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[House Report 115-45]
[From the U.S. Government Publishing Office]

115th Congress   }                                           {  Report
                        HOUSE OF REPRESENTATIVES
 1st Session     }                                           {  115-45

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                REDUCING DHS ACQUISITION COST GROWTH ACT

                                _______
                                

 March 20, 2017.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

  Mr. McCaul, from the Committee on Homeland Security, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 1294]

    The Committee on Homeland Security, to whom was referred 
the bill (H.R. 1294) to amend the Homeland Security Act of 2002 
to provide for congressional notification regarding major 
acquisition program breaches, and for other purposes, having 
considered the same, report favorably thereon without amendment 
and recommend that the bill do pass.

                                CONTENTS

                                                                   Page
Purpose and Summary..............................................     1
Background and Need for Legislation..............................     2
Hearings.........................................................     2
Committee Consideration..........................................     3
Committee Votes..................................................     3
Committee Oversight Findings.....................................     3
New Budget Authority, Entitlement Authority, and Tax Expenditures     3
Congressional Budget Office Estimate.............................     3
Statement of General Performance Goals and Objectives............     3
Duplicative Federal Programs.....................................     4
Congressional Earmarks, Limited Tax Benefits, and Limited Tariff 
  Benefits.......................................................     4
Federal Mandates Statement.......................................     4
Preemption Clarification.........................................     4
Disclosure of Directed Rule Makings..............................     4
Advisory Committee Statement.....................................     4
Applicability to Legislative Branch..............................     4
Section-by-Section Analysis of the Legislation...................     5
Changes in Existing Law Made by the Bill, as Reported............     5

                          Purpose and Summary

    The purpose of H.R. 1294, the Reducing DHS Acquisition Cost 
Growth Act of 2017, is to amend the Homeland Security Act of 
2002 to provide for congressional notification regarding major 
acquisition program breaches and for other purposes.
    H.R. 1294 requires that DHS's major acquisition programs 
(those worth $300 million or more) be subject to greater 
Departmental and congressional oversight when they fail to meet 
(i.e. ``breach'') key cost, schedule, or performance 
requirements.

                  Background and Need for Legislation

    The Government Accountability Office (GAO) and the DHS 
Office of Inspector General (OIG) have consistently reported on 
the longstanding challenges DHS faces in managing its major 
acquisition programs, which cost the Department over $7 billion 
each year. Every 2 years, the GAO identifies areas in the 
Federal Government that are ``high risk'' due to their 
vulnerabilities to fraud, waste, abuse, and mismanagement. 
Since 2003, GAO has identified DHS's transformation of 22 
agencies into one department, and the Department's subsequent 
challenges with its management functions, as high risk. In 
GAO's 2017 high risk update, GAO noted that DHS has made 
progress in addressing its management challenges, but has not 
yet completed all the necessary actions to fully address 
acquisition management. Additionally, the OIG reports annually 
on major management challenges facing the Department. In 
November 2016, the OIG identified challenges in DHS's 
management of acquisition programs. Although DHS has taken 
steps to improve acquisition management, DHS continues to 
struggle to ensure that major acquisition programs cost what 
was originally estimated, are delivered on schedule, and 
provide the capabilities originally intended. H.R. 1294 is 
intended to provide greater accountability to major acquisition 
programs and provides Congress with greater oversight of 
failing acquisition programs to prevent the waste of taxpayer 
dollars.

