Testimony 

Before the Committee on Homeland 

Security, House of Representatives

United States Government Accountability Office

GAO 

For Release on Delivery 

Expected at 10:00 a.m. EDT 

Thursday, May 8, 2008 DEPARTMENT OF 

HOMELAND SECURITY 

Better Planning and 

Oversight Needed to 

Improve Complex Service 

Acquisition Outcomes 

Statement of John P. Hutton, Director 

Acquisition and Sourcing Management 

GAO-08-765T 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

To view the full product, including the scope 

and methodology, click on GAO-08-765T. 

For more information, contact John Hutton at 

(202) 512-4841 or huttonj@gao.gov. 

Highlights of GAO-08-765T, a testimony 

before the Committee on Homeland 

Security, House of Representatives 

May 8, 2008

DEPARTMENT OF HOMELAND SECURITY

Better Planning and Oversight Needed to Improve 

Complex Service Acquisition Outcomes

Over the past several years, GAO has found that appropriate planning, 

structuring, and monitoring of agency service acquisitions, including those 

that are performance-based, can help minimize the risk of cost overruns, 

delayed delivery, and unacceptably quality. Several prior GAO and DHS 

Inspector General reviews of major DHS investments using a performancebased approach point to such shortcomings. While all of the contracts GAO 

reviewed at the Coast Guard, CBP, and TSA had outcome-oriented 

requirements, contracts for four of the eight investments did not have welldefined requirements, or a complete set of measurable performance 

standards, or both at the time of contract award or start of work. These 

service contracts experienced cost overruns, schedule delays, or did not 

otherwise meet performance expectations. In contrast, contracts for the other 

four investments had well-defined requirements linked to measurable 

performance standards and met the standards for contracts that had begun 

work. 

In managing its service acquisitions, including those that are performancebased, DHS has faced oversight challenges that have limited its visibility over 

service acquisitions and its ability to make informed acquisition management 

decisions. Notably, the department lacks reliable data on performance-based 

service acquisitions. About half of the 138 contracts identified by DHS as 

performance-based had none of the elements DHS requires for such contracts: 

a performance work statement, measurable performance standards, or a 

quality assurance surveillance plan. Such inaccurate data limit DHS’s ability to 

perform management assessments of these acquisitions. In addition, the Chief 

Procurement Officer, who is responsible for departmentwide procurement 

oversight, has not conducted management assessments of performance-based 

service acquisitions. 

To help DHS improve outcomes for its service acquisitions, including those 

that are performance-based, GAO recommended that DHS routinely assess 

requirements for complex investments to ensure that they are well-defined, 

and develop consistently measurable performance standards linked to those 

requirements. GAO also recommended that DHS systematically evaluate the 

outcomes of major investments and relevant contracting methods and 

improve the quality of data to facilitate identifying and assessing the use of 

various contracting methods. DHS generally concurred with GAO’s 

recommendations, noting some departmental initiatives to improve 

acquisition management. 

The Department of Homeland 

Security (DHS) has relied on 

service acquisitions to meet its 

expansive mission. In fiscal year 

2006, DHS spent $12.7 billion to 

procure services. To improve 

service acquisition outcomes, 

federal procurement policy 

establishes a preference for a 

performance-based approach, 

which focuses on developing 

measurable outcomes rather than 

prescribing how contractors should 

perform services. 

This testimony focuses on how 

contract outcomes are influenced 

by how well DHS components have 

defined and developed contract 

requirements and performance 

standards, as well as the need for 

improved assessment and oversight 

to ensure better acquisition 

outcomes. 

GAO’s statement is based on its 

report being released today, which 

reviewed judgmentally selected 

contracts for eight major 

investments at three DHS 

components—the Coast Guard, 

Customs and Border Protection 

(CBP), and the Transportation 

Security Administration (TSA)—

totaling $1.53 billion in fiscal years 

2005 and 2006; prior GAO and DHS 

Inspector General reviews; 

management documents and plans; 

and related data, including 138 

additional contracts, primarily for 

basic services from the Coast 

Guard, CBP, TSA, and Immigration 

and Customs Enforcement. 
Page 1 GAO-08-765T 

Mr. Chairman and Members of the Committee: 

