Transportation Security Administration: High-Level Attention Needed to Strengthen Acquisition Function
Published: 2004-05-28T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The Transportation Security Administration (TSA), within the Department of Homeland Security, was established to secure the nation's transportation systems, beginning with commercial airports. To meet its mission, TSA has awarded over $8.5 billion in contracts since its creation in 2001. Spending on contracts accounted for 48 percent of TSA's fiscal year 2003 budget. Because of TSA's reliance on contracts to carry out its mission, its acquisition infrastructure-- including oversight, policies and processes, acquisition workforce, and information about its acquisitions--is critical. GAO was asked to review TSA's acquisition infrastructure to assess how well TSA is positioned to carry out its acquisition function.
section_title: What GAO Found
paragraphs: Since its inception, TSA has been focused on meeting an urgent mandate to deploy more than 55,000 airport passenger and baggage screening personnel and equipment to secure the nation's airways. To do so, it created basic organizational and acquisition infrastructures. However, our review of TSA's acquisition function and inspector general reports identified a number of challenges in each of the four areas we assessed. Organizational alignment and leadership: TSA's Office of Acquisition is at an organizational level too low to oversee the acquisition process, coordinate acquisition activities, and enforce acquisition policies effectively. The position of the office hinders its ability to help ensure that TSA follows acquisition processes that enable the agency to get the best value on goods and services. Policies and processes: TSA's acquisition policies and processes emphasize personal accountability, good judgment, justifiable business decisions, and integrated acquisition teams. However, effective implementation of TSA's policies and processes has been hindered by several factors. For example, TSA has not effectively communicated its acquisition policies throughout the agency. TSA also lacks internal controls to identify and address implementation issues and performance measures to determine whether acquisition policies are achieving desired results. Human capital: TSA risks an imbalance in the size and capabilities of its acquisition workforce that could diminish the performance of the acquisition function throughout the agency. TSA's Office of Acquisition worked closely with the Department of Homeland Security to develop and begin implementing an acquisition workforce plan. However, TSA's Human Resource Office, which is responsible for recruiting and hiring the acquisition workforce agencywide, did not participate in developing the acquisition workforce plan. Without input from the Human Resources Office, it is not clear that the workforce plan can be effectively implemented throughout the agency. In addition, the Office of Acquisition reports that it is having difficulty attracting, developing, and retaining a workforce with the acquisition knowledge and skills required to accomplish TSA's mission. Knowledge and information management: while TSA is participating in the Department of Homeland Security's efforts to develop requirements for an enterprisewide solution, TSA does not currently have the strategic information needed to support effective acquisition management decisions. To manage on a day-to-day basis, program and acquisition managers are relying on data derived from informal, ad-hoc systems. TSA is in the process of adopting the Coast Guard's procurement and financial systems as interim solutions until the Department of Homeland Security implements a departmentwide system. However, near-term improvement in acquisition outcomes will be difficult because TSA does not have the data needed to analyze and improve its acquisition processes.

section_title: Letter
paragraphs: Since its creation in November 2001, the Transportation Security  Administration (TSA) has awarded more than $8.5 billion in contracts for  goods and services used to secure the nation’s transportation systems.  TSA currently has contracts to recruit, hire, train, and outfit passenger  and baggage screeners, as well as contracts to develop and manufacture  screening equipment and to provide the information technology needed  to manage its day-to-day operations. TSA built its organization while  simultaneously concentrating its resources on meeting tight deadlines for  deploying more than 55,000 federal screeners to all of the nation’s  commercial airports.
Because of TSA’s significant reliance on contracts to carry out its mission,  its acquisition infrastructure—including oversight mechanisms, policies  and processes, acquisition workforce, and information systems—will in  large part determine whether the agency succeeds in its mission. However,  the Inspectors General of the Departments of Transportation and  Homeland Security—the two executive departments TSA has been a  part of since it was created— have repeatedly criticized the agency’s  management and oversight of its contracts. As a result, you asked us  to review TSA’s acquisition infrastructure to assess how well TSA is  positioned to carry out its acquisition function.
Based on our previous reviews of acquisition management issues  governmentwide, at individual agencies, and at leading private sector  firms, we have identified four broad areas that we believe are critical to  the success of an acquisition organization:    Organizational alignment and leadership: The appropriate placement  of the acquisition function within an agency can facilitate efficient and  effective management of acquisition activities. In addition, agency leaders  need to create a climate that fosters good acquisition practices.
