for our strategy 

for restructuring. 

Additionally, Vice Admiral Vivien Crea, who is the Agency Acquisition Executive, is fully engaged with the Department in two particular activities to ensure that through the Joint Requirements 

Council that whatever procurements we are doing are surveyed 

across the Department for applicability to other component agenVerDate 0ct 09 2002 09:36 Jan 17, 2008 Jkt 036612 PO 00000 Frm 00011 Fmt 6633 Sfmt 6633 P:\DOCS\36612.TXT SAFFAIRS PsN: PAT
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cies, as well as her involvement in the Investment Review Board 

on a cyclical basis to review our financial and program status. 

We have established several collaborative teams to facilitate communications and best practices amongst our stakeholders within 

the Coast Guard and within the Department. For example, the 

Capstone Integrated Project Team, under the direction of the 

Under Secretary for Science and Technology, was convened for the 

first time this year to identify technology gaps and to assess whether projects are capable of meeting those gaps and meeting the stated objectives of the procurements. 

Under our blueprint strategy, an area of particular focus will be 

the New Start Management. We and virtually all other Federal 

agencies have been weak in managing the front end of major systems acquisitions. Adequate cost estimation and programmatic risk 

assessment are critical to the success of program execution. We 

need to become better at the formulation of systems acquisition 

strategies early on in the project identification phase. This includes 

not only requirements generation, but resources and contract vehicle planning. We also need to become more effective at oversight 

in two critical areas, at the program level and at the executive 

level. 

Our blueprint effort to date has already resulted in some 

progress. For example, using the Defense Acquisition University as 

a third party, we accomplished a nose-to-tail review of our Rescue 

21 program to determine problems, adequacy of our acquisition 

strategy, and most importantly, a way ahead in close collaboration 

with the prime contractor, General Dynamics. The contract has 

been restructured to improve our business relationship with the 

prime and also contain costs. 

We have aggressively restructured the Deepwater program to position the Coast Guard to assume a greater systems integrator responsibility. We want to enhance competition, pursue service-wide 

logistics and network architecture solutions, and create necessary 

bench strength within our workforce to be able to see this execution through, we need to see through this vital recapitalization. 

Our executive oversight has been materially enhanced by our 

Commandant, Admiral Allen, who periodically meets with the chief 

executive officers of the major companies with which we are contractually engaged. The purpose for those meetings are to review 

the programs and to align expectations. 

At my level, Admiral Blore, the PEO Deepwater, and myself regularly meet with our vice president counterparts with the major 

companies with which we have contracts and program reviews on 

a regular cycle. 

Our reformation in acquisition is the result of robust analysis 

process, tapping the expertise of several third parties, notably 

DOD, the Office of Naval Research, the Center for Naval Analysis, 

Naval Sea Systems Command, and the Defense Acquisition University. We are closely working with the Department’s Chief Procurement Officer, Chief Information Officer, and Chief Financial Officer 

to ensure a meaningful relationship for oversight, guidance, and investment review. 

In the end, the Coast Guard must be able to do three things: 

Contract for sustainment; procure assets and acquire major sysVerDate 0ct 09 2002 09:36 Jan 17, 2008 Jkt 036612 PO 00000 Frm 00012 Fmt 6633 Sfmt 6633 P:\DOCS\36612.TXT SAFFAIRS PsN: PAT
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1The prepared statement of Mr. Hutton appears in the Appendix on page 41. 

tems on a single asset basis—an example would be patrol boats; 

and also employ a government or non-government commercial systems integrator for networked complex acquisitions. We are currently reorganizing the Coast Guard acquisition and, in fact, the 

overarching mission support architecture to effectively meet our 

mission requirements, not only now but in the future as we grow 

with our security focus in the post-September 11 world. 

Thank you, Senators, for this opportunity to describe our program and I look forward to answering your questions. 

Senator AKAKA. Thank you very much, Admiral. 

Mr. Hutton, will you please proceed with your statement. 

TESTIMONY OF JOHN P. HUTTON,1 DIRECTOR OF ACQUISITION AND SOURCING MANAGEMENT, U.S. GOVERNMENT ACCOUNTABILITY OFFICE 

Mr. HUTTON. Thank you. Mr. Chairman, Senator Voinovich, and 

Members of the Subcommittee, thank you for inviting GAO to this 

hearing to discuss the Department of Homeland Security’s acquisition organization. 

As you know, DHS is the result of one of the biggest mergers to 

take place in U.S. Government, integrating 22 separate Federal 

agencies and organizations with multiple missions, values, and cultures into one department. Now, such a merger involves a variety 

of transformational efforts, one of which is to design and implement the necessary management structure and processes for acquiring goods and services. In fact, DHS has some of the most extensive acquisition needs in the Federal Government. In fiscal year 

2006, the Department reported that it obligated over $15 billion for 

goods and services to support its broad and complex acquisition 

portfolio. 

Now, my testimony today focuses on accountability and management of DHS acquisitions and it is based primarily on GAO’s reports and testimonies. I will discuss three issues: First, the Department’s challenges in creating an integrated acquisition function; 

second, the investment review process; and third, the Department’s 

reliance on contractors for critical services. 

Having an acquisition function that efficiently, effectively, and 

appropriately acquires goods and services is critical for agencies 

that rely heavily on the private sector to support its mission. We 

have reported, however, that the structure of DHS’s acquisition 

function creates some ambiguity about who is actually accountable 

for acquisition decisions. Specifically, the structure depends on a 

system of dual accountability and cooperation and collaboration between the Chief Procurement Officer and the component heads. 

An October 2004 Management Directive, the Department’s principal guidance for governing and integrating and managing the acquisition function, highlights the Chief Procurement Officer’s broad 

authority, including the management, administration, and oversight of department-wide acquisition. In our report, we noted that 

the directive may not achieve its goal of establishing an integrated 

acquisition organization because it creates unclear working relationships between the CPO and the component heads. For example, 

10

some of the duties delegated to the CPO are shared with the component heads, such as recruiting, selecting key acquisition officials 

at the components, etc. 

Another potential integration issue concerns managing and providing appropriate resources across DHS’s acquisition organization. 