Thank you for inviting me here today to discuss the Department of 

Homeland Security’s (DHS) planning and assessment of its complex 

service acquisitions. To meet its expansive homeland security mission, 

DHS spends billions of dollars on service acquisitions for critical trade, 

transportation, and border security investments. In fact, more than 80 

percent of DHS’s total procurement dollars are spent on services. Prior 

GAO work has found that appropriate planning, structuring, and 

monitoring of acquisitions is critical to ensuring that the services provided 

meet the government’s needs.1

 To help improve service acquisition 

outcomes, federal procurement policy calls for agencies to use a 

performance-based approach to the maximum extent practicable. This 

approach includes a performance work statement that describes outcomeoriented requirements, measurable performance standards, and quality 

assurance surveillance. If properly implemented, these characteristics can 

help ensure that contracted services meet cost, schedule, and performance 

requirements. Other factors, such as pressure to get programs up and 

running, additional external requirements, and technological challenges 

also impact the ability to achieve good acquisition outcomes. 

While a performance-based approach has been widely accepted, we have 

found that agencies face certain challenges in implementing the 

approach—especially for complex or major investments. My testimony 

today will focus on the particular challenges DHS has confronted. 

Specifically, I will discuss how contract outcomes are influenced by how 

well DHS components have defined and developed contract requirements 

and performance standards. I will also discuss the need for improved 

assessment and oversight to ensure better outcomes. 

My statement is based on our report that is being released today.2

 This 

report focused on contracts for major investments with complex service 

acquisitions at the Coast Guard, Customs and Border Protection (CBP), 

and the Transportation Security Administration (TSA)—three of the DHS 

components reporting among the highest obligations for performance-

 1

For example, GAO, Defense Acquisitions: Tailored Approach Needed to Improve Service 

Acquisition Outcomes, GAO-07-20 (Washington, D.C.: Nov. 9, 2006). 

2

GAO, Department of Homeland Security: Better Planning and Assessment Needed to 

Improve Outcomes for Complex Service Acquisitions, GAO-08-263 (Washington, D.C.: 

Apr. 22, 2008). 
Page 2 GAO-08-765T 

based service acquisitions in fiscal years 2005 and 2006. We conducted this 

performance audit 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. 

Over the past several years, we have found that if agency service 

acquisitions, including those that are performance-based, are not 

appropriately planned, structured, and monitored, there is an increased 

risk that the government may receive products or services that are over 

budget, delivered late, and of unacceptable quality. Several prior GAO and 

DHS Inspector General reviews of major DHS investments using a 

performance-based approach point to such shortcomings. For the report 

we are releasing today, we reviewed contracts for eight major investments 

at the Coast Guard, CBP, and TSA and found that all had outcome-oriented 

requirements—as required in acquisition regulations and policy. However, 

contracts for four of these investments did not have well-defined 

requirements, or a complete set of measurable performance standards, or 

both at the time of contract award or start of work. These service 

contracts experienced cost overruns, schedule delays, or did not 

otherwise meet performance expectations. In contrast, service contracts 

for the other four investments had well-defined requirements linked to 

measurable performance standards and performed within budget meeting 

the standards in all cases where contractors had begun work. DHS 

components conducted quality assurance surveillance, and for the 

contracts that had negative outcomes, surveillance helped to identify 

contractor performance weaknesses and corrective action was taken. 

In managing its service acquisitions, including those that are performancebased, DHS has faced oversight challenges, including a lack of reliable 

data and systematic management reviews. Although contracting and 

program staff at DHS components told us that they used a performancebased approach to the maximum extent practicable, the department does 

not have reliable data to facilitate required reporting or perform 

management assessments of these acquisitions. Our review of an 

additional 138 contracts, which were primarily for basic services, found 

that about half of the contracts coded by DHS as performance-based had 

none of the three elements DHS requires: a performance work statement, 

measurable performance standards, or a quality assurance surveillance 

plan. Inaccurate data limit DHS’s visibility over service acquisitions and 

Summary 
Page 3 GAO-08-765T 

the department’s ability to make informed acquisition management 

decisions. The Chief Procurement Officer (CPO), who has responsibility 

for departmentwide procurement oversight, has begun some initial review 

of performance-based service acquisitions, but has not conducted 

management assessments of this acquisition method. 

