Page 1 GAO-04-876R Chief Operating Officer Concept at DHS 

June 28, 2004 

 

The Honorable Christopher Cox 

Chairman 

Select Committee on Homeland Security 

House of Representatives 

Subject: The Chief Operating Officer Concept and its Potential Use as a Strategy 

to Improve Management at the Department of Homeland Security 

Dear Mr. Chairman: 

In a May 18, 2004 letter, you observed that many management and integration 

challenges remain at the Department of Homeland Security (DHS) and to 

strengthen the departmentwide reforms and transformation underway at DHS the 

Select Committee is considering options such as the Chief Operating Officer (COO) 

concept to help address these challenges. At your request, this letter describes the 

roles and responsibilities of an effective COO and presents certain options that 

could serve to strengthen and streamline management functions in a department as 

large and diverse as DHS. As agreed, we have summarized our reports on the COO 

concept, organizational transformation, as well as DHS’s management and 

transformation challenges. 

On September 9, 2002, GAO also convened a roundtable of government leaders and 

management experts to discuss the COO concept and how it might apply within 

selected federal departments and agencies.1

 The intent of the roundtable was to 

generate ideas and to engage in an open dialogue on the possible application of the 

COO concept to selected federal departments and agencies. There was general 

agreement on a number of overall themes concerning the need for agencies to 

elevate, integrate, and institutionalize attention on key management challenges. 

Our prior work presented in issued reports on DHS’s management and 

transformation challenges was done in accordance with generally accepted 

government auditing standards. Because this response is based primarily on our 

previously issued work and the non-audit work performed for the roundtable, we 

 

1

U.S. General Accounting Office, Highlights of a GAO Roundtable: The Chief Operating Officer 

Concept: A Potential Strategy to Address Federal Governance Challenges, GAO-03-192SP 

(Washington, D.C.: Oct. 4, 2002). 

United States General Accounting Office

Washington, DC 20548 

Comptroller General

of the United States
Page 2 GAO-04-876R Chief Operating Officer Concept at DHS 

did not obtain agency comments on a draft of this letter. However, we are sending 

a copy of this letter to the Secretary of the Department of Homeland Security. 

As DHS and other agencies across the federal government embark on large-scale 

organizational change initiatives in order to address 21st century challenges, there 

is a compelling need to elevate, integrate, and institutionalize responsibility for key 

functional management initiatives to help ensure their success. A COO or similar 

position may effectively provide the continuing, focused attention essential to 

successfully completing these multiyear transformations. However, the specific 

implementation of such an approach must be determined within the context of the 

particular facts, circumstances, challenges, and opportunities of each individual 

agency. In addition, certain mechanisms can serve to augment the COO position, 

and thus further strengthen and streamline management functions within an 

agency. These mechanisms include articulating the COO’s role in statute in order to 

make clear its broad responsibilities, using performance agreements to clarify 

individual performance expectations, and setting a term appointment for the 

position to ensure accountability over the long term. Finally, strong and continuing 

congressional oversight can help determine how best to elevate, integrate, and 

institutionalize key management and transformation responsibilities in executive 

agencies. 

DHS Faces Management and Organizational Transformation Challenges 

DHS faces enormous management and organizational transformation challenges as 

it works to simultaneously establish itself, integrate numerous entities and systems, 

and protect the nation from terrorism. To achieve success, the result should not 

simply be a collection of components in a new department, but the transformation 

of the various programs and missions into a high-performing, focused organization.2

 

However, the size, complexity, and importance of DHS’s mission make the 

challenges involved especially daunting. As a reflection of this, in January 2003 we 

designated the implementation and transformation of DHS as high risk.3 This 

determination reflected the fact that DHS was formed from diverse components 

with a wide array of existing major management challenges and program risks. For 

example, one DHS directorate’s responsibility includes the protection of critical 

information systems that we already considered a high-risk area. Also, many of the 

originating components—including the Immigration and Naturalization Service, the 

Transportation Security Administration, the U.S. Customs Service, the Federal 

Emergency Management Agency, and the U.S. Coast Guard—individually faced one 

or more major management challenge, such as strategic human capital risks, critical 

 

2

For additional information on the attributes of high-performing organizations, see U.S. General 

Accounting Office, Highlights of a GAO Forum on High-Performing Organizations: Metrics, 

Means, and Mechanisms for Achieving High Performance in the 21st Century Public Management 

Environment, GAO-04-343SP (Washington, D.C.: Feb. 13, 2004). 

