a

GAO

United States General Accounting Office

Report to Congressional Requesters

February 2004 INFORMATION 

TECHNOLOGY

OMB and Department 

of Homeland Security 

Investment Reviews

GAO-04-323
In July 2002, the Office of 

Management and Budget (OMB) 

issued two memorandums directing 

agencies expected to be part of the 

Department of Homeland Security 

(DHS) to temporarily cease funding 

for new information technology (IT) 

infrastructure and business systems 

investments and submit information 

to OMB on current or planned 

investments in these areas (see 

figure below for a timeline). 

GAO was asked to (1) explain 

OMB’s implementation of these 

memorandums, (2) identify any 

resulting changes to applicable IT 

investments, and (3) ascertain if 

DHS has initiated its own 

investment management reviews 

and, if so, what the results of 

these reviews have been.

GAO is making recommendations 

to DHS to (1) report savings 

resulting from its consolidation 

and integration of systems and 

(2) develop a schedule for 

reviews of IT investments 

subject to departmental oversight. 

In commenting on a draft of the 

report, OMB representatives 

stated that they generally agreed 

with our findings and DHS 

officials stated that it was 

factually accurate. 

www.gao.gov/cgi-bin/getrpt?GAO-04-323.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact David Powner 

at (202) 512-9286 or pownerd@gao.gov. 

Highlights of GAO-04-323, a report to the 

Chairman, House Committee on 

Government Reform and Chairman, 

Subcommittee on Technology, Information 

Policy, Intergovernmental Relations and 

the Census 

February 2004

INFORMATION TECHNOLOGY 

OMB and Department of Homeland 

Security Investment Reviews 

The July 2002 memorandums established an investment review group cochaired by OMB and the Office of Homeland Security to review submitted 

investments and estimated that millions of dollars potentially could be saved 

as a result of consolidating and integrating component agency investments. 

The investment review group relied on an informal, undocumented process 

to fulfill its responsibilities. Nevertheless, according to OMB and DHS IT 

officials, the review group both reviewed five component agency 

investments that were submitted and addressed long-term IT strategic issues 

related to the transition to the new department. 

OMB and DHS IT officials cited some changes to agency IT infrastructure 

and business systems investments because of the July memorandums. In 

addition, DHS IT officials cited other benefits that resulted from the 

memorandums. However, it is not known whether, or the extent to which, 

savings have resulted from the memorandums. In particular, OMB did not 

track savings associated with the July memorandums because, according to 

OMB IT staff, anticipated budgetary savings had not occurred at the time the 

review group was in place. DHS’s chief information officer stated that the 

department plans to track savings related to the consolidation and 

integration of systems and has established a mechanism for doing so. 

However, until such savings are identified, tracked, and reported it will 

remain unknown whether the July memorandums and the subsequent 

establishment of DHS have achieved the potential economies identified by 

OMB. 

Once DHS became operational and the investment review group no longer 

existed, the department established its own IT investment management 

process, which is still evolving. As part of this process, between May 2003 

and late January 2004, the DHS’s highest level investment management 

board performed reviews of nine investments that had reached key decision 

points. Even with this progress, the department has identified about 100 IT 

programs that are eligible for review by its two top department-level boards. 

However, DHS has not established a process to ensure that key reviews of 

such IT investments are performed in a timely manner. 

Timeline of Events Related to the OMB Memorandums and the Establishment of DHS 

Source: GAO. 

P.L. 107-296 signed 

by the President 

(Homeland Security 

Act of 2002)

November 25, 2002

DHS is established

January 24, 2003

DHS becomes 

operational

March 1, 2003

President proposes 

to create DHS

June 18, 2002

OMB issues 

memorandum 

on IT 

infrastructure 

investments

July 19, 2002

OMB issues 

memorandum 

on business 

systems 

investments 

July 30, 2002

H.R. 5005 

introduced 

to establish 

DHS 

June 24, 2002

2002 2003

June July August September October November December January February March
Page i GAO-04-323 DHS IT Investments

Contents

Letter 1

Results in Brief 3

Background 4

Implementation of OMB’s July 2002 Memorandums 9

Some Changes Were Made to Component Agency IT Infrastructure 

and Business Systems Investments 11

DHS Has Initiated Reviews of Component Agency IT Investments, 

but Its Processes Are Still Evolving 15

Conclusions 20

Recommendations for Executive Action 21

Agency Comments 21

Appendix

Appendix I: DHS Department-Level Investment Management Boards 23

Tables Table 1: Summary of Changes to Component Agencies’ IT 

Investments 12

Table 2: Summary of IRB Control Reviews 18

Figures Figure 1: Timeline of Events Related to the OMB Memorandums 

and the Establishment of DHS 8

Figure 2: DHS Investment Review Process 17
Contents

Page ii GAO-04-323 DHS IT Investments

Abbreviations

ACE Automated Commercial Environment

CAPPS II Computer Assisted Passenger Prescreening System

CIO chief information officer

DHS Department of Homeland Security

IRB Investment Review Board

IT information technology

OMB Office of Management and Budget

US-VISIT United States Visitor and Immigrant Status Indicator

Technology

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Page 1 GAO-04-323 DHS IT Investments

United States General Accounting Office

Washington, D.C. 20548

A

February 10, 2004 Letr

The Honorable Tom Davis

Chairman, Committee on Government Reform

House of Representatives

The Honorable Adam H. Putman

Chairman, Subcommittee on Technology, Information

Policy, Intergovernmental Relations and the Census

Committee on Government Reform

House of Representatives

The Homeland Security Act of 2002 (P.L. 107-296), which was enacted in 

November 2002, brought together 22 diverse agencies and created a new 

cabinet-level department—the Department of Homeland Security (DHS)—

to help prevent terrorist attacks in the United States, reduce the 

vulnerability of the United States to terrorist attacks, and minimize the 

damage and assist in recovery from attacks that do occur. The new DHS 

presents both information technology (IT) challenges and opportunities. 

For example, DHS (1) faces considerable challenges in integrating the 

many systems and processes that provide management with information 

necessary for decision making and (2) offers opportunities to identify and 

eliminate redundant investments and achieve more efficiencies in IT 

investments. 

