HOMELAND SECURITY

DHS Requires More 

Disciplined Investment 

Management to Help Meet 

Mission Needs

Statement of John Hutton, Director 

Acquisition and Sourcing Management

Testimony 

Before the Subcommittee on Oversight, 

Investigations, and Management, 

Committee on Homeland Security, 

House of Representatives

For Release on Delivery 

Expected at 9:00 a.m. EDT

Friday, September 21, 2012

GAO-12-1029T

United States Government Accountability Office

GAO
Page 1 GAO-12-1029T 

United States Government Accountability Office

Washington, DC 20548

Chairman McCaul, Ranking Member Keating, and Members of the 

Subcommittee

I am pleased to be here today as you examine investment management 

at the Department of Homeland Security (DHS). DHS invests extensively 

in acquisition programs to help secure the border, facilitate trade, screen 

travelers, enhance cyber security, improve disaster response, and 

execute a wide variety of other operations in support of its critical 

missions. In 2011, DHS reported to Congress that it planned to ultimately 

invest $167 billion in its major acquisition programs, and in fiscal year 

2012 alone, DHS reported it was investing more than $18 billion in the 

department’s acquisition programs. DHS acquisition management 

activities have been highlighted in our High Risk List since 2005, and our 

work over the past several years has identified significant shortcomings in 

the department’s ability to manage an expanding portfolio of complex 

acquisitions.1 We have previously established that a program must have 

a sound business case that includes firm requirements, a knowledgebased acquisition strategy, and realistic cost estimates in order to reduce 

program challenges.2 These conditions provide a program a reasonable 

chance of overcoming challenges yet delivering on time and within 

budget. Earlier this week, GAO issued a report entitled Homeland 

Security: DHS Requires More Disciplined Investment Management to 

Help Meet Mission Needs.

3

In 2008, DHS issued the initial version of its current acquisition policy – 

Acquisition Management Directive 102-01 (AD 102) – in an effort to 

In this report, GAO found that while DHS has 

a sound acquisition management policy in place and has introduced 

initiatives to address longstanding challenges, DHS’s ability to manage its 

acquisition programs is hampered by the lack of consistency with which it 

has implemented its policy. This report is the basis for my remarks today.

 

1

GAO, High-Risk Series: An Update, GAO-05-207 (Washington, D.C.: January 2005); 

Department of Homeland Security: Billions Invested in Major Programs Lack Appropriate 

Oversight, GAO-09-29 (Washington, D.C.: November 18, 2008); Department of Homeland 

Security: Assessments of Selected Complex Acquisitions, GAO-10-588SP (Washington, 

D.C.: June 30, 2010).

2

GAO, Defense Acquisitions: Managing Risk to Achieve Better Outcomes, GAO-10-374T

(Washington, D.C.: Jan. 20, 2010).

3

GAO-12-833 (Washington, D.C.: Sept. 18, 2012).

 
 

Page 2 GAO-12-1029T 

establish an acquisition management system that effectively provides 

required capability to operators in support of the department’s missions.4

AD 102 establishes that DHS’s Chief Acquisition Officer – currently the 

Under Secretary for Management (USM) – is responsible for the 

management and oversight of the department’s acquisition policies and 

procedures.5

Because DHS invests significant resources developing capabilities to 

support the department’s mission, our recent report identifies the extent to 

which (1) DHS’s major acquisition programs face challenges that increase 

the risk of poor outcomes; (2) DHS has policies and processes in place to 

effectively manage individual acquisition programs; (3) DHS has policies 

and processes in place to effectively manage its portfolio of acquisition 

programs as a whole; and (4) DHS has taken actions to address the highrisk acquisition management issues we have identified in previous 

AD 102 also establishes that the USM and other senior 

leaders are responsible for reviewing and approving the movement of 

DHS’s major acquisition programs through four phases of the acquisition 

life cycle at a series of five predetermined Acquisition Decision Events. 

An important aspect of the Acquisition Decision Events is the review and 

approval of key acquisition documents critical to establishing the need for 

a major program, its operational requirements, an acquisition baseline, 

and testing and support plans. At the Acquisition Decision Events, AD 

102 requires that an Investment Review Board (IRB) – consisting of 

senior managers from various functional disciplines – support the USM 

and other senior leaders by reviewing major acquisition programs for 

proper management, oversight, accountability, and alignment to the 

department’s strategic functions. The Office of Program Accountability 

and Risk Management (PARM), which is responsible for DHS’s overall 

acquisition governance process, supports the IRB, and reports directly to 

the USM. PARM develops and updates program management policies 

and practices, oversees the acquisition workforce, provides support to 

program managers, and collects program performance data.

 

4

The interim version of AD 102 replaced Management Directive 1400, which had 

governed major acquisition programs since 2006. DHS originally established an 

investment review process in 2003 to provide departmental oversight of major investments 

throughout their life cycles, and to help ensure that funds allocated for investments 

through the budget process are well spent. DHS issued an updated version of AD 102 in 

January 2010 and subsequently updated the guidebook and appendices.

5

The Secretary of DHS designated the USM the department’s Chief Acquisition Officer in 

April, 2011.
 