Over the last decade, the use of federal service contracting has increased 

and now accounts for over 60 percent of federal procurement dollars 

spent annually. A performance-based approach to federal service 

contracting was introduced during the 1990s, representing a shift from 

specifying the way in which contractors should perform work to 

specifying acquisition outcomes. Regardless of the contracting method, 

focusing on outcomes and collaboration among multiple stakeholders in 

the contracting process has been acknowledged as sound contract 

management. In 2000, federal procurement law established a performancebased approach as the preferred acquisition method for services.3

 The 

Federal Acquisition Regulation requires all performance-based service 

acquisitions to include 

• a performance work statement that describes outcome-oriented 

requirements in terms of results required rather than the methods of 

performance of the work; 

• measurable performance standards describing how to measure contractor 

performance in terms of quality, timeliness, and quantity; and 

• the method of assessing contract performance against performance 

standards, commonly accomplished through the use of a quality assurance 

surveillance plan.4

A 1998 Office of Federal Procurement Policy (OFPP) study on 

performance-based contracts—based largely on contracts for basic 

services, such as janitorial or maintenance services—showed that a 

 3

Floyd D. Spence National Defense Authorization Act for Fiscal Year 2001, Pub. L. No. 106-

398 § 821(a) (2000) required that the Federal Acquisition Regulation (FAR) be revised to 

establish a preference for the use of a performance-based approach in the acquisition of 

services, which was done in FAR 37.102(a), providing that performance-based acquisition 

is the preferred method for acquiring services and generally is to be used to the maximum 

extent practicable. In addition, this act established a preference for using firm fixed-price 

contracts or task orders—where a specified price is paid regardless of the contractor’s 

incurred costs—when using a performance-based approach for service acquisitions. 

4

FAR 37.601; FAR 37.602(b); FAR 37.604. A fourth element, performance incentives, is 

required where appropriate. 

Background 
Page 4 GAO-08-765T 

number of anticipated benefits had been achieved, including reduced 

acquisition costs, increased competition for contracts, and improved 

contractor performance.5

 However, implementing a performance-based 

approach is often more difficult for complex acquisitions, such as 

information technology, than it is for basic services, because agencies 

begin with requirements that are less stable, making it difficult to establish 

measurable outcomes. Such complex acquisitions may need to have 

requirements and performance standards continually refined throughout 

the life-cycle of the acquisition for a contractor to deliver a valuable 

service over an extended period of time. OFPP also has noted in policy 

that certain types of services, such as research and development, may not 

lend themselves to outcome-oriented requirements. 

To encourage agencies to apply a performance-based approach to service 

acquisitions, the Office of Management and Budget (OMB) established 

governmentwide performance targets, which increased to 50 percent of 

eligible service contract dollars for the current fiscal year. In January 2007, 

the congressionally mandated Acquisition Advisory Panel reported that 

performance-based acquisition has not been fully implemented in the 

federal government, despite OMB encouragement, and recommended that 

OMB adjust the governmentwide target to reflect individual agency 

assessments and plans.6

 In May 2007, OMB’s OFPP issued a memo 

providing that agencies, at a minimum, were expected to meet targets 

established and report on them in their management plans. In response, 

DHS’s CPO established a performance-based target of 25 percent for fiscal 

year 2007, increasing to 40 percent by fiscal year 2010, that was included in 

DHS’s Performance-Based Management Plan. The Acquisition Advisory 

Panel also recommended that OFPP issue more explicit implementation 

guidance and create an “Opportunity Assessment” tool to help agencies 

identify when they should consider using this acquisition method. 

 5

Office of Management and Budget, Office of Federal Procurement Policy, A Report on the 

Performance-Based Service Contracting Pilot Project, May 1998. 

