Department of Homeland Security: A Comprehensive and Sustained Approach Needed to Achieve Management Integration
Published: 2005-03-16T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The creation of the Department of Homeland Security (DHS) represents one of the largest reorganizations of government agencies and operations in recent history. Significant management challenges exist for DHS as it merges the multiple management systems and processes from its 22 originating agencies in functional areas such as human capital and information technology. GAO was asked to identify opportunities for DHS to improve its management integration.
section_title: What GAO Found
paragraphs: GAO found that while DHS has made some progress in its management integration efforts, it has the opportunity to better leverage this progress by implementing a comprehensive and sustained approach to its overall integration efforts. GAO assessed DHS's integration efforts to date against three of nine key practices consistently found to be at the center of successful mergers and transformations: setting implementation goals and a time line to build momentum and show progress, dedicating an implementation team to manage the transformation, and ensuring top leadership drives it. While there are other practices critical to successful mergers and transformations--including using the performance management system to define responsibility and assure accountability for change--GAO selected these three key practices because they are significant to building the infrastructure needed for DHS at this early juncture in its management integration efforts. Establishing implementation goals and a time line is critical to ensuring success and could be contained in an overall integration plan for a merger or transformation. DHS has issued guidance and plans to assist its integration efforts, on a function-by-function basis (information technology and human capital, for example); but it does not have a comprehensive strategy, with overall goals and a time line, to guide the management integration departmentwide. GAO's research shows that it is important to dedicate a strong and stable implementation team for the day-to-day management of the transformation. DHS has established a Business Transformation Office (BTO), reporting to the Under Secretary for Management, to help monitor and look for interdependencies among the individual functional integration efforts. However, the role of the BTO could be strengthened so that it has the requisite responsibility and authority to help the Under Secretary set priorities and make strategic decisions for the integration, as well as implement the integration strategy. The current responsibilities of the Under Secretary contain some of the characteristics of a COO/CMO. GAO has reported that such a position could help elevate, integrate, and institutionalize DHS's management initiatives. Recent DHS actions, such as management directives clarifying roles for the integration, can provide the Under Secretary additional support. However, it is still too early to tell whether the Under Secretary will have sufficient authority to direct, and make trade-off decisions for the integration, and institutionalize it departmentwide. The Congress should continue to monitor whether it needs to provide additional leadership authorities to the Under Secretary, or create a new position that more fully captures the roles and responsibilities of a COO/CMO.

section_title: Letter
paragraphs: The creation of the Department of Homeland Security (DHS) represents  one of the largest reorganizations and consolidations of government  agencies, personnel, programs, and operations in recent history. As DHS’s  Under Secretary for Management has stated, the implementation of the  department is at once a full-scale government divestiture, merger,  acquisition, and start-up. DHS faces significant management and  organizational transformation challenges as it works to protect the nation  from terrorism and simultaneously establish itself. It must integrate  approximately 180,000 employees from 22 originating agencies,  consolidate multiple management systems and processes, and transform  into a more effective organization with robust planning, management, and  operations. For these reasons, in January 2005, we continued to designate  the implementation and transformation of the department as high risk.  DHS’s Inspector General also reported, in December 2004, that integrating  DHS’s many separate components into a single, effective, efficient and  economical department remains one of its biggest challenges.  Furthermore, DHS must continue to meet these daunting challenges while  transitioning to new leadership.
DHS has an overall vision to become a fully integrated and unified  department, adhering to the former Secretary’s high-level vision of “One  DHS, One Fight.” While the protection of the homeland is the primary  mission of the department, critical to meeting this challenge is the  integration of DHS’s varied management processes, systems, and people— in areas such as information technology, financial management,  procurement, and human capital—as well as in its administrative services.  The integration of these various functions is being executed through DHS’s  management integration initiative. The success of this initiative is  important since it provides critical support for the total integration of the  department, including its operations and programs, to ultimately meet its  mission of protecting the homeland. This report focuses on the progress  DHS has made on this functional or management integration.
Specifically, we sought to identify opportunities for DHS to improve these  management integration efforts. To address our objective, we assessed  DHS’s efforts to date against selected key practices we have reported are  consistently found to be at the center of successful mergers and  organizational transformations. These practices were identified to assist  DHS in its consolidation before the department was created and were  based on useful practices and lessons learned from major private and  public sector organizational mergers, acquisitions, and transformations.  We selected three of these nine practices as criteria for this review because  they are significant to building the infrastructure needed to manage any  merger or transformation and are particularly important to DHS at this  early juncture in its management integration efforts:  Setting implementation goals and a time line to build momentum and  show progress from day one. A merger or transformation is a  substantial commitment that could take years before it is completed,  and therefore must be carefully and closely managed. As a result, it is  essential to establish and track implementation goals and use a time line  to pinpoint performance shortfalls and gaps and suggest midcourse  corrections.
Dedicating an implementation team to manage the transformation  process. Dedicating a strong and stable implementation team with the  responsibility for the transformation’s day-to-day management is  important to ensuring that it receives the focused attention needed to be  successful.