To begin to tackle these issues even before the department was formed, the 

Office of Management and Budget (OMB) in July 2002 issued two 

memorandums directing federal agencies1

 that were expected to be part of 

the new department to temporarily cease funding for new IT infrastructure 

and business systems investments and submit information to OMB on

1

The entities that were affected by one or both of the July 2002 memorandums were the 

Department of Agriculture’s Animal and Plant Health Inspection Service, the Federal 

Emergency Management Agency, the Department of Justice’s Immigration and 

Naturalization Service, the Department of Transportation’s Transportation Security 

Administration and Coast Guard, and the Department of the Treasury’s Secret Service and 

Customs Service. Each of these entities was transferred at least in part to DHS, and will be 

referred to as component agencies for purposes of this report. 
Page 2 GAO-04-323 DHS IT Investments

current or planned investments in these areas.2 These memorandums also 

established an investment review group,3 co-chaired by OMB and the Office 

of Homeland Security, to review investments that met the criteria in the 

July memorandums. In October 2002, we testified that it was too early to 

assess the impact of OMB’s action because agency submissions were still 

being evaluated.4

Since DHS has now been established, you requested that we follow up on 

our prior testimony and (1) explain how OMB implemented the July 2002 

memorandums; (2) identify what, if any, changes to agency IT investments 

resulted from the July memorandums and the Homeland Security IT 

Investment Review Group’s evaluations (hereafter called the review 

group); and (3) ascertain whether DHS has initiated its own investment 

management reviews and, if so, what the results of these reviews have 

been. To address the first objective, we sought available documentation on 

the criteria and process used by the investment review group to make 

decisions. Likewise for the second objective, we sought documentation 

from OMB and applicable DHS component agencies on decisions made by 

the investment review group and on changes to IT investments that 

resulted from the July 2002 memorandums. However, according to OMB 

and DHS IT officials, the processes used and decisions made by the review 

group and the DHS component agencies were not documented. As a result, 

we largely relied upon interviews with applicable OMB and DHS IT 

officials—including representatives from OMB’s Office of Information and 

Regulatory Affairs, the DHS chief information officer (who is also the 

former Office of Homeland Security co-chair of the investment review 

group), and DHS component agency IT officials—to address the first two 

2

According to OMB representatives, the July 2002 memorandums stopped being applicable 

once DHS became operational in March 2003. 

3

The July 2002 memorandums created two investment review groups, the (1) Homeland 

Security IT Investment Review Group, which was to review IT infrastructure investments, 

and (2) Business Systems IT Review Group, which was to review business systems 

investments. However, according to an OMB IT representative and the Office of Homeland 

Security co-chair of these groups, because the membership was largely the same (they 

generally comprised the chief information officers of the component agencies expected to 

be part of DHS although some chief financial officers were also represented), they acted as 

a single entity. Accordingly, we refer to these groups as the Homeland Security IT 

Investment Review Group for purposes of this report. 

4

U.S. General Accounting Office, Homeland Security: OMB’s Temporary Cessation of 

Information Technology Funding for New Investments, GAO-03-186T (Washington, D.C.: 

Oct. 1, 2002). 
Page 3 GAO-04-323 DHS IT Investments

objectives. To address the third objective, we reviewed DHS’s IT 

investment management review policies and documentation of DHS 

reviews performed of component agency IT investments. This 

documentation included decision memorandums issued by its highest level 

investment management board on the results of its reviews. We also 

interviewed the DHS chief information officer (CIO), chief technology 

officer, and the coordinator of the DHS investment review process. We 

performed our work at OMB and DHS in Washington, D.C., between July 

2003 and January 2004, in accordance with generally accepted government 

auditing standards.

Results in Brief The Homeland Security IT Investment Review Group relied on an informal 

and undocumented process to fulfill its responsibilities under the July 2002 

memorandums. Nevertheless, according to OMB and DHS IT officials, the 

review group both reviewed the few component agency investments that 

were submitted for approval and addressed long-term issues related to the 

transition to the new department. In particular, OMB IT representatives 

stated that when the establishment of DHS became closer in time the 

investment review group shifted its focus to IT strategic issues related to 

the transition to the proposed department. 

OMB and DHS IT officials cited some changes to agency IT infrastructure 

and business systems investments because of the July memorandums. The 

component agencies submitted five requests to the review group, which 

recommended their approval but with conditions. An example of a request 

that was recommended for approval was the Secret Service’s request to 

procure search engine software. According to Secret Service, OMB, and 

DHS IT officials, this request was recommended for approval with the 

condition that the contractual document allow other component agencies 

to use the search engine. Four component agencies also reported other 

changes, including putting planned enhancements on hold, as a result of 

the July memorandums. However, it is not known whether, or the extent to 

which, savings have resulted from the memorandums. In particular, OMB 

did not track the savings associated with the July memorandums because, 

according to OMB IT staff, budgetary savings had not occurred at the time 

that the review group was in place. Until savings resulting from the 

consolidation and integration of systems and services are identified, 

tracked, and reported it will remain unknown whether OMB’s July 

memorandums and the subsequent establishment of DHS have achieved 

the potential economies identified by OMB in the memorandums.
Page 4 GAO-04-323 DHS IT Investments

Once DHS became operational and the investment review group no longer 

existed, the department established its own IT investment management 

process, which is still evolving. As part of this process, DHS’s CIO reported 

that he approved the department’s IT portfolio for the fiscal year 2005 

budget cycle. In addition, between May 2003 and late January 2004, the 

department’s highest level investment management board had performed 

control reviews5

 on nine investments that had reached certain key decision 

points. In each of these cases the project was allowed to proceed but 

additional documentation was required and/or conditions set. Although 

DHS is making progress in reviewing component agency projects, the 

department has identified about 100 IT programs that are eligible for 

review by its two top-level departmental investment management boards. 

According to IT officials, DHS is having difficulty in bringing all of these 

programs before the boards in a timely manner. Moreover, DHS has not 

established a process to ensure that key reviews of component agency IT 

investments subject to departmental reviews are performed in a timely 

manner, although it has begun to collect information on the priorities and 

schedules of its top-level investments as a first step.