6

Report of the Acquisition Advisory Panel to the Office of Federal Procurement Policy and 

the United States Congress, January 2007. 
Page 5 GAO-08-765T 

Our work has found that performance-based acquisitions must be 

appropriately planned and structured to minimize the risk of the 

government receiving services that are over cost estimates, delivered late, 

and of unacceptable quality.7

 Specifically, we have emphasized the 

importance of clearly defined requirements to achieving desired results 

and measurable performance standards to ensuring control and 

accountability. Prior GAO and DHS Inspector General reviews of complex 

DHS investments using a performance-based approach point to a number 

of shortcomings. For example, in June 2007, we reported that a 

performance-based contract for a DHS financial management system, 

eMerge2, lacked clear and complete requirements, which led to schedule 

delays and unacceptable contractor performance.8

 Ultimately, the program 

was terminated after a $52 million investment. In March 2007, we similarly 

reported that the Coast Guard’s performance-based contract for replacing 

or modernizing its fleet of vessels and aircraft, Deepwater, had 

requirements that were set at unrealistic levels and were frequently 

changed.9

 This resulted in cost escalation, schedule delays, and reduced 

contractor accountability. The DHS Inspector General has also indicated 

numerous opportunities for DHS to make better use of sound practices, 

such as well-defined requirements.10

Consistent with our prior work, definition of requirements and 

performance standards influenced outcomes for the eight complex 

investments we reviewed. In using a performance-based approach, sound 

contracting practices dictate that required contract outcomes or 

requirements be well-defined, providing clear descriptions of results to be 

achieved. While all eight contracts for these investments had outcomeoriented requirements, the requirements were not always well-defined.11

 7

GAO-07-20. 

8

GAO, Homeland Security: Departmentwide Integrated Financial Management Systems 

Remain a Challenge, GAO-07-536 (Washington, D.C.: June 21, 2007). 

9

GAO, Coast Guard: Status of Efforts to Improve Deepwater Program Management and 

Address Operational Challenges, GAO-07-575T (Washington D.C.: Mar. 8, 2007). 

10See for example, Department of Homeland Security Inspector General, Major 

Management Challenges Facing the Department of Homeland Security, OIG-08-11 (Jan. 

2008), and Department of Homeland Security Inspector General, Transportation Security 

Administration’s Information Technology Managed Services Contract, OIG-06-23 (Feb. 

2006). 

11FAR 2.101 specifically provides that a performance work statement for performancebased acquisitions describe the required results in clear, specific, and objective terms with 

measurable outcomes. 

Requirements and 

Standards Definition 

Influence Program 

Outcomes 
Page 6 GAO-08-765T 

Further, contracts for half of the investments did not have a complete set 

of measurable performance standards. Appendix I provides a summary of 

our analysis of the requirements, performance standards, and outcomes 

for the eight performance-based contracts for major investments we 

reviewed. 

Complex investments with contracts that did not have well-defined 

requirements or complete measurable performance standards at the time 

of contract award or start of work experienced either cost overruns, 

schedule delays, or did not otherwise meet performance expectations. For 

example, contracts for systems development for two CBP major 

investments lacked both well-defined requirements and measurable 

performance standards prior to the start of work and both experienced 

poor outcomes. The first, for DHS’s Automated Commercial Environment 

(ACE) Task Order 23 project—a trade software modernization effort—was 

originally estimated to cost $52.7 million over a period of approximately 17 

months.12 However, the program lacked stable requirements at contract 

award and, therefore, could not establish measurable performance 

standards and valid cost or schedule baselines for assessing contractor 

performance. Software requirements were added after contract award, 

contributing to a project cost increase of approximately $21.1 million, or 

40 percent, over the original estimate. Because some portions of the work 

were delayed to better define requirements, the project is not expected to 

be completed until June 2009—about 26 months later than planned. 

The second, Project 28 for systems development for CBP’s Secure Border 

Initiative (SBInet)—a project to help secure a section of the United StatesMexico border using a surveillance system—did not meet expected 

outcomes due to a lack of both well-defined requirements and measurable 

performance standards. CBP awarded the Project 28 contract planned as 

SBInet’s proof of concept and the first increment of the fielded SBInet

system before the overall SBInet operational requirements and system 

specifications were finalized. More than 3 months after Project 28 was 

awarded, DHS’s Inspector General reported that CBP had not properly 

 12Begun in 2001, ACE is intended to replace and supplement existing cargo processing 

technology and will be developed and deployed in a series of increments. The goals of ACE 

include (1) supporting border security by enhancing analysis and information sharing with 

other government agencies and providing CBP with the means to decide before a shipment 

reaches the border if it should be targeted or expedited and (2) streamlining timeconsuming and labor-intensive tasks for CBP personnel and the trade community through a 

national trade account and single Web-based interface. Task Order 23 was the sole focus of 

our review. 
Page 7 GAO-08-765T 

defined SBInet’s operational requirements and needed to do so quickly to 

avoid rework of the contractor’s systems engineering. We found that 

several performance standards were not clearly defined to isolate the 

contractor’s performance from that of CBP employees, making it difficult 

to determine whether any problems were due to the contractor’s system 

design, CBP employees, or both. As a result, it was not clear how CBP 

intended to measure compliance with the Project 28 standard for 

probability of detecting persons attempting to illegally cross the border. 