3

U.S. General Accounting Office, High-Risk Series: An Update, GAO-03-119 (Washington, D.C.: 

January 2003).
Page 3 GAO-04-876R Chief Operating Officer Concept at DHS 

information technology management challenges, or financial management 

vulnerabilities.4

The high-risk designation also reflected DHS’s daunting management challenge 

associated with the process of organizational integration and transformation itself. 

During its first year of operations, nearly 180,000 employees from 22 different 

agencies with a combined budget of over $30 billion became part of the new 

department. Moreover, we have previously noted that successful merger and 

transformation efforts can be much more difficult to achieve in the public sector 

than in the private sector.5 Public sector transformation efforts, such as that under 

way at DHS, must contend with more stakeholders and power centers, less 

management flexibility, and greater transparency than in the private sector. 

Organizational mergers of this magnitude carry significant risks, including lost 

productivity and inefficiencies. Furthermore, top officials in the public sector are 

typically political appointees who do not stay in their positions long enough to 

effectively address key transformation initiatives. Indeed, major mergers and 

acquisitions in the private sector often do not live up to their expectations, and in 

the short term, the experience of major private sector mergers and acquisitions has 

been that productivity and effectiveness actually decline.6 This can happen for a 

number of reasons. For example, attention is concentrated on critical and 

immediate integration issues and diverted from longer-term mission issues. In 

addition, employees and managers inevitably worry about their place in the new 

organization. The key is to adopt practices that minimize the duration and the 

significance of factors that reduce productivity and effectiveness. 

The COO Concept Can Provide Needed Focus to Address Management and 

Organizational Transformation Challenges

The COO concept may provide federal agencies, such as DHS, with a tool to provide 

the long-term attention required to effectively address significant management 

challenges and transformational needs. Under this concept, the COO provides a 

single organizational focus for key management functions, such as human capital, 

financial management, information technology, acquisition management, and 

performance management as well as for selected organizational transformation 

initiatives. Establishing a COO position can enable selected federal agencies to 

address the following. 

 

4

GAO-03-119, and U.S. General Accounting Office, Major Management Challenges and Program 

Risks: Department of Homeland Security, GAO-03-102 (Washington, D.C.: January 2003).

5

U.S. General Accounting Office, Highlights of a GAO Forum: Mergers and Transformation: 

Lessons Learned for a Department of Homeland Security and Other Federal Agencies, GAO-03-

293SP (Washington, D.C.: Nov. 14, 2002). 

6

U.S. General Accounting Office, Results-Oriented Cultures: Implementation Steps to Assist 

Mergers and Organizational Transformations, GAO-03-669 (Washington, D.C.: July 2, 2003).
Page 4 GAO-04-876R Chief Operating Officer Concept at DHS 

Elevate Attention on Management Issues and Transformational Change

As a result of short-term priorities and other demands on the time of agency heads 

and their deputies, they generally do not have the ability to focus enough dedicated 

attention to management issues. However, the nature and scope of the changes 

needed in many agencies require the sustained and inspired commitment of the top 

political and career leadership. As mentioned earlier, many of the originating 

organizational components merged to create DHS brought with them preexisting 

management challenges. Top leadership attention is essential to overcome 

organizations’ natural resistance to change, marshal the resources needed to 

implement change, and build and maintain the organizationwide commitment to 

new ways of doing business. We have previously reported that building an effective 

DHS will require consistent and sustained leadership from top management to 

ensure the needed transformation of disparate agencies, programs, and missions 

into an integrated organization.7

 A COO position can provide one potential 

approach for achieving this goal. 

Integrate Various Key Management and Transformation Efforts 

By their very nature, the problems and challenges facing agencies are crosscutting 

and thus require coordinated and integrated solutions. However, the federal 

government too often places management responsibilities, such as information 

technology, human capital, or financial management, into “stovepipes” and fails to 

design and implement organizational transformation efforts in a comprehensive, 

ongoing, and integrated manner. In recent testimony before the Select Committee, 

DHS’s Deputy Secretary reported that DHS has consolidated 22 different personal 

property management systems into 3 and expects to further reduce them to a single, 

departmentwide system over the next few years. 