Ensuring top leadership drives the transformation. Sustained and  consistent leadership can help provide the long-term attention required  to effectively address significant management challenges and  transformational needs.
We focused our review primarily on the management integration activities  of DHS’s Management Directorate because the Homeland Security Act of  2002 establishes that the Under Secretary for Management is responsible  for the transition and reorganization process for the department. We did  not include an assessment of the mission or program integration efforts of  DHS in this review primarily because GAO has additional work under way  on these efforts. To address our objective, we reviewed key transition,  management integration, and planning and policy documents, and met with  the chiefs of staff or directors of operations for the five directorates in  DHS, as well as the U.S. Secret Service, the U.S. Coast Guard, the Bureau of  Citizenship and Immigration Services, and other DHS offices. Within the  Management Directorate, we reviewed documents from and met with the  Under Secretary for Management, the Chief Financial Officer, the Chief  Procurement Officer, the Chief Human Capital Officer, the Chief  Information Officer, and the Chief Administrative Officer. We also  examined reports from GAO, DHS’s Inspector General, and others that  addressed the integration of departmentwide management functions, such  as the development of an integrated departmental financial management  system, information technology, and others. A more detailed discussion of  our scope and methodology is in appendix I.
We conducted our work from April 2004 through February 2005 in  accordance with generally accepted government auditing standards.
subsections: section_title: Background
paragraphs: The creation of DHS is an historic opportunity for the federal government  to fundamentally transform how the nation will protect itself from  terrorism and other threats. Not since the creation of the Department of  Defense in 1947 has the federal government undertaken an organizational  merger of this magnitude. Enacted on November 25, 2002, the Homeland  Security Act established DHS by merging 22 disparate agencies and  organizations with multiple missions, values, and cultures. On  March 1, 2003, DHS officially began operations as a new department.  DHS is now the third largest federal government agency with an  anticipated budget of $40.7 billion for fiscal year 2005 and an estimated  180,000 employees.
In accordance with section 1502 of the Homeland Security Act, the  President provided a DHS reorganization plan to appropriate congressional  committees specifying the agencies that would integrate into DHS, along  with an overall organizational structure, but the plan did not specify how  the integration of these agencies and employees would occur. Section 701  of the Homeland Security Act gave the Under Secretary for Management at  DHS the responsibility for the management and administration of the  department, including the transition and reorganization process, among  other things. As seen in figure 1, the Chief Financial Officer (CFO), the  Chief Information Officer (CIO), the Chief Human Capital Officer (CHCO),  the Chief Procurement Officer (CPO), and the Chief Administrative Officer  (CAO) are all housed within the Management Directorate. Figure 1 shows  the organizational structure of the department, as of December 2004.
section_title: Selected Key Mergers and Transformation Practices Can Help Guide DHS in Taking a Comprehensive and Sustained Approach to its Management Integration Efforts
paragraphs: DHS would have the comprehensive and sustained approach to its  management integration efforts that it needs over the long term to  successfully transform the agency, if it more closely adhered to three  selected key practices that we have found consistently at the center of  successful mergers, acquisitions, and transformations. Otherwise, the  department runs the risk of not establishing and maintaining the  management infrastructure needed to steer the integration of the  department and ultimately to help meet its critical mission of protecting  the homeland.
We identified these key practices through a forum the Comptroller General  convened in September 2002, as DHS was being created, to help DHS  merge its various originating components into a unified department.  The forum was designed to identify and discuss useful practices and  lessons learned from major private and public sector organizational  mergers, acquisitions, and transformations. In July 2003, we further  identified implementation steps for the nine key practices raised at the  forum. These key practices and implementation steps are shown in  figure 2.
To assess DHS’s progress to date in integrating its management functions,  we determined that three of the nine practices were especially important to  ensure the agency has the management infrastructure it needs this early in  the process to manage and sustain its integration: (1) an overarching  integration strategy, with implementation goals and a time line that links its  various individual management integration initiatives; (2) a dedicated  implementation team with the responsibility and authority to drive the  department’s management integration; and (3) committed and sustained  leadership. DHS has opportunities to more fully implement each of these  practices and increase its ability to successfully integrate.
subsections: section_title: DHS Has Issued Some Guidance and Plans to Help Its Management Integration Efforts, But Needs an Overarching Strategy to Integrate Across Management Functions and to Identify Critical Interdependencies, Interim Milestones, and Possible Efficiencies
paragraphs: We have reported that a merger or transformation is a substantial  commitment that could take years before it is completed, and therefore  must be carefully and closely managed and monitored to achieve success.  Establishing implementation goals and a time line is critical to ensuring  success, as well as pinpointing performance shortfalls and gaps and  suggesting midcourse corrections. Such goals and time lines could be  contained in an overall integration plan for a merger or transformation  effort. It is important to note that such a plan typically goes beyond what  is contained in an agency strategic plan, and provides more specific  operational and tactical information to manage a sustained effort. For  example, as required by the Government Performance and Results Act of  1993, a strategic plan generally contains the high-level goals and mission  for an agency based on its statutory requirements, while an integration  strategy would provide the activities and time lines needed, along with  assigned responsibilities, for accomplishing the goals of an organizational  merger or transformation. Finally, another element essential to executing  a merger or transformation is to make the implementation goals and  time lines public, so that employees, customers, and stakeholders are  aware of what is to be accomplished and when.