We are making recommendations to DHS that it report the savings that 

result from its consolidation and integration of systems and services and 

develop a control review schedule for IT investments subject to 

departmental oversight.

We received oral comments on a draft of this report from OMB and DHS 

representatives, who stated that they generally agreed with our findings 

and that it was factually accurate, respectively. 

Background With the terrorist attacks of September 11, 2001, the threat of terrorism 

rose to the top of the country’s national security and law enforcement 

agendas. In response to these growing threats, the Congress passed and the 

President signed the Homeland Security Act of 2002, which created DHS. 

We have previously identified IT management as critical to the

5

During the control phase of the IT investment management process, the organization 

ensures that, as projects develop and as funds are spent, the project is continuing to meet 

mission needs at the expected levels of cost and risk. 
Page 5 GAO-04-323 DHS IT Investments

transformation of the new department.6 Not only does DHS face 

considerable challenges in integrating the many systems and processes that 

provide management with information for decision making, but it must 

sufficiently identify its future needs in order to build effective systems that 

can support the national homeland security strategy in the coming years. 

To jump start this planning process and also begin to identify opportunities 

for improved effectiveness and economy, OMB issued two memorandums 

in July 2002 to selected agencies telling them to “cease temporarily” and 

report on new IT infrastructure and business systems investments above 

$500,000.

Mission, Organization, and 

Role of IT in DHS

On March 1, 2003, DHS assumed operational control of nearly 180,000 

employees from 22 incoming agencies and offices. In establishing the new 

department, the Congress articulated a seven-point mission for DHS: 

• Prevent terrorist attacks within the United States.

• Reduce the vulnerability of the United States to terrorism.

• Minimize the damage and assist in the recovery from terrorist attacks.

• Carry out all functions of entities transferred to the department, 

including by acting as a focal point regarding natural and man-made 

crises and emergency planning.

• Ensure that the functions of the agencies within the department that are 

not directly related to securing the homeland are not diminished or 

neglected.

• Ensure that the overall economic security of the United States is not 

diminished by efforts aimed at securing the homeland.

• Monitor connections between illegal drug trafficking and terrorism, 

coordinate efforts to sever such connections, and otherwise contribute 

to efforts to interdict illegal drug trafficking.

6

U.S. General Accounting Office, Major Management Challenges and Program Risks: 

Department of Homeland Security, GAO-03-102 (Washington, D.C.: January 2003).
Page 6 GAO-04-323 DHS IT Investments

To help DHS accomplish its mission, the Homeland Security Act of 2002 

establishes four mission-related directorates, the (1) Border and 

Transportation Security directorate, (2) Emergency Preparedness and 

Response directorate, (3) Science and Technology directorate, and (4) 

Information Analysis and Infrastructure Protection directorate. In addition 

to these directorates, the U.S. Secret Service and the U.S. Coast Guard 

remain intact as distinct entities within DHS; Immigration and 

Naturalization Service adjudications and benefits programs report directly 

to the deputy secretary as the Bureau of Citizenship and Immigration 

Services, and the Management directorate is responsible for budget, human 

capital, and other general management issues.7

According to the most recent President’s budget, DHS expects to make 

about $4 billion in IT investments in fiscal year 2004—the third largest IT 

investment budget in the federal govenment.8

 In addition, as we have 

testified, information management and technology are among the critical 

success factors that the new department should emphasize in its initial 

implementation phase.9

 For example, DHS currently has several ongoing IT 

projects that are critical to the effective implementation of its mission, 

such as the

• Integrated Surveillance Intelligence System, which is to provide “24 by 

7” border coverage through ground-based sensors, fixed cameras, and 

computer-aided detection capabilities;

• Student Exchange Visitor Information System, which is expected to 

manage information about nonimmigrant foreign students and exchange 

visitors from schools and exchange programs; 

7

DHS’s Office of the CIO is part of the Management directorate. 

8

Office of Management and Budget, Budget of the U.S. Government, Fiscal Year 2005, 

Report on IT Spending for the Federal Government for Fiscal Years 2003, 2004, and 2005. 

We did not verify these data. 

9

U.S. General Accounting Office, Homeland Security: Proposal for Cabinet Agency Has 

Merit, But Implementation Will be Pivotal to Success, GAO-02-886T (Washington, D.C.: 

June 25, 2002). 
Page 7 GAO-04-323 DHS IT Investments

• Automated Commercial Environment project, which is to be a new trade 

processing system;10 and 

• United States Visitor and Immigrant Status Indicator Technology (USVISIT), a governmentwide program intended to improve the nation’s 

capacity for collecting information on foreign nationals who travel to 

the United States, as well as control the pre-entry, entry, status, and exit 

of these travelers.11

Moreover, as all of the programs and agencies are brought together in the 

new department, it will be an enormous undertaking to integrate their 

diverse communication and information systems. Among the IT challenges 

that the new department will have to face and overcome are developing, 

maintaining, and implementing an enterprise architecture,12 and 

establishing and enforcing a disciplined IT investment management 

process (which includes establishing an effective selection, control, and 

evaluation process).13 The department’s ability to overcome these 

challenges is complicated by the IT management problems that its major 

components had when they transferred to DHS. Specifically, as we 

previously reported, we still have numerous outstanding IT management 

recommendations that require action at component agencies, such as the 

Customs Service and the Coast Guard.14

10We have previously issued reports on this initiative. For example, see U.S. General 

Accounting Office, Customs Service Modernization: Automated Commercial 

Environment Progressing, but Further Acquisition Management Improvements Needed, 

GAO-03-406 (Washington, D.C.: Feb. 28, 2003).

11We have previously issued reports on this initiative. For example, see U.S. General 

Accounting Office, Homeland Security: Risks Facing Key Border and Transportation 

Security Program Need to Be Addressed, GAO-03-1083 (Washington, D.C.: Sept. 19, 2003). 

12An enterprise architecture is a blueprint for institutional modernization and evolution that 

consists of models describing how an entity operates today and how it intends to operate in 

the future, along with a plan for how it intends to transition to this future state. 