Policies and processes: To facilitate effective planning, award,  administration, and oversight of contracts, and to help ensure the best  value on goods and services, the agency must have clear, consistent, and  enforceable policies and processes. Internal controls and performance  measures help to ensure that policies and processes are implemented and  have the desired outcomes.
Human capital: Strategic workforce planning—including workforce and  skills assessments and succession planning—is key to recruiting, training,  and rewarding staff and ensuring the acquisition workforce has the skills  needed to carry out their responsibilities effectively.
Knowledge and information management: To inform strategic decisions  aimed at reducing costs, improving service levels, measuring compliance,  and managing providers, the agency must have knowledge and  information systems that can produce credible, reliable, and timely data.
We assessed TSA’s acquisition infrastructure against what our previous  work has shown to be best practices in these four areas. To do so, we  reviewed agency directives, memorandums, and other documentation;  interviewed agency officials; and analyzed agency systems and processes.  To gain further insight into how TSA’s acquisition system is functioning,  we also reviewed 21 judgmentally selected contract files. For more on our  scope and methodology, see appendix I.
We conducted our review from July 2003 through March 2004 in  accordance with generally accepted government auditing standards.
subsections: section_title: Assessment Summary
paragraphs: Since its inception, TSA has been focused on meeting an urgent mandate  to deploy more than 55,000 airport passenger and baggage screening  personnel and equipment to secure the nation’s airways. To do so, it  created basic organizational and acquisition infrastructures. To date,  however, TSA has not developed an acquisition infrastructure that  facilitates successful management and execution of acquisition activities,  helps ensure that the agency acquires quality goods and services at  reasonable prices, and supports informed decisions about acquisition  strategy. Specifically, our review of TSA’s acquisition function and  inspector general reports identified a number of challenges in each of the  four areas we assessed.
Organizational alignment and leadership: TSA’s Office of Acquisition  is at an organizational level too low to oversee the acquisition process,  coordinate acquisition activities, and enforce acquisition policies  effectively. The position of the office hinders its ability to help ensure that  TSA follows the acquisition processes that enable the agency to get the  best value on goods and services. Senior acquisition officials told us that  the Office of Acquisition is not appropriately placed within TSA; however,  TSA has not elevated the office to a position that would enable it to  coordinate agencywide acquisition activities or enforce acquisition  policies.
Policies and processes: Because TSA’s acquisition policies and processes  emphasize personal accountability, good judgment, justifiable business  decisions, and integrated acquisition teams, effective implementation of  TSA’s policies and processes depends on clear communication, measures  to evaluate performance, and incentives to reward good acquisition  practices. Effective implementation of TSA’s policies and processes has  been hindered, however, by several factors: (1) TSA has not effectively  communicated its acquisition policies throughout the agency; (2) TSA  lacks internal controls to identify and address implementation issues and  performance measures to determine whether TSA’s acquisition policies  achieve desired outcomes; and (3) TSA’s deadline-driven culture fails to  reinforce the importance of complying with policies.
Human capital: TSA risks an imbalance in the size and capabilities of its  acquisition workforce that could diminish the performance of the  acquisition function throughout the agency. TSA’s Office of Acquisition  worked closely with the Department of Homeland Security to develop and  begin implementing an acquisition workforce plan. However, TSA’s  Human Resource Office, which is responsible for recruiting and hiring the  acquisition workforce agencywide, did not participate in developing the  acquisition workforce plan. Without input from the Human Resources  Office, it is not clear that the workforce plan can be effectively  implemented throughout the agency. In addition, the Office of Acquisition  reports that it is having difficulty attracting, developing, and retaining a  workforce with the acquisition knowledge and skills required to  accomplish TSA’s mission.
Knowledge and information management: While TSA is participating in  the Department of Homeland Security’s efforts to develop functional  requirements for an enterprisewide solution that supports the  department’s resource management functions—including procurement  and finance—TSA does not currently have the strategic information  needed to support effective acquisition management decisions. To manage  on a day-to-day basis, program and acquisition managers are relying on  data derived from informal, ad hoc systems—which are often out-of-date,  incomplete, inaccurate, or otherwise unreliable. TSA is in the process of  adopting the Coast Guard’s procurement and financial systems as interim  solutions until the Department of Homeland Security implements  departmentwide systems. However, near-term improvements to TSA’s  acquisition outcomes will be difficult until TSA has critical financial and  procurement information systems that allow decision makers to track  spending, manage budgets, and collect detailed data on goods and  services, suppliers, and spending patterns.