Our prior work shows that DHS needed to carefully plan and manage its  integration, and a study commissioned by DHS underscored that the  department should use an overall integration strategy to help accomplish  this. For example, prior to the establishment of the department, we  identified a number of management challenges that DHS might face as it  moved forward in its integration, such as the establishment of a  comprehensive planning and management focus and the need for a results- oriented approach to ensure accountability and sustainability. In  December 2002, we recommended that careful and thorough transition  planning would be critical to the successful creation of DHS and that the  importance of the transition efforts to implement the new homeland security could not be overemphasized. Specifically, we recommended to  OMB that in developing an effective transition plan for DHS, it should  ensure that the plan incorporates the key practices we identified as being  found at the center of successful mergers and transformations. In  July 2004, we reported on the merger of the Federal Protective Service  (FPS) into DHS and recommended that FPS develop an overall  transformation strategy for how it will carry out its expanding mission, as  well as meet other challenges it faces. DHS agreed with our  recommendation. Moreover, in early 2003, DHS recognized the challenges  it faced and commissioned a comprehensive management study to help the  department create an operating structure that integrates the department’s  components and to facilitate a DHS-wide integration plan linked to core  missions and capabilities, among other things. This management study  also recommended that DHS develop a comprehensive integration plan  with major milestones defined, encompassing all of the department’s  integration initiatives including functional management and mission  integration activities.
Early on, the department made some progress in consolidating the  processes and systems of each individual function in areas such as  information technology, financial management, procurement, and human  capital. For example, according to DHS’s performance and accountability  report for fiscal year 2004 and updated information provided by DHS  officials, the department has accomplished the following activities as part  of its integration efforts:  reduced the number of financial management service centers from   consolidated acquisition support for 22 legacy agencies within 8 major  procurement programs,  reduced the number of its payroll systems from 8 to 2, and expects to be  using one single payroll system by the beginning of fiscal year 2006,  consolidated 22 different human resource offices to 7,  consolidated 271 processes associated with administrative services   consolidated bank card programs from 27 to 3, and  realigned more than 6,000 support services employees (both  government and contractor) from the legacy U.S. Customs Service and  the legacy Immigration and Naturalization Service (INS) to support the  68,000 employees of the U.S. Customs and Border Protection (CBP),  Immigration and Customs Enforcement (ICE), and Citizenship and  Immigration Services (CIS) organizations.
In addition to improving the effectiveness of the department, according to  DHS, these consolidation activities are aimed at realizing the efficiencies  and economies of scale envisioned by the President and the Congress in  creating DHS, by eliminating overlap and redundancies in these processes,  systems, and services. The DHS IG reported in December 2004 that while  DHS has made notable progress in integrating its many separate  components in one department, structural and resource problems continue  to inhibit progress in certain support functions. For example, while the  department is trying to create integrated and streamlined support service  functions, most of the critical support personnel are distributed throughout  the various components and are not directly accountable to the  management chiefs. We have also identified areas of concern with some of  these efforts and have made a number of recommendations to make these  support functions more effective and efficient. (See app. II for a list of  GAO reports on these individual consolidation efforts.) For example, we  reported that DHS intends to acquire and deploy an integrated financial  enterprise solution and reports that it has reduced the number of it legacy financial systems. While DHS has established an office within the  Management Directorate to manage its financial enterprise solution  project, we concluded that the acquisition is in the early stages and  continued focus and follow through will be necessary for it to be  successful.
DHS has issued some guidance to help each management function  integrate its portion of the disparate processes and functions inherited  when the 22 organizations merged into DHS. According to DHS officials,  the following plans and documents were helping to provide overall  guidance for these functional integration efforts.
Strategic Plan: According to several senior DHS officials, the CFO, CIO,  and the staff officer to the Deputy Secretary, the agency’s strategic plan,  issued in February 2004, was the primary guidance being used for DHS’s  management integration. The DHS strategic plan describes the  department’s vision, mission, core values, and guiding principles to  achieve its mission of protecting the homeland. In addition, one of its  seven strategic goals, organizational excellence, acknowledges the need  to integrate the systems, processes, and services the department  inherited to improve efficiency and effectiveness.