The COO concept is consistent with the commonly agreed-upon governance 

principle that there needs to be a single point within agencies with the perspective 

and responsibility—as well as authority—to ensure the successful implementation 

of functional management and, if appropriate, transformation efforts. At the same 

time, given the competing demands on deputy secretaries in executive branch 

departments across the government to help execute the President’s policy and 

program agendas, it is not practical to expect that they will be able to consistently 

undertake this vital integrating responsibility. Moreover, while many deputy 

secretaries may be nominated based in part on their managerial experience, it has 

not always been the case, and not surprisingly, the management skills, expertise, 

and interests of the deputy secretaries have always varied and will continue to vary. 

To take advantage of the added status and visibility a COO position would provide 

and in order to be successful, the COO will need to be among an agency’s top 

leadership (for example, a new level two position with the title of deputy secretary 

 

7

GAO-03-102. 
Page 5 GAO-04-876R Chief Operating Officer Concept at DHS 

for management or principal under secretary for management). However, 

consistent with the desire to integrate responsibilities, the creation of a senior 

management position needs to be considered carefully with regard to existing 

positions and responsibilities so that it does not result in unnecessary “layering” at 

an agency. 

Institutionalize Accountability for Addressing Management Issues and Leading 

Transformational Change

Management weaknesses in some agencies are deeply entrenched and longstanding and will take years of sustained attention and continuity to resolve. This is 

especially important since private sector experience with mergers and acquisitions 

suggests that over 40 percent of executives in acquired companies leave within the 

first year and 75 percent within the first 3 years.8

 In addition, making fundamental 

changes in agencies’ cultures will also require a long-term effort. In our previous 

work, we have noted that the experiences of successful transformation initiatives in 

large private and public sector organizations suggest that it can often take at least 5 

to 7 years until such initiatives are fully implemented and the related cultures are 

transformed in a sustainable manner.9 In the federal government, the frequent 

turnover of the political leadership has often made it extremely difficult to obtain 

the sustained attention required to make needed changes. The creation of a COO 

position can provide one way for institutionalizing accountability over the long 

term. 

Certain Mechanisms Can Augment the COO Position 

In the context of providing agencies with a tool to elevate, integrate, and 

institutionalize responsibility for certain key management functions and 

transformational efforts within federal agencies, Congress can further enhance the 

importance and authority of the COO position, and thus strengthen and streamline 

management functions within a department. For example, Congress could 

articulate the COO’s broad responsibilities in statute. In 2003, Congress created the 

position of Deputy Architect of the Capitol/COO; this official is responsible for the 

overall direction, operation, and management of that organization. Under the 

statute, besides developing and implementing a long-term strategic plan, including a 

comprehensive mission statement and an annual performance plan, the Deputy 

Architect/COO is to propose organizational changes and new positions needed to 

carry out the organization’s mission and strategic and annual performance goals.10

 

 

8

GAO-03-669. 

9

GAO-03-293SP. 

10Section 1203 of Division H, Title I, Pub. L. No. 108-7, February 20, 2003, (The Consolidated 

Appropriations Resolution, 2003). The Architect of the Capitol appointed the first COO on July 28, 

2003. 

 
Page 6 GAO-04-876R Chief Operating Officer Concept at DHS 

Articulating the role and responsibilities of the COO in statute helps to create 

unambiguous expectations for the position and underscores Congress’ desire to 

follow a professional, nonpartisan approach in connection with these positions. In 

addition, it provides, in effect, an implicit set of qualification standards and 

expectations that the incumbents will have leadership experience in the areas that 

will be within their portfolios. For example, under the statute, the Deputy 

Architect/COO is to have strong leadership skills and demonstrated ability in 

management, including such areas as strategic planning, performance management, 

worker safety, customer satisfaction, and service quality. Congress also set 

qualifications in statute when it created the position of Chief Financial Officer 

(CFO) at 24 departments and federal agencies. The CFOs are to “possess 

demonstrated ability in general management of, and knowledge of and extensive 

practical experience in financial management practices in large governmental or 

business entities.”11 In addition, Congress set the qualifications for the position of 

Chief Information Officer (CIO) at federal departments and agencies. CIOs are to 

“be selected with special attention to the professional qualifications” required for 

records management, information dissemination, security, and technology 

management among others areas.12 

Another potentially important accountability mechanism to augment the COO role 

is to use clearly defined, results-oriented performance agreements accompanied by 

appropriate incentives, rewards, and accountability mechanisms.13 Performance 

agreements for senior leaders provide a potentially important mechanism for 

clarifying expectations, monitoring progress, and assessing accountability. In 

addition, we have reported on a number of benefits of performance agreements.14

Performance agreements can 

• strengthen alignment of results-oriented goals with daily operations, 

• foster collaboration across organizational boundaries, 

• enhance opportunities to discuss and routinely use performance 

information to make program improvements, 

• provide a results-oriented basis for individual accountability, and 

• maintain continuity of program goals during leadership transitions. 