Indeed, a common theme in our work has been DHS’s struggle to 

provide adequate support for its mission components and resources 

for department-wide oversight. For example, in our 2005 report, we 

noted disparities in the staffing levels and workload among the 

component procurement offices and we recommended that DHS 

conduct a department-wide assessment, and it is my understanding 

they plan to do so. While DHS reported progress in providing staff 

for the component contracting offices in 2006, much work, as we 

have been noting, remains to fill the positions with qualified, 

trained acquisition professionals. 

The CPO recently established a department-wide acquisition 

oversight program, and this is a promising initiative. It is designed 

to provide insight into components’ acquisition programs as well as 

facilitate lessons learned across the components. Now, while implementation is ongoing, we reported in 2006 that the CPO lacks the 

authority needed to ensure that the Department’s components comply with its procurement policies and procedures, such as the acquisition oversight program. 

Now, turning to DHS’s major investments, DHS put in place a 

review process intended to reduce risk and increase the chances for 

successful outcomes in terms of cost, schedule, and performance. In 

2005, we reported that this process adopted many acquisition best 

practices that, if applied consistently, could increase the chances 

for success. We also noted how additional management reviews and 

other steps could better position DHS to make well-informed decisions. Concerns have been raised about how the investment review 

process has been used to oversee its largest acquisitions and we understand DHS expects to make some changes to the process. 

Finally, to quickly get the Department up and running and to obtain necessary expertise, DHS has relied extensively on contracts 

with the private sector for a broad range of mission-related services 

and complex acquisitions. In particular, our work has found at 

DHS, and it is similar to other government agencies, they face 

challenges, particularly when they are managing the use of another 

agency’s contracting service or existing contracts to acquire services. Although use of such interagency contracts can provide advantages in terms of timeliness and efficiency, they may not necessarily provide the best outcome for the agency. 

Further, the government agencies, including DHS components, 

have also turned to a systems integrator in situations such as 

when they believe they do not have the in-house capability to design, develop, and manage a complex acquisition. This arrangement 

creates an inherent risk as a contractor is given more discretion to 

make certain program decisions. With the increased reliance on 

contractors comes a need for an appropriate level of oversight and 

management attention to its contracting for services and major systems. 

In closing, since DHS was established in 2003, it has been challenged to integrate 22 separate Federal agencies and organizations. 

11

Such a merger involves a variety of transformational efforts, one of 

which is to design and implement and the necessary management 

structure and processes for acquiring goods and services, and given 

the size of DHS and the scope of its acquisitions, we are continuing 

to assess the Department’s acquisition efforts in ongoing work and 

planned work. 

Mr. Chairman, this concludes my statement. I will be happy to 

answer any questions. 

Senator AKAKA. Thank you very much. 

Mr. Hutton, GAO has recommended for years that the Chief Procurement Officer be given authority over the Coast Guard and the 

Secret Service. You also recommend that the CPO be given more 

authority over other DHS component procurement operations. Exactly what new authorities is GAO recommending for the CPO and 

how do you think this would improve acquisition management at 

DHS? 

Mr. HUTTON. Senator, if we take it back to the original Management Directive where we noted that a goal was to integrate an acquisition function over at DHS, in reading that and in our past 

work, we noted, too, though, that it was assigning dual accountability and collaboration between CPO and the component heads. 

So we had recommendations, as you pointed out, that we felt that 

the CPO needed some additional resources and enforcement authority to make sure that the procurement policy and procedures 

are followed through. 

Now, we are not talking about a direct report or centralized procurement, and quite frankly, there is really no single optimal way 

to organize an acquisition function. But I think in our work, what 

we are trying to point out is that are we aligned in such a way that 

we can have an effective acquisition organization? 

And just to use one example, in our work in 2005, we noted that 

the Coast Guard and Secret Service were explicitly exempted from 

the Management Directive. So you had a situation where you had 

a couple components over at DHS and you had the CPO with their 

operations and you had several others, but the way the directive 

was written, it basically made it sound like the CPO had no authority over the Secret Service and the Coast Guard. 

So when we raised that issue in that work, initially, we were informed that it was for statutory reasons, but in that work, in discussions with DHS General Counsel, we found that it really was 

more of a policy decision. And it is my understanding that DHS is 

considering having the Secret Service and Coast Guard under that 

umbrella of the Management Directive. So that would be a good 

thing. 

Senator AKAKA. Let me try to clarify your last remarks here. Do 

you think that DHS can strengthen the CPO using their own current authority? You used the word ‘‘statutory.’’ Is some kind of 

Congressional action needed? 

Mr. HUTTON. Well, sir, I think that GAO wouldn’t want to be 

prescriptive as to how DHS should go about doing it. I think what 

we tried to do was apply some best practices and principles, and 

the Admiral went through some of them, what drove his blueprint, 

and one of the issues has to do with organizational alignment and 

leadership. 

12

What we were just pointing out is that, for example, if you had 

a situation, like in our 2005 report where we noted that the components had varying numbers of contract specialists and you looked 

at what their workload is, and just doing simple math, and that 

may not be the best analysis, but it is just showing that, well, 

maybe the staff isn’t perfectly aligned. As we all note, DHS brought 

in all these different components and basically had to start and get 

up and running. 

What we said there was that we felt that we ought to have an 

analysis across the components. What are the needs on a component basis? What are the needs of the DHS? If there are opportunities that, because of urgent needs and other reasons, you need to 

move some people, how easy would that be? What kind of authorities would be required to be able to do something like that? And 

that was where we were coming from when we were making that 

particular point about what authorities does the CPO have to effectively carry out what we are reading in the Management Directive 

as the responsibilities. 

Senator AKAKA. Mr. Schneider, in your testimony, you explained 

that you are the Chief Acquisition Officer at DHS while Ms. Duke 

is the Chief Procurement Officer. I understand that Ms. Duke also 

sits on the Chief Acquisition Officer Council at the Office of Management and Budget. Do you and the Chief Procurement Officer 

have authority over particular acquisition functions or are you essentially letting the CPO exercise your authority as the Chief Acquisition Officer under your supervision? 

