DHS MANAGEMENT 

AND 

ADMINISTRATION 

SPENDING

Reliable Data Could 

Help DHS Better 

Estimate Resource 

Requests 

Report to Congressional Requesters

December 2013

GAO-14-27

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-14-27, a report to 

congressional requesters

December 2013

DHS MANAGEMENT AND ADMINISTRATION

SPENDING

Reliable Data Could Help DHS Better Estimate 

Resource Requests

Why GAO Did This Study

DHS is the third-largest federal 

department, with budget authority of 

approximately $60 billion. Since its 

inception in 2003, DHS has faced 

challenges strengthening its multiple 

management systems and processes. 

Some Members of Congress said that

DHS’s components’ budget requests

do not provide sufficient detail to allow 

them to distinguish between funding for 

mission and M&A activities. GAO was 

asked to provide information on what 

DHS spends on M&A activities, 

including spending by its components 

since fiscal year 1999.

This report addresses the following 

questions: (1) How have select DHS 

components defined and identified 

their M&A activities and spending, and

to what extent are M&A data available 

from fiscal years 1999 through 2013?

(2) How has DHS identified M&A 

spending department-wide, and to 

what extent has DHS defined M&A 

activities and taken steps to enhance 

efforts to collect M&A data? GAO 

analyzed documents, such as DHS’s 

budget execution reports, and efforts to 

identify spending on M&A activities

since fiscal year 1999. GAO

interviewed officials from eight DHS 

components, selected on the basis of 

their budget authority, which in total

accounts for nearly 88 percent of 

DHS’s fiscal year 2013 budget 

authority. Though not generalizable, 

the interviews provided insights. 

What GAO Recommends

GAO recommends that DHS 

implement a mechanism to assess and 

correct M&A data entered by 

components into the PDM. DHS 

concurred with GAO’s

recommendation.

What GAO Found

Officials from all eight Department of Homeland Security (DHS) components in 

GAO’s review define management and administration (M&A) activities—activities 

that help agencies achieve their mission and program goals—differently, and 

while component officials said they can identify M&A spending, limitations exist in 

obtaining spending data from fiscal years 1999 through 2013. Officials from four 

of the eight components define their M&A activities according to the activities 

funded through their appropriations accounts and programs, projects, or activities

(PPA) that are M&A in nature. For example, officials from the Transportation 

Security Administration said its M&A activities are those found within three PPAs 

within its Transportation Security Support appropriations account. The remaining 

four components each define M&A activities differently, and those definitions are 

not tied to activities contained in specific appropriations accounts. For example, 

the Coast Guard’s M&A activities are those associated with headquarters and its 

service centers (e.g., personnel support), according to officials. According to 

component officials, the eight components GAO reviewed can identify their M&A 

spending, but currently do not because they are not required to do so by the 

department. Officials from seven of the eight components said they could provide 

M&A spending data for some, but not all, fiscal years since 1999 because of

changes in their financial systems, among other reasons. Federal Emergency 

Management Agency (FEMA) officials stated that FEMA could provide data since 

fiscal year 1999. Because components define M&A differently, have different 

methods for identifying spending, and limitations exist in obtaining data, it is not 

possible to compare components’ M&A spending data from fiscal years 1999 

through 2013.

DHS has not identified the department’s total spending on M&A activities, but has 

identified some M&A spending through DHS’s Efficiency Review—an effort to 

identify opportunities to improve efficiency—and the Campaign to Cut Waste—a 

government-wide effort to reduce administrative spending. DHS is also taking 

steps to define and collect data on M&A activities, but has encountered 

difficulties in implementing these steps. Specifically, in 2010, DHS developed a 

common definition of M&A in conjunction with the Future Years Homeland 

Security Program (FYHSP) System Program Data Module (PDM) for

components to submit resource allocation requests for future years by activity 

type: mission/operational, mission support, and business support/M&A. However, 

DHS is unable to reliably estimate what percentage of its requests are identified 

as M&A because 4 out of 15 components did not enter all appropriate business 

support/M&A activities and 1 component did not enter any business support/M&A 

activities, among other errors, which DHS officials said are a result of manual 

data entry and components not adhering to the guidance in the user manual. 

DHS does not have a mechanism in place to work with the components to 

correct data errors in the FYHSP System PDM. By implementing a mechanism to 

assess whether components have entered the appropriate M&A activities into the 

PDM, and working with the components to correct the data, as needed, DHS 

would be better positioned to reliably estimate and report to external 

stakeholders what percentage of DHS’s resource allocations requests are 

identified as M&A.

View GAO-14-27. For more information, 

contact David C. Maurer at (202) 512-9627 or 

maurerd@gao.gov.
Page i GAO-14-27 DHS M&A Spending

Letter 1

Background 6

DHS Components Define M&A Activities Differently and Can 

Identify M&A Spending, but Limitations Exist in Obtaining Data 

from Fiscal Years 1999 through 2013 12

DHS Identifies Some M&A Spending and Is Taking Steps to Define 

and Collect Data on M&A Activities, but Could Improve 

Reliability of Data for Estimating Future Resource Requests 18

Conclusions 29

Recommendation for Executive Action 30

Agency Comments and Our Evaluation 30

Appendix I Limitations to Identifying and Analyzing Management and 

Administration Spending 32

Appendix II Objectives, Scope, and Methodology 37

Appendix III Comments from the Department of Homeland Security 42

Appendix IV GAO Contact and Staff Acknowledgments 44

Related GAO Products 45

Tables

Table 1: Department of Homeland Security Components’ Financial 

Systems, as of August 2013 11

Table 2: Selected Department of Homeland Security Components’ 

Definitions and Sources for Identifying Their Management 

and Administration Activities and Spending 14

Table 3: Management and Administration Data Available by 

Selected Department of Homeland Security Components 

for Fiscal Years 1999 through 2013 16

Contents
Page ii GAO-14-27 DHS M&A Spending

Table 4: Spending by Campaign to Cut Waste Category, Fiscal Year 

2012 and First Two Quarters of Fiscal Year 2013 24

Table 5: Description of the Object Classification System 35

Figures

Figure 1: Department of Homeland Security Organizational Chart 7

Figure 2: Examples of Contractual Services and Supplies Object 

Classification for the Department of Homeland Security 9

Figure 3: Department of Homeland Security’s Spending by 

Efficiency Review Initiative, Fiscal Years 2010-2012 20

Figure 4: Department of Homeland Security Cost Avoidances 

Achieved by Efficiency Review Initiative, Fiscal Year 2012 

through the First Quarter of Fiscal Year 2013 21
Page iii GAO-14-27 DHS M&A Spending

Abbreviations 

ACS Accounting Classification Structure

CBP U.S. Customs and Border Protection 

DHS Department of Homeland Security 

DMO Departmental Management and Operations 

ER Efficiency Review 

FEMA Federal Emergency Management Agency 

FLETC Federal Law Enforcement Training Center 

FYHSP Future Years Homeland Security Program

ICE U.S. Immigration and Customs Enforcement 

IT information technology 

M&A management and administration 

OCFO Office of the Chief Financial Officer

OMB Office of Management and Budget

PA&E Program Analysis & Evaluation 

PDM Program Data Module 

PPA program, project, or activity 

TSA Transportation Security Administration 

USSS U.S. Secret Service

This is a work of the U.S. government and is not subject to copyright protection in the 

United States. The published product may be reproduced and distributed in its entirety 

without further permission from GAO. However, because this work may contain 

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Page 1 GAO-14-27 DHS M&A Spending

441 G St. N.W.

Washington, DC 20548

December 4, 2013

The Honorable Thomas R. Carper

Chairman

Committee on Homeland Security and Governmental Affairs

United States Senate

The Honorable Ron Johnson

Ranking Member

Subcommittee on Financial and Contracting Oversight

Committee on Homeland Security and Governmental Affairs

United States Senate

The Department of Homeland Security (DHS) is the third-largest federal 

department, with a total budget authority of approximately $60 billion for 

fiscal year 2013 and more than 240,000 employees performing a wide 

variety of missions. Since its inception in 2003 from 22 originating 

agencies and offices, DHS has faced challenges consolidating its multiple 

management systems and processes and transforming into a more 

effective organization with robust planning, management, and 

operations.1 In recent years, DHS has reported maximizing effectiveness 

and efficiency by, in part, prioritizing the funding of frontline activities 

(core missions) by redirecting funding from management and 

administration (M&A) activities—activities that help agencies achieve their 

mission and program goals.2

 1

We previously reported on these challenges as Strengthening DHS Management 

Functions is on GAO’s high-risk list. See, for example, GAO, High Risk Series: An Update, 

These activities include, among other things, 

planning and budgeting, legal support, acquisitions and grants 

administration, workforce management, information technology (IT) 

infrastructure and operations, and facilities support. However, according 

to some Members of Congress, the budget requests of DHS’s 

components and offices do not provide a sufficient level of detail to allow 

them to distinguish between funding for mission versus M&A activities.

GAO-13-283 (Washington, D.C.: February 2013).

2

DHS has five core missions: (1) preventing terrorism and enhancing security, (2) 

securing and managing our borders, (3) enforcing and administering our immigration laws, 

(4) safeguarding and securing cyberspace, and (5) ensuring resilience to disasters.
Page 2 GAO-14-27 DHS M&A Spending

You asked us to provide information on what DHS spends on M&A 

activities, including spending by its components since fiscal year 1999—

prior to their inclusion in DHS. This report addresses the following 

questions:

1. How have select DHS components defined and identified their M&A 

activities and spending, and to what extent are M&A data available 

from fiscal years 1999 through 2013?

2. How has DHS identified M&A spending department-wide, and to what 

extent has DHS defined M&A activities and taken steps to enhance 

efforts to collect M&A data?

To address the first objective, we analyzed DHS’s congressional budget 

justifications, budget execution reports, and budget-in-briefs, as well as 

presidential budgets and appropriations legislation from fiscal years 2004 

through 2013 to understand how M&A activities are defined and 

accounted for within components’ appropriations accounts. We sought to 

independently identify components’ M&A activities and related spending, 

but were unable to because of various challenges. In particular, sources 

of federal budget data do not define and distinguish all M&A spending 

from other types of spending. Moreover, in cases where groupings of 

budget data, such as appropriation accounts, are largely M&A, the 

activities contained in those groupings do not include all M&A activities 

and are not consistent from year to year. See appendix I for further 

details. To determine how selected DHS components define their M&A 

activities and how they would go about identifying spending associated 

with these activities, we interviewed officials representing two of DHS’s 

eight support components—Departmental Management and Operations 

(DMO)3

 3

We discussed DMO’s financial management with officials in DHS’s Office of the Chief 

Financial Officer (OCFO) because OCFO manages DMO’s finances. We also interviewed 

officials within the Office of Policy and the Office of the Chief Procurement Officer to 

obtain the perspectives of individual offices within DMO.

and the Federal Law Enforcement Training Center (FLETC)—and 

six of DHS’s seven operational components—the Federal Emergency 

Management Agency (FEMA), U.S. Customs and Border Protection 

(CBP), the U.S. Coast Guard, the Transportation Security Administration 

(TSA), U.S. Immigration and Customs Enforcement (ICE), and the U.S. 
Page 3 GAO-14-27 DHS M&A Spending

Secret Service (USSS).4

To address the second objective, we examined DHS’s two efforts to 

identify its spending on specific M&A activities—DHS’s Efficiency Review 

(ER)—an effort to identify opportunities to improve efficiency and 

streamline decision making through a series of initiatives—and the 

Obama administration’s Campaign to Cut Waste—a government-wide 

effort to reduce administrative spending.