 

11Pub. L. No. 101-576, November 15, 1990, 104 Stat. 2838.

12Pub. L. No. 104-13, May 22,1995, 44 U.S.C. §§3501-3521.

13U.S. General Accounting Office, Results-Oriented Government: Shaping the Government to Meet 

21st Century Challenges, GAO-03-1168T (Washington, D.C.: Sept. 17, 2003). 

14U.S. General Accounting Office, Managing for Results: Emerging Benefits From Selected 

Agencies’ Use of Performance Agreements, GAO-01-115 (Washington, D.C.: Oct. 30, 2000). 
Page 7 GAO-04-876R Chief Operating Officer Concept at DHS 

While performance agreements can be implemented administratively as was done in 

the Department of Transportation since the mid-1990s, Congress has also required 

performance agreements in statute as well as provided for performance 

assessments with consequences.15 For example, in 1998 Congress established a 

COO position at the Department of Education’s Office of Student Financial 

Assistance.16 In 2000 we reported that the COO is to complete an annual 

performance agreement with measurable organizational and individual goals that 

the COO would be accountable for achieving. Further, the COO’s progress in 

meeting these goals is to form the basis of a possible performance bonus of up to 50 

percent of base pay, as well as any decisions to remove or reappoint him or her. 

The COO is to enter into subsequent performance agreements with the Office of 

Student Financial Assistance’s senior managers. Similarly, Congress made it clear 

in statute that the Deputy Architect/COO may be removed from office for failure to 

meet performance goals. Congress also required in statute that annual performance 

reports contain an evaluation of the extent to which the Office of the Architect of 

the Capitol met its goals and objectives. 

To help ensure accountability over the long term, setting a term appointment can 

help provide the continuing focused attention essential to successfully completing 

multiyear transformations, which can extend beyond the tenure of political leaders. 

As mentioned above, large-scale change initiatives and organizational 

transformations typically require long-term, concerted effort, often taking years to 

complete. Providing a COO with a term-appointment of about 5 to 7 years would be 

one way to institutionalize accountability over extended periods needed to help 

ensure long-term management and transformation initiatives are successfully 

completed. No matter how the position is structured, it is critical that the people 

appointed to these positions be vested with sufficient authority to achieve results. 

Finally, through enhanced oversight, Congress will need to continue to be fully 

engaged in any ongoing discussions on how best to elevate, integrate, and 

institutionalize key management and transformation responsibilities and what role 

the COO concept should play in achieving this goal. The Select Committee’s record 

of holding oversight hearings and its interest in considering a variety of potential 

strategies to strengthen the management functions at DHS provides a clear example 

of this engagement. For selected agencies, Congress may want to make the COO 

subject to Senate confirmation to ensure that nominees have the requisite 

leadership and management skills and the proven track records in similar positions 

to successfully address the challenges facing federal agencies. In creating such a 

position, Congress might consider making certain subordinate positions, such as 

the CFO, not subject to Senate confirmation. 

 

15GAO-01-115, and U.S. General Accounting Office, Results-Oriented Cultures: Creating a Clear 

Linkage between Individual Performance and Organizational Success, GAO-03-488 (Washington, 

D.C.: Mar. 14, 2003). 

16The name of the Office of Student Financial Assistance was changed to Federal Student Aid on 

March 6, 2002. 
Page 8 GAO-04-876R Chief Operating Officer Concept at DHS 

__ __ __ __ __ __ __ __ __ 

We are sending copies of this letter to the Vice Chair and Ranking Minority Member 

of the Select Committee on Homeland Security, the Chairman and Ranking Minority 

Member of the Senate Committee on Governmental Affairs, and the Secretary of the 

Department of Homeland Security. In addition, we will make copies available to 

others upon request. This letter will also be available on the GAO Web site at 

www.gao.gov. If you have any questions concerning this letter, please contact me 

on (202) 512-5500 or J. Christopher Mihm, Managing Director, Strategic Issues, on 

(202) 512-6806 or at mihmj@gao.gov. 

Sincerely yours, 

David M. Walker 

Comptroller General 

of the United States 

(450333)