Mr. SCHNEIDER. Senator, first, regarding the Chief Procurement 

Officer being on the Acquisition Council, in the absence of—in the 

gap between when my predecessor left the position of Under Secretary until I was appointed, Ms. Duke, in fact, assumed the responsibility of not just being the Chief Procurement Officer, but the 

Chief Acquisition Officer. So as such, she participated in the Chief 

Acquisition Officer Councils. 

I believe that the responsibilities of the Chief Procurement Officer are very clear and so let us kind of take this a piece at a time. 

This is where I think, with all due respect to the GAO reports and 

considerations, I think there has been a continuing confusion of 

this issue of procurement versus what I will call the big concept of 

acquisition. 

I believe that the responsibilities and authorities of the Chief 

Procurement Officer are very clear and I believe the responsibilities 

from a procurement standpoint within the organizational operating 

components of the Department are very clear. I also believe that 

the Chief Procurement Officer has the authority, if you will, to review—for example, if Ms. Duke decides that she wants to review 

every procurement and concur with every procurement, whether it 

is CBP or you name the agency, above $1,000, above $1 million, 

whatever the threshold she establishes, that is her authority. She 

has the authority to go in and conduct procurement oversight reviews. She has the authority, I believe, to basically request the removal of a contracting officer’s warrant if she determines, in fact, 

that contracting officer is not following the rules and regulations as 

dictated by applicable law. 

13

And regarding the issue of resources throughout the Department, 

the Chief Procurement Officer at headquarters works very closely 

with the Chief Procurement Officers in each of the operating components. They address resource issues. Ms. Duke acts as, for all 

practical purposes, the Chief Recruiting Officer for contracting officers among the Department. So from my standpoint, I observe, 

having been in this job now 5 months, an unprecedented degree of 

cooperation, if you will, among the Chief Procurement Officers at 

headquarters and within the Department. 

Let us talk the second point about the Coast Guard. From a 

practical standpoint, on a day-to-day operational basis, I couldn’t 

ask, and I know if you asked her she would say the same thing, 

for a better, closer working relationship with the Coast Guard than 

what we have today. And so regardless of what the directives say 

or the like, the fact of the matter is the Coast Guard is an inherent 

part of the Department. We operate as one. I spend a tremendous 

amount of time with Admiral Currier, Admiral Blore, the Commandant, Admiral Crea, and their Chief Procurement Officer when 

we work together on major procurement and acquisition issues. 

Now, let us talk about acquisition authority. And that is one of 

the reasons why I tried to emphasize that in my testimony—here 

is where—let us talk about dual accountability. I do not believe in 

the case of acquisition there is a dual accountability. I think it is 

very clear. I think it is the Secretary who has responsibility and 

the head of the operating component. There is absolutely no doubt 

in my mind that the head of Customs and Border Protection is the 

official that the Secretary holds responsible and accountable for the 

execution of SBInet. There is absolutely no doubt that the Secretary holds the Commandant responsible for the execution of Rescue 21 and Deepwater. And so in terms of dual accountability, I am 

sorry, but I do not agree with that statement. 

In the course of exercising the Secretary’s oversight, however, 

there are processes that are put in place at the Department level 

to conduct reviews of the program. That is where we, the Department, exercise oversight. I think the perfect example of this is the 

Deepwater program. The Deepwater program will be coming up for 

a major acquisition milestone decision in terms of proceeding to 

award of National Security Cutter 3. There was an Investment Review Board review of the Deepwater program, an acquisition decision memorandum that was signed by me on behalf of the Deputy 

Secretary who chairs the IRB, that basically says prior to coming 

and getting a milestone approval, you must do A, B, C, D, and E. 

It was done in a cooperative manner with participation on the 

Coast Guard, the CPO, the CIO, etc., and so I think that is a process that is in place by which the Secretary exercises oversight. 

That does not dilute, in my mind, or that does not change what 

I consider to be the clear line of responsibility and accountability 

between the Secretary and the head of the operating component. 

Senator AKAKA. Thank you. We will have another round of questions. Senator Voinovich. 

Senator VOINOVICH. Thank you, Senator Akaka. 

You made mention of the issue of recruiting people with the experience that you need in acquisition. I would like you to share 

with me if you have the budget to hire the people that you need 

14

to get the job done? Second, do you have the flexibilities to bring 

them on board? 

Mr. SCHNEIDER. Thank you, Senator, for the question. This is 

really the key issue and I would say people is our No. 1 priority. 

I think, first of all, the most critical career field in my view is the 

contracting officer career field, and in that particular career field, 

we have direct hiring authority across the Department, which 

means we interview somebody, we like them, we can hire him or 

her immediately. 

And so the challenge then is to find qualified contracting officers, 

and to be very frank, we are aggressively trying to recruit at the 

mid-level and the higher level. Our intern program is structured to 

prime the pipeline, so to speak, at the intern level, and we have 

funds in the fiscal year 2008 budget to begin that program. So I 

am pretty comfortable with 1102s, or the contracting officers. 

The other career fields, we do not have direct hire authority. I 

will be signing a letter to OPM requesting the direct hire authority 

for these other career fields, and this ends up being logisticians, 

cost estimators, people that have managed programs, program 

management experience, test and evaluation-type experience, and 

the reason being is we are in a very competitive market, not just 

with private industry but government, and if we cannot—we think 

we have a mission that sells relative to attracting people, but we 

need to be able to act and act fast. 

So I think, frankly, I am hopeful that we will get the direct hire 

authority from OPM without too much difficulty. So I think that 

is No. 1. 

No. 2 is the ability to hire re-employed annuitants. Let me give 

you an example. It is a well known fact, we do not have the range 

and depth of experienced acquisition personnel. Key to the success 

of our intern program is to have the right types of mentors to mentor these people. The other thing we are looking at is getting senior 

acquisition experienced people that can mentor ongoing programs, 

and especially new starts. And so what we want is the ability, if 

we can find people and get them interested in the mission, frankly, 

like the Administration did with me, to come back in and go work 

some of these programs. We believe that would be helpful. So I am 

about to request from OPM the authority to do that. 