13We have issued guidance to agencies related to enterprise architecture, IT investment 

management, and other management issues. For example, see U.S. General Accounting 

Office, Information Technology: A Framework for Assessing and Improving Enterprise 

Architecture Management (Version 1.1), GAO-03-584G (Washington, D.C.: Apr. 1, 2003) and 

Information Technology Investment Management: A Framework for Assessing and 

Improving Process Maturity, GAO/AIMD-10.1.23, Exposure Draft (Washington, D.C.: May 

2000).

14U.S. General Accounting Office, Homeland Security: Information Technology Funding 

and Associated Management Issues, GAO-03-250 (Washington, D.C.: Dec. 13, 2002). 
Page 8 GAO-04-323 DHS IT Investments

OMB’s July 2002 

Memorandums on IT 

Infrastructure and Business 

Systems Investments

Figure 1 illustrates the timing of OMB’s July 2002 memorandums. These 

memorandums instructed selected agencies to (1) cease temporarily new 

IT infrastructure and business systems (i.e., financial management, 

procurement, and human resources systems) investments above $500,000 

pending a review of the investment plans of all proposed DHS component 

agencies; (2) identify and submit to OMB information on any current or 

planned spending on these types of initiatives; and (3) participate in 

applicable IT investment review groups co-chaired by OMB and the Office 

of Homeland Security. 

Figure 1: Timeline of Events Related to the OMB Memorandums and the 

Establishment of DHS

According to OMB, its goal in issuing these memorandums was to seek 

opportunities for improved effectiveness and economy. In addition, 

according to officials from OMB’s Office of Information and Regulatory 

Affairs, another purpose was to obtain an inventory of current and planned 

IT infrastructure and business systems investments for organizations to be 

moved to DHS, which was expected to help in the administration’s 

transition planning.

Although OMB directed selected agencies to temporarily cease these 

investments, it did not necessarily mean that work was to be stopped on all 

IT infrastructure and business systems projects at the applicable agencies. 

First, the memorandums only pertained to funding for new development 

efforts and not to existing systems in a “steady state” using operations and 

maintenance funding. Second, the cessation did not apply if funds 

pertaining to a development or acquisition contract had already been 

obligated. Third, agencies could request an expedited review to obtain the 
Page 9 GAO-04-323 DHS IT Investments

approval to proceed if they had an emergency or critical need. The 

following are examples of how OMB’s direction to temporarily cease IT 

investments would apply in certain circumstances.

• If an agency had an existing procurement system in a steady state in 

which no major modifications or modernization efforts were planned, 

there would have been no effect on the funding of this system.

• If an agency had an ongoing contract with available obligations for the 

development of a financial management system, there would have been 

no effect on this contract, but new obligations for development or 

modernization efforts would have been required to be approved by the 

review group.

• If an agency wanted to award a contract over $500,000 for a new or 

modernized IT infrastructure item such as a local area network, it would 

have been required to obtain approval from the investment review group 

before proceeding.

Our testimony of October 2002, stated that it was not possible to assess the 

full effect of the July memorandums on the selected agencies at that time.15

Except for emergency requests, according to representatives from OMB’s 

Office of Information and Regulatory Affairs, the review group had not 

taken any action at the time of our review on the agencies’ submissions in 

response to the July memorandums because neither they nor OMB had 

completed their reviews of these documents. 

Implementation of 

OMB’s July 2002 

Memorandums

The July memorandums called on the Homeland Security IT Investment 

Review Group to assess individual IT investments as part of considering 

whether to consolidate or integrate component agency efforts. In fulfilling 

this role, the review group relied on an informal process, which was not 

documented. Although the review group reviewed the few investments that 

component agencies submitted, according to OMB and DHS IT officials, the 

group generally addressed broader issues related to the transition to the 

new department. In particular, these officials noted that the review group 

concentrated on longer term IT strategic issues, such as those related to 

15GAO-03-186T. 
Page 10 GAO-04-323 DHS IT Investments

the development of an enterprise architecture, associated with the 

transition to the proposed department.

The investment review group was tasked with (1) reviewing component 

agency IT investment submissions that met the criteria in the 

memorandums, and (2) making recommendations related to these 

submissions, including looking for opportunities to consolidate and 

integrate component agency investments. According to OMB IT 

representatives, the group generally met once a week but did not have a 

documented process for performing reviews of the few component agency 

investments that were submitted for review. These officials reported that in 

the review process that was implemented, (1) agencies requested approval 

of selected IT investments, (2) OMB and the investment review group 

reviewed the agency submission, and (3) the review group made a 

recommendation. Once this recommendation was made, the normal budget 

execution process was implemented. Moreover, according to these 

representatives, the investment review group used the principles contained 

in section 300 of OMB Circular A-11 and section 8(b) of OMB Circular A-130 

as the criteria for evaluating submitted investments.16 In addition, in 

commenting on a draft of this report, representatives from OMB’s Office of 

Information and Regulatory Affairs and Office of the General Counsel 

stated that although the activities of the Homeland Security IT Investment 

Review Group were generally conducted on an informal basis, the group 

relied on the already-existing processes documented in these circulars to 

fulfill its responsibilities.

According to OMB IT representatives, when the establishment of DHS 

became closer in time, the focus of the review group shifted from reviewing 

individual investments to addressing the IT strategic issues involved with 

establishing the department. In particular, according to DHS officials, the 

review group created six working groups to address, respectively, business 

architecture, networks, information security, Web management, directory 

services (e.g., e-mail capability), and technical reference model issues. In 

addition, according to these officials, the investment review group took 

16These circulars instruct agencies to develop, implement, and use capital programming 

processes that, for example: (1) evaluate and select capital asset investments that will 

support core mission functions and demonstrate projected returns on investments that are 

clearly equal to or better than alternative uses of public resources, (2) ensure that 

improvements to existing and planned information systems do not unnecessarily duplicate 

IT capabilities within the same agency, and (3) institute performance measures and 

management processes that monitor and compare actual performance with planned results. 
Page 11 GAO-04-323 DHS IT Investments

into account transition work being performed by other entities. For 

example, the review group worked with a liaison from the Chief Financial 

Officers Council, which was looking at financial management system 

matters related to the new department.