We selected these eight components based on 

the amount of their budget authority (totaling nearly 88 percent of DHS’s 

fiscal year 2013 budget authority); their mission, whether operational or 

support; and date established, whether before or after the inception of 

DHS. To determine the extent to which M&A data are available from fiscal 

years 1999 through 2013, we interviewed officials from the eight selected 

components about their ability to provide M&A spending data during the 

time frame. We did not obtain available data from the components 

because the data would not be comparable. While the results of our 

interviews cannot be generalized across all DHS components, these 

interviews allowed us to obtain perspectives on how selected components 

define and would identify M&A spending, as well as the availability of their 

M&A data since fiscal year 1999.

5 Specifically, we analyzed all 

available expenditure and cost avoidance data collected through the ER 

from the third quarter of fiscal year 20096

 4

We use “component” consistent with DHS’s identification of agencies and offices as 

components in its U.S. Department of Homeland Security Annual Performance Report: 

Fiscal Years 2012-2014, 66. 

—when data collection began—

through the first quarter of fiscal year 2013—the most recent data 

5

DHS initiated the ER in March 2009, and the Obama administration launched the 

Campaign to Cut Waste in June 2011 with Exec. Order No. 13,576, 76 Fed. Reg. 35,297 

(June 16, 2011).

6

Cost avoidances are savings that are reallocated to mission-critical activities, and do not 

result in decreases to the budget. For example, as we previously found, the Coast Guard 

and CBP reported using efficiency gains from ER initiatives to support mission-critical 

activities, such as securing the border, while also facilitating the flow of legitimate trade 

and travel. See GAO, Streamlining Government: Key Practices from Select Efficiency 

Initiatives Should Be Shared Governmentwide, GAO-11-908 (Washington, D.C.: Sept. 30, 

2011).
Page 4 GAO-14-27 DHS M&A Spending

available at the time of our review.7

We analyzed data collected for the Campaign to Cut Waste for fiscal year 

2012 through the second quarter of fiscal year 2013—all of the data 

available at the time of our review. Specifically, we analyzed DHS’s 

spending against its spending targets for all seven categories of the 

campaign—(1) travel, (2) printing, (3) supplies, (4) advisory service 

contracts, (5) promotional items, (6) IT devices, and (7) executive sedan 

services. To assess the reliability of the data, we discussed DHS’s 

implementation of and methodology for developing metrics for the 

campaign with a Budget Analyst from the Office of the Chief Financial 

Officer (OCFO) Budget Division, and we interviewed officials from the 

eight DHS components in our review about how they determine and 

report their spending figures for the campaign and any challenges they 

experience in determining these figures. We determined that the data 

were sufficiently reliable to illustrate general levels of DHS’s spending 

against its spending targets on the Campaign to Cut Waste categories for 

six of the seven categories—all but IT devices, for which data were not 

complete, and therefore excluded from our analysis.

To assess the reliability of the data, 

we traced one component’s recorded expenditure and cost avoidance 

data back to documentation showing its original data submission. We also 

interviewed component officials responsible for entering the data and the 

ER Director to determine how the data are collected and maintained. We 

determined that the expenditure data were sufficiently reliable to illustrate 

general levels of spending by DHS. We determined that the cost 

avoidance data prior to fiscal year 2012 were not reliable for two of the 

initiatives, since the formula used during that time was not an accurate 

method to determine cost avoidances, a conclusion with which 

component officials concurred since figures could be overstated. 

However, we determined that cost avoidance data beginning with the first 

quarter of fiscal year 2012 were sufficiently reliable for reporting DHS’s 

cost avoidances, as the ER Office began requiring an explanation of the 

specific actions that led to cost avoidance in order for the cost avoidance 

to be counted.

 7

The ER collects expenditure data for three initiatives: (1) facilities, (2) printing, and (3) 

travel. These initiatives represent the initiatives for which the ER was collecting cost 

avoidance data as of the second quarter of fiscal year 2013—the time we began our 

review. Data were collected for an additional initiative prior to this time, but collection 

ended when the initiative was sufficiently institutionalized. The ER also collects cost 

avoidance data for five initiatives: (1) facilities, (2) IT inventory management, (3) printing, 

(4) travel, and (5) wireless assets and services.
Page 5 GAO-14-27 DHS M&A Spending

We also analyzed fiscal year 2012 and 2013 data in the Future Years 

Homeland Security Program (FYHSP) System Program Data Module 

(PDM), which was developed by DHS, in part to model the percentage of 

DHS’s resource allocation requests that are for activities identified as 

M&A in future years. We compared components’ categorization of 

activities by type in the PDM with the definitions for the three activity type 

categories (mission/operational, mission support, and business 

support/M&A) as stated in the FYHSP System PDM User Manual, which 

provides guidance to components on entering data into the PDM. We 

discussed the development and implementation of the FYHSP System 

PDM with DHS OCFO Program Analysis & Evaluation (PA&E) officials 

who oversee the PDM. Moreover, we reviewed PA&E’s data quality 

analysis, conducted in March 2013, of fiscal years 2014 through 2018 

resource requests identified as M&A to determine the accuracy of M&A 

data entered into the PDM. On the basis of our review of the analysis for 

any obvious data errors and outliers, we determined that the results of 

PA&E’s analysis were reliable for identifying any limitations of the PDM 

data. On the basis of our analysis, PA&E’s analysis, and interviews with 

PA&E officials, we determined the data were not sufficiently reliable for 

reporting the percentage of DHS’s resource allocations requests that are 

categorized as M&A, as discussed later in the report. We compared the 

ability to use the PDM data with criteria in Standards for Internal Control 

in the Federal Government 8 and Statement of Federal Financial 

Accounting Concepts No. 1, Objectives of Federal Financial Reporting.

9

Also, to address the second objective, we interviewed DHS OCFO 

officials in the Resource Management Transformation Division to discuss 

the steps DHS has taken to enhance the collection of M&A data for the 

department. We analyzed documentation related to DHS’s efforts to 

implement its business intelligence initiative to standardize financial data, 

We did not assess the reliability of data beyond the categorization by 

activity type (e.g., categorization of activities by investment type), since 

such data were outside of the scope of our review.

 8

GAO, Standards for Internal Control in the Federal Government, GAO/AIMD-00-21.3.1

(Washington, D.C.: Nov. 1, 1999).

9

Statement of Federal Financial Accounting Concepts No. 1, Objectives of Federal 

Financial Reporting, September 2, 1993. These standards are part of the Federal 

Accounting Standards Advisory Board Handbook of Federal Accounting Standards and 

Other Pronouncements, as Amended, June 30, 2012, which contains the body of 

accounting concepts and standards for the U.S. government.
Page 6 GAO-14-27 DHS M&A Spending

including its draft Accounting Classification Structure (ACS) Policy and 

Standards and ACS Guidebook. We compared these efforts to 

standardize financial data with criteria for cost accounting in the 

Statement of Federal Financial Accounting Standards No. 4, Managerial 

Cost Accounting Standards and Concepts.

10

We conducted this performance audit from February 2013 to December 

2013 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.

We also reviewed the 

Concept of Operations and program milestones for “CFO Horizon”—a 

means to consolidate components’ financial data. Finally, we interviewed 

OCFO Resource Management Transformation officials about their efforts 

to implement CFO Horizon and develop ACS. Appendix II provides more 

details on our objectives, scope, and methodology.

DHS’s seven operational components, listed along the bottom of figure 1, 

lead the department’s frontline activities. As described in DHS’s 

Quadrennial Homeland Security Review Report, the department has five 

core missions: (1) preventing terrorism and enhancing security, (2) 

securing and managing our borders, (3) enforcing and administering our 

immigration laws, (4) safeguarding and securing cyberspace, and (5) 

ensuring resilience to disasters.11

 10Federal Financial Accounting Standards No. 4, Managerial Cost Accounting Standards 

and Concepts, July 31, 1995.

In addition to the five missions, DHS 

focuses on two areas: (1) providing essential support to national and 

economic security, such as maximizing the collection of customs revenue,

and (2) maturing and strengthening DHS, such as enhancing shared 

awareness of risks and threats. DHS’s eight support components provide 

resources, analysis, equipment, research, policy development, and 

11DHS, Quadrennial Homeland Security Review Report: A Strategic Framework for a 

Secure Homeland (Washington, D.C.: February 2010).

Background

DHS Organization 

and Missions
Page 7 GAO-14-27 DHS M&A Spending

support to help ensure the operational components have the tools and 

resources to accomplish DHS’s missions. Figure 1 shows DHS’s 

organizational structure.

Figure 1: Department of Homeland Security Organizational Chart

Appropriation account and PPA: Congress appropriates funds to DHS in 

appropriations accounts that authorize it to incur obligations and make 

payments (expenditures) from the Treasury for specified purposes.12

 12For the purposes of this report, we also use “spending” to refer more generally to 

obligations and expenditures.

These appropriations accounts are further broken down by program, 

project, or activity (PPA). PPAs are identified in conference reports and in 

the President’s budget submission. In addition, each DHS component 

explains its funding request by PPA in DHS’s congressional budget 

justification. PPAs are intended to provide a meaningful representation of 

the operations financed by the account. PPAs are not standard among 

DHS components. For example, the Transportation Security 

Administration’s PPAs generally align with its programs (e.g., Screening 

Partnership Program and Secure Flight), whereas the Coast Guard’s 

Federal Budget

Data Sources
Page 8 GAO-14-27 DHS M&A Spending

PPAs align with expense type.13 For example, the Coast Guard’s 

Operating Expenses account consists of the following six PPAs: military 

pay and allowances, civilian pay and benefits, training and recruiting, 

operating funds and unit-level maintenance, centrally managed accounts, 

and depot-level maintenance. In addition, the number of appropriations 

accounts and PPAs each component has varies. For example, the 

President’s fiscal year 2013 budget submission requested funding for the 

Federal Law Enforcement Training Center in a total of two appropriations 

accounts and three PPAs. In contrast, the budget submission requested 

funding for FEMA in a total of nine appropriations accounts and 19 PPAs. 