With respect to money, funding, we have the funding this year 

to and are aggressively hiring, so I am not worried about that. I 

am worried, however, about what I just learned relative to the 

House Appropriations Committee action on our budget for 2008 

that basically removed a considerable amount of money that we 

had put in for hiring initiatives and training and development initiatives, especially in the acquisition career field. So that just happened apparently from what I understand yesterday, so what I 

plan to do is to get the facts and figures and hopefully when the 

appropriations bill gets considered by the Senate, we can get some 

help, if you will, to get that back in. That hurts us significantly. 

So relative to authorities, yes, I have got what I need on contracting. I am going to OPM for expanding the direct hiring and 

to be able to employ re-employed annuitants. And money is okay 

this year, but I am worried about next year. 

15

Senator VOINOVICH. Please let us know about the House action. 

We will look into it and see if we can make sure that it is in the 

Senate bill. If you don’t have the money, you can’t get the job done. 

Mr. SCHNEIDER. Thank you. 

Senator VOINOVICH. One thing that we have noticed is that DHS 

has doubled spending on contracts from 2004 to 2006. However, 

over the last 5 years, the number of dollars devoted to training employees in contract management across the government has remained basically the same. Once you bring new people on, how 

long does it take them to get to the point where they are fully 

trained. What is your training budget and why hasn’t that budget 

increased to respond to the new hires so you can continue to upgrade their skills? 

Mr. SCHNEIDER. I think that is a question, frankly, I have asked 

myself. I think one of the problems is when, prior to the forming 

of the agency or of the Department or shortly thereafter, the concept of major acquisition, that wasn’t the nature of the business. 

It was relatively simple procurement. And so the Department relied most heavily on contracting officers who typically would be the 

procurement experts to basically perform what would be considered 

to be a simple or not as complex acquisition. I think it is only in 

the past 2 years when this concept of what is acquisition and the 

complexity of large systems came to the Department. The Department’s budget, and I may not have the numbers totally right, but 

it has gone up like about 50 percent over the past 3 or 4 years. A 

lot of this stuff has gone into the development and the procurement 

of major systems. 

So if we did not shape or modify the workforce, frankly, over the 

past 2 or 3 years, the response to the roughly 50 percent increase 

in budget authority, and so our training budget, and I would suspect most organizations, is fairly well baseline. So organizations 

like CBP or TSA, whose mission—well, CBP, for example, in the 

case of some of their major initiatives, they didn’t have a SBInet, 

and I think that is one of the reasons—and the reason they didn’t, 

because their previous attempts at it in different initiatives were 

not successful. Part of the reason it was not successful was because 

they didn’t have trained people. And so I don’t think there was an 

ability to, in real time, fundamentally give like an adrenaline shot 

of training to people that were trying to execute. 

So what we have been doing with the Chief Human Capital Officer is work across the Department. What are our training and development needs? We have a Chief Learning Officer who is working 

very closely with all of the operating components across the Department to leverage those training and development opportunities 

that is best of breed and then use, whether it is CBP or if it is the 

Coast Guard, use that as the foundation to provide that training 

and development capability for the entire Department. 

So we are in many cases relying on Coast Guard for a lot of their 

training and development. There are a couple of nuggets that CBP 

had in terms of, I believe it is leadership training. And so that is 

one of the reasons why we have been trying to justify, if you will, 

an increased budget, and it is one of the reasons why I am shocked, 

actually, at the budget action on the House, because for 2008, that 

16

is where we wanted to basically make a significant increase. And 

so I think we are trying, but we have been having some difficulty. 

And if I might add, I think part of the difficulty is we get a bad 

rap, frankly, on this HR Max effort that was initiated. And so I 

think there is a tendency, quite frankly, to paint everything that 

we are doing in the personnel training and development area, etc., 

even though Max HR had six or seven components, the fact of the 

matter is it all gets lumped into—that is one of these personnel 

things where—and so it is a target. 

And so one of the reasons, frankly, why we have moved away 

from Max HR to Human Capital Operating, emphasizing training 

and development, is to get away from the stigma of something that 

is, frankly, from the public perspective, is out to do harm to employees, which is not the case. 

Senator VOINOVICH. Thank you. Senator Akaka. 

Senator AKAKA. Thank you. Admiral Currier, under a 2004 DHS 

Management Directive, the Coast Guard is not under the authority 

of the Chief Procurement Officer. Can you tell me to what extent 

the Coast Guard still works with the CPO? 

Admiral CURRIER. Yes, sir, Senator. I think that Under Secretary 

Schneider accurately described our relationship with the Department. We are very closely tied to the Chief Procurement Officer, 

the Chief Information Officer, the Chief Financial Officer, and all 

of our processes in acquisition. I mean, basically, the Department 

controls our budget, so there are mechanisms for control of component agencies. 

We don’t look at it that way. We look at it as a mutually supportive organization where DHS has brought their organization 

and their engagement with the components. They have matured 

that as they have formed up the CPO Office. We helped them do 

that. We offered policy advice. We offered people. We have worked 

collaboratively with DHS to see them through this, and I think 

that they have matured to the point where we are quite comfortable with the relationship of a subordinate component agency 

working in close collaboration with DHS across the board. 

I have seen, in my 2 years as Assistant Commandant for Acquisition, no problems, no issues where they have asked for a policy implementation and we have not complied, or when we raise an objection because we feel it is an onerous oversight or something that 

doesn’t sink up, they are not very responsive. We have absolutely 

no complaints from an organizational level that our relationship 

with the Department is anything but proper and mutually supportive. 

Senator AKAKA. Let me follow up to ask you whether or not the 

Coast Guard is under the authority of the Chief Procurement Officer. 

Admiral CURRIER. I would say, sir, that if you read the letter, 

were I an attorney, I would tell you if I read the Management Directive, I would probably say that could be the case, but I can tell 

you functionally that is not the case. 

Senator AKAKA. Let me ask, would there be a downside to having 

the CPO exert more authority over the Coast Guard? 

Admiral CURRIER. I don’t see it as being that way, sir. I really 

have—I feel that is the functional relationship that exists. If the 

17

1The information provided by Mr. Schneider appears in the Appendix on page 59. 

statute or the code followed that, currently, we have certainly no 

objection to that. 