                                Hearings

    No hearings were specifically held on H.R. 1294. However, 
the Committee held oversight hearings on acquisition 
management, as listed below.
    On February 26, 2015, the Subcommittee on Oversight and 
Management Efficiency held a hearing entitled ``Assessing DHS's 
Performance: Watchdog Recommendations to Improve Homeland 
Security.'' The Subcommittee received testimony from The 
Honorable John Roth, Inspector General, U.S. Department of 
Homeland Security; Ms. Rebecca Gambler, Director, Homeland 
Security and Justice, U.S. Government Accountability Office; 
and Dr. Daniel M. Gerstein, Senior Policy Researcher, The RAND 
Corporation.
    On April 22, 2015, the Subcommittee on Oversight and 
Management Efficiency held a hearing entitled ``Acquisition 
Oversight: How Effectively is DHS Safeguarding Taxpayer 
Dollars?'' The Subcommittee received testimony from Ms. Michele 
Mackin, Director, Acquisition and Sourcing Management, U.S. 
Government Accountability Office; The Honorable Chip Fulghum, 
Acting Deputy Undersecretary for Management and Chief Financial 
Officer, U.S. Department of Homeland Security; and Dr. Cedric 
Sims, Partner, Evermay Consulting Group.
    On September 18, 2015, the Subcommittee on Oversight and 
Management Efficiency held a hearing entitled ``Making DHS More 
Efficient: Industry Recommendations to Improve Homeland 
Security.'' The Subcommittee received testimony from Mr. Marc 
Pearl, President and Chief Executive Officer, Homeland Security 
and Defense Business Council; Mr. Harry Totonis, Board 
Director, Business Executives for National Security; and Ms. 
Elaine Duke, Principal, Elaine Duke & Associates, LLC.
    On February 16, 2017, the Subcommittee on Oversight and 
Management Efficiency held a hearing entitled ``Watchdog 
Recommendations: A Better Way Ahead to Manage the Department of 
Homeland Security.'' The Subcommittee received testimony from 
The Honorable John Roth, Inspector General, U.S. Department of 
Homeland Security, and Ms. Rebecca Gambler, Director, Homeland 
Security and Justice, U.S. Government Accountability Office.

                        Committee Consideration

    The Committee met on March 8, 2017, to consider H.R. 1294, 
and ordered the measure to be reported to the House with a 
favorable recommendation, without amendment, by voice vote.

                            Committee Votes

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the recorded 
votes on the motion to report legislation and amendments 
thereto.
    No recorded votes were requested during consideration of 
H.R. 1294.

                      Committee Oversight Findings

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee has held oversight 
hearings and made findings that are reflected in this report.

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee finds that H.R. 
1294, the Reducing DHS Acquisition Cost Growth Act, would 
result in no new or increased budget authority, entitlement 
authority, or tax expenditures or revenues.

                  Congressional Budget Office Estimate

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, a cost estimate provided by the 
Congressional Budget Office pursuant to section 402 of the 
Congressional Budget Act of 1974 was not made available to the 
Committee in time for the filing of this report. The Chairman 
of the Committee shall cause such estimate to be printed in the 
Congressional Record upon its receipt by the Committee.

         Statement of General Performance Goals and Objectives

    Pursuant to clause 3(c)(4) of rule XIII of the Rules of the 
House of Representatives, H.R. 1294 contains the following 
general performance goals and objectives, including outcome 
related goals and objectives authorized.
    The purpose of H.R. 1294, the Reducing DHS Cost Growth Act 
of 2017, is to provide guidance to the Department of Homeland 
Security regarding acquisition management.

                      Duplicative Federal Programs

    Pursuant to clause 3(c) of rule XIII, the Committee finds 
that H.R. 1294 does not contain any provision that establishes 
or reauthorizes a program known to be duplicative of another 
Federal program.

   Congressional Earmarks, Limited Tax Benefits, and Limited Tariff 
                                Benefits

    In compliance with rule XXI of the Rules of the House of 
Representatives, this bill, as reported, contains no 
congressional earmarks, limited tax benefits, or limited tariff 
benefits as defined in clause 9(e), 9(f), or 9(g) of the Rule 
XXI.

                       Federal Mandates Statement

    An estimate of Federal mandates prepared by the Director of 
the Congressional Budget Office pursuant to section 423 of the 
Unfunded Mandates Reform Act was not made available to the 
Committee in time for the filing of this report. The Chairman 
of the Committee shall cause such estimate to be printed in the 
Congressional Record upon its receipt by the Committee.

                        Preemption Clarification

    In compliance with section 423 of the Congressional Budget 
Act of 1974, requiring the report of any Committee on a bill or 
joint resolution to include a statement on the extent to which 
the bill or joint resolution is intended to preempt State, 
local, or Tribal law, the Committee finds that H.R. 1294 does 
not preempt any State, local, or Tribal law.

                  Disclosure of Directed Rule Makings

    The Committee estimates that H.R. 1294 would require no 
directed rule makings.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                  Applicability to Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

             Section-by-Section Analysis of the Legislation

Section 1.   Short Title.