We previously found that there are limitations to using account structures 

to identify and analyze M&A spending.14

Object classification: Object classes are numbered categories used in 

budget preparation to classify obligations by the types of goods or 

services purchased by the federal government. Obligations are 

commitments that create a legal liability of the federal government for the 

payment of goods and services. For example, an agency incurs an 

obligation when it places an order, signs a contract, purchases a service, 

or awards a grant. Obligations may also include interagency transactions 

where funds are transferred from one appropriation account to another. 

Object class information is mandated by law, which requires the 

President’s budget to present obligations by object class for each 

account.

Specifically, we found that the 

appropriation account structure was not constructed to delineate program 

and administrative expenses. In particular, (1) the budget does not 

identify an administrative account for all agencies, (2) similar expenses 

are categorized differently across agencies and within the same agencies 

from year to year, and (3) administrative accounts do not include all 

administrative expenses of an agency. See appendix I for more details on 

the limitations of using appropriations accounts and PPAs to identify M&A 

spending.

15

 13The Screening Partnership Program was established to permit an airport operator to 

request screening services through a private screening company. Secure Flight’s mission 

is to strengthen the security of commercial air travel into, out of, within, and over the 

United States through the use of improved and expanded watch list matching using riskbased security measures.

In DHS’s annual congressional budget justification, 

14GAO, Budget Issues: Assessing Executive Order 12837 on Reducing Administrative 

Expenses, GAO/AIMD-94-15 (Washington, D.C.: Nov. 17, 1993).

15See 31 U.S.C. § 1104(b). 
Page 9 GAO-14-27 DHS M&A Spending

components break down their funding requests for each PPA by object 

class. The Office of Management and Budget (OMB) established five 

major object classes; by number, they are as follows: 10, personnel 

compensation and benefits; 20, contractual services and supplies; 30, 

acquisition of assets; 40, grants and fixed charges; and 90, other. See 

appendix I (table 5) for a description of the major object classes. These 

major classes are divided into smaller classes. For example, object class 

20 includes 21, travel and transportation of persons; 24, printing and 

reproduction; and 26, supplies and materials. See figure 2 for examples 

of the contractual services and supplies object classification for DHS.

Figure 2: Examples of Contractual Services and Supplies Object Classification for 

the Department of Homeland Security

We previously found that object class data have limitations when used to 

identify and analyze obligations of an M&A nature.16

 16GAO, Budget Object Classification: Origins and Recent Trends,

For example, there is 

not an object class exclusively for M&A activities, so obligations for M&A 

GAO/AIMD-94-147

(Washington, D.C.: Sept.13, 1994). 
Page 10 GAO-14-27 DHS M&A Spending

activities cannot be separated from obligations for mission activities. See 

appendix I for more details on the limitations of using object class data to 

identify M&A spending.

Components use financial systems to track obligations and expenditures 

by account and PPA, as well as object classification. The term “financial 

system” includes an information system, composed of one or more 

applications, that is used for collecting, processing, maintaining, 

transmitting, or reporting data about financial events; supporting financial 

planning or budgeting activities; accumulating and reporting costs 

information; or supporting the preparation of financial statements.17 Of the 

15 DHS components, 6 own and operate financial systems. The 

remaining components, with the exception of the Office of Inspector 

General, which relies on the Department of the Treasury, are customers 

of those 6 components that own and operate their own financial systems 

and serve as internal shared service providers.18 For example, the Coast 

Guard owns and operates a financial system, and TSA and the Domestic 

Nuclear Detection Office are customers of the Coast Guard. Each of the 6 

components that own financial systems use different software or versions 

of software. Table 1 depicts which DHS components own financial 

systems and which are customers that use those systems.

 17Pub. L. No. 104-208, § 806(5), 110 Stat. 3009, 3393 (codified at 31 U.S.C. § 3512 note).

18A shared service provider is a third-party entity that manages and distributes softwarebased services and solutions to customers across a wide area network from a central data 

center.

Financial Systems
Page 11 GAO-14-27 DHS M&A Spending

Table 1: Department of Homeland Security Components’ Financial Systems, as of August 2013

System owner/host Components that use the system Financial system

Coast Guard Domestic Nuclear Detection Office

Transportation Security Administration

Oracle Federal Financials Core Accounting 

System

Customs and Border 

Protection

Systems, Applications and Products (SAP) 

Applications MySAP Enterprise Resource 

Planning

Federal Emergency 

Management Agency

Digital Systems Integrated Financial

Management lnformation Systems

Federal Law Enforcement 

Training Center

Analysis and Operations Momentum

Immigration and Customs 

Enforcement 

Departmental Management and Operations

National Protection and Programs

Directorate

Office of Health Affairs

Science & Technology Directorate

U.S. Citizenship and Immigration Services

Savantage Federal Financial Management 

System

Secret Service Oracle Federal Financials

Source: GAO analysis of Department of Homeland Security information.

Note: The Office of Inspector General is a customer of the Bureau of the Public Debt in the 

Department of the Treasury, which utilizes Oracle Federal Financials.

In addition to the financial systems components utilize to track budget 

execution, DHS utilizes the FYHSP System PDM to develop the FYHSP 

report to Congress and assist the department with budget formulation. In 

response to DHS’s Bottom-Up Review,19 which called for the capability to 

better align DHS’s budget with its missions, PA&E developed the FYHSP 

System PDM.20

 19DHS, Bottom-Up Review Report (Washington, D.C.: July 2010).

The PDM is a data collection tool for components to 

submit their resource allocation plans to request funding for future years. 

Financial systems use the appropriation structure specified by Congress 

for budget execution, while the PDM captures DHS’s programmatic 

20PA&E, a division of DHS OCFO, is responsible for developing and performing analyses 

and evaluations of alternative plans, programs, personnel levels, and budget submissions 

for the department in relation to homeland security objectives, projected threats, 

vulnerability assessments, estimated costs, resource constraints, and the most recent 

homeland security strategy. PA&E also provides guidance and oversees the development 

of the FYHSP, among other things.

Future Years Homeland 

Security Program System 

Program Data Module
Page 12 GAO-14-27 DHS M&A Spending

structure used for resource formulation, managerial decision making, 

performance management, and articulating outcome-oriented mission 

programs to the public.

The eight DHS components we reviewed define M&A spending 

differently. According to component officials, the components can identify 

M&A spending, but they do not do so because they are not required to by 

the department. In addition, the methods for identifying M&A spending 

vary among components. Components also have varied ability to report 

consistent, reliable M&A data, limiting the data available from fiscal years 

1999 through 2013. Because components define M&A differently, have 

different methods for identifying spending, and limitations exist in 

obtaining data, it is not possible to compare components’ M&A spending 

data from fiscal years 1999 through 2013.

Officials from all eight DHS components we reviewed provided us 

different definitions of M&A activities and told us that they can identify 

spending on M&A activities. (See table 2.) Four of the eight components 

in our review—FEMA, FLETC, ICE, and TSA—define their M&A activities 

according to the activities funded through their appropriations accounts 

and PPAs that are M&A in nature (i.e., activities of a support nature such 

as planning and budgeting, legal support, and IT infrastructure), while the 

other four—Coast Guard, DMO, CBP, and USSS—each define M&A 

activities differently and their definitions are not tied to activities in specific 

appropriation accounts or PPAs.21

 21M&A activity definitions represent components’ definitions as of August 2013, and are 

not necessarily the same definition used by the component since fiscal year 1999.

For example, TSA officials stated that 

TSA’s M&A activities are those found within its Transportation Security 

Support appropriations account, specifically the following three 

PPAs: Headquarters Administration, Human Capital Services, and 

Information Technology. These three PPAs fund TSA’s headquarters and 

support functions. Alternatively, the Coast Guard does not have an M&A 

PPA. According to Coast Guard officials, the Coast Guard’s M&A 

activities are those associated with headquarters and its service centers, 

DHS Components 

Define M&A Activities 

Differently and Can 

Identify M&A 

Spending, but 

Limitations Exist in 

Obtaining Data from 

Fiscal Years 1999 

through 2013

DHS Components Define 

M&A Activities Differently 

and Can Identify M&A 

Spending
Page 13 GAO-14-27 DHS M&A Spending

such as personnel support and finance, which support the entire Coast 

Guard and cannot be attributed to a single unit or mission. Unlike officials

in other components, DMO officials said that they consider all of DMO’s 

activities to be M&A in nature, and therefore all of its spending to be M&A.

DHS components are not required by the department to identify M&A 

spending as they obligate or expend funds, and as a result, none of the 

eight components we reviewed currently do so. However, all the 

components said they can identify M&A spending. Seven of the 

components would use their financial systems to identify M&A spending,

while one component would use its cost model. However, methods for 

identifying spending vary among components. For example, FEMA 

officials said they can obtain M&A data from object classes within FEMA’s 

financial system, while Coast Guard officials said that they can use 

expenditures by cost centers and ICE officials said that they can calculate 

obligations and expenditures by PPA. Alternatively, officials from one 

component, CBP, said that CBP can use its cost model, which aligns 

costs with activities—but is separate from its financial system—to identify 

M&A spending. Table 2 summarizes how DHS components we reviewed 

define and would identify M&A activities and spending.
Page 14 GAO-14-27 DHS M&A Spending

Table 2: Selected Department of Homeland Security Components’ Definitions and Sources for Identifying Their Management 

and Administration Activities and Spending

Department of 

Homeland 

Security (DHS)

component Definition of management and administration (M&A) activities

Source for 

identifying M&A 

spending

Coast Guard Activities performed by headquarters and service centers, such as the finance center and 

personnel support center, that cater to the entire organization, and cannot be attributed to a 

single unit, mission, or asset class. 

Expenditures by cost 

centers as recorded 

in the Coast Guard’s 

financial system 

Customs and 

Border 

Protection

Generally the same business support activities, such as conducting strategic planning, 

identified by DHS for use when requesting resource allocations in future years.

Profitability & Cost 

Management 

Application (cost 

model), which aligns 

costs to activities 

Departmental 

Management 

and Operations

All activities are M&A in nature and include providing leadership, direction, and 

management to the department and all of its components; establishing and implementing 

policy; and providing various support functions and oversight to all entities within DHS, 

among others.

All expenditures 

recorded in financial 

system

Federal 

Emergency 

Management 

Agency

Activities contained in the Salaries and Expenses appropriation account, which include 

information technology; human capital management; acquisition management; security; 

administration (facilities management, records management, and occupational health and 

safety); as well as the leadership, management, and mission support functions of the 

regional offices. 

Object classes 

contained in the 

financial system 

Federal Law 

Enforcement 

Training Center

Activities contained in the Management and Administration Program, Project, or Activity 

(PPA), which include providing budget, finance, accounting, financial systems, financial 

statements, relocation, travel, and strategic planning functions, as well as asset 

management and human capital services, among others. 