Senator AKAKA. Mr. Schneider, last year, DHS appropriations 

contained funding for 400 additional acquisition employees at DHS. 

How many new acquisition staff have you hired to date? 

Mr. SCHNEIDER. The key number I track is the contracting officers. I know we were trying to hire somewhere around three to—

I think we have hired about 50 percent of the number. 

Senator AKAKA. Well, Mr. Schneider——

Mr. SCHNEIDER. It is about 150, so—I can provide that information.1

Senator AKAKA. If you can provide that——

Mr. SCHNEIDER. Sure. 

Senator AKAKA [continuing]. That would be fine. And also, I 

would like to know how these staff are being divided between 

CPO’s office and the component offices, as well. 

Mr. SCHNEIDER. Well, it is really a joint recruiting effort, so what 

Ms. Duke does is if we get a pretty good athlete and she decides 

that TSA or CBP needs him, she ships him in that direction. They 

work together, the heads of contracts of all the operating components and the Chief Procurement Officer, on who is in the most serious shape and who desperately needs help. And so what they do 

is working together among themselves figure out how best to utilize the talent that comes in. 

For example, we had a big exposition, job exposition one day 

downtown at the Reagan Building. We had, I think it was 1,200, 

1,300 people showed up. And so what we do is we tag them and 

classify them. They go talk to people from the CPO’s office. They 

talk to people from across the Department. Then we basically 

evaluate them and we decide who really needs to be looking at 

them depending on what the career fields are. We also advertised 

in the local papers a couple of months ago, and in response to two 

ads we have gotten, I believe it is 400, 500 applicants, and so doing 

the same thing with them. We are also targeting, quite frankly, 

where we think organizations are leaving town that perhaps we 

have some experienced people that may want to do that. 

But basically, it is being run like a joint recruiting effort and, 

frankly, because they work so well together, this particular group 

of Chief Procurement Officers, they recognize who is in the most 

serious condition and they try and fulfill those needs first. 

Senator AKAKA. Before I call on Senator Voinovich, Secretary 

Schneider, the Homeland Security Appropriations Act contained a 

provision I authored creating a rotation program at DHS to let 

staff gain expertise throughout the Department. With all of the 

component agencies of DHS still having their own individual acquisition shops, I believe this kind of program could be especially useful for procurement professionals. Is the Department doing anything to encourage procurement staff to rotate between procurement offices? 

Mr. SCHNEIDER. Yes, sir. Let me just give you a couple of examples. We have two what I call premier leadership programs. We 

have an OPM-approved SES candidate program, and so our first 

18

class of SES candidates were selected, I think it might have been 

about 4 or 5 months ago. As part of that candidate development 

program, these folks are required to go do rotational assignments. 

We also have, and it was actually initiated by the Commandant 

of the Marine Corps, Admiral Allen, who had a personal interest 

in it, is a DHS Fellows Program. Part of that DHS Fellows Program, and this is where the best and the brightest at different 

grade levels, civilian and in the case of the Coast Guard military, 

were picked for this very special effort. What we have decided to 

do is at the tail end of that program, and I forget how long it is, 

is to require a mandatory, I think it is 4- or 5-month rotational assignment, and this is where we use, and this is probably along the 

lines of the best practice that many of the Fortune 500 companies 

use, we have these folks working critical corporate-type projects. 

They work—it is about, I think, roughly 34 of them—and then at 

the end of this development effort, they get assigned at one of—a 

different operating component from where they come from, and I 

think it is 4 to 6 months. 

The other thing we do is this. Our Chief Financial Officer, the 

counterpart of the Chief Procurement Officer, he has been very key 

in hiring. We get a lot of Presidential Management Interns. He is 

a former Presidential Management Intern and apparently that program draws people to where successful folks that have been in the 

program are. And what he does is takes these people, rotates them 

throughout the Department, and ultimately we are building a financial officer type of infrastructure that has had experience across 

the Department. 

I also think it is important to note that I think at least one and 

maybe two of the Chief Procurement Officers that are in the Department used to work at headquarters. 

So I think there is no massive initiative that says we are going 

to take 25 percent of the workload and start rotating them around, 

but I think we started on the right path within the past 6 months 

on these key initiatives to making rotation a key element and almost to be considered as a future prerequisite to promotion. 

Senator AKAKA. Senator Voinovich. 

Senator VOINOVICH. Admiral, in your testimony you said that the 

end result of the Coast Guard’s Blueprint for Acquisitions Reform 

will be an Acquisition Directorate capable of efficiently and effectively meeting mission requirements. Do you have metrics to measure if the blueprint is successful, and was Mr. Schneider or anybody from DHS involved with developing the blueprint? Did you 

consult with GAO in developing the blueprint? 

Admiral CURRIER. Thank you, Senator. The blueprint was put together because we looked at Rescue 21 and the nose-to-tail survey 

that I described earlier, and we also did that with Deepwater over 

the last 18 months. We looked at a compilation, a library of IG reports and GAO reports and different programs and projects that 

the Coast Guard had done. Initially when I took over as Assistant 

Commandant for Acquisition, I looked at these individually, viewed 

them, quite frankly, as history and put them aside. 

But it became evident there were emergent themes throughout 

these reports, so we cataloged those themes and we put together 

about 12 efficiencies in acquisition across the board. When I 

19

showed them to Defense Acquisition University (DAU), it became 

evident that those were common acquisition shortcomings across 

the Federal Government. So we tried to decipher a way, how could 

we devise a strategy that would give us meaningful solution to 

some of these things. 

The other theme that emerged is the GAO framework for Federal 

agency acquisition assessment. We decided to use that for two reasons. One is it made sense, and secondarily, often you are what you 

measure. So we did do that. 

As far as metrics, when we produced our first edition of the blueprint, we had a catalog of activities as an appendix. I got my senior 

staff together. We collaborated with the Department and we cataloged activities that we had to do. Initially, our metrics were the 

accomplishment of those activities on time and basically if there 

were cost elements, on cost. 

The second edition that will come out when we stand up the consolidated Acquisition Directorate on July 13 will have a more robust set of metrics that also measure projects, program outcomes 

as far as cost control and schedule execution. So there will be two 

tiers of metrics within the blueprint. One is for activities that are 

specifically called out, and the second is the aggregate effect on 

program execution. 