Some Changes Were 

Made to Component 

Agency IT 

Infrastructure and 

Business Systems 

Investments

The July 2002 memorandums resulted in some changes to agency IT 

infrastructure and business systems investments. Specifically, according to 

OMB and DHS IT officials, the review group recommended approval with 

conditions the five IT investments submitted to it and four component 

agencies reported that they changed other initiatives as a result of the 

memorandums. However, it is not known whether, or the extent to which, 

savings have resulted from the memorandums. In particular, OMB did not 

track the savings associated with the July memorandums because, 

according to OMB IT representatives, budgetary savings had not occurred 

when the review group was in place. Nevertheless, OMB and DHS IT 

officials cited other benefits that resulted from the memorandums, such as 

the identification of ongoing component agency efforts or resources that 

were important to the operation of the department at its inception.

Four component agencies submitted five IT investment requests to be 

reviewed by the review group. According to OMB and DHS IT officials, all 

of these requests were recommended for approval with conditions. In 

addition, four component agencies reported that on their own initiative 

that they terminated, delayed, or changed other initiatives as a result of the 

July memorandums. (See table 1.)
Page 12 GAO-04-323 DHS IT Investments

Table 1: Summary of Changes to Component Agencies’ IT Investments

Component 

agencya

Reported investment request/decision by the

Homeland Security IT Investment Review Group

Investment decision reported by the

component agency

Animal and Plant 

Health Inspection 

Service

Did not request any decisions. • Stopped expansion and maintenance of the Plant 

Protection and Quarantine Small Site Data 

Communications Infrastructure. 

• Put on hold further development of the 

Automated Target System. Future enhancements 

to this system are still on hold pending DHS-wide 

decisions. 

Coast Guard Submitted an emergency request to proceed with a licensing 

agreement with Microsoft. This was recommended for approval 

with the condition that the agreement be expanded to include 

other DHS entities. (According to Coast Guard IT officials, the 

licensing agreement was not expanded to include other DHS 

entities, but they could not explain why the review group’s 

condition was not met.)b

Did not report any other changes as a result of the 

July memorandums.

Customs Service Submitted a nonemergency request to procure a new e-mail 

system. The review group agreed with the procurement of a 

new e-mail system but recommended a different technical 

solution. As of early January 2004, this solution had not yet 

been implemented.

Did not report any other changes as a result of the 

July memorandums.

Federal Emergency 

Management 

Agency

Did not request any decisions. • Terminated a planned correspondence tracking 

system.c

• Terminated a planned personnel resources 

information system.

• Integrated five infrastructure projects into 

ongoing DHS initiatives.

• Scaled back its enterprise resource planning 

project pending DHS-wide decisions.

• Scaled back planned upgrades to its financial 

management system pending DHS-wide 

decisions.
Page 13 GAO-04-323 DHS IT Investments

Source: OMB, DHS, and component agency IT officials.

a

For the purposes of this table, we used the names of the component agencies that were employed at 

the time of the July 2002 memorandums. Some of these names changed after DHS was established.

b

According to the DHS CIO, this lack of compliance with the investment review group’s condition was 

mitigated by the later implementation of a DHS-wide Microsoft enterprise license.

c

The Federal Emergency Management Agency reported that this project was terminated, in part, 

because of the July 2002 memorandums.

Immigration and 

Naturalization 

Service

Did not request any decisions. • Put on hold planned enhancements to its core 

financial management system pending DHSwide decisions. These enhancements are still on 

hold.

• Put on hold a planned replacement of its 

Correspondence Control and Task Tracking 

System, which remains on hold. 

• Put on hold planned enhancements to Atlas, an 

initiative to upgrade its IT infrastructure, pending 

DHS-wide decisions. These enhancements are 

still on hold.

Secret Service Submitted an emergency request to procure a search engine 

that would conduct database searches across the agency. This 

request was recommended for approval with the condition that 

the procurement include other DHS entities.

Did not report any other changes as a result of the 

July memorandums.

Transportation 

Security 

Administration

• Submitted an emergency request to proceed with a task 

order for a managed services contract, which was 

recommended for approval with the condition that the 

contract be expanded to include other DHS entities.

• Submitted a nonemergency request to procure network 

infrastructures at airports. This request was recommended 

for approval with the condition that the agency use, to the 

extent possible, the existing airport infrastructure capabilities 

of the Customs Service and the Immigration and 

Naturalization Service. The Transportation Security 

Administration was also directed to work with these agencies 

when a need for network infrastructure is identified at specific 

airports.

Delayed the agency’s plans for “back office” 

systems, such as human resources and payroll 

systems. According to the Transportation Security 

Administration’s CIO, a final decision on these 

efforts is awaiting DHS-wide decisions. 

(Continued From Previous Page)

Component 

agencya

Reported investment request/decision by the

Homeland Security IT Investment Review Group

Investment decision reported by the

component agency
Page 14 GAO-04-323 DHS IT Investments

The July memorandums stated that initial estimates indicated that potential 

savings of between $100 million and $200 million (IT infrastructure) and 

$65 million and $85 million (business systems) could be achieved over a 2-

year period17 as a result of consolidating and integrating component agency 

investments. OMB reported to congressional committees that these 

estimates were based primarily on best practices in the federal government 

and private industry. However, an OMB IT representative stated that these 

estimates were a rough approximation and that no documentation existed 

to support how they were derived. 

The July memorandums also stated that the review group would track 

these savings. Moreover, OMB reported to congressional committees that 

this tracking would include a breakout of the savings, the cause of the 

savings, and the time period in which the savings would be generated. 

However, a tracking process was not established because, according to an 

OMB IT representative, no budgetary savings had occurred at the time that 

the investment review group was in place since no investment was 

terminated by the group. According to this representative, OMB still 

believes that budgetary savings will occur and expects that DHS will track 

these savings. Moreover, this representative stated that OMB will be 

actively working with DHS as part of its budgetary and management 

processes to ensure that such savings occur.

DHS’s CIO agreed that savings are expected to result from the department’s 

consolidation and integration of systems. Moreover, he stated that DHS will 

be tracking such savings and has established a mechanism for doing so. 