Although it did not fully meet user needs and its design will not be used as 

a basis for future SBInet development, DHS fully accepted the project after 

an 8-month delay.13 In addition, DHS officials have stated that much of the 

Project 28 system will be replaced by new equipment and software. 

Conversely, we found that contracts with well-defined requirements linked 

to measurable performance standards delivered results within budget and 

provided quality service. For example, contracted security services at the 

San Francisco International Airport for TSA’s Screening Partnership 

Program had well-defined requirements, and all measurable performance 

standards corresponded to contract requirements—an improvement from 

our prior reviews of the program.14 The requirements for gate, checkpoint, 

and baggage screening services clearly stated that the contractor should 

use technology and staff to prevent prohibited items from entering sterile 

areas of the airport and should work to minimize customer complaints 

while addressing in a timely manner any complaints received. The 

performance standards assessed how often screeners could successfully 

detect test images of prohibited items in checked baggage; the percentage 

of audited records and inspected equipment, property, and materials that 

were well-kept, operational, and recorded on maintenance logs; and 

whether all new hires received the required training before assuming their 

screening responsibilities. In terms of expected outcomes, the contractor 

achieved a 2.2 percent cost underrun during the first 5 months of the 

contract and exceeded most requirements. 

 13GAO, Secure Border Initiative: Observations on the Importance of Applying Lessons 

Learned to Future Projects, GAO-08-508T (Washington, D.C.: Feb. 27, 2008). 

14GAO, Aviation Security: Preliminary Observations on TSA’s Progress to Allow Airports 

to Use Private Passenger and Baggage Screening Services, GAO-05-126 (Washington, D.C.: 

Nov. 19, 2004), and Aviation Security: Progress Made to Set Up Program Using PrivateSector Airport Screeners, but More Work Remains, GAO-06-166 (Washington, D.C.: Mar. 

31, 2006). 
Page 8 GAO-08-765T 

In managing its service acquisitions, including those that are performancebased, DHS has faced oversight challenges, including a lack of reliable 

data and systematic management reviews. DHS contracting and program 

representatives told us that they use a performance-based approach to the 

maximum extent practicable. However, DHS does not have reliable data—

either from the Federal Procurement Data System-Next Generation 

(FPDS-NG), the governmentwide database for procurement spending, or 

at a departmentwide level—to systematically monitor or evaluate or report 

on service acquisitions, including those that are performance-based. 

Reliable data are essential to overseeing and assessing the implementation 

of contracting approaches, acquisition outcomes, and making informed 

management decisions. Moreover, the Chief Procurement Officer (CPO), 

who has responsibility for departmentwide procurement oversight, has 

begun some initial review of performance-based service acquisitions, but 

has not conducted systematic management assessments of this acquisition 

method. 

Our analysis of information provided by contracting representatives at the 

Coast Guard, CBP, Immigration and Customs Enforcement (ICE), and TSA 

showed that about 51 percent of the 138 contracts we identified in FPDSNG as performance-based had none of the required performance-based 

elements: a performance work statement, measurable performance 

standards, and a method of assessing contractor performance against 

performance standards. Only 42 of the 138 contracts, or 30 percent, had all 

of the elements, and about 18 percent had some but not all of the required 

performance-based acquisition elements (see table 1). 

Table 1: Review of Performance-Based Elements on Selected Contracts 

Performance-based 

elements Coast Guard 

Customs 

and Border 

Protection

Immigration 

and Customs 

Enforcement

Transportation 

Security 

Administration 

Total 

contracts

Percentage 

of total 

contracts

All elements 18 3 0 21 42 30.4

Some elements 16 0 5 4 25 18.1

No elements 20 5 34 12 71 51.5

Total 54 8 39 37 138 100.0

Source: GAO analysis of DHS review of 138 contracts coded as performance-based in FPDS-NG. 