We did closely collaborate with the Department, the Defense Acquisition University, Admiral Massenburg at NAVAIR, actually Retired General Kadish, who at one time was in charge of DOD acquisition reform. They were very generous with their time sitting 

down with me, and I will tell you in all honesty, I am an operator 

by trade. I am level three certified as a program manager, but my 

main experience is certainly not on a par with theirs. Very generous with their time. The Under Secretary was generous with his 

time. Ms. Duke was very—contributed to this. And I think that the 

Under Secretary would tell you that certain elements within this 

are going to be used as a model for other agencies within the Department. 

Sir, I hope that answers your question. 

Senator VOINOVICH. Mr. Hutton, you have been listening to the 

testimony. I would like your comments about what the Admiral has 

made reference to and how you feel about it and how do you think 

they are coming along. 

Mr. HUTTON. Sure, Senator. First, I want to say at the outset 

that obviously we are very pleased that the Admiral found that the 

framework for assessing the acquisition function was very useful, 

because that was based on a lot of work that we have done over 

the years, best practices, literature searches, panels that we held 

and things like that. And it is a holistic approach to look at the 

whole function and it breaks down into very key areas that one 

wants to look at how they are doing. It is general guidance. It is 

not a cookbook, but it is really used more for self-reflection and assessment of where you are. 

So I was very pleased to hear that. I have reviewed the Coast 

Guard’s blueprint at a very high level several months back. I can’t 

right now give you an assessment of the merits and of all the details and the specifics, and as the Admiral mentioned, there is apparently going to be a revision coming very shortly. But I was very 

20

pleased to hear that the GAO framework is one of the instruments 

that they used to assess their acquisition function. 

Senator VOINOVICH. Mr. Schneider, it looks like the Coast Guard 

is really getting it. It looks like their system is in decent shape. Mr. 

Schneider, do you agree with the Admiral? 

Mr. SCHNEIDER. Let me, Senator——

Senator VOINOVICH. They have their own acquisition, but Ms. 

Duke is in charge of acquisition everywhere else? 

Mr. SCHNEIDER. Let me try it this way. I guess within the spirit 

of full disclosure, the in-depth reviews of the Coast Guard programs that the Admiral referred to, Rescue 21 and Deepwater, it 

really is a coincidence because all this happened before I was even 

considered by the Administration for this job. But I am the guy 

that led those reviews for the Defense Acquisition University. It 

just kind of turns out that way. 

It really is a fluke that all these improvements and recommendations that we developed, especially in the case of Rescue 21, the 

Admiral aggressively instituted them, and then with Deepwater, I 

think led to a more systematic overview, just like he said. So we 

have—which is why—the Admiral and I first met last March, and 

so they were kind enough that, just as he indicated, to work very 

closely with DAU and I was the lead for DAU, and so this whole 

Blueprint for Acquisition, I believe truly reflects the best practices 

and lessons learned from a lot of major programs that have had 

difficulties. 

There is no daylight between us, quite frankly, at the Department level and at the Coast Guard level in terms of structure and 

process. There is no daylight between us in terms of the individual 

efforts, whether it be the National Security Cutter, the Offshore 

Patrol Cutter, the Aviation Initiatives, logistics, CFR, ISR, etc. So 

we are in full concurrence and working very closely on everything. 

And so I think, just as the Admiral said and as I indicated, this 

Chief Procurement Officer contracting function and how I exercise 

acquisition oversight for the Secretary, I think it works very well, 

and quite frankly, it is a model for how it ought to work across the 

Department. 

Senator VOINOVICH. Good. Is it coordinated? 

Mr. SCHNEIDER. Yes, sir. 

Senator VOINOVICH. If GAO reviewed this, they would say that 

you are communicating? 

Mr. SCHNEIDER. Yes, sir. 

Senator VOINOVICH. And are sharing and learning from each 

other. 

Since the Deepwater problem, you have analyzed the issues. Is 

there a piece of paper someplace that talks about lessons learned 

and how the new system is going to make sure that those things 

don’t occur again? 

Mr. SCHNEIDER. I think, if I recall, the DAU Deepwater report 

lists the lessons learned and a series of recommendations which 

you or your staff may find informative as a starting point. I also 

think, I am not sure if we sent you several months ago, and maybe 

not, but we can check that, we can send you a document that indicates the status of the Deepwater program which goes asset by 

21

asset through what is the status and what is being done in terms 

of the restructuring. I think you would find that informative. 

Senator VOINOVICH. In other words, the recommendations that 

came out of that GAO report are being folded into the new system 

to make sure that the problems that——

Mr. SCHNEIDER. Their blueprint——

Senator VOINOVICH [continuing]. Occurred there are not going to 

occur with other procurement——

Mr. SCHNEIDER. Their blueprint for acquisition and reemergence 

of a technical authority within the Coast Guard and migrating to 

a single logistics concept, C4I that is directed and more hands-on 

direction and breaking up some of these procurements like the Admiral referred to relative to procurement of patrol boats, which is 

their specialty and the like, that is exactly what they are doing. 

Senator VOINOVICH. Thank you. Senator Akaka. 

Senator AKAKA. We will have another round here. 

Mr. Schneider, as you know, and I want to in a sense follow up 

on what Senator Voinovich was indicating. As you know, the Coast 

Guard recently dropped their lead systems integrator, choosing instead to fulfill the role itself. In light of Deepwater, should the Department continue to rely so heavily on LSIs for large projects? 

Mr. SCHNEIDER. I have given this a lot of thought, Senator, and 

I think in many ways the concept—that the originators of the 

Deepwater concept with the integration concept—there are some 

days I think it was not a good idea, but frankly, in many ways, it 

might have been a brilliant idea. I think the serious problem that—

I think it is almost like a confluence of factors that contributed to 

the problem. 

First off, clearly, I don’t think the Coast Guard had the range 

and depth of talent to manage that type of contract. And so an integrator means different things to different people. In this particular type of contract, we were talking about a concept whereby 

the Coast Guard said, here are my requirements. I want to totally 

recapitalize my entire Deepwater fleet of planes, ships, boats, landbased infrastructure, and logistics, so you figure out how best to do 

it. 