Draft Paper on the 21st Century Department: In April 2004, the Under  Secretary for Management also developed a draft 21st century paper to  provide more details as to how DHS would achieve its strategic goal of  organizational excellence. The draft paper summarizes DHS’s plans for  its management integration within three primary areas: (1) human  capital, (2) information technology, and (3) business transformation,  including the support areas of procurement and acquisition,  administrative services, and financial management and budgeting.  The draft paper describes key integration initiatives it will take within  each key area with short-term milestones, dates, and possible obstacles.  For example, the paper discusses DHS plans to implement the  Maximizing Results, Rewarding Excellence (MAXHR) initiative, the  department’s new human resources management system, and the  Electronically Managing Enterprise Resources for Government  Efficiency and Effectiveness (eMerge) initiative. The latter uses a  consolidated departmentwide solution approach to integrate DHS’s  financial and administrative systems, including accounting, acquisition,  budgeting, and procurement.
Management Directives: At the request of the Secretary and the Deputy  Secretary, in October 2004, each of the five DHS management chiefs  issued a management directive that, among other things, provides  standard definitions of each of their respective roles and  responsibilities, as well as a general description of how other  directorates and agencies will support them. Specifically, the directives  discuss the concept of dual accountability for both mission  accomplishment and functional integration as the shared responsibility  of the heads of DHS’s individual agencies or components and the  management chiefs. Each directive also discusses how the management  chief, along with the heads of the directorates, agencies and others, will  annually recommend and establish integration milestones for the  consolidation of the chief’s function and the development of  performance metrics for the respective function.
While the documents and plans discussed above are being used to help  DHS generally guide its management integration and DHS has made some  progress in addressing integration concerns within each functional  management area, there still is no overarching, comprehensive plan that  clearly identifies the critical links that must occur across these functions,  the necessary timing to make these links occur, how these critical  interrelationships will occur, and who will drive and manage them. As  previously discussed, an agency’s strategic plan does not serve as a tactical  or operational integration strategy and does not include the more detailed  blueprints, time lines, and resources needed for accomplishing the  department’s management integration. The department’s draft paper also  does not have a comprehensive linkage across all of its functional  initiatives with goals, time lines, and resources needed that would  comprise a departmentwide integration strategy. Nor does it lay out how  the integration across these functions must be managed. For example, to  successfully implement DHS’s human capital system, it must coordinate  this implementation with IT modernization. In addition, the majority of the  various management chiefs and senior officials we interviewed did not  indicate to us that this draft paper was being used as an overarching  management integration strategy. Finally, the recently issued management  directives can be helpful in guiding individual functional integration efforts,  as well as increasing departmentwide accountability for achieving its  management integration, but the directives do not serve as a  departmentwide integration strategy.
Some of the plans and directives already issued by DHS could be used as  foundations for building this needed integration strategy. Such a strategy  could also help to ensure that the various functional initiatives are  prioritized, sequenced, and implemented in a coherent and integrated way,  thereby achieving even greater efficiency and cost savings. Based on our  prior work on mergers and transformations, as well as results-oriented  management, such a comprehensive strategy would involve (1) looking  across the initiatives within each of the stove-piped functional units and  clearly identifying the critical links that must occur among these initiatives;  (2) developing specific departmentwide goals and milestones that would  allow DHS to track critical phases and essential activities; (3) identifying  tradeoffs and setting priorities; and (4) identifying any potential  efficiencies that could be achieved. The institution of a departmentwide  management integration strategy could also provide the Congress, DHS’s  employees, and other key stakeholders with transparent information on the  integration’s goals, needed resources, critical links, cost savings, and  status, and a way for these parties to hold DHS accountable for its  management integration.
section_title: DHS’s Business Transformation Office Could Be Strengthened to Serve as a Dedicated Team to Help Set Priorities and Make Strategic Decisions for Management Integration and to Implement the Comprehensive Integration Strategy
paragraphs: Our research shows that a dedicated team vested with necessary authority  and resources to help set priorities, make timely decisions, and move  quickly to implement decisions is critical for a successful transformation.  In addition, the team ensures that various change initiatives are sequenced  and implemented in a coherent and integrated way. Furthermore, the team  monitors and reports on the progress of the integration to top leaders and  across the organization, enabling those leaders to make any necessary  adjustments. Other networks, including a senior executive council,  functional teams, or cross-cutting teams, can be used to help the  implementation team manage and coordinate the day-to-day activities of  the merger or transformation. The 2003 study commissioned by DHS also  recommended that the department should (1) establish a leadership team  with implementation responsibility for integration across directorates and  be held accountable for departmentwide performance, and (2) create a  dedicated program management office responsible for the execution of  both mission and management integration efforts.
The Under Secretary for Management had acknowledged the need for a  dedicated program office to help guide the integration of management  functions across the department, but had not created one until October  2004 when funds were appropriated. Specifically, as part of DHS’s fiscal  year 2005 appropriation, the conference committee allocated $920,000 for  DHS to establish a BTO, which will include a director and four additional  staff that will report to the Under Secretary for Management. At the time  of our review, DHS was still establishing the office within its Management  Directorate and advertising for the director’s position, but had not defined  and filled the staff positions. According to the Acting Chief of Staff to the  Under Secretary for Management, the department intends that the staff  hired for the office will have expertise in program and project  management, quality analysis, and performance and data analysis.