We are making four recommendations to the Secretary of Homeland  Security to help improve TSA’s acquisition capabilities by elevating the  placement of TSA’s Office of Acquisition, developing adequate internal  controls and performance measures, addressing the needs of the  acquisition workforce, and assessing proposed knowledge management  systems. In written comments on a draft of this report, the Department of  Homeland Security generally concurred with our report and  recommendations. They also provided additional information about  various initiatives related to our recommendations.
section_title: Background
paragraphs: Two months after the September 11, 2001, terrorist attacks, the President  signed the Aviation and Transportation Security Act, establishing TSA as a  new administration within the Department of Transportation responsible  for securing the nation’s transportation systems. In February 2002, TSA  assumed responsibility for aviation screening, and by November 2002, the  agency had deployed a federal security screener workforce in the nation’s  429 commercial airports. In March 2003, TSA, along with 21 other  agencies, began transferring to the Department of Homeland Security.  Figure 1 shows the timeline of TSA’s brief history.
When TSA was established in November 2001, the agency had no  personnel, no organizational structure, no policies and processes, and no  legacy systems. To begin operating, TSA adopted some of the Department  of Transportation’s infrastructure components, such as the financial  management system, and developed others in-house, such as a  procurement tracking system. In addition, the Aviation and Transportation  Security Act directed TSA to adopt the Federal Aviation Administration’s  (FAA) Acquisition Management System,  which establishes policy,  processes, and guidance for all aspects of the acquisition life cycle. The act  gives TSA’s administrator the latitude to make modifications to FAA’s  system as appropriate. Because FAA is, by law, generally exempt from  federal acquisition laws as well as the Federal Acquisition Regulation  (FAR), and TSA was directed to adopt FAA’s system, TSA is also exempt  from these requirements.
TSA has relied on contractors to accomplish much of its mission. In fiscal  year 2002, TSA obligated more than $3.7 billion for goods and services  procured under contracts awarded by TSA, FAA, and the Department of  Transportation. TSA currently has contracts to manage human resource  needs, including recruiting, hiring, training, and outfitting passenger and  baggage screeners; develop and manufacture screening equipment; and  provide the information technology systems the agency uses to manage its  day-to-day operations. These contracts represent about 48 percent of  TSA’s fiscal year 2003 budget.
TSA’s large expenditures on goods and services have prompted reviews  by the Inspectors General of the Departments of Transportation and  Homeland Security, who found a lack of contractor oversight and  significant cost overruns. For example, in January 2004, the Department  of Homeland Security Inspector General reported that inadequate  contractor oversight contributed to TSA’s lack of timely background  checks on screeners at airports. Specifically, inadequate oversight of  contractors contributed to more than 500 boxes of background check  documentation remaining unprocessed for months. The Department of  Transportation’s Inspector General also found that inadequate oversight  and contracts without clearly defined deliverables caused the cost of  TSA’s initial contracts to balloon. For example, TSA’s initial human  resource contract to recruit, screen, hire, and train screeners grew from  $100 million to $700 million within 1 year.
In late 2003, the Department of Homeland Security’s Inspector General  cited integrating the procurement functions of the department’s  component organizations as a major management challenge, adding that  some of the procurement functions lacked important management  controls. Despite TSA’s efforts to resolve initial problems, the Inspector  General cited TSA as an example of an agency lacking procurement  management controls.
In a 2004 update to the previous year’s report on management challenges,  the Inspector General’s Office reported that TSA was taking steps to  address weaknesses in contract oversight, such as increasing the size of its  contract management staff, devising policies and procedures that require  adequate procurement planning, and arranging for the Defense Contract  Audit Agency to perform over 130 contract audits and support contract  administration.
section_title: TSA’s Organizational Alignment and Leadership
subsections: section_title: Best Practices
paragraphs: The appropriate placement of the acquisition function within an agency  can facilitate efficient and effective management of acquisition activities.  In our work on best practices,  we learned that leading companies  elevated or expanded the role of the company’s acquisition organization;  designated commodity managers to oversee key services; and made  extensive use of cross-functional teams to help identify the company’s  service needs, conduct market research, evaluate and select providers, and  manage performance. To cut across traditional organizational boundaries  that contributed to a fragmented approach to acquiring services, these  companies generally restructured their procurement organizations,  typically assigning them greater responsibility and authority for strategic  planning, management, and oversight of the companies’ service spending.  In making such changes, the companies acknowledged that acquisition is  an important strategic function and that success in this area contributes to  the accomplishment of company missions. These changes transformed the  role of the purchasing unit from one focused on mission support to one  that was strategically important to the company’s bottom line.