And so the concept, depending—it might have been brilliant in 

concept, but it was seriously flawed in practically being able to be 

executed by a Department who is so hands-on operationally. And 

I think to think that the operational forces would allow just an industry team to decide what was best in terms of operational spaces 

and how things were going to operate, what the mix would be, was 

probably not the right decision. I also think that trying to start so 

many individual asset developments, like the Offshore Patrol Cutter, the Fast Response Cutter, and National Security Cutter, at the 

same time, given the lack of depth and experience they had, was 

one of the major contributions to its not being successful. 

On the other hand, I think on major system integration-type contracts where you have, for example—and that is why SBInet, and 

I differentiate between it—it may, in fact, be the appropriate type 

of concept and contract vehicle, especially in the fact that I think 

the SBInet is manned with many more resources and in many 

cases they have the range and depth of talent that are needed to 

manage a very complex technical integration effort. 

22

So I would not, to use the expression, throw the baby out with 

the bathwater. I think it has a place. I think it needs to be based 

on the circumstances and the nature of the contract and how it is 

structured and how you incentivize the contractor. But I think 

there were really some very strong reasons why people thought at 

the start it was a good idea. 

Senator AKAKA. Admiral, as I understand it, between June 2003 

and December 2006, Lockheed and Northrup Grumman, the former 

Deepwater lead system integrator, received $18 million in contract 

award fees from the Coast Guard. This is about 88 percent of the 

available award fees, which would seem to indicate that the job 

was done 88 percent well. To give it a grade, you might think of 

it as being a B-plus in most grading systems. I don’t think, from 

what we have heard about the problems with Deepwater, that it 

deserves a B-plus. My question to you is, how would you grade 

Deepwater? 

Admiral CURRIER. Well, Senator, I will be honest with you. This 

puts me in a little bit of a difficult situation because I have been 

in charge of the Acquisition Directorate, which is contracting and 

programs that are non-Deepwater, so I can give you an observation, but I want to be clear that I am not the program executive 

officer for Deepwater. 

I can give you my opinion on this, there was a set of criteria used 

for award term evaluation that are currently being reviewed, such 

that they are more applied to actual performance than some of the 

general criteria that were used in the first evaluation of the award 

term. I think that is being relooked at by Admiral Blore, who is the 

PEO for Deepwater, and I think that there is going to be some 

overhaul in that area, sir. But I cannot give you—I will have to get 

back to you with specifics on that information. 

Senator AKAKA. Would you consider the contract award fees in 

this case, fair? 

Admiral CURRIER. Sir, I am not trying to be evasive, but I don’t 

have enough information. I really don’t. I can get back to you with 

that, with a statement from Admiral Blore, who is the PEO. But 

I, quite frankly, would be uncomfortable rendering an opinion on 

that. 

Senator AKAKA. Let me ask Mr. Hutton, can you give me your 

thoughts on these contract award fees? How is it that a program 

with so many issues could get 80-plus percent of available award 

fees? 

Mr. HUTTON. Senator, GAO issued a report, I believe a year ago, 

where they looked more broadly across several contracts over at 

DOD and I think there was a finding that was similar, that there 

were fees around that range. But yet when you look at the systems, 

they were having problems and it just raised the issue of are you 

sufficiently motivating the contractor for positive performance. 

I share the Admiral’s point that the award fee determining official basically makes that determination based on what was established as the criteria that they were going to use to judge the contractor’s performance. So if that process was followed as appropriate and the determinations were considered appropriately and 

that is the score, then I think that is what they get. But I do think 

if there are major problems with systems, maybe one place you 

23

might look at first, though, is just what was the criteria we were 

evaluating, if it seemed out of sync. 

Senator AKAKA. Senator Voinovich. 

Senator VOINOVICH. Mr. Schneider, a number of corrective actions to improve acquisition management for the SBInet program 

were to have been completed by this January. In the CBP response 

to the DHS Inspector General report, made with the concurrence 

of the Chief Procurement Officer, the Department said it would address concerns about the lack of defined project activities, measures 

for operational requirements and performance management objectives, time lines, anticipated costs, staffing levels, and expected 

outcomes. GAO testified in February that many of these issues remained. 

I would like you to respond directly to the concern raised by the 

GAO and the DHS OIG and to tell us what, in your view, has been 

done, what needs to be done, and then Mr. Hutton, if you are at 

all familiar with what has transpired since February, what are 

your observations. 

[The information requested for the Record follows:] 

INFORMATION SUBMITTED FOR THE RECORD 

DHS’s Secure Border Initiative Network (SBInet) is a multi-year, multi-billion dollar program that will develop a comprehensive border protection system through a 

mix of technology, infrastructure, and personnel. In fiscal year 2007, the Congress 

appropriated $1.2 billion for the program and asked GAO to review the SBInet expenditure plan. In February 2007, we recommended that DHS (1) ensure that future 

expenditure plans include explicit and measurable commitments relative to the capabilities, schedule, costs, and benefits associated with individual SBInet program 

activities; (2) modify the SBInet contract to include a maximum quantity or dollar 

value; and (3) re-examine the level of concurrency and appropriately adjust the acquisition strategy. To address our recommendation on the level of concurrency, in 

March 2007, DHS submitted a revised SBInet expenditure plan for fiscal year 2007 

to Congress. The new plan delayed some technology deployment and, in its place, 

accelerated tactical infrastructure construction. 

As of July 2007, SBInet is behind schedule because the pilot deployment project, 

Project 28, did not meet its June 2007 deadline. We continue to monitor the implementation of the SBInet program as part of our on-going work.

Mr. SCHNEIDER. Well, Senator, first off, as of right now, we are 

on track in terms of completing Project 28, and Project 28 is absolutely key. This is a 28-mile stretch of the border south of Tucson. 

So this is where we are basically—I call it the initial deployment 

of SBInet, where we are using cameras, we are using radar, we are 

using wireless communications. We have these roughly, I think it 

is 98-foot towers. We are basically exercising command and control, 

a common operating picture that goes back to Tucson headquarters 

as well as mobile command units, and we are actually—this is 

where the Army is going to be doing this test and evaluation. 