    This section provides that this bill may be cited as the 
``Reducing DHS Acquisition Cost Growth Act''.

Sec. 2.   Congressional Notification for Major Acquisition Programs.

    Section 2 amends subtitle D of the title VIII of the 
Homeland Security Act of 2002 (Pub. L. 107-296) and requires 
that DHS's major acquisition programs (those worth $300 million 
or more) be subject to greater Departmental and congressional 
oversight when they fail to meet (i.e. ``breach'') key cost, 
schedule, or performance requirements. Specifically, when a 
major acquisition program breaches any of those key 
requirements, section 2 requires program managers to notify the 
officials responsible for overseeing those programs not later 
than thirty days after the breach has been identified.
    Section 2 also establishes requirements for egregious 
instances of major acquisition programs in breach of key 
requirements. In extreme cases (when a major acquisition 
program exceeds its cost requirements by more than 15 percent, 
delays its schedule by more than 180 days, or fails to meet any 
performance requirement), the Secretary and the DHS Office of 
Inspector General (OIG) must be notified. If this happens, 
section 2 requires the Secretary to notify the House and Senate 
Committees on Homeland Security of the breach in the next 
quarterly Comprehensive Acquisition Status Report (CASR). The 
Secretary must include a justification of a major acquisition 
program if it exceeds (1) costs by 20 percent more or (2) 
planned schedule dates by 12 months or more.
    Further, section 2 requires program managers to develop a 
plan when a breach occurs on how the breach will be remediated, 
which must, among other things, propose corrective actions for 
addressing the breach, as well as an analysis identifying 
potential root causes behind the breach. This plan must be 
submitted to the head of the relevant component, the 
Department's Program Accountability and Risk Management (PARM) 
division, which is responsible for overseeing major acquisition 
programs, and the Under Secretary for Management (USM).
    Section 2 requires the USM to review the corrective actions 
and either approve the plan or provide alternative corrective 
actions for addressing the breach. The USM must submit to the 
House and Senate Committees on Homeland Security a copy of the 
remediation plan, root cause analysis, and a description of 
actions taken to address the breach.
    This section should provide greater accountability to major 
acquisition programs and provide Congress with greater 
oversight of failing acquisition programs to prevent the waste 
of taxpayer dollars. Section 2 also includes relevant 
definitions related to acquisition management.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (new matter is 
printed in italics and existing law in which no change is 
proposed is shown in roman):

                     HOMELAND SECURITY ACT OF 2002

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

  (a) Short Title.--This Act may be cited as the ``Homeland 
Security Act of 2002''.
  (b) Table of Contents.--The table of contents for this Act is 
as follows:

     * * * * * * *

 TITLE VIII--COORDINATION WITH NON-FEDERAL ENTITIES; INSPECTOR GENERAL; 
      UNITED STATES SECRET SERVICE; COAST GUARD; GENERAL PROVISIONS

     * * * * * * *

                        Subtitle D--Acquisitions

Sec. 831. Research and development projects.
     * * * * * * *
Sec. 836. Congressional notification and other requirements for major 
          acquisition program breach.

           *       *       *       *       *       *       *

TITLE VIII--COORDINATION WITH NON-FEDERAL ENTITIES; INSPECTOR GENERAL; 
UNITED STATES SECRET SERVICE; COAST GUARD; GENERAL PROVISIONS

           *       *       *       *       *       *       *

Subtitle D--Acquisitions

           *       *       *       *       *       *       *

SEC. 836. CONGRESSIONAL NOTIFICATION AND OTHER REQUIREMENTS FOR MAJOR 
                    ACQUISITION PROGRAM BREACH.