Organization code, 

object class data, and 

PPA obligations 

contained in the 

financial system 

Immigration and 

Customs 

Enforcement 

Activities contained in the Personnel Compensation and Benefits, Service, and Other Costs 

PPA, such as overseeing the budget, procurement, and facilities; providing human 

resources services and training for all employees and special agents; tracking the agency’s 

performance measurements; and agency leadership.

PPA obligations and 

expenditures 

captured in 

spreadsheets 

produced by financial 

system 

Secret Service Activities that support and sustain operational success through progressive planning and 

performance in the areas of science and technology, organizational effectiveness, 

professional responsibility, stewardship of resources, and communication. Headquarters, 

management and administration resources support the DHS strategic goal to protect critical 

infrastructure by enhancing the Secret Service’s administrative, professional, and technical 

infrastructure as well as its management systems and processes. 

Project codes and 

object classes in 

financial system 

Transportation 

Security 

Administration 

Activities contained in the Transportation Security Support appropriation account and three 

M&A PPAs: Headquarters Administration (leadership, management, and logistics support 

for operations); Human Capital Services (oversight of all human resources contractual 

activities; and development of policies, guidance, and programs that are used to identify and 

promote human resources practices); and Information Technology (support for core 

information technology and telecommunications infrastructure, and personnel such as 

information technology engineers, application developers, and technical specialists).

PPA expenditures 

captured in Monthly 

Execution and 

Staffing Reports 

produced by financial 

system

Source: GAO analysis of DHS documentation and component information.
Page 15 GAO-14-27 DHS M&A Spending

DHS components have varied ability to report consistent, reliable M&A 

data, limiting the data available from fiscal years 1999 through 2013. 

While FEMA officials stated that FEMA could provide data since fiscal 

year 1999, officials from seven of the eight DHS components we 

reviewed told us they would be able to provide M&A spending data for 

some, but not all, fiscal years since 1999 because of changes in their 

financial systems and data reliability issues, among other reasons. 

Examples of these limitations in obtaining data include the following:

Financial system changes: Officials from two of eight components 

cited a change or upgrade to their financial systems as a reason for 

not having data readily available since fiscal year 1999. For example, 

according to USSS officials, they could most easily identify M&A data 

for fiscal years 2005 through 2012, since USSS changed its financial 

system in 2005. The officials added that obtaining M&A data before 

fiscal year 2005 would be time-consuming, and the data would be 

difficult to merge with data in USSS’s current system because the 

financial systems are not compatible or linked.

Data reliability: Officials from two of eight components cited data 

reliability as a reason for not having data readily available since fiscal 

year 1999. For example, officials representing DMO—which was 

established in fiscal year 2004 along with its financial system—told us 

that they do not consider fiscal year 2004 data to be reliable because 

the data are for a partial year and the officials were learning the 

system; however, they consider the next fiscal year’s data (2005) 

reliable, as the financial system was fully operational for an entire 

fiscal year and officials had become familiar with using the system.

Date component established: Four of the eight components were 

not established, or not established in their current form, until after 

1999, and therefore data are not available or could be difficult to 

obtain. For example, CBP officials told us that obtaining M&A data 

prior to fiscal year 2003—when CBP was part of other federal 

departments—would be nearly impossible because the offices and 

agencies in those departments were not wholly transferred into what 

is now CBP.22

 22The Homeland Security Act of 2002 merged the U.S. Customs Service with parts of the 

Immigration and Naturalization Service and the Department of Agriculture’s Animal and 

Plant Health Inspection Service, effective in March 2003. Pub. L. No. 107-296, § 402, 116 

Stat. 2135, 2177.

Limitations Exist in 

Obtaining Data from Fiscal 

Years 1999 through 2013
Page 16 GAO-14-27 DHS M&A Spending

Table 3 provides information on the range of M&A data available by fiscal 

year, and the reason for that range.

Table 3: Management and Administration Data Available by Selected Department of Homeland Security Components for 

Fiscal Years 1999 through 2013

Department of 

Homeland Security 

(DHS) component

Date 

established

Fiscal years 

management 

and 

administration 

(M&A) data 

available Reason for range

Coast Guard 1790 2008-2013 The Coast Guard does not archive a complete set of data that is more 

than 5 years old, since single-year appropriations are cancelled after 

being in an expired status for 5 years. Furthermore, old data are less 

useful for financial analysis because of structural changes endured over 

time, according to Coast Guard officials.

Secret Service (USSS) 1865 2005-2012 USSS changed its financial system to Oracle in 2005 and data in the 

previous system are difficult to obtain and merge with data in the 

current system because the systems are not compatible or linked, 

according to USSS officials.

Federal Law 

Enforcement Training 

Center (FLETC)

1970 2000-2013 According to FLETC officials, FLETC changed financial systems in 

1999 from another federal department-managed system to its own 

financial system, Momentum. Officials told us they could not attest to 

data reliability prior to 2000.

Federal Emergency 

Management Agency 

(FEMA)

1979 1999-2013 FEMA would be able to provide data for fiscal years 1999 through 2013, 

but FEMA officials told us that M&A data from the most recent fiscal 

years would be more reliable and accessible than data from earlier 

years. 

Transportation Security 

Administration (TSA)

2001 2008-2013 TSA, consistent with its service provider (the Coast Guard), does not 

archive a complete set of data that is more than 5 years old, since 

single-year appropriations are cancelled after being in an expired status 

for 5 years.

Customs and Border 

Protection (CBP)

2003 2010-2013 CBP officials told us that they redefined M&A activities as a result of 

DHS’s Bottom-Up Reviewa

Immigration and 

Customs Enforcement 

(ICE)

completed in 2010, and enhanced CBP’s 

ability to collect M&A data through its cost model.

2003 2007-2013 ICE destroys files 6 years and 3 months after the close of the fiscal year 

consistent with guidance from the National Archives and Records 

Administration. 

Departmental 

Management and 

Operations (DMO)

2004 2005-2013 Officials in the Office of Financial Operations within the Office of the 

Chief Financial Officer, which oversees DMO finances, told us that data 

from fiscal year 2004 are likely not reliable as that is when DMO 

established its financial system.

Source: GAO analysis of DHS component information.

a

The Bottom-Up Review is a department-wide assessment to implement the Quadrennial Homeland 

Security Review strategy by aligning DHS’s programmatic activities, such as investigating drug 

smuggling and inspecting cargo at ports of entry, and its organizational structure with the missions 

and goals identified in the Quadrennial Homeland Security Review.
Page 17 GAO-14-27 DHS M&A Spending

Because components define M&A differently, have different methods for 

identifying spending, and limitations exist in obtaining data, it is not 

possible to compare components’ M&A spending data from fiscal years 

1999 through 2013. Furthermore, components’ missions and authorities 

have changed over time, making a meaningful analysis of a single 

component’s spending over time difficult. For example, the Coast Guard

doubled in size shortly after the terrorist attacks of September 11, 2001, 

because its mission was broadened to include additional national security 

responsibilities such as increasing port security. Specifically, as reported 

in the President’s fiscal year 2003 budget, port security accounted for 

approximately 1 to 2 percent of daily operations before September 11, 

2001, and accounted for between 50 and 60 percent of daily operations in 

fiscal year 2003. Additionally, FEMA’s authority changed with the PostKatrina Emergency Management Reform Act of 2006. The act enhanced 

FEMA’s autonomy—FEMA became a distinct entity within DHS23—and 

responsibilities. For example, the act tasked FEMA with leading and 

supporting the nation’s risk-based, comprehensive emergency 

management system of preparedness, protection, response, recovery, 

and mitigation.24 Appendix I provides additional information on limitations 

to identifying and analyzing DHS’s M&A data.

 236 U.S.C. § 316.

246 U.S.C. § 313. 
Page 18 GAO-14-27 DHS M&A Spending

DHS has not identified the department’s total spending on M&A activities, 

but through two efforts to achieve efficiencies and reduce spending, it 

identifies spending on some M&A activities. DHS implemented a system 

to estimate the percentage of the department’s budget request in future 

years that is identified as M&A using a common definition, but not all 

components are adhering to the definition when entering resource 

allocation requests into the system. DHS is taking steps to require 

components to apply the same common M&A definition to obligations and 

expenditures contained in their financial systems, but it is too early to tell 

whether the steps DHS is taking will allow it to successfully collect reliable 

M&A data in the future.

According to DHS OCFO officials, DHS has not identified the 

department’s total spending on M&A activities since DHS’s inception in 

2003 because (1) there has not been a common M&A definition and (2) 

obtaining data would require requesting data from the components, which 

would require a manual, labor-intensive effort on their part to identify the 

data in their financial systems. However, through two efforts to achieve 

efficiencies and reduce spending, DHS is identifying and collecting data 

on components’ spending on specific M&A activities.

The first effort, DHS’s Efficiency Review, was initiated by the department 

in March 2009 to achieve efficiencies among initiatives in three 

categories: day-to-day expenditures, personnel, and physical assets.25

 25“Day-to-day expenditures” includes background investigations, communication devices, 

office supplies, software licenses, and subscriptions. “Personnel” includes employee 

orientation and training, hiring and security suitability processes, coordination and decision 

making, paperless earning and leave statements, and retention. “Physical assets” includes 

bulk fuel acquisition, energy management, fleet management, hybrid vehicles, and IT and 

office equipment.

As 

of June 2013, DHS has implemented 46 initiatives through the ER. To 

assist in determining DHS’s cost avoidance figures, the ER Office 

requires components to report their respective expenditures and cost 

DHS Identifies Some 

M&A Spending and Is 

Taking Steps to 

Define and Collect 

Data on M&A 

Activities, but Could 

Improve Reliability of 

Data for Estimating 

Future Resource 

Requests

DHS Identifies Spending 

on Specific M&A Activities 

through Two Efforts to 

Achieve Efficiencies and 

Reduce Spending

Efficiency Review
Page 19 GAO-14-27 DHS M&A Spending

avoidance figures quarterly through the ER Quarterly Reporting System.26

1. facilities: rental costs for nongovernmental facilities for meetings, 

conferences, and training events;

The ER collects expenditure data for three initiatives to determine 

whether the cost avoidance figures are reasonable and to verify 

components’ compliance with the initiatives:

2. printing: total cost of printed products; and

3. travel: all expenditures assigned to object class 21 travel and 

transportation of persons.27

The data provided reflect all spending on the initiatives, including M&A 

activities and operational activities, such as mission-critical travel. 

According to the ER data, travel expenditures far exceeded spending on 

facilities rental and printing from fiscal years 2010 through 2012. 

Furthermore, components’ travel and printing expenditures were similar in 

both fiscal years 2010 and 2011, but increased in fiscal year 2012. In 

contrast, expenditures on facilities rental steadily declined from fiscal 

years 2010 to 2012. According to the ER Director, variations in 

expenditures across years are a result of mission needs, which can be 

cyclical in nature. For example, according to USSS officials, USSS 

generally has increased travel costs in an election year because of its 

mission to protect presidential candidates. Figure 3 shows DHS spending 

by initiative for fiscal years 2010 through 2012.