Specifically, the CIO pointed to DHS’s establishment of IT commodity 

councils—groups that are responsible for a collection of related materials 

or services—that would perform this function. According to the Director of 

Strategic Sourcing and Acquisition Systems, the councils have established 

project teams that are responsible for tracking savings. According to this 

official, each project is in the process of developing their project plans, 

departmental requirements, and savings targets. Until savings resulting 

from the consolidation and integration of systems and services are 

identified, tracked, and reported, it will remain unknown whether OMB’s 

July memorandums and the subsequent establishment of DHS have 

achieved the potential economies identified by OMB. In addition, DHS IT 

officials stated that they were not aware of any plans to report budgetary 

17OMB did not specify the 2 years. The DHS CIO believes that the OMB savings estimates are 

achievable, but are not likely to be realized in the first 2 years of DHS’s establishment.
Page 15 GAO-04-323 DHS IT Investments

savings resulting from the consolidation and integration of systems to 

applicable congressional committees. Such savings information is an 

important element for the Congress to consider when deliberating DHS 

budget requests and overseeing its IT management. Moreover, the 

Chairman of the House Committee on Government Reform has previously 

expressed concern that there has been a tremendous push for additional IT 

spending at DHS component agencies without ensuring appropriate 

management or accountability.

Although budgetary savings have not yet been identified, DHS IT officials, 

including the CIO, cited other benefits to the July memorandums. In 

particular, DHS IT officials estimated that several million dollars in costs 

have been avoided as a result of the Secret Service decision. (A Secret 

Service IT official provided an explanation of how this estimate was 

derived, but we could not validate this amount because it was not clearly 

supported by the documentation provided.) In addition, the CIO stated that 

the investment review group evolved into the department’s CIO Council, 

which is responsible for developing, promulgating, implementing, and 

managing a vision and direction for information resources and 

telecommunications management. Further, the DHS chief technology 

officer reported that the review group provided the new department with a 

head start on day one operations by, for example, deciding to use the 

Immigration and Naturalization Service’s network backbone for the 

department. Finally, these and DHS component agency IT officials stated 

that the memorandums facilitated the department’s long-term IT planning 

efforts, including the development of an enterprise architecture.18

DHS Has Initiated 

Reviews of Component 

Agency IT Investments, 

but Its Processes Are 

Still Evolving

Once DHS became operational and the investment review group 

established by the July memorandums no longer existed, the department 

established an IT investment management process that includes 

departmental reviews of component agency IT investments meeting certain 

criteria. As part of the selection phase19 of this process, DHS’s CIO reported 

that he approved the department’s IT portfolio as part of the fiscal year 

2005 budget cycle. In addition, as of January 26, 2004, the department’s 

18In September 2003, DHS completed the first version of its target enterprise architecture. 

19During the selection phase of an IT investment management process, the organization (1) 

selects projects that will best support its mission needs and (2) identifies and analyzes each 

project’s risks and returns before committing significant funds. 
Page 16 GAO-04-323 DHS IT Investments

highest level investment management board had performed control 

reviews20 of nine investments that had reached key decision points. In each 

of these cases, the project was allowed to proceed although additional 

documentation was required and/or conditions were set. Finally, the 

department’s investment management process is still evolving as the 

department attempts to deal with a large number of IT investments eligible 

for departmental reviews. 

In May 2003, DHS issued an investment review management directive and 

IT capital planning and investment control guide, which provide the 

department’s entities with requirements and guidance on documentation 

and review of IT investments. In particular, the management directive 

establishes four levels of investments, the top three of which are subject to 

review by department-level boards—the Investment Review Board (IRB), 

Management Review Council, and Enterprise Architecture Board. 

Appendix I provides a description of these department-level boards and the 

investments that they are responsible for. The directive also establishes a 

five-phase acquisition process that calls for these investments to be 

reviewed at key decision points, such as program authorization. In 

addition, the IT capital planning and investment control guide lays out a 

process for selecting, controlling, and managing investments. Figure 2 

provides an overview of the review process outlined in the management 

directive and capital planning and investment control guide.

20During the control phase of the IT investment management process, the organization 

ensures that, as projects develop and as funds are spent, the project is continuing to meet 

mission needs at the expected levels of cost and risk. 
Page 17 GAO-04-323 DHS IT Investments

Figure 2: DHS Investment Review Process

As part of the selection phase of its capital planning and investment control 

process, DHS reviewed component agency IT investments for its fiscal year 

2005 budget submission. Specifically, according to DHS IT officials, (1) the 

CIO approved the department’s IT portfolio and (2) all of the major IT 

systems submitted to OMB for the fiscal year 2005 budget were assessed 

and scored by an investment review team.21

In addition, beginning in May 2003, DHS’s top-level board (the IRB) began 

reviewing the department’s highest priority projects. As of January 26, 

2004, the department had performed 12 control reviews of nine 

investments. Table 2 summarizes the results of these reviews.

21The investment review team was made up of representatives from the offices of the CIO, 

chief financial officer, and the chief procurement officer, as well as several component 

agencies.
Page 18 GAO-04-323 DHS IT Investments

Table 2: Summary of IRB Control Reviewsa

Sponsoring 

component entity IT investment Decision Comments

Border and 

Transportation 

Security 

Directorate

Automated Commercial 

Environment (ACE)

Two reviews of this program were held. First, 

on September 25, 2003, the IRB designated 

this investment as a DHS level I investment 

and approved its strategic direction. The IRB 

also decided to reconvene when a DHS 

review team assessing the ACE program 

documentation had completed its review. 

Second, on November 20, 2003, the IRB 

agreed with the findings of this review team 

and directed that the team’s 

recommendations be implemented. The IRB 

also authorized the approval of the program’s 

fiscal year 2004 expenditure plan. 

In both reviews, the IRB directed the 

sponsor to submit additional 

documentation. In addition, in the 

second review the IRB stated that 

DHS’s Planning Analysis and 

Evaluation office would hold working 

group meetings with ACE program staff 

to review the department’s comments 

and develop an oversight action plan.

Border and 

Transportation 

Security 

Directorate

United States Visitor and 

Immigrant Status Indicator 

Technology (US-VISIT)

Three reviews on this program were held. 