Based on our discussions with this official, and our analysis of documents  describing the role of this office, the purpose of the BTO is to help monitor  and look for interdependencies among the department’s discrete  management integration efforts. Another purpose of the BTO is to  communicate the progress of the functional management initiatives across  the department. For example, implementation of eMerge, or for leading and  managing the coordination and integration that must occur across  functions not only to make these individual initiatives work, but to achieve  and sustain overall functional integration at DHS. Without creating a  dedicated team to serve in this role, it will be more difficult for DHS to  coordinate all integration initiatives across the department and make the  tradeoffs necessary to undertake an integration of the magnitude of DHS.
As mentioned above, networks, including functional teams, can help the  dedicated implementation team ensure that DHS’s efforts are coordinated  and integrated. DHS has recently strengthened the role of its functional  councils through its management directives to help coordinate integration  departmentwide. Early on, each management chief, such as the CIO,  CHCO, or CFO established a functional council to address issues pertaining  to the relative function. For example, the CFO established a Council that  includes component or agency CFOs across DHS and addresses and  coordinates departmentwide financial management issues. The other  management chiefs established functional councils with similar  membership drawn from their relative personnel in each component or  agency. Likewise, the Under Secretary for Management has a respective  Management Council that discusses issues of departmentwide importance,  such as training and development programs, but this council is not  dedicated full-time to managing the integration effort across the agency.
According to senior DHS officials in the Office of the Under Secretary for  Management, the membership of these functional councils had primarily  been serving in an information-sharing role for their particular  management function across the department. The councils also have been  helpful in gaining feedback and buy in from their members on function- specific issues of importance across DHS, as well as providing a way to  communicate about these issues. More recently, according to its five  management directives, DHS enhanced the role of its functional councils,  to include more decision-making responsibilities, rather than just serving in  an advisory capacity. In general, the councils are now responsible within  each of their individual functional areas for: (1) establishing a strategic  plan, (2) balancing priorities on how to best capitalize on the respective  management function resources, (3) defining and continuously improving  governance structures, processes, and performance, (4) establishing  centers of excellence, boards, and working groups tied to relevant council  priorities, (5) developing and executing formal communications programs  for internal and external stakeholders, and (6) supporting the respective  management chief in the design, planning, and implementation of an  integration plan for the chief’s individual functional area, among  other things.
The increased authorities and responsibilities of the functional councils  could help DHS further coordinate the integration of each individual  function across the department, and the recent establishment of the BTO  could also assist DHS in departmentwide integration issues. However,  neither the functional councils or the BTO are currently serving as a  dedicated team to help manage the department’s management integration.  The BTO is well-positioned to serve as a dedicated team, and the role of the  office could be strengthened to provide it with the necessary authority and  resources to set priorities and make strategic decisions to drive the overall  integration strategy. The BTO could also be responsible for leading the  development and implementation of the integration strategy as thus  described and communicating the progress of the integration to top leaders  and DHS stakeholders. Such a dedicated team, as led by a senior leader  described below, can provide the focused, day-to-day management needed  for successful integration.
section_title: Continued Monitoring Is Needed to Ensure Senior DHS Leadership Elevates, Integrates, and Institutionalizes Its Management Initiatives
paragraphs: We have reported that top leadership clearly and personally involved in the  merger or transformation represents stability and provides an identifiable  source for employees to rally around during the tumultuous times created  by such dramatic reorganizations and transformations as DHS’s merger.  Leadership must set the direction, pace, and tone for the transformation  and could provide sustained attention over the long term. As we have  previously reported, as DHS and other agencies, such as the Department of  Defense, embark on large-scale organizational change initiatives to address  21st century challenges, such as national security concerns—there is a  compelling need to elevate, integrate, and institutionalize responsibility for  key functional management initiatives to help ensure their success. We  have reported that creation of a COO or CMO for DHS could help to elevate  attention on management issues and transformational change, integrate  various key management and transformation efforts, and institutionalize  accountability for addressing these issues and leading this change.  For example, such an official could provide a single point of contact to  manage the integration of functions that operate within their own vertical  “stovepipes,” such as information technology, human capital, or financial  management, in a comprehensive and ongoing manner. Another potentially  important mechanism for such a position is to use clearly-defined,  results-oriented performance agreements accompanied by appropriate  incentives, rewards, and accountability. To help ensure accountability over  the long term, setting a term appointment of not less than 5 years can help  provide the continuing focused attention essential to successfully  completing multiyear transformations, which can extend beyond the  tenure of political leaders.
The role of the Under Secretary for Management does contain some of the  characteristics of a COO/CMO as we have described, such as integrating  key management and transformation efforts by providing a single point of  contact as the chief integrator of management functions across DHS.  Congress anticipated the difficulty of establishing DHS by creating a  Management Directorate as one of the five major organizational units of the  new department and vesting responsibilities for the transition and  reorganization of the department within the Office of the Under Secretary  for Management. According to section 701 of the Homeland Security Act,  the Under Secretary is responsible for the management and administration  of the Department in such functional areas as budget, accounting, finance,  procurement, human resources and personnel, information technology, and  communications systems. In addition, the Under Secretary is responsible  for the transition and reorganization process, to ensure an efficient and  orderly transfer of functions and personnel to the Department, including  the development of a transition plan. The Under Secretary also told us that  she sees one of her roles as integrating the various management functions  across the department.