Lacking reliable FPDS-NG data, reports on the use of performance-based 

contracts for eligible service obligations are likely inaccurate. Data 

reported on the use of performance-based contracts by service types—

ranging from basic, such as janitorial and landscaping, to complex, such as 

Unreliable Data and 

Lack of Management 

Review Constrain 

Oversight 
Page 9 GAO-08-765T 

information technology or systems development—requested by OFPP in 

July 2006—are also likely misleading. The Acquisition Advisory Panel and 

DHS’s CPO also have raised concerns regarding the accuracy of the 

performance-based designation in FPDS-NG. The Acquisition Advisory 

Panel’s 2007 report noted from its review at 10 federal agencies that 42 

percent of the performance-based contracts the panel reviewed had been 

incorrectly coded. 

Inaccurate federal procurement data is a long-standing governmentwide 

concern. Our prior work and the work of the General Services 

Administration’s Inspector General have noted issues with the accuracy 

and completeness of FPDS and FPDS-NG data.15 OMB has stressed the 

importance of submitting timely and accurate procurement data to FPDSNG and issued memos on this topic in August 2004 and March 2007. 

Accurate FPDS-NG data could facilitate the CPO’s departmentwide 

oversight of service acquisitions, including those that are performancebased. 

At a departmentwide level, CPO representatives responsible for 

procurement oversight indicated that they have not conducted systematic 

assessments including costs, benefits, and other outcomes of a 

performance-based approach. To improve the implementation of 

performance-based acquisitions, CPO representatives established a work 

group in May 2006 to leverage knowledge among DHS components. They 

also noted that they are working with OFPP to develop a best practices 

guide on measurable performance standards and to gather good examples 

of performance-based contracts. In addition, the CPO has implemented a 

departmentwide acquisition oversight program, which was designed with 

the flexibility to address specific procurement issues, such as 

performance-based service acquisitions, and is based on a series of 

component-level reviews.16 Some initial review of performance-based 

acquisitions has begun under this program, but management assessment 

or evaluation of the outcomes of this acquisition method has not been 

conducted. 

 15For example, GAO, Reliability of Federal Procurement Data, GAO-04-295R (Washington, 

D.C.: Dec. 30, 2003); GAO, Improvements Needed to the Federal Procurement Data 

System-Next Generation, GAO-05-960R (Washington, D.C.: Sept. 27, 2005); and General 

Services Administration Inspector General, Review of the Federal Procurement Data 

System-Next Generation (FPDS-NG), Report Number A040127/O/T/F06016 (March 2006). 

16GAO, Department of Homeland Security: Progress and Challenges in Implementing the 

Department’s Acquisition Oversight Plan, GAO-07-900 (Washington, D.C.: June 2007). 
Page 10 GAO-08-765T 

Consistent with federal procurement policy, DHS has emphasized a 

performance-based approach to improve service acquisition outcomes. 

However, in keeping with our prior findings, DHS’s designation of a 

service acquisition as performance-based was not as relevant as the 

underlying contract conditions. Sound acquisition practices, such as 

clearly defining requirements and establishing complementary measurable 

performance standards, are hallmarks of successful service acquisitions. 

In the cases we reviewed as well as in prior findings where these key 

elements were lacking, DHS did not always achieve successful acquisition 

outcomes. The report we are releasing today recommends that the 

Secretary of Homeland Security take several actions to increase DHS’s 

ability to achieve improved outcomes for its service acquisitions, including 

those that are performance-based. These actions include routinely 

assessing requirements for complex investments to ensure that they are 

well-defined and developing consistently measurable standards linked to 

those requirements; systematically evaluating outcomes of major 

investments and relevant contracting methods; and improving the quality 

of FPDS-NG data to facilitate identifying and assessing the use of various 

contracting methods. DHS generally concurred with our 

recommendations, noting some departmental initiatives under way to 

improve acquisition management. However, the department’s response did 

not address how the CPO’s process and organizational changes at the 

departmental level will impact component-level management and 

assessment of complex acquisitions to improve outcomes. Improving 

acquisition management has been an ongoing challenge since the 

department was established and requires sustained management attention. 