First, on May 30, 2003, US-VISIT was 

approved to continue work but did not receive 

approval to enter into the capability 

development and demonstration acquisition 

phase. Second, on September 8, 2003, DHS 

stated that US-VISIT had not satisfied the exit 

criteria for increment 1 and 2. Nevertheless, 

because of its importance to improving 

security, US-VISIT was allowed to continue 

the design and deployment of its first 

increment and planning for future increments 

concurrent with it working on satisfying the 

DHS requirements set forth in the decision 

memorandum. Third, the IRB reviewed USVISIT on November 25, 2003, but the 

decision memorandum was not available as 

of January 26, 2004.

At the time of the first review, the 

sponsor was provided with exit criteria 

and dates for submission of 

documentation, such as the 

configuration management plan and 

life-cycle cost estimate, which 

constitutes the exit criteria for the next 

acquisition phase.

Border and 

Transportation 

Security 

Directorate

Computer Assisted 

Passenger Prescreening 

System (CAPPS II)

Designated as a DHS level I investment, 

approved its strategic direction, and 

authorized the program to proceed with the 

capability development and demonstration 

phase.

Stated that program must provide 

updated information prior to requesting 

the next key decision point approval and 

required that it address various areas of 

concern, such as ensuring 

interoperability of data transfer, 

addressing privacy and policy issues, 

and identifying industry savings 

associated with the project.
Page 19 GAO-04-323 DHS IT Investments

Source: DHS.

a

According to DHS IT officials, the Enterprise Architecture Board approved each of these projects’ 

presentations to the IRB prior to their submission.

Citizenship and 

Immigration 

Services Bureau

Immigration Services 

Modernization

Designated as a DHS level I investment and 

provided interim approval to commence the 

capability development and demonstration 

phase. 

Required that the sponsor (1) develop a 

transition plan that is approved by the 

DHS CIO; (2) develop a plan to 

accelerate the development of 

paperless processes and electronic 

archives; and (3) submit systems 

documentation, such as a mission 

needs statement and test and 

evaluation plan.

Coast Guard Integrated Deepwater 

Systems Program

Designated as a DHS level I investment and 

approved its strategic direction.

Established an oversight process in 

which (1) DHS’s Planning Analysis and 

Evaluation office is to establish a 

reporting system to capture key/critical 

program/platform activities and attend 

Deepwater program reviews, (2) the 

IRB deferred decisions on Key Decision 

Points related to specific 

asset/capability types to the Coast 

Guard Acquisition Executive, and (3) 

the IRB is to be briefed annually on the 

program.

Management 

Directorate

Consolidated IT Security 

Program

Designated as a DHS level I investment and 

provided interim approval to commence the 

capability development and demonstration 

phase.

Directed the sponsor to submit a 

mission needs statement and other 

planning documents, including a 

program management plan and 

operational requirements document, the 

successful completion of which 

constitutes the exit criteria for the next 

acquisition phase.

Management 

Directorate

Homeland Secure Data 

Network

Decision memorandum was not available as 

of January 26, 2004.

Management 

Directorate

Resource Management 

Transformation Program

Approved mission needs statement and 

authorized the program’s entry into the 

concept & technology development phase.

Decision memorandum included exit 

criteria for the next acquisition phase, 

such as the successful completion of a 

risk management plan and test and 

evaluation plan, the successful 

completion of which constitutes the exit 

criteria for the next acquisition phase.

Science and 

Technology 

Directorate

Wireless Public Safety 

Interoperable 

Communications Program 

Designated as a DHS level I investment and 

approved its strategic direction.

Directed the sponsor to submit a 

mission needs statement and other 

planning documents, the successful 

completion of which constitute the exit 

criteria for the next acquisition phase 

and required that a review team be 

established to study funding issues.

(Continued From Previous Page)

Sponsoring 

component entity IT investment Decision Comments
Page 20 GAO-04-323 DHS IT Investments

Although DHS is making progress in reviewing component agency projects, 

its investment management process continues to evolve. In particular, as of 

January 2, 2004, the department had identified about 100 IT programs22 that 

were eligible for review by its two top-level departmental boards and, 

according to IT officials, is having difficulty in bringing all of these 

programs before the boards in a timely manner. Moreover, DHS has not 

established a process to ensure that control reviews of component agency 

IT investments are performed in a timely manner. Specifically, although 

DHS’s capital planning and investment control guide states that the Office 

of the CIO will maintain a control review schedule for all initiatives in the 

department’s IT investment portfolio, as of January 2, 2004, this schedule 

has not been developed. According to the DHS IRB coordinator and IT 

officials, DHS has requested information from its component entities 

related to the schedules and priorities of its level 1, or top-level, 

investments. These officials stated that such information can then be used 

to develop a master milestone calendar for control reviews.23 Control 

review schedules, or master milestone calendars, are important to ensure 

that DHS is reviewing its highest priority IT investments in a timely manner 

so as to be able to affect changes to component agency approaches or even 

terminate a poorly managed or strategically unnecessary investment, if 

appropriate.

DHS’s CIO also stated that the department’s CIO Council is developing a 

peer review process for major IT projects that is expected to include 

defining a life-cycle management process and a quarterly reporting 

process. The CIO stated that the new process is expected to be instituted 

by the end of March 2004.

Conclusions OMB took a prudent step in issuing its July memorandums directing federal 

agencies that were expected to be part of the new department to 

temporarily cease funding for new IT infrastructure and business systems 

investments in anticipation of the establishment of DHS. Although 

documentation of the implementation of the memorandums was lacking, 

22As of January 2, 2004, DHS was still in the process of finalizing its list of level 1, level 2, and 

level 3 IT investments. 