Recent initiatives within the Department could help to strengthen the role  and responsibilities of the Under Secretary for Management in leading  DHS’s management integration efforts. The management directives, issued  in October 2004, are intended to clarify accountability for the integration of  the functions across the various directorates. The directives create dual  accountability relationships between the department-level functional  chiefs and similar chiefs within the agencies and components in the four  other directorates. For example, the department CFO within the  Management Directorate is accountable for consolidating and integrating  financial systems across the department and must work with the multiple  CFOs for the various components within the four other directorates and  agencies to do so. To help ensure this collaboration occurs, the department  CFO has input to the agency and component CFOs’ daily work and annual  performance evaluations, according to the directive on financial  management, but these CFOs still report to and take direction from their  agency or component head. In addition, the recently established BTO could  help provide the Under Secretary for Management with a team of resources  dedicated to monitoring and assisting with the management integration.
It is still too early to tell, however, whether these initiatives will provide the  Under Secretary for Management with the elevated authority necessary to  integrate functions across the department and institutionalize this new  structure, as envisioned for a COO, CMO, or similar position. For example,  the indirect authority over component and agency chiefs who are critical to  integration, and a BTO that primarily has a monitoring role, may not  provide the authority the Under Secretary needs to set priorities for, and  make trade-off decisions about resources and investments for integrating  these functions. Likewise, without a comprehensive integration plan, the  Under Secretary does not have a road map to guide and manage all the  players critical to the integration.
Furthermore, without additional mechanisms in place to increase  accountability and sustainability for achieving the results of the  department’s integration, DHS may not be successful in realizing the goals  of an improved homeland security function with integrated management  support. For example, as mentioned previously, at the time of our review,  the then Secretary and Deputy Secretary had announced their intention to  leave DHS in early 2005, raising questions about the agency’s ability to  provide the consistent and sustained senior leadership necessary to  achieve integration over the long term. Without a senior leader with a term  limit that extends beyond changes in administration, it may be difficult for  DHS to successfully achieve its management integration. The Congress  should continue to closely monitor whether additional leadership  authorities are needed for the Under Secretary, or whether a revised  organizational arrangement is needed to fully capture the roles and  responsibilities of a COO/CMO position, such as elevating the position, and  including a performance agreement and setting a term limit for it.
section_title: Conclusions
paragraphs: Though national needs suggest a rapid reorganization of homeland security  functions, such dramatic transitions of agencies and programs, as well as  the breadth and scope of management support functions that need to be  incorporated into the new department are likely to take time to achieve.  DHS is engaged in a number of individual efforts and initiatives as it works  to implement its vision of an integrated, unified department. However, the  momentum to create a successful homeland security function generated by  the attacks of 9/11 could be lost if DHS does not work quickly to put in  place some key merger and transformation practices to be more effective  in taking a comprehensive and sustained approach to its management  integration.
First, without a comprehensive strategy addressing all departmental  management integration initiatives, DHS may not be able to establish the  critical links, identify tradeoffs, set priorities, and design the efficiencies  needed to succeed in integrating the functional management of the  department, especially given the long-term fiscal challenges facing the  federal government. Some of the guidance and plans DHS has already  created could be used as a foundation for building such an integrated  strategy. Second, a dedicated implementation team, like the planned BTO,  vested with the responsibility and authority, can be used to more actively  drive the department’s integration across functions. Finally, Congress could  continue to monitor DHS’s management integration efforts and whether the  current role of the Under Secretary for Management in driving and  sustaining these efforts over the long term is effective or needs to be  enhanced by creating a senior leadership position, such as a COO/CMO.  Without taking these steps, DHS may have difficulty providing a  comprehensive approach and sustaining its long-term management  integration efforts.
section_title: Recommendations for Executive Action
paragraphs: In order to build the management infrastructure needed to help support the  department’s integration and transformation, we are making two  recommendations to the Secretary of Homeland Security. We recommend  that the Secretary direct the Under Secretary for Management, working  with others, to  develop an overarching management integration strategy for the  department. Such a strategy would, among other things, (1) look across  the initiatives within each of the management functional units;  (2) clearly identify the critical links that must occur among these  initiatives; (3) identify tradeoffs and set priorities; (4) set  implementation goals and a time line to monitor the progress of these  initiatives to ensure the necessary links occur when needed; and  (5) identify potential efficiencies, and ensure that they are achieved.  The department should also use this strategy to clearly communicate a  consistent set of goals and the progress achieved internally to all its  employees, and externally to key stakeholders, such as the Congress;  and  designate the planned BTO within DHS’s Management Directorate as the  dedicated implementation team for the department’s management  integration and provide it with the requisite authority and responsibility  to help set priorities and make strategic decisions to drive the  integration across all functions. The BTO would also be responsible for  helping to develop and implement the overarching management  integration strategy.