Recent legislation recognizes the importance of placing the acquisition  function at an appropriate level and mandates that most executive  departments appoint a chief acquisition officer. This official will have the  responsibility to monitor the performance of acquisition activities and  programs; evaluate the performance of acquisition programs; increase the  use of full and open competition; increase the use of performance-based  contracting; establish clear lines of authority, accountability, and  responsibility for acquisition decision making; manage the direction of the  agency’s acquisition policies; advise the head of the executive agency  regarding the appropriate business strategy to achieve the mission of the  executive agency; and develop and maintain an acquisition career  management program to ensure that there is an adequate acquisition  workforce.
section_title: Assessment
paragraphs: TSA’s Office of Acquisition is at an organizational level too low to oversee  the acquisition process, coordinate acquisition activities, and enforce  acquisition policies effectively. As shown in figure 2, the Office of  Acquisition is at a lower level than other key offices involved in the  acquisition process. Its current position within the organizational structure  essentially relegates acquisition to the status of one of many  administrative functions. The placement of the Office of Acquisition  hinders the ability of the office to oversee the acquisition process and to  coordinate with other offices involved in that process—responsibilities  that are particularly critical given that almost half of TSA’s budget is spent  on acquisitions. This issue was also noted by senior acquisition officials  who told us that the Office of Acquisition is not appropriately placed  within TSA. Further, the Chief Support Systems Officer said that  adjustments to the placement of the office might be worthy of  consideration.
From its current position, the office has not been able to coordinate the  agency’s acquisition activities or enforce acquisition policies throughout  the agency. This has resulted in certain inefficiencies, as the following  examples demonstrate:    Senior acquisition officials told us that some program offices within TSA  bypass the Office of Acquisition at key points in the acquisition process or  fail to consult the contracting officer early enough in the acquisition  process—typically without consequence. For example, program offices  have submitted purchase requests without allowing adequate time for  planning, requiring the contracting officers to spend additional time on  tasks such as rewriting the requirements or performing additional market  research to ensure that the goods or services purchased satisfy the  program offices’ needs. Had the program offices consulted with the Office  of Acquisition earlier in the process, much of the additional work could  have been avoided.
Different support offices involved in managing contracts for the airport  screening function did not coordinate when contracting for airport  screening equipment because, according to a senior operations official,  TSA failed to ensure effective communication between the support offices.  As a result, the number of personnel needed to operate the additional  equipment was not sufficient once the equipment was installed.
Reports from the Inspectors Generals of the Department of Homeland  Security and the Department of Transportation also noted that TSA’s  program offices failed to plan for and coordinate contractor oversight.  While TSA’s Office of Acquisition now requires program offices to have  oversight plans in place before major contracts are awarded, the office  does not have the means to ensure that oversight plans are actually  implemented.
The lack of recognition of the importance of the acquisition function was  also evident at a senior level of the organization. For example, an  acquisition official told us that a representative from the Office of  Acquisition was not initially consulted when senior TSA officials were  developing strategies for responding to questions following congressional  testimony on TSA’s acquisition problems.
section_title: TSA’s Acquisition Policies and Processes
subsections: section_title: Best Practices
paragraphs: Implementing strategic acquisition decisions to achieve agencywide  outcomes requires clear, transparent, and consistent policies and  processes that govern the planning, award, administration, and oversight  of acquisitions. Agency policies and processes, along with their rationale,  need to be clearly communicated to all involved in the acquisition  function. In addition, appropriate actions are needed to ensure acquisition  personnel understand the organization’s acquisition policies and  processes, as well as their roles and responsibilities in adhering to them.  Appropriate internal controls to ensure that acquisition personnel follow  policies and processes, and performance measures to assess the  effectiveness of policies and processes in achieving desired outcomes, also  are needed.
In our work on best practices, we learned that maintaining clear lines  of communication among all organizations involved in the acquisition  function, and using performance measures to evaluate acquisition  processes, were critical to successfully implementing strategic approaches  to acquisition. Leading companies also found that the use of metrics  increased the likelihood that acquisition processes would be successfully  implemented. Metrics can be used to assess an organization’s current  performance level, identify the critical processes that require focused  management attention, obtain the knowledge needed to set realistic goals  for improvement, and document results over time.
section_title: Assessment
paragraphs: Since TSA was established, it has issued management directives, policy  letters, and guidance on its acquisition policies and processes. These have  been based on FAA policy and guidance for acquiring goods and services  and on Department of Homeland Security directives. TSA’s policies and  processes emphasize personal accountability, good judgment, justifiable  business decisions, and integrated acquisition teams. However, the  following examples indicate that several of these policies have not been  effectively implemented.