So there is a modeling and simulation that has been done to predict, if you will, how well this system will perform in terms of 

tracking, cueing, and then determining the optimum method of 

intercept prior to the point of where the illegal aliens can basically 

not be apprehended. 

So our plan is to—we have a pretty good idea of how well this 

system will perform. This equipment, for the most part, is off-theshelf type of equipment and the communications gear is pretty 

straightforward. So our plan is—and we know how much this cost. 

This is a fixed price. I think it is roughly a $20 million effort. And 

24

so our plan is, as a result of this initial deployment and this independent test evaluation of the Army, is to figure out what the costbenefit, if you will, is, how scalable it is as we march across the 

border. 

So while sometimes we are criticized, and I have personally had 

this discussion with both the Inspector General and with the 

Comptroller General, David Walker, so while we are criticized 

sometimes for not having very clear performance requirements, 

etc., this is an example where we are trying to use available technology to minimize the risk and get an assessment for how well 

this system will perform, how we can augment it, if we need to put 

more cameras, if we need to put more radar, if we need to put more 

unattended ground sensors, etc., to enhance the performance if it 

is not adequate, and then make these trade-offs about is that performance acceptable, what is the manpower that it takes to go execute this, what is the cost——

Senator VOINOVICH. What I am trying to get at is that it is my 

understanding that they came back and they had some criticisms 

of the way this was being undertaken. What have you done to respond to those criticisms in terms of a system? Mr. Hutton, are you 

familiar at all with what has been happening since February? You 

folks came in and said they hadn’t done these things. They were 

supposed to have them done by the end of January and the fact 

was they haven’t been done. Have they been done to your knowledge or haven’t you reviewed it lately? 

Mr. HUTTON. Senator, I am not personally involved in that review. Colleagues at GAO are looking at that system. I believe there 

is some ongoing work right now, but I really do not know the status of those issues. 

Senator VOINOVICH. I would like to know what were the issues 

and what have you done to respond to the issues. 

I would also like to ask about your work with the Partnership 

for Public Service Private Sector Council. Max Stier and his group 

are a good resource that can be helpful. Have they been helpful in 

improving your post-award contract management? A lot of times 

the problem is that once they are awarded, nobody really stays on 

top of the contractor to make sure you get what has been promised. 

I would like you, Mr. Schneider, to comment on the partnerships 

pilot project. 

Mr. SCHNEIDER. Well, I know that they are looking at best practices for contract administration, and that is the sum of it. I would 

have to get back to you and give you an assessment of—and I 

will—about exactly what they have done and what have we learned 

from them. 

Senator VOINOVICH. Senator Akaka, I have no more questions. 

Senator AKAKA. Thank you very much. I want to thank Senator 

Voinovich. As you know, I regard him as a champion of human capital management. He has been going after the high risks within our 

government system with me for years, and I want to emphasize 

that we are working together on these issues and trying to improve 

program outcomes. 

So I want to thank you witnesses for being here today and contributing with your testimony and your responses. Getting DHS’s 

acquisition management on track is vitally important to us and it 

25

is an important issue because if it is not done properly, then there 

is the risk of waste, fraud, and abuse in contracting, and in this 

particular case in DHS contracting. It also puts not only our tax 

dollars at risk, but more importantly, our national security. I look 

forward to continuing to work with you, with the Department of 

Homeland Security, in monitoring this issue. 

Senator VOINOVICH. Senator Akaka, could I make one more comment after you have finished? 

Senator AKAKA. Yes. Let me call on Senator Voinovich for his 

closing remarks and then I will close it. 

Senator VOINOVICH. I don’t know whether this immigration bill 

is going to pass or not. Even if it doesn’t pass, there is a lot in 

there that is already in the law. SBInet is going to be part of that. 

I would like to say to you that there is a feeling out there that 

things aren’t right at the Department of Homeland Security and 

that it has been an embarrassment to the Bush Administration. 

There is a feeling on the street that for some reason we just can’t 

get things done around here. It is not helpful politically, and it is 

not helpful from a substantive point of view because people have 

to believe that those of us in government know what we are doing, 

especially when dealing with issues of national security. 

I would suggest to you that if the immigration bill passes, the 

microscope is going to be focused on the Department. I would suggest that everybody be aware of that fact. Mr. Schneider, you and 

I have been talking about, are we winding up or are we winding 

down? One of the best things that could happen is that if it does 

pass, that you would really get together and make it happen. 

And I am sure, following up on your suggestion about their budget, I know Senator Akaka and I will do everything within our 

power to make sure that money is put back in your budget so you 

have the money to do what you have to do. 

Mr. SCHNEIDER. I would like the opportunity just to make a comment, if I may, Senator. 

Senator AKAKA. Go ahead. 

Mr. SCHNEIDER. I believe that if that bill passes, then the implementation and execution of that is probably the single most important thing that I have to worry about. If it helps, frankly, I would 

like you to know that going back about 4 or 5 weeks ago is when 

the Secretary asked me to make sure that we are positioned to successfully execute that. And I can tell you that we have put together 

a team from across the Department in a manner that is probably 

unprecedented since the Department was formed. This team works 

for me, and our job is the detailed execution of how this bill will 

be executed on the assumption that it passes. 

We have the entire leadership of this Department that is mobilized in terms of focusing on what we have to do to execute, and 

I realize, and I know the Secretary and the Deputy Secretary and 

the heads of all the operating components realize what the importance of this bill is to the Nation, and the fact is we are very well 

aware that there will be a tremendous amount of visibility given 

to how well we perform. That is why I am personally satisfied that 

we have some of the best and brightest people from across the Department that are looking at how we are going to execute this 

thing. 

26

Senator VOINOVICH. Thank you. Thank you, Senator. 

Senator AKAKA. Thank you very much for your closing remarks, 

Mr. Schneider and Senator Voinovich. 

Again, I want to thank you for your testimony and your responses. The hearing record will be open for 1 week for additional 

statements or questions other Members may have pertaining to 

this hearing. 

The hearing is now adjourned. 

[Whereupon, at 4:14 p.m., the Subcommittee was adjourned.] 

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