section_title: Matters for Congressional Consideration
paragraphs: To help ensure accountability and sustainability for DHS’s management  integration over the long term, Congress may wish to continue to monitor  the following:  the progress of DHS’s management integration, for example, by  requiring the department to periodically report on the status of its  efforts, especially to determine whether it has:  implemented a departmentwide integration management strategy;   provided the BTO with sufficient authority to serve as a dedicated  implementation team to help set priorities and make strategic  decisions to drive integration across all functions, and  whether the Under Secretary for Management has the authority to  elevate attention on management issues and transformational change,  integrate various key management and transformation efforts, and  institutionalize accountability for addressing these management issues  and leading this change. If not, the Congress could reassess whether it  needs to statutorily adjust existing positions at DHS, or create a new  COO/CMO position, with provisions for a term limit and performance  agreement, that has the necessary responsibilities and authorities to  more effectively drive the integration.
section_title: Agency Comments and Our Evaluation
paragraphs: In commenting on a draft of this report, DHS generally agreed with the  report’s recommendations. DHS also provided additional information on  the planned responsibilities and role of the BTO in departmental  management integration. For example, DHS stated that the BTO is the  dedicated resource for providing guidance for the integration of the  department’s management process, such as setting project management  standards and establishing standardized processes for monitoring and  reporting on the progress of DHS’s integration initiatives. In addition, the  department commented that the BTO is establishing an integrated project  plan/integration strategy and anticipates it will be released by June 2005.  However, at the time of our review, agency officials told us that there was  not an integration strategy in place to manage the department’s integration.
Based on our work on mergers and transformation practices, we also  recommended that DHS provide the BTO with the appropriate authority  and responsibilities to help set priorities and make strategic decisions for  the department’s integration efforts. DHS agreed with our recommendation  and noted that the BTO is to serve as the agent for the Under Secretary for  Management whose role is to lead the transition and reorganization of the  department. The agency stated that the BTO has been vested with the  authorities necessary to ensure an integration strategy is in place and will  be used to advise management on decisions about, and direction on,  integration. We agree that the BTO is well-positioned to serve as a  dedicated integration team, but continue to believe that the role of the  office could be strengthened to provide it with the necessary authority and  resources to set priorities and make strategic decisions to drive the overall  integration strategy. DHS’s more detailed written comments are reprinted  in appendix II.
As agreed with your office, unless you publicly announce the contents of  this report earlier, we plan no further distribution until 30 days from the  date of this letter. At that time, we will send copies of this report to the  Ranking Minority Member of the Subcommittee on the Federal Workforce  and Agency Organization, House Committee on Government Reform and to  others and made publicly available at no charge on GAO’s Web site at  http://www.gao.gov.
If you have further questions about this report, please contact me or  Sarah Veale at (202) 512-6806 or on larencee@gao.gov or veales@gao.gov.  Major contributors to this report included John W. Barkhamer, Jr.,  Carole Cimitile, Dewi Djunaidy, Masha Pastuhov-Pastein, and  Amy W. Rosewarne.
section_title: Scope and Methodology
paragraphs: To identify opportunities for DHS to improve its management integration  efforts, we assessed these efforts by using three of the nine key practices  consistently found at the center of successful mergers, acquisitions, and  transformations. We selected three of these practices as criteria for this  review because they are especially important to ensuring that DHS has the  management infrastructure it needs at this early juncture in its efforts to  sustain the integration of the department. The three selected practices are:  ensuring top leadership drives the transformation, setting implementation  goals and a time line to build momentum and show progress from day one,  and dedicating an implementation team to manage the transformation  process. We assessed the extent to which DHS is using these selected  practices to support its management integration efforts, i.e., the integration  of DHS’s varied management processes, systems, and people—in areas  such as information technology, financial management, procurement,  human capital, and administrative services. We focused our review  primarily on the management integration activities of DHS’s Management  Directorate because the Homeland Security Act of 2002 establishes that the  Under Secretary for Management is responsible for the transition and  reorganization process for the department. However, we limited the scope  of our review to the integration of management functions at this time and  did not review mission or program integration efforts of the department  primarily because GAO has additional work under way on these efforts.
We reviewed and analyzed key DHS documents about the department’s  management integration, as well as interviewed key senior leaders in the  Management Directorate and operational and program leaders from across  the department. Key DHS documents that we used for our review include,  but were not limited to, memoranda from the then Secretary and Deputy  Secretary, the DHS Strategic Plan, various transition and integration  planning and policy documents, materials from offices involved with  integration efforts, and Departmental Management Directives that  addressed the overall approach that each management chief was taking to  the integration of its relevant management area.