  (a) Requirements Within Department in Event of Breach.--
          (1) Notifications.--
                  (A) Notification of breach.--If a breach 
                occurs in a major acquisition program, the 
                program manager for such program shall notify 
                the Component Acquisition Executive for such 
                program, the head of the component concerned, 
                the Executive Director of the Program 
                Accountability and Risk Management division, 
                the Under Secretary for Management, and the 
                Deputy Secretary not later than 30 calendar 
                days after such breach is identified.
                  (B) Notification to secretary.--If a breach 
                occurs in a major acquisition program and such 
                breach results in a cost overrun greater than 
                15 percent, a schedule delay greater than 180 
                days, or a failure to meet any of the 
                performance thresholds from the cost, schedule, 
                or performance parameters specified in the most 
                recently approved acquisition program baseline 
                for such program, the Component Acquisition 
                Executive for such program shall notify the 
                Secretary and the Inspector General of the 
                Department not later than five business days 
                after the Component Acquisition Executive for 
                such program, the head of the component 
                concerned, the Executive Director of the 
                Program Accountability and Risk Management 
                Division, the Under Secretary for Management, 
                and the Deputy Secretary are notified of the 
                breach pursuant to subparagraph (A).
          (2) Remediation plan and root cause analysis.--
                  (A) In general.--If a breach occurs in a 
                major acquisition program, the program manager 
                for such program shall submit to the head of 
                the component concerned, the Executive Director 
                of the Program Accountability and Risk 
                Management division, and the Under Secretary 
                for Management in writing a remediation plan 
                and root cause analysis relating to such breach 
                and program. Such plan and analysis shall be 
                submitted at a date established at the 
                discretion of the Under Secretary for 
                Management.
                  (B) Remediation plan.--The remediation plan 
                required under this subparagraph (A) shall--
                          (i) explain the circumstances of the 
                        breach at issue;
                          (ii) provide prior cost estimating 
                        information;
                          (iii) include a root cause analysis 
                        that determines the underlying cause or 
                        causes of shortcomings in cost, 
                        schedule, or performance of the major 
                        acquisition program with respect to 
                        which such breach has occurred, 
                        including the role, if any, of--
                                  (I) unrealistic performance 
                                expectations;
                                  (II) unrealistic baseline 
                                estimates for cost or schedule 
                                or changes in program 
                                requirements;
                                  (III) immature technologies 
                                or excessive manufacturing or 
                                integration risk;
                                  (IV) unanticipated design, 
                                engineering, manufacturing, or 
                                technology integration issues 
                                arising during program 
                                performance;
                                  (V) changes to the scope of 
                                such program;
                                  (VI) inadequate program 
                                funding or changes in planned 
                                out-year funding from one 5-
                                year funding plan to the next 
                                5-year funding plan as outlined 
                                in the Future Years Homeland 
                                Security Program required under 
                                section 874;
                                  (VII) legislative, legal, or 
                                regulatory changes; or
                                  (VIII) inadequate program 
                                man-age-ment personnel, 
                                including lack of sufficient 
                                number of staff, training, 
                                credentials, certifications, or 
                                use of best practices;
                          (iv) propose corrective action to 
                        address cost growth, schedule delays, 
                        or performance issues;
                          (v) explain the rationale for why a 
                        proposed corrective action is 
                        recommended; and
                          (vi) in coordination with the 
                        Component Acquisition Executive for 
                        such program, discuss all options 
                        considered, including the estimated 
                        impact on cost, schedule, or 
                        performance of such program if no 
                        changes are made to current 
                        requirements, the estimated cost of 
                        such program if requirements are 
                        modified, and the extent to which 
                        funding from other programs will need 
                        to be reduced to cover the cost growth 
                        of such program.
          (3) Review of corrective actions.--
                  (A) In general.--The Under Secretary for 
                Management shall review the remediation plan 
                required under paragraph (2). The Under 
                Secretary may approve such plan or provide an 
                alternative proposed corrective action within 
                30 days of the submission of such plan under 
                such paragraph.
                  (B) Submission to congress.--Not later than 