 26The goal of some initiatives is efficiency gains, such as improving processes, so 

components are not required to report expenditures and cost avoidance figures for all 

initiatives. For example, in response to the contractor background investigations initiative, 

which is an initiative to improve the background investigation process through new 

policies, for example, components are to report the percentage of contractors found to be 

ineligible to work as a result of criminal conduct, employee misconduct and drug use.

27Officials from four of the eight components we interviewed reported providing either

obligations or obligations and expenditures as opposed to just expenditures.
Page 20 GAO-14-27 DHS M&A Spending

Figure 3: Department of Homeland Security’s Spending by Efficiency Review 

Initiative, Fiscal Years 2010-2012

Note: These figures, based on obligations and expenditures, likely understate DHS’s total spending, 

as two components and two offices did not report their spending in some quarters. Furthermore, the 

figures do not include the Federal Emergency Management Agency’s travel for disaster recovery or 

the Transportation Security Administration’s travel for permanent change of station, and the Coast 

Guard did not report all of its travel during the time frame provided. Data are reported at the end of 

the quarter, but components may not have fully reconciled the data. Therefore, the data may not 

reflect the final, fully reconciled expenditures for the department. Despite these limitations, we believe 

the data are sufficiently reliable for reporting aggregate spending over time.

The ER office requires components to report their cost avoidance figures 

for 5 of the 46 initiatives: (1) facilities, (2) IT inventory management, (3) 

printing, (4) travel, and (5) wireless assets and services. Cost avoidances 

are savings that are reallocated to mission-critical activities, and do not 

result in decreases to the budget. These initiatives include M&A activities 

as well as operational activities, such as mission-critical travel, so the cost 

avoidances reported are not limited to M&A activities. DHS has reported 

achieving cost avoidances through sharing excess IT equipment within 

the department rather than buying new equipment, and using government 

office space and online tools for conferences instead of renting private 

facilities, for example. Figure 4 shows the cost avoidances DHS has 
Page 21 GAO-14-27 DHS M&A Spending

achieved by these five initiatives for fiscal year 2012 through the first 

quarter of fiscal year 2013.

Figure 4: Department of Homeland Security Cost Avoidances Achieved by 

Efficiency Review Initiative, Fiscal Year 2012 through the First Quarter of Fiscal 

Year 2013

Note: We did not include data prior to fiscal year 2012, since DHS changed its method for 

determining cost avoidance figures for the printing and travel initiatives beginning with the first quarter 

of fiscal year 2012.

DHS has achieved the greatest cost avoidances through the wireless 

assets and services, IT inventory management, and facilities initiatives. 

According to the ER data, FEMA, for example, reported a collective cost 

avoidance of $8 million during the time period as a result of reducing by 

approximately half what it was paying for wireless service per employee. 

Cost avoidances have been limited for the printing and travel initiatives 
Page 22 GAO-14-27 DHS M&A Spending

relative to the other initiatives. According to officials from six of the eight 

components we interviewed, there are limited opportunities to avoid these 

costs, since mission needs dictate spending. For example, USSS officials 

stated that while USSS looks for opportunities to reduce costs and has 

recently opted for travel by bus rather than by aircraft, it ultimately has 

limited control over travel spending because the agency must provide 

protection for its protectees when and where they travel.

In response to the Campaign to Cut Waste—a government-wide effort to 

reduce administrative spending—DHS sets spending targets and tracks 

components’ spending (obligations and expenditures) for seven M&A 

categories: (1) travel, (2) printing, (3) supplies, (4) advisory service 

contracts (e.g., contracts for IT services and program management), (5) 

promotional items, (6) IT devices, and (7) executive sedan services. DHS 

components’ spending targets generally reflect a 20 percent decrease 

from their fiscal year 2010 spending levels in accordance with Executive 

Order 13589, issued in November 2011,28 and a subsequent May 2012 

memorandum from OMB providing implementation guidance.29 Unlike ER 

data, the figures reported for the Campaign to Cut Waste generally 

exclude spending on mission-essential activities (e.g., travel for national 

security purposes), as the goal of the Campaign to Cut Waste is to 

reduce spending on administrative activities. The Campaign to Cut Waste 

concluded at the end of fiscal year 2013 per OMB guidance, with the 

exception of continued collection of spending data for travel.30

Of the eight components we reviewed, officials from six reported having 

difficultly determining spending for some of the Campaign to Cut Waste 

categories, highlighting the challenges of both defining and identifying 

M&A activities and spending. More specifically, while officials from all 

eight components did not report any difficulties determining travel 

spending, six of the eight components reported difficultly determining 

 28The decrease specified in the OMB guidance was15 percent in the case of advisory 

service contracts for fiscal year 2012, and 30 percent in the case of travel for fiscal year 

2013. According to a DHS OCFO Budget Analyst, spending targets were determined by 

DHS using fiscal year 2010 obligations in relevant object classes as the baseline and 

working with components to exclude obligations of an operational nature.

29Exec. Order No. 13,589, 76 Fed. Reg. 70,863 (Nov. 15, 2011); and OMB, M-12-12 

Promoting Efficient Spending to Support Agency Operations, May 11, 2012.

30OMB, M-12-12. 

Campaign to Cut Waste
Page 23 GAO-14-27 DHS M&A Spending

spending on promotional items, supplies, and/or IT devices. Officials from 

these six components cited unclear definitions and lack of a 

straightforward method to identify spending, such as no corresponding 

object class, as reasons for the difficulty. For example, ICE, TSA, and 

USSS officials stated that what qualifies as a promotional item is not well 

defined in the guidance, and as a result, the activities and associated 

spending that should be reported for this category are subjective. 

According to DHS OCFO and FEMA officials, FEMA delayed reporting its 

spending on office supplies in April 2013 when it realized the figures 

previously reported may have been overstated, as the object class that 

contains office supplies also includes purchases made on credit cards, 

which could include items other than office supplies. Officials from four of 

the eight components we reviewed reported difficulties determining 

spending for IT devices as a result of the broad definition in the executive 

order and the ability to isolate spending on specific types of IT devices 

(e.g., laptops) in their financial system.

Despite the data limitations described above, we determined that the data 

are sufficiently reliable to illustrate general levels of DHS’s spending 

against its spending targets on the Campaign to Cut Waste categories for 

six of the seven categories (all but IT devices). Overall, DHS spent 12 

percent less than its spending target for fiscal year 2012 on these six

categories. However, given that data for the IT device category are 

incomplete and the final spending and spending target figures are being 

determined, it is unknown at this time whether DHS met its overall 

spending goal for fiscal year 2012. According to DHS’s Budget Division, 

for fiscal year 2013, the department was on track to meet or exceed the 

reduction levels established in the executive order in the areas of supplies 

and advisory service contracts, which will allow DHS to meet its overall 

spending target. Table 4 shows the amount DHS spent compared with its 

spending target by Campaign to Cut Waste category during fiscal year 

2012 and the first two quarters of fiscal year 2013.
Page 24 GAO-14-27 DHS M&A Spending

Table 4: Spending by Campaign to Cut Waste Category, Fiscal Year 2012 and First Two Quarters of Fiscal Year 2013

Dollars rounded to millions

Fiscal year 2012 Fiscal year 2013 

Categorya Total spent(all quarters)

Spending

target

Percentage 

spent

Total spent

(first two 

quarters)

Spending

target

Percentage 

spent

Travel $1,361.5 b $1,202.1 113% $488.1 $1,202.1 41%

Printing $37.2 c $22.4 166% $13.3 $28.5 47%

Supplies $304.4 $527.0 58% $57.9 $526.7 11%

Advisory service 

contracts $1,478.2 c $1,884.1 78% $433.4 $2,011.5 22%

Promotional items $2.0 c $2.5 80% $.1 2.7 4%

Executive sedan 

services $1.6 c $1.4 114% $1.9 3.6 53%

Total $3,184.9 $3,639.5 88% $995 $3,775.1 26%

Source: GAO analysis of Department of Homeland Security data.

a

We excluded the information technology (IT) devices category, since the data were incomplete as a 

result of challenges some components face in determining their spending on IT devices.

b

Figures do not include mission-critical and operational readiness travel (e.g., Secret Service travel 

for the 2012 presidential campaign).

c

The spending target was increased in fiscal year 2013 to reflect fiscal year 2010 expenses that 

should have been taken into consideration when determining the fiscal year 2012 spending target but 

were inadvertently excluded.

In response to DHS’s 2010 Bottom-Up Review, which called for the 

capability to better align DHS’s budget with its missions,31

 31DHS, Bottom-Up Review Report. Among other things, the Bottom-Up Review identified 

priority initiatives to strengthen DHS’s mission performance, improve departmental 

management, and increase accountability.

PA&E 

implemented the FYHSP System PDM in March 2010, as well as three 

activity types for categorizing the department’s activities: (1) 

Mission/Operational; (2) Mission Support; and (3) Business Support (also 

referred to as M&A), including a definition of M&A activities. The FYHSP 

System PDM User Manual directs components to submit resource 

allocation requests by activity type according to the definitions below:

DHS Defined M&A 

Activities for Future Year 

Resource Requests, but 

Reliable Data Would Allow 

DHS to Better Estimate the 

Percentage of Requests for 

M&A Activities
Page 25 GAO-14-27 DHS M&A Spending

1. mission/operational activities: activities that directly contribute to a 

mission outcome (e.g., screening and disaster operations).32

2. mission support: activities providing a product or service for, and 

tailored to, mission/operational activities (e.g., logistical support, 

research and development, and intelligence).

3. business support (also referred to as M&A): activities found on the 

master list of 92 activities included in the user manual (e.g., conduct 

strategic planning, manage public affairs, and ensure information 

security).

As a result, DHS has the ability to model the percentage of its future 

years’ budget requests allocated to each of the three activity categories, 

including M&A, using a consistent definition. However, on the basis of our 

analysis of the activities entered into the FYHSP System PDM for fiscal 

years 2012 and 2013, we determined that 1 component did not enter any 

business support/M&A activities, and 5 components did not correctly 

categorize their business support activities since they entered some 

business support activities as mission support activities. Further, 

according to an analysis conducted by PA&E of the activities entered in 

the PDM as business support/M&A for fiscal years 2014 through 2018, 

components did not correctly categorize their requests by activity type or 

enter all of their business support/M&A activities, among other errors. For 

example,

• 9 out of 15 components did not correctly word a portion of their 

business support/M&A activities to correspond with the master list;

• 4 of the 15 components entered the wrong corresponding business 

support/M&A activity number as found on the master list for a portion 

of their business support activities; and

• 4 out of 15 components entered fewer business support/M&A 

activities than PA&E would have expected, and 1 component did not 

enter any business support activities.