23The DHS IRB coordinator and IT officials stated that after the level 1 investment process is 

stabilized, they intend to implement a comparable process for level 2 investments; however, 

they did not yet know how level 3 investments were going to be addressed. Level 1, 2, and 3 

investments are subject to review by department-level boards.
Page 21 GAO-04-323 DHS IT Investments

OMB and DHS IT officials outlined an approach that included both 

reviewing specific IT investments and the beginning of planning for the 

transition to the new department. Further, DHS component agencies 

identified actions that they took, such as putting initiatives on hold, and 

other benefits that resulted from the memorandums. Nevertheless, 

according to OMB IT representatives, budgetary savings as a result of the 

July memorandums had not occurred at the time that the review group was 

in place. Although DHS has begun to establish a mechanism to track such 

savings in the future, until savings resulting from the consolidation and 

integration of systems and services are identified, tracked, and reported, it 

will remain unknown whether OMB’s July memorandums and the 

subsequent establishment of DHS have achieved the millions of dollars in 

potential economies identified by OMB. The Congress would benefit from 

such information in its deliberations on the department’s budget and in its 

oversight of DHS’s management of IT. Finally, DHS has begun to perform 

high-level oversight of component agency IT investments, although much 

remains to be accomplished and the process for this oversight is still 

evolving. Accordingly, DHS continues to face challenges in providing 

robust and constructive oversight of component agency IT investments. A 

significant challenge remaining is determining the current status and 

upcoming major milestones of IT investments subject to departmental 

review in order to schedule timely control reviews.

Recommendations for 

Executive Action

To demonstrate its progress in consolidating and integrating its systems 

and services, we recommend that the Secretary of Homeland Security 

direct the Chief Information Officer to periodically report to appropriate 

congressional committees, the budgetary savings that have resulted from 

the department’s IT consolidation and integration efforts, including a 

breakout of the savings, the cause of the savings, and the time period in 

which the savings have been, or will be, generated.

To ensure that IT investments subject to departmental review undergo 

timely control reviews, we recommend that the Secretary of Homeland 

Security direct the Chief Information Officer to develop a control review 

schedule for IT investments subject to departmental oversight (i.e., level 1, 

2, and 3 investments).

Agency Comments We received oral comments on a draft of this report from OMB and DHS. 

Representatives from OMB’s Office of Information and Regulatory Affairs 
Page 22 GAO-04-323 DHS IT Investments

and Office of the General Counsel generally agreed with the findings of the 

report. These representatives also provided a technical comment that we 

included in the report, as appropriate. In addition, DHS’s Office of the CIO 

capital planning and investment control officials stated that the report was 

factually accurate.

As agreed with your offices, unless you publicly announce the contents of 

this report earlier, we plan no further distribution until 30 days from the 

report date. At that time, we will send copies of this report to the Secretary 

of Homeland Security and the Director, Office of Management and Budget. 

Copies will also be available at no charge on the GAO Web site at

www.gao.gov.

If you have any questions on matters discussed in this report, please 

contact me at (202) 512-9286 or Linda J. Lambert, Assistant Director, at 

(202) 512-9556. We can also be reached by e-mail at pownerd@gao.gov and 

lambertl@gao.gov, respectively. Another key contributor to this report was 

Niti Bery.

David A. Powner

Director, Information Technology

Management Issues
Page 23 GAO-04-323 DHS IT Investments

Appendix I

DHS Department-Level Investment Apendxies

Management Boards ApendxiI

 Board Membership

Types of 

investments 

reviewed

Investment threshold level

and criteria Other comments

Investment 

Review 

Boarda

• Deputy Secretary (Chair)

• Under Secretary of Management 

(Vice-Chair)

• Under Secretary, Border and 

Transportation Security

• Under Secretary, Emergency 

Preparedness and Response

• Under Secretary, Science and 

Technology

• Under Secretary, Information 

Analysis and Infrastructure 

Protection

• Deputy Chief of Staff for Policy

• Chief Information Officer (CIO)

• Chief Financial Officer

• Chief Procurement Officer

• Privacy Officer

• General Counsel

All capital assets 

meeting the 

investment 

threshold criteria

Level 1 investments:

• Contract costs exceeds $50 million

• Importance to DHS strategic and 

performance plans

• High development, operating, or 

maintenance cost

• High risk

• High return

• Significance in resource 

administration

• For IT investments only:

• life-cycle costs exceed $200 million
Appendix I

DHS Department-Level Investment 

Management Boards

Page 24 GAO-04-323 DHS IT Investments

Management 

Review 

Councila

• CIO

• Chief Financial Officer

• Chief Procurement Officer

All capital assets 

meeting the 

investment 

threshold criteria

Level 2 investments:

• Contract cost $5-$50 million

• Affects more than one DHS 

component

• Significant program or policy 

implication

• High executive visibility

• For IT investments only:

• life-cycle costs of $20-$200 million

• financial system with operational 

cost exceeding $500,000

• was major in fiscal year 2004 

budget submission

• is E-government related

• is directly tied to the top two layers 

of the Federal Enterprise 

Architecture business reference 

model

• is an integral part of the DHS 

modernization blueprint (enterprise 

architecture)

• affects more than one component 

entity through the sharing of data or 

facilities, and/or affects the sharing 

of facilities, data, and/or information 

with state and local governments

• common administrative services for 

which a single, DHS-wide solution 

may be possible or for which a joint 

DHS team has been established or 

planned

• new technology initiatives

• sensitive initiatives

(Continued From Previous Page)

 Board Membership

Types of 

investments 

reviewed

Investment threshold level

and criteria Other comments
Appendix I

DHS Department-Level Investment 

Management Boards

Page 25 GAO-04-323 DHS IT Investments

Source: DHS.

a

DHS also plans to employ a Joint Requirements Council to serve as a working group to make 

recommendations to the Investment Review Board and Management Review Council on cross-cutting 

IT investments. The Joint Requirements Council, whose membership includes the Chief Technology 

Officer, Director of Strategic Sourcing and chief operating officers of DHS’s component entities, met for 

the first time on January 7, 2004.

Enterprise 

Architecture 

Board

• CIO (Chair) 

• Chief Financial Officer designee

• Chief Procurement Officer 

designee

• Business unit and program 

representatives

• Information officers in the 

directorates/organizational 

elements

IT investments 

meeting the 

investment 

threshold criteria

• Annual costs of $1-$5 million

• Life-cycle costs of $5-$20 million

• E-government transformation focus 

area

This board also 

reviews all level 1 and 

2 IT investments and 

makes 

recommendations to 

the Investment 

Review Board and 

Management Review 

Council

(Continued From Previous Page)

 Board Membership

Types of 

investments 

reviewed

Investment threshold level

and criteria Other comments

(310450)
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