Page 3 GAO-12-1029T 

reports.6 To address these issues, we surveyed all 77 major program 

offices from January to March 2012, and achieved a 92 percent response 

rate.7 We also reviewed all available documentation of department-level 

acquisition decisions from November 2008 to April 2012; interviewed 

acquisition officials at DHS headquarters and components; reviewed 

resource plans and DHS performance reports; compared our key 

acquisition management practices to DHS acquisition policy; identified the 

extent to which DHS has implemented its policy; and analyzed the 

department’s recently proposed efforts to address high-risk acquisition 

management challenges.8

In summary, we found that 68 of the 71 programs that responded to our 

survey reported that they experienced funding instability, faced workforce 

shortfalls, or that their planned capabilities changed after initiation. Most 

respondents reported a combination of these challenges. We have 

previously reported that these challenges increase the likelihood 

acquisition programs will cost more and take longer to deliver capabilities 

than expected. Although DHS largely does not have reliable cost 

estimates and realistic schedules to accurately measure program 

performance, we used our survey results, cost information DHS provided 

to Congress, and an internal DHS review to identify 42 programs that 

experienced cost growth, schedule slips, or both. Further, using DHS’s 

future-years funding plans – which aggregate funding levels to produce 

total project costs – we gained insight into the magnitude of the cost 

growth for 16 of the 42 programs. The total project costs for these 16 

programs increased from $19.7 billion in 2008 to $52.2 billion in 2011, an 

aggregate increase of 166 percent.

We also found that DHS’s acquisition policy reflects many key program 

management practices that could help mitigate risks and increase the 

 

6

GAO-12-833. 

7

DHS originally identified 82 major acquisition programs in the 2011 major acquisition 

oversight list, but five of those programs were subsequently cancelled in 2011. Seventyone program managers responded to the survey.

8

We conducted this performance audit from August 2011 to September 2012 in 

accordance with generally accepted government auditing standards. Those standards 

require that we plan and perform the audit to obtain sufficient, appropriate evidence to 

provide a reasonable basis for our findings and conclusions based on our audit objectives. 

We believe that the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives. 
 

Page 4 GAO-12-1029T 

chances for successful outcomes. It requires programs to develop

documents demonstrating critical knowledge that would help leaders 

make better informed investment decisions when managing individual 

programs, such as operational requirements documents that provide 

performance parameters that programs must meet, and acquisition 

program baselines that establish programs’ critical baseline cost, 

schedule, and performance parameters. However, there are areas where 

DHS could further enhance its acquisition policy. Furthermore, as we 

have similarly reported in 2008 and 2010, DHS has not consistently met 

the requirements it has established.9

In addition, we determined that DHS’s acquisition policy does not fully 

reflect several key portfolio management practices, such as allocating 

resources strategically, and DHS has not yet re-established an oversight 

board to manage its investment portfolio across the department. Since 

2006, DHS has largely made investment decisions on a program-byprogram and component-by-component basis. Cost growth and schedule 

slips, coupled with the fiscal challenges facing the federal government, 

make it essential that DHS allocate resources to its major programs in a 

deliberate manner. DHS plans to develop stronger portfolio management 

policies and processes, but until it does so, DHS programs are more likely 

to experience additional funding instability, which will increase the risk of 

further cost growth and schedule slips. These outcomes, combined with a 

tighter budget, could prevent DHS from developing needed capabilities.

The department has only verified 

that four programs documented all of the critical knowledge the policy 

requires to proceed with acquisition activities. A number of officials 

explained that DHS’s culture has emphasized the need to rapidly execute 

missions more than sound acquisition management practices. DHS 

recognizes the need to implement its acquisition policy more consistently, 

but significant work remains to ensure DHS has the knowledge required 

to effectively manage its programs.

In 2011, DHS began to develop initiatives that could improve acquisition 

management by addressing longstanding challenges we have identified, 

such as funding instability and acquisition workforce shortfalls. DHS has 

made progress implementing some of the initiatives. As of August 2012, 

DHS chartered eight Centers of Excellence to bring together program 

managers, senior leadership staff, and subject matter experts, and 

 

9

GAO-09-29, GAO-10-588SP. 
 

Page 5 GAO-12-1029T 

created a Procurement Staffing Model to determine optimal numbers of 

personnel to properly award and administer contracts. However, 

implementation plans are still being developed, and DHS is still working to 

address critical issues, particularly capacity questions. Because of this, it 

is too early to determine whether the DHS initiatives will be effective, as 

we have previously established that agencies must sustain progress over 

time to address management challenges. DHS is also pursuing a tieredgovernance structure that would delegate major milestone decision 

authority to lower-level managers, but it must reduce risks and improve 

program outcomes before delegating this authority.10

In our report, we made five recommendations intended to improve 

investment management at DHS: (1) modify DHS policy to better reflect 

key program management practices, (2) modify DHS policy to better 

reflect key portfolio management practices, (3) ensure acquisition 

programs fully comply with DHS acquisition policy by obtaining 

department-level approval for key acquisition documents, (4) prioritize 

major acquisition programs department-wide and account for anticipated 

resource constraints, and (5) document prerequisites for delegating major 

milestone decision authority. In commenting on our draft report, DHS 

concurred with all five of our recommendations, and identified specific 

actions they plan to take to address three of them. DHS stated that the 

remaining two recommendations – ensure acquisition programs comply 

with DHS acquisition policy, and document prerequisites for delegating 

major milestone decision authority – should be closed based on actions 

taken. However, it would be premature to do so because nearly all of 

DHS’s major acquisition programs lack key acquisition documents and 

DHS did not provide documentation clearly establishing prerequisites for 

delegating major milestone decision authority.

Chairman McCaul, Ranking Member Keating, and Members of the 

Subcommittee, this concludes my prepared remarks. I would be happy to 

answer any questions that you may have.

 

10DHS implemented this tiered-governance structure for 14 information technology 

programs in fiscal year 2011. 
 

Page 6 GAO-12-1029T 

For questions about this statement, please contact John Hutton at 

(202) 512-4841, or at (huttonj@gao.gov). Contact points for our Offices of 

Congressional Relations and Public Affairs may be found on the last page 

of this statement. Individuals making key contributions to this testimony 

include Assistant Director Katherine Trimble, John Crawford, and 

Nathan Tranquilli.

GAO Contact and 

Staff 

Acknowledgments 

(121093)
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