According to DHS PA&E officials, the errors are a result of manual data 

entry or components not adhering to the guidance in the PDM user 

 32DHS’s five missions, as stated in the Quadrennial Homeland Security Review Report, 

include (1) preventing terrorism and enhancing security, (2) securing and managing our 

borders, (3) enforcing and administering our immigration laws, (4) safeguarding and 

securing cyberspace, and (5) ensuring resilience to disasters.
Page 26 GAO-14-27 DHS M&A Spending

manual. For example, 1 component believes every activity it undertakes 

is in support of its mission and therefore it has no business support/M&A 

activities. Standards for Internal Control in the Federal Government calls

for relevant, reliable, and timely information to be available for external 

reporting purposes and management decision making.33 Additionally, 

these Standards state that management should put in place control 

mechanisms and activities to enable it to enforce its directives and 

achieve results, such as providing relevant, reliable, and timely 

information. Furthermore, the Statement of Federal Financial Accounting 

Concepts No. 1, Objectives of Federal Financial Reporting, states that the 

objectives of federal financial reporting are to provide useful information 

to assist internal and external users in assessing the budget integrity, 

operating performance, stewardship, and systems and control of the 

federal government.34 DHS does not have a mechanism in place to work 

with the components to correct data errors in the PDM. According to 

PA&E, as of August 2013, it was in the process of working with 

components to revise the master list from 92 activities to fewer than 50 in 

conjunction with DHS’s efforts to revise its Quadrennial Homeland 

Security Review Report. In addition, in September 2013, PA&E told us 

that it plans to develop drop-down menus for the FYHSP System PDM to 

systematically ensure consistency of nomenclature and spelling of 

business support activities. While the development of drop-down menus 

will likely address the errors as a result of incorrectly worded activities 

and wrong activity numbers, the steps to be taken will not address the 

errors related to components not entering business support activities into 

the PDM or entering business support activities as mission support 

activities. By implementing a mechanism to assess whether components 

have entered the appropriate business support activities into the PDM, 

and working with the components to correct the data, as needed, DHS

would be better positioned to reliably estimate and report to external 

stakeholders, such as Congress, what percentage of the department’s 

resource allocations requests are identified as M&A.

 33GAO/AIMD-00-21.3.1.

34Statement of Federal Financial Accounting Concepts No. 1, Objectives of Federal 

Financial Reporting.
Page 27 GAO-14-27 DHS M&A Spending

DHS has taken steps to enhance the collection of actual M&A spending 

for the department as a whole. However, DHS’s M&A definition only 

applies to future allocation requests entered into the FYHSP System PDM 

beginning with fiscal year 2012. Accordingly, it is not used by components 

to identify obligations or expenditures by activity type in their financial 

systems. According to DHS, there is no linkage between components’ 

financial systems and the FYHSP System PDM because the systems 

were built upon different structures. Components’ financial systems are 

designed to track how components are spending funds and track 

obligations and expenditures according to their appropriations accounts 

and PPAs, which are established by the Appropriations Committees and 

are different for each component. The PDM was designed to help 

estimate future resource needs and was created based on a common 

account structure that aligns activities with the department’s 

programmatic structure—missions and objectives, according to the 

FYHSP System PDM User Manual. Managerial cost accounting concepts 

and standards call for reliable and timely information on the full cost of 

federal programs, their activities, and outputs.35

DHS plans to require components to collect the same data elements in 

their financial systems when they modernize their systems, an act that 

will, among other things, address challenges in collecting and analyzing 

M&A data for the department as a whole. In response to an OMB 

initiative

The cost information can 

be used by Congress and federal executives in making decisions about 

allocating federal resources, authorizing and modifying programs, and 

evaluating program performance. The cost information can also be used 

by program managers in making managerial decisions to improve 

operating economy and efficiency.

36 and U.S. Department of the Treasury directive37

 35Statement of Federal Financial Accounting Standards No. 4, Managerial Cost 

Accounting Standards and Concepts.

to standardize 

the accounting line, DHS OCFO has drafted an Accounting Classification 

Structure (ACS) Policy and Standards, and corresponding ACS 

Guidebook that requires components to collect the same 73 data 

elements as they either (1) implement a new financial system, (2) make a 

36Financial Systems Integration Office, 2007 Report on Federal Financial Management 

Standards: Common Government-wide Accounting Classification Structure, version 1.0.

37Treasury Financial Management Volume I, Bulletin No. 2012-08.

DHS Has Taken Steps to 

Enhance the Collection of 

Actual M&A Spending, but 

It Is Too Early to Assess 

These Efforts
Page 28 GAO-14-27 DHS M&A Spending

major upgrade to their system, or (3) move to a shared service provider.38

One element of the 73, defined by DHS is “mission activity,” which 

requires components to identify data by activity type using the same 

business support (or M&A) definition in the FYHSP System PDM. 

Furthermore, through an effort called CFO Horizon, DHS has developed a 

data repository in which to collect data from DHS and its components’ 

various financial systems, so when data such as M&A are collected by 

the components in the future, they can be readily accessible by the 

department for consolidation, according to the CFO Horizon Concept of 

Operations.39

DHS OCFO is implementing ACS in two phases: Phase I and Phase II. 

According to DHS OCFO officials, DHS anticipates publishing the ACS 

Policy and Standards in November 2013, thus completing Phase I in the 

first quarter of fiscal year 2014. Phase II, implementation of ACS by the 

components, is scheduled to begin in fiscal year 2014. If a component 

does not store and cannot derive the data element, the component will 

not be expected to report on the data element until it modernizes, 

upgrades or move to a shared service provider, according to a DHS 

official. The mission activity element is not an element components can 

provide or easily provide without financial system modernization. 

According to the preliminary results of an assessment conducted by 

OCFO on the ability of the components to meet the ACS requirements 

using their financial systems as of May 2013, none of the components 

capture or store data by “mission activity” in their financial systems. While 

4 of 15 components responded they could derive the data from their 

existing systems, 3 reported the level of difficulty to be high. Therefore, 

most components will need to modernize their systems in order to obtain 

M&A data, as they are currently unable to obtain or derive the data with 

their current financial systems. DHS is in the early stages of the phased 

 38Of the 73 elements, 15 are defined by DHS and the remaining 58 are defined by OMB

and the U.S. Department of the Treasury.

39CFO Horizon is a centralized data repository to collect component-level financial 

information from various sources and generate department-level financial information 

using business intelligence tools.
Page 29 GAO-14-27 DHS M&A Spending

implementation of its financial system modernization, with completion 

projected for the second quarter of fiscal year 2018.40

OCFO officials told us that in response to their assessment of 

components’ readiness to implement ACS, some components reported 

that even after they have a financial system that provides the capability to 

categorize by mission activity, they may not be able to do so because 

funds are not obligated by activity type. For example, CBP officials told us 

that approximately 70 percent of CBP’s budget is for salaries and 

benefits, and defining an individual’s salary by mission activity is difficult 

given that individuals, especially those working in the field (e.g., border 

patrol agents), perform a wide variety of tasks, making it difficult to 

accurately break down their salary expenses by activity type (mission, 

mission support, and business support). Additionally, TSA reported that it 

would be an extensive burden to manually enter such data. According to 

DHS OCFO officials, while implementation of any new financial system 

and new accounting structure is inherently challenging, it is executing a 

process to address issues as they are identified. However, it is too early 

to tell whether the steps DHS is taking will allow it to successfully collect 

reliable M&A data in the future.

DHS has developed a common definition of M&A activities for resource 

planning for the department, but on the basis of our analysis, and PA&E’s 

analysis, not all components are accurately identifying or entering 

business support/M&A activities in accordance with the definition in the 

FYHSP System PDM User Manual when entering their future resource 

allocation requests into the PDM. By implementing a mechanism to 

assess whether components have entered the appropriate M&A activities 

into the PDM, and working with the components to correct the data, as 

needed, DHS would be better positioned to reliably estimate and report to 

external stakeholders, such as Congress, what percentage of the 

department’s resource allocations requests are identified as M&A. DHS’s 

M&A definition applies only to future allocation requests entered into the 

FYHSP System PDM. Accordingly, it is not used by components to 

identify obligations or expenditures by activity type in their financial 

systems. While DHS has drafted the ACS Policy and Standards to require 

 40For additional information on DHS’s modernization efforts, see GAO, DHS Financial 

Management: Additional Efforts Needed to Resolve Deficiencies in Internal Controls and 

Financial Management Systems, GAO-13-561 (Washington, D.C.: Sept. 30, 2013).

Conclusions
Page 30 GAO-14-27 DHS M&A Spending

components to collect the same data elements, including mission activity,

financial system modernization, which is scheduled for completion in 

fiscal year 2018, will need to take place before all components are in a 

position to implement the mission activity element. Further, some 

components have identified challenges to categorizing obligations and 

expenditures by activity type regardless of the capability of their financial 

systems. Consequently, it is too early to tell how successful the steps 

DHS is taking will be in allowing it to collect reliable M&A spending data in 

the future.

To help ensure DHS is able to reliably estimate the department’s future 

resource allocation requests identified as M&A, we recommend that the 

Under Secretary for Management direct PA&E to implement a 

mechanism to assess whether components have entered the appropriate 

M&A activities into the PDM, and work with the components to correct the 

data, as needed.

We provided a draft of this report to DHS for its review and comment. 

DHS provided written comments, which are reprinted in appendix III, and 

concurred with our recommendation. In its written comments, DHS stated 

that it will continue to periodically assess whether components have 

entered the appropriate M&A activities into the PDM and continue to work 

with components to correct the data, as needed. In addition, DHS stated it 

will develop and implement a mechanism to ensure component 

compliance with guidance in time for the fiscal years 2016-2020 

programming and budget process with an estimated completion date of 

June 30, 2014. Such actions should address the intent of our 

recommendation. DHS also provided technical comments, which we 

incorporated as appropriate.

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

this report, we plan no further distribution for 30 days from the report date. 

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

Homeland Secretary, appropriate congressional committees, and other 

interested parties. In addition, this report will be available at no charge on 

GAO’s website at http://www.gao.gov.

If you or your staff have any questions about this report, please contact 

me at (202) 512-9627 or maurerd@gao.gov. Contact points for our 

Offices of Congressional Relations and Public Affairs may be found on 

Recommendation for 

Executive Action

Agency Comments

and Our Evaluation
Page 31 GAO-14-27 DHS M&A Spending

the last page of this report. GAO staff who made key contributions to this 

report are listed in appendix IV.