                30 days after the review required under 
                subparagraph (A) is completed, the Under 
                Secretary for Management shall submit to the 
                congressional homeland security committees the 
                following:
                          (i) A copy of the remediation plan 
                        and the root cause analysis required 
                        under paragraph (2).
                          (ii) A statement describing the 
                        corrective action or actions that have 
                        occurred pursuant to paragraph 
                        (2)(b)(iv) for the major acquisition 
                        program at issue, with a justification 
                        for such action or actions.
  (b) Requirements Relating to Congressional Notification if 
Breach Occurs.--
          (1) Notification to congress.--If a notification to 
        the Secretary is made under subsection (a)(1)(B) 
        relating to a breach in a major acquisition program, 
        the Under Secretary for Management shall notify the 
        congressional homeland security committees of such 
        breach in the next quarterly Comprehensive Acquisition 
        Status Report, as required by title I of division D of 
        the Consolidated Appropriations Act, 2016, (Public Law 
        114-113) following receipt by the Under Secretary of 
        notification under such subsection.
          (2) Significant variances in costs or schedule.--If a 
        likely cost overrun is greater than 20 percent or a 
        likely delay is greater than 12 months from the costs 
        and schedule specified in the acquisition program 
        baseline for a major acquisition program, the Under 
        Secretary for Management shall include in the 
        notification required in paragraph (1) a written 
        certification, with supporting explanation, that--
                  (A) such program is essential to the 
                accomplishment of the Department's mission;
                  (B) there are no alternatives to the 
                capability or asset provided by such program 
                that will provide equal or greater capability 
                in both a more cost-effective and timely 
                manner;
                  (C) the new acquisition schedule and 
                estimates for total acquisition cost are 
                reasonable; and
                  (D) the management structure for such program 
                is adequate to manage and control cost, 
                schedule, and performance.
  (c) Definitions.--In this section:
          (1) Acquisition.--The term ``acquisition'' has the 
        meaning given such term in section 131 of title 41, 
        United States Code.
          (2) Acquisition program.--The term ``acquisition 
        program'' means the process by which the Department 
        acquires, with any appropriated amounts, by contract 
        for purchase or lease, property or services (including 
        construction) that support the missions and goals of 
        the Department.
          (3) Acquisition program baseline.--The term 
        ``acquisition program baseline'', with respect to an 
        acquisition program, means a summary of the cost, 
        schedule, and performance parameters, expressed in 
        standard, measurable, quantitative terms, which must be 
        met in order to accomplish the goals of such program.
          (4) Best practices.--The term ``best practices'', 
        with respect to acquisition, means a knowledge-based 
        approach to capability development that includes--
                  (A) identifying and validating needs;
                  (B) assessing alternatives to select the most 
                appropriate solution;
                  (C) clearly establishing well-defined 
                requirements;
                  (D) developing realistic cost assessments and 
                schedules;
                  (E) securing stable funding that matches 
                resources to requirements;
                  (F) demonstrating technology, design, and 
                manufacturing maturity;
                  (G) using milestones and exit criteria or 
                specific accomplishments that demonstrate 
                progress;
                  (H) adopting and executing standardized 
                processes with known success across programs;
                  (I) establishing an adequate workforce that 
                is qualified and sufficient to perform 
                necessary functions; and
                  (J) integrating the capabilities described in 
                subparagraphs (A) through (I) into the 
                Department's mission and business operations.
          (5) Breach.--The term ``breach'', with respect to a 
        major acquisition program, means a failure to meet any 
        cost, schedule, or performance threshold specified in 
        the most recently approved acquisition program 
        baseline.
          (6) Congressional homeland security committees.--The 
        term ``congressional homeland security committees'' 
        means--
                  (A) the Committee on Homeland Security of the 
                House of Representatives and the Committee on 
                Homeland Security and Governmental Affairs of 
                the Senate; and
                  (B) the Committee on Appropriations of the 
                House of Representatives and of the Senate.
          (7) Component acquisition executive.--The term 
        ``Component Acquisition Executive'' means the senior 
        acquisition official within a component who is 
        designated in writing by the Under Secretary for 
        Management, in consultation with the component head, 
        with authority and responsibility for leading a process 
        and staff to provide acquisition and program management 
        oversight, policy, and guidance to ensure that 
        statutory, regulatory, and higher level policy 
        requirements are fulfilled, including compliance with 
        Federal law, the Federal Acquisition Regulation, and 
        Department acquisition management directives 
        established by the Under Secretary for Management.
          (8) Major acquisition program.--The term ``major 
        acquisition program'' means a Department acquisition 
        program that is estimated by the Secretary to require 
        an eventual total expenditure of at least $300,000,000 
        (based on fiscal year 2017 constant dollars) over its 
        life cycle cost.

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