Mr. Chairman, this concludes my prepared statement. I would be pleased 

to respond to any questions that you or other members of the committee 

may have at this time. 

For further information about this statement, please contact John P. 

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

Offices of Congressional Relations and Public Affairs may be found on the 

last page of this statement. Staff making key contributions to this 

statement were Amelia Shachoy, Assistant Director; Jeffrey Hartnett; Sean 

Seales; Karen Sloan; and Don Springman. 

Conclusion and 

Recommendations 

Contacts and 

Acknowledgments 
Appendix I: Key Characteristics of Eight 

Performance-Based Service Contracts 

Page 11 GAO-08-765T 

 

Major investment by 

component Service 

Well-defined 

requirementsa

Measurable 

performance 

standardsb

Outcomes 

Coast Guard 

Response Boat 

Medium 

Research, analysis, 

and financial and 

information 

management 

z z Contractor submitted all required documentation on 

time; met project management quality standards; 

and maintained electronic archiving and restoration 

standards. 

Customs and Border Protection 

Automated 

Commercial 

Environment 

Trade systems 

software 

development (task 

order 23) 

{  Costs increased by 40 percent ($21.1 million). 

More than a year behind schedule; unplanned 

software redesign. 

National Prime 

Integration 

Maintenance of 

equipment used at 

border crossings, 

airports, and seaports 

z  Costs increased by 53 percent ($24 million). 

Maintenance wait times were longer than planned. 

SBInet Project 28 border 

surveillance systems 

development and 

fielding 

{  DHS rejected initial acceptance of Project 28. The 

project was delayed 8 months with final acceptance 

in February 2008. DHS noted that the contractor 

met the requirements, but the project did not fully 

meet DHS’s needs and the technology will not be 

replicated in future SBInet development. 

Transportation Security Administration 

Electronic Baggage 

Screening Program 

Maintenance for 

explosive trace 

detection machines 

z z Contractor exceeded the performance standard for 

machine downtime with a score 1 hour less than 

required and operated at cost through the second 

quarter of fiscal year 2007. 

Screening Partnership 

Program 

Passenger screening 

services at one 

airport 

z z Contractor exceeded most performance standards; 

for example, threat detection performance and 

false alarm rates exceeded the quality standards. 

Contractor had cost underrun of 2.2 percent 

($677,000). 

Secure Flight Maintaining database 

used to screen airline 

passenger data 

z  Initial contractor planning reports were inadequate; 

system experienced operational downtime; 

surveillance reports identified poor contractor 

performance. Contractor generally met time frames 

and delivered within budget. 

Transportation Worker 

Identification 

Credential 

Issuing identification 

credentials to 

maritime workers 

z z Outcomes not available at the time of our review. 

Legend: z contract met or mostly met the criteria;  contract partially met the criteria; { contract did 

not meet the criteria. 

Source: GAO analysis. 

Appendix I: Key Characteristics of Eight 

Performance-Based Service Contracts 
Appendix I: Key Characteristics of Eight 

Performance-Based Service Contracts 

Page 12 GAO-08-765T 

a

Well-defined requirements should provide clear descriptions of results to be achieved at the time of 

the award or start of work and primary requirements should not change substantially following 

contract award. 

b

The set of measurable performance standards for a contract enables the government to assess all 

aspects of the contractor’s work in terms of quality, timeliness, and quantity. The contract’s 

performance standards are also linked to the requirements. 

(120756) 
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Web site: www.gao.gov/fraudnet/fraudnet.htm 

E-mail: fraudnet@gao.gov

Automated answering system: (800) 424-5454 or (202) 512-7470 

Ralph Dawn, Managing Director, dawnr@gao.gov, (202) 512-4400 

U.S. Government Accountability Office, 441 G Street NW, Room 7125 

Washington, DC 20548 

Chuck Young, Managing Director, youngc1@gao.gov, (202) 512-4800 

U.S. Government Accountability Office, 441 G Street NW, Room 7149 

Washington, DC 20548 

GAO’s Mission 

Obtaining Copies of 

GAO Reports and 

Testimony 

Order by Mail or Phone 

To Report Fraud, 

Waste, and Abuse in 

Federal Programs 

Congressional 

Relations 

Public Affairs 

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