David C. Maurer

Director, Homeland Security and Justice Issues
Appendix I: Limitations to Identifying and 

Analyzing Management and Administration 

Spending

Page 32 GAO-14-27 DHS M&A Spending

We sought to independently identify and analyze the Department of 

Homeland Security’s (DHS) management and administration (M&A) 

activities and related spending from fiscal years 1999 through 2013 but 

were unable to because of various limitations. In particular, sources of 

federal budget data, including appropriations accounts broken down into 

program, project, or activity (PPA) and object classes, do not clearly 

distinguish M&A spending from other types of spending. Moreover, in 

cases where appropriations accounts and PPAs are largely M&A, the 

activities contained in those groupings are not consistent from year to 

year or complete since M&A activities can be found in other accounts or 

PPAs.

We previously found that there are limitations to using account structures 

to identify and analyze M&A spending because the appropriation account 

structure was not constructed to delineate program and administrative 

expenses.1

On the basis of our review, of DHS’s appropriation account and PPA 

structure, 5 of 15 DHS components did not have an M&A account or PPA 

for fiscal year 2013. Moreover, for those 10 components that did have 

M&A PPAs in 2013, they did not all exist as far back as fiscal year 1999 

or did not exist in their current form, making an analysis over time nearly 

impossible. For example, the Federal Law Enforcement Training Center’s 

(FLETC) Management and Administration PPA was established 

beginning with fiscal year 2013 at the request of the Office of 

Management and Budget to obtain better insight on M&A costs. 

Additionally, the Federal Emergency Management Agency (FEMA) 

previously had a Management and Administration account with an 

Operating Activities PPA, but those activities were within the Salaries and 

Expenses account, including all seven of its PPAs, for fiscal year 2013. 

For the components, such as U.S. Customs and Border Protection (CBP), 

which existed as legacy agencies in different federal departments before 

In particular, (1) the budget does not identify an administrative 

account for all agencies, (2) similar expenses are categorized differently 

across agencies and within the same agencies from year to year, and (3) 

administrative accounts do not include all administrative expenses of an 

agency. We identified the same limitations based on our review of DHS’s 

appropriations accounts and PPAs.

 1

GAO/AIMD-94-15, 7.

Appendix I: Limitations to Identifying and 

Analyzing Management and Administration 

Spending

Appropriation Account 

and PPA Limitations
Appendix I: Limitations to Identifying and 

Analyzing Management and Administration 

Spending

Page 33 GAO-14-27 DHS M&A Spending

DHS was established, it would be difficult to identify relevant expenditures 

by PPA before 2003 because agencies and offices were not transferred 

intact.

For those 10 components with M&A PPAs, they differed from one another

in terms of the activities funded through those PPAs. For example, 

activities contained in the Management and Administration PPA for 

FLETC include providing budget, finance, accounting, financial systems, 

financial statements, relocation, travel, and strategic planning functions, 

as well as asset management and human capital services, among others. 

U.S. Immigration and Customs Enforcement’s (ICE) activities contained in 

its Personnel Compensation and Benefits, Service, and Other Costs PPA 

include overseeing the budget, procurement, and facilities; providing 

human resources services and training for all employees and special 

agents; and tracking the agency’s performance measurements, but do not 

include strategic planning functions and asset management like FLETC’s. 

Without a consistent definition, comparing M&A spending among DHS 

components would likely lead to inaccurate conclusions about which 

components are spending more or less on M&A activities.

On the basis of our review we also found that the activities included and 

funded in a component’s PPA can also change annually. As a result, an 

increase in an M&A PPA may not actually mean increased M&A 

spending. For example, the conference report accompanying the fiscal 

year 2012 DHS appropriations act provided that funding for the Office of 

the Assistant Secretary for Cybersecurity and Communications and the 

Office of the Assistant Secretary for Infrastructure Protection had been 

moved to the National Protection and Programs Directorate M&A 

account.2

 2

H.R. Rep. No. 112-331, at 985 (2011).

As a result, the National Protection and Programs Directorate 

requested an additional $3.9 million for its Directorate Administration PPA 

within its M&A account in fiscal year 2013. Without understanding this 

organizational change or the activities included in a particular PPA, the 

National Protection and Programs Directorate appears to have increased 

spending on Directorate Administration activities by $3.9 million. 

Conducting a year-to-year comparison without understanding these types 

of organizational changes could lead to faulty conclusions. Finally, M&A 

PPAs may not capture all M&A-related expenses, as some M&A activities 

may be captured in other PPAs. For example, FEMA officials reported 
Appendix I: Limitations to Identifying and 

Analyzing Management and Administration 

Spending

Page 34 GAO-14-27 DHS M&A Spending

that its M&A PPAs are found within its Salaries and Expenses 

appropriation account, but noted that there may be other accounts 

containing M&A activities.

We previously found that object class data have limitations when used to 

identify and analyze obligations of an M&A nature since (1) no object 

class contains purely M&A activities, so obligations for M&A activities 

cannot be separated from obligations for mission activities; (2) the same 

type of expenses can be assigned to different object classes; and (3) 

reimbursements made by federal agencies are reobligated, which can 

lead to double counting.3 We identified the same limitations on the basis 

of our review. For example, we found that object class 26, supplies and 

materials, which is seemingly an administrative object class, is 

appropriately used by DHS components to capture obligations for more 

than office supplies. Specifically, Coast Guard officials told us the Coast 

Guard’s obligations for fuel for marine and air assets, uniforms, and 

ammunition, among other operational expenses, are assigned to object 

class 26. Similarly, the U.S. Secret Service (USSS) uses this object class 

to report obligations for fuel for the presidential limousine as well as the 

rest of its vehicle fleet. See table 5 for the entire list of object classes.

 3

GAO/AIMD-94-147.

Object Classification 

Limitations
Appendix I: Limitations to Identifying and 

Analyzing Management and Administration 

Spending

Page 35 GAO-14-27 DHS M&A Spending

Table 5: Description of the Object Classification System

Major object classes Description Smaller object classes 

Personnel 

Compensation and 

Benefits (10) 

Compensation directly related to duties performed for the government by 

federal civilian employees, military personnel, and non-federal personnel. 

Benefits for currently employed federal civilian, military, and certain nonfederal personnel. Benefits for former officers and employees or their 

supervisors that are based (at least in part) on the length of service to 

the federal government. 

Personnel compensation (11.0)

Personnel benefits (12.0) 

Benefits for former personnel 

(13.0) 

Contractual Services 

and Supplies (20) 

Purchases of contractual services and supplies, such as travel and 

transportation costs of government employees and other persons. 

Transportation of things (including animals). Payments for the use of 

land, structures, or equipment owned by others and charges for 

communication and utility services. Printing and reproduction obtained 

from the private sector or from other federal entities. Other contractual 

services for advisory and assistance services acquired by contract from 

non-federal sources, other services provided by non-federal sources not 

otherwise classified, purchases of goods and services from government 

accounts, operation and maintenance of facilities, research and 

development contracts, medical care payments to contractors, operation 

and maintenance of equipment, and subsistence and support of persons. 

In addition, includes purchase of supplies and materials. 

Travel and transportation of 

persons (21.0)

Transportation of things (22.0) 

Rent, communications, and 

utilities (23.0)

Printing and reproduction (24.0)

Other contractual services (25.0)

Supplies and materials (26.0) 

Acquisition of Assets 

(30) 

Purchases of personal property of a durable nature and the initial 

installation of equipment when performed under contract. Purchase and 

improvement of land and interest in lands, buildings, and other 

structures; nonstructural improvements of land; and fixed equipment 

when acquired under contract. Also includes purchases of (1) stocks, 

bonds, debentures, and other securities that are neither U.S. government 

securities nor securities of wholly owned federal government enterprises;

(2) temporary or permanent investments; and (3) interest accrued at the 

time of purchase and premiums paid on all investments. 

Equipment (31.0)

Land and structures (32.0) 

Investments and loans (33.0)

Grants and Fixed 

Charges (40) 

Cash payments to states, other political subdivisions, corporations, 

associations, and individuals for grants, subsidies, gratuities, and other 

aid. Contributions to foreign countries, international societies, 

commissions, proceedings, or projects. Taxes imposed by state and 

local taxing authorities where the federal government has consented to 

taxation and payments in lieu of taxes. Benefit payments from the social 

insurance and federal retirement trust funds and payments for losses 

and claims including those under the Equal Access to Justice Act. 

Payments to creditors, distribution of earnings, and interest payments 

under lease-purchase contracts for construction of buildings. Payments 

of amounts previously collected by the government. 

Grants, subsidies, and 

contributions (41.0)

Insurance claims and indemnities 

(42.0)

Interest and dividends (43.0) 

Refunds (44.0) 

Other (90) Charges that may be incurred lawfully for confidential purposes and are 

not subject to detailed vouchering or reporting. Charges that cannot be 

distributed. Financial interchanges between federal government 

accounts that are not in exchange for goods and services. Includes the 

sum for an object class entry below the reporting threshold of $500,000 

and the sum of all the below threshold amounts rounds to $1 million or 

more.

Unvouchered (91.0) 

Undistributed (92.0)

Financial transfers (94.0) 

Below reporting threshold (99.5) 

Source: OMB Circular No. A-11 (August 2012).
Appendix I: Limitations to Identifying and 

Analyzing Management and Administration 

Spending

Page 36 GAO-14-27 DHS M&A Spending

Given the different missions of DHS components and different activities 

assigned to an object class from component to component, any crosscomponent comparison of object class data could lead to inaccurate 

conclusions. This problem is compounded given that when components 

do have the same types of expenses, they can be appropriately assigned 

to different object class categories. For example, on the basis of our 

review, we found that one component may decide that information 

technology (IT) support belongs to budget object class 26, supplies and 

materials, while another component may decide these same IT costs 

belong to object class 25.7, operation and maintenance of equipment, 

according to a DHS Budget Division Analyst.

Finally, object class data can exaggerate spending because reimbursable 

authority can lead to double counting if direct obligations cannot be 

distinguished from reimbursable obligations. Object classes present gross 

obligations—that is, the separate obligations made by each appropriation 

account, including the “reobligation” of amounts received as 

reimbursements from other federal agencies—and not actual expenses. 

For example, according to a DHS Budget Division Analyst, in fiscal year 

2010, DHS had approximately $2 billion in expenditures in the supplies 

object class, but $512 million of the $2 billion was reimbursable authority.
Appendix II: Objectives, Scope, and 

Methodology

Page 37 GAO-14-27 DHS M&A Spending

This report addresses the following questions:

1. How have select DHS components defined and identified their M&A 

activities and spending, and to what extent are M&A data available 

from fiscal years 1999 through 2013?

2. How has DHS identified M&A spending department-wide, and to what 

extent has DHS defined M&A activities and taken steps to enhance 

efforts to collect M&A data?