We also asked key senior DHS officials to describe to us DHS’s approach to  its management integration, such as whether DHS had a plan for its  integration and if a dedicated team was in place to manage the integration.  Within the Management Directorate, we met with the Under Secretary for  Management, the Chief Procurement Officer, the Chief Financial Officer,  the Chief Administrative Officer, the Chief Information Officer, and the  Chief Human Capital Officer. Other officials whom we interviewed  included chiefs of staff and/or directors of operations for each of the five  directorates, and key senior leaders from the Secret Service, the Coast  Guard, the Bureau of Citizenship and Immigration Services, the Office of  Public Affairs, and the Office for State and Local Government Coordination  and Preparedness. We also reviewed published assessments on the  organization of DHS and interviewed the authors of these publications to  discuss their views on organizational change at DHS.
We also examined reports from GAO, DHS’s Inspector General, and others  that addressed the integration of departmentwide management functions,  such as the development of an integrated departmental financial  management system, and information technology, as well as reports that  focused on the merger of specific agencies or initiatives within the  Department, such as the Federal Protective Service.
We conducted our work from April 2004 through February 2005 in  accordance with generally accepted government auditing standards.
section_title: Related GAO Products
paragraphs: High-Risk Series: An Update. GAO-05-207. Washington, D.C.: January 2005.  For more information on the Department of Homeland Security’s major  management challenges, see http://www.gao.gov/pas/2005/dhs.htm.
Department of Defense: Further Actions Are Needed to Effectively  Address Business Management Problems and Overcome Key  Business Transformation Challenges. GAO-05-140T. Washington, D.C.:  November 18, 2004.
Homeland Security: Management Challenges Remain in Transforming  Immigration Programs. GAO-05-81. Washington, D.C.: October 14, 2004.
Department of Homeland Security: Formidable Information and  Technology Management Challenge Requires Institutional Approach.  GAO-04-702. Washington, D.C.: August 27, 2004.
Homeland Security: Efforts Under Way to Develop Enterprise  Architecture, but Much Work Remains. GAO-04-777. Washington, D.C.:  August 6, 2004.
Financial Management: Department of Homeland Security Faces  Significant Financial Management Challenges. GAO-04-774.  Washington, D.C.: July 19, 2004.
Homeland Security: Transformation Strategy Needed to Address  Challenges Facing the Federal Protective Service. GAO-04-537.  Washington, D.C.: July 14, 2004.
Department of Homeland Security: Financial Management Challenges.  GAO-04-945T. Washington, D.C.: July 8, 2004.
Status of Key Recommendations GAO Has Made to DHS and Its Legacy  Agencies. GAO-04-865R. Washington, D.C.: July 2, 2004.
Human Capital: DHS Faces Challenges in Implementing Its New  Personnel System. GAO-04-790. Washington, D.C.: June 18, 2004.
Transfer of Budgetary Resources to the Department of Homeland  Security. GAO-04-329R. Washington, D.C.: April 30, 2004.
Human Capital: Preliminary Observations on Proposed DHS Human  Capital Regulations. GAO-04-479T. Washington, D.C.: February 25, 2004.
Human Capital: DHS Personnel System Design Effort Provides for  Collaboration and Employee Participation. GAO-03-1099.  Washington, D.C.: September 30, 2003.
Results-Oriented Cultures: Implementation Steps to Assist Mergers and  Organizational Transformations. GAO-03-669. Washington, D.C.:  July 2, 2003.
Homeland Security: Information Sharing Responsibilities, Challenges,  and Key Management Issues. GAO-03-715T. Washington, D.C.: May 8, 2003.
Major Management Challenges and Program Risks: Department of  Homeland Security. GAO-03-102. Washington, D.C.: January 2003.
Homeland Security: Management Challenges Facing Federal Leadership.  GAO-03-260. Washington, D.C.: December 20, 2002.
Highlights of a GAO Forum: Mergers and Transformation: Lessons  Learned for a Department of Homeland Security and Other Federal  Agencies. GAO-03-293SP. Washington, D.C.: November 14, 2002.
Highlights of a GAO Roundtable: The Chief Operating Officer Concept:  A Potential Strategy to Address Federal Governance Challenges.   GAO-03-192SP. Washington, D.C.: October 4, 2002.
Homeland Security: Critical Design and Implementation Issues.   GAO-02-957T. Washington, D.C.: July 17, 2002.
Homeland Security: Proposal for Cabinet Agency Has Merit, But  Implementation Will Be Pivotal to Success. GAO-02-886T.  Washington, D.C.: June 25, 2002.
Executive Guide: Effectively Implementing the Government Performance  and Results Act. GAO/GGD-96-118. Washington, D.C.: June 1, 1996.
subsections: section_title: DHS Products
paragraphs: Major Management Challenges Facing the Department of Homeland  Security. OIG-05-06. DHS Office of the Inspector General.  Washington, D.C.: December 2004.
Review of the Status of Department of Homeland Security Efforts to  Address Its Major Management Challenges. OIG-04-21. DHS Office of the  Inspector General. Washington, D.C.: March 2004.
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