To address the first objective, we analyzed DHS’s congressional budget 

justifications, budget execution reports, and budget-in-briefs, as well as 

presidential budgets and appropriations legislation from fiscal years 2004 

through 2013 to understand how M&A activities are defined and 

accounted for within components’ appropriations accounts. We sought to 

independently identify components’ M&A activities and related spending, 

but were unable to because of various challenges. In particular, sources 

of federal budget data do not define and distinguish all M&A spending 

from other types of spending. Moreover, in cases where groupings of 

budget data, such as appropriation accounts, are largely M&A, the 

activities contained in those groupings do not include all M&A activities 

and are not consistent from year to year. To determine how selected DHS 

components define their M&A activities and how they would go about 

identifying spending associated with these activities, we interviewed 

officials representing two of DHS’s eight support components—

Departmental Management and Operations (DMO)1 and FLETC—and six 

of DHS’s seven operational components—FEMA, CBP, the U.S. Coast 

Guard, the Transportation Security Administration, ICE, and USSS.2

 1

We discussed DMO’s financial management with officials in DHS’s Office of the Chief 

Financial Officer (OCFO) because OCFO manages DMO’s finances. We also interviewed 

officials within the Office of Policy and the Office of the Chief Procurement Officer to 

obtain the perspectives of individual offices within DMO.

We 

selected these eight components based on the amount of their budget 

authority (totaling nearly 88 percent of DHS’s fiscal year 2013 budget 

authority); their mission, for components with both operational and 

support missions; and date established, for components established both 

before and after the inception of DHS. To determine the extent to which 

M&A data are available from fiscal years 1999 through 2013, we 

2

We use “component” consistent with DHS’s identification of agencies and offices as 

components in its U.S. Department of Homeland Security Annual Performance Report: 

Fiscal Years 2012-2014, 66. 

Appendix II: Objectives, Scope, and 

Methodology
Appendix II: Objectives, Scope, and 

Methodology

Page 38 GAO-14-27 DHS M&A Spending

interviewed officials from the eight selected components about their ability 

to provide M&A spending data during the timeframe. We did not obtain 

available data from the components because the data would not be 

comparable. While the results of our interviews cannot be generalized 

across all DHS components, these interviews allowed us to obtain 

perspectives on how selected components would define and identify M&A 

spending, as well as the availability of their M&A data since fiscal year 

1999.

To address the second objective, we examined DHS’s two efforts to 

identify and manage its spending on specific M&A activities—DHS’s 

Efficiency Review (ER)—an effort to identify opportunities to improve 

efficiency and streamline decision making through a series of initiatives—

and the Obama administration’s Campaign to Cut Waste—a governmentwide effort to reduce administrative spending.3 Specifically, we analyzed 

all available expenditure and cost avoidance data collected through the 

ER.4 The ER collects expenditure data for three initiatives: (1) facilities, 

(2) printing, and (3) travel. The ER also collects cost avoidance data for 

five initiatives: (1) facilities, (2) IT inventory management, (3) printing, (4) 

travel, and (5) wireless assets and services.5

 3

DHS initiated the ER in March 2009, and the Obama administration launched the 

Campaign to Cut Waste in June 2011 with Exec. Order No. 13,576, 76 Fed. Reg. 35,297 

(June 16, 2011).

We analyzed all expenditure 

and cost avoidance data available from the third quarter of fiscal year 

2009—when data collection began—through the first quarter of fiscal year 

2013—the most recent data available at the time of our review. To assess 

the reliability of the data, we reviewed the data for obvious errors and 

traced one component’s recorded expenditure and cost avoidance data 

back to documentation showing its original data submission. We also 

interviewed component officials responsible for entering the data, and the 

ER Director to determine how the data are collected and maintained in 

4

Cost avoidances are savings that are reallocated to mission critical activities, and do not 

result in decreases to the budget. For example, as we previously found, the Coast Guard 

and CBP reported using efficiency gains from ER initiatives to support mission-critical 

activities, such as securing the border, while also facilitating the flow of legitimate trade 

and travel. See GAO-11-908.

5

These initiatives represent the initiatives for which the ER was collecting cost avoidance 

data as of the second quarter of fiscal year 2013—the time we began our review. Data 

were collected for an additional initiative prior to this time, but collection ended when the 

initiative was sufficiently institutionalized.
Appendix II: Objectives, Scope, and 

Methodology

Page 39 GAO-14-27 DHS M&A Spending

the ER Quarterly Reporting Site. We determined that the expenditure 

data likely understate DHS’s total spending, since some components and 

offices did not submit their expenditures at all in certain quarters or did 

not report all expenditures, as they excluded certain types of travel. 

Specifically, one component and one office did not report their facilities 

expenditures, one component and two offices did not report their printing 

expenditures, and one office did not report its travel expenditures, and 

three components under-reported their travel expenditures. Despite these 

limitations, the data were sufficiently reliable to illustrate general levels of 

spending by DHS. We determined that the cost avoidance data prior to 

fiscal year 2012 were not reliable, since the formula used during that time 

frame for two of the initiatives—printing and travel—was not an accurate 

method to determine cost avoidances, a conclusion with which 

component officials concurred because figures could be overstated. 

However, we determined that cost avoidance data beginning with the first 

quarter of fiscal year 2012 were sufficiently reliable for reporting DHS’s 

cost avoidances as the ER Office began requiring an explanation of the 

specific actions that led to cost avoidance in order for the cost avoidance 

to be counted.

We analyzed data collected for the Campaign to Cut Waste for fiscal year 

2012 through the second quarter of fiscal year 2013—all of the data 

available at the time of our review. Specifically, we analyzed DHS’s 

spending against its spending targets for all seven categories of the

campaign—(1) travel, (2) printing, (3) supplies, (4) advisory service 

contracts, (5) promotional items, (6) IT devices, and (7) executive sedan 

services. To assess the reliability of the data, we discussed DHS’s 

implementation of and methodology for developing metrics for the 

campaign with a Budget Analyst from the Office of the Chief Financial 

Officer (OCFO) Budget Division. We also interviewed officials from the 

eight DHS components in our review about how they determine and 

report their spending figures for the campaign, and any challenges they 

experience in determining these figures. On the basis of these interviews, 

we identified data limitations in terms of the consistency, completeness, 

and accuracy of the data for three of the categories as a result of 

components defining categories differently, and experiencing difficulty 

identifying accurate figures or not reporting figures as a result of the 

difficulties. After considering the portion of spending these categories 

contributed to total spending tracked by the Campaign to Cut Waste, we 

determined the data were sufficiently reliable to illustrate general levels of 

DHS’s spending against its spending targets on the Campaign to Cut 

Waste categories for six of the seven categories—all but IT devices, for 

which data are not complete, and therefore excluded from our analysis.
Appendix II: Objectives, Scope, and 

Methodology

Page 40 GAO-14-27 DHS M&A Spending

We also analyzed fiscal year 2012 and 2013 data in the Future Years 

Homeland Security Program (FYHSP) System Program Data Module 

(PDM), which was developed by DHS, in part to model the percentage of 

DHS’s resource allocation requests that are for activities identified as 

M&A in future years. We compared components’ categorization of 

activities by type in the PDM with the definitions for the three activity type 

categories (mission/operational, mission support, and business 

support/M&A) as stated in the FYHSP System PDM User Manual, which 

provides guidance to components on entering data into the PDM. We 

discussed the development and implementation of the FYHSP System 

PDM with DHS OCFO Program Analysis & Evaluation (PA&E) officials 

who oversee the PDM. Moreover, we reviewed PA&E’s data quality 

analysis of fiscal year 2014 through 2018 resource requests identified as 

M&A to determine the accuracy of M&A data entered into the PDM 

consistent with instructions in the user manual. On the basis of our review 

of the analysis for any obvious data errors and outliers, we determined 

that the results of PA&E’s analysis are sufficiently reliable for identifying 

any limitations of the PDM data. On the basis of our analysis, PA&E’s 

analysis, and interviews with PA&E officials, we determined the data were 

not sufficiently reliable for reporting the percentage of DHS’s resource 

allocations requests that are categorized as M&A. We compared the 

ability to use the PDM data with criteria in Standards for Internal Control 

in the Federal Government 6 and Statement of Federal Financial 

Accounting Concepts No. 1, Objectives of Federal Financial Reporting.

7

Also, to address the second objective, we interviewed DHS OCFO 

officials in the Resource Management Transformation Division to discuss 

the steps DHS has taken to enhance the collection of M&A data for the 

department as a whole. We analyzed documentation related to DHS’s 

efforts to implement its business intelligence initiative to standardize 

financial data, among other things. Specifically, we analyzed 

We did not assess the reliability of data beyond the categorization by 

activity type (e.g., categorization of activities by investment type), since 

such data were outside of the scope of our review.

 6

GAO/AIMD-00-21.3.1.

7

Statement of Federal Financial Accounting Concepts No. 1, Objectives of Federal 

Financial Reporting. These standards are part of the Federal Accounting Standards 

Advisory Board Handbook of Federal Accounting Standards and Other Pronouncements, 

as Amended, which contains the body of accounting concepts and standards for the U.S. 

government.
Appendix II: Objectives, Scope, and 

Methodology

Page 41 GAO-14-27 DHS M&A Spending

documentation describing DHS’s plans for standardizing its accounting 

structure across the department, including its draft Accounting 

Classification Structure (ACS) Policy and Standards and ACS Guidebook. 

We compared these efforts against criteria for cost accounting in the 

Statement of Federal Financial Accounting Standards No. 4, Managerial 

Cost Accounting Standards and Concepts.

8

We conducted this performance audit from February 2013 to December 

2013 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.

We also reviewed the 

Concept of Operations and program milestones for “CFO Horizon”—a 

means to consolidate components’ financial data. Finally, we interviewed 

OCFO Resource Management Transformation officials about their efforts 

to implement CFO Horizon and develop ACS.

 8

Statement of Federal Financial Accounting Standards No. 4, Managerial Cost Accounting 

Standards and Concepts.
Appendix III: Comments from the Department 

of Homeland Security

Page 42 GAO-14-27 DHS M&A Spending

Appendix III: Comments from the 

Department of Homeland Security
Appendix III: Comments from the Department 

of Homeland Security

Page 43 GAO-14-27 DHS M&A Spending
Appendix IV: GAO Contact and Staff 

Acknowledgments

Page 44 GAO-14-27 DHS M&A Spending

David C. Maurer, (202) 512-9627 or maurerd@gao.gov

In addition to the contact named above, Glenn Davis (Assistant Director), 

Lisa Canini, and Wendy Dye made significant contributions to this work. 

David Dornisch, Eric Hauswirth, Tracey King, Mike LaForge, Lara 

Miklozek, Leah Nash, Jack Warner, and Leonard Zapata also contributed 

to this report.

Appendix IV: GAO Contact and Staff 

Acknowledgments

GAO Contact

Staff 

Acknowledgments
Related GAO Products

Page 45 GAO-14-27 DHS M&A Spending

DHS Financial Management: Additional Efforts Needed to Resolve 

Deficiencies in Internal Controls and Financial Management Systems. 

GAO-13-561. Washington, D.C.: September 30, 2013.

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