Despite acquisition policies regarding contractor oversight, the  Department of Homeland Security’s Inspector General reported that a lack  of adequate oversight on TSA’s early contracts resulted in airline  passenger screeners being allowed to begin work without completing a  criminal history records check or to continue to work with adverse  background checks. Some screeners who had been hired failed  background checks, were determined to be ineligible, and were  subsequently fired.
TSA also failed to implement policies and processes intended to ensure  coordination of acquisition activities. TSA guidelines call for integrated  product teams—which may include representatives from program,  technical, finance, contracting, and legal offices—to coordinate key  acquisition activities and to work together to make decisions throughout  the acquisition process. According to TSA acquisition officials, however,  such teams are often not formed, and there is currently no formal process  for doing so. Without such teams, TSA risks having acquisition activities  that are not well coordinated and key decisions that fail to take into  account all essential considerations.
TSA’s acquisition policies and processes have not been effectively  communicated throughout the agency. The Office of Acquisition has  implemented training initiatives in an attempt to educate key staff about  their responsibilities, but officials across the agency told us that they or  their staffs are unclear about their roles and responsibilities in the  acquisition process. Because TSA’s personnel were hired from other  agencies and from the private sector, which may have defined their roles  and responsibilities differently, it is critical that personnel throughout TSA  have a clear understanding of the agency’s acquisition policies and  processes. Personnel must be properly trained in applying the flexibilities  inherent in TSA’s acquisition policies to ensure fair and open competition  and effective procurement practices.
TSA lacks performance measures to determine whether its acquisition  policies are achieving desired outcomes. TSA also lacks internal controls  to identify and address implementation issues. Each office within TSA is  responsible for developing its own performance measures. TSA’s Office of  Acquisition has measures to track the number of contracts awarded and  the amount of the awards, but does not have measures to assess how well  personnel carry out acquisition activities, such as oversight. For example,  TSA does not track the number of contracts awarded that include  incentives for performance, such as performance-based contracts or  contracts with fees based on different levels of performance. The Office  of Acquisition is currently considering the use of customer satisfaction  measures used by the U.S. Navy and the Department of Transportation to  determine whether they would be suitable for measuring the office’s  performance. TSA’s template for individual performance agreements  attempts to tie individual goals to organizational goals. However, the  template has no acquisition-specific goals. Supervisors may add  acquisition-specific goals for individuals. Without such goals it may be  difficult to hold individuals accountable for performance on acquisition  activities.
TSA’s deadline-driven culture fails to reinforce the importance of  compliance with policies. TSA officials acknowledged, and Inspector  General reports and testimony confirmed, that TSA initially sacrificed cost  concerns and disciplined acquisition practices in order to meet schedules.  As a result, TSA created a culture that prioritized meeting deadlines at the  expense of other acquisition goals. TSA’s initial deadlines for deploying its  screener workforce were met. However, senior officials from multiple TSA  offices told us that the agency has maintained its sense of urgency, and  that program offices still expect acquisition functions to be accomplished  quickly, even if the appropriate acquisition practices are not always  followed.
section_title: Contract File Reviews
paragraphs: Our review of 21 contract files showed that TSA did not always use  practices that help to ensure quality and cost efficiency. While some of the  problems we identified in early contracts stemmed from shortcuts taken to  meet urgent deadlines, the persistence of such problems suggests that TSA  did not consistently follow disciplined acquisition practices. TSA’s policies  require that the agency perform quality assurance, but several contract  files we reviewed contained little evidence that contract oversight or  quality assurance was performed. For example, the contract files for  background investigations, baggage screening, and engineering and  technical services contained no evidence of oversight or quality assurance  plans. TSA’s policies also require that performance metrics be identified in  the requirements of complex contracts. Our review of the contract files  found that TSA failed to develop performance metrics for the contractor  prior to award. Instead, TSA often asked the contractor to develop these  plans or metrics after award. Because of problems with inadequate  contractor oversight, however, TSA now requires that an oversight plan be  in place prior to award.
Several of the contract files we reviewed were cost reimbursement or  time and materials contracts and did not contain evidence of government  surveillance to ensure cost efficiency. Of the 21 contracts we reviewed, 6  were awarded on a fixed-price basis, and 9 were awarded on a cost- reimbursable or time and materials basis, while 6 were a combination.  Cost-reimbursement and time and materials contracts are generally only  suitable when appropriate government surveillance during performance  will provide reasonable assurance that efficient methods and effective cost  controls are used. Frequent use of cost-reimbursement and time and  materials contracts, coupled with the inspector generals’ findings that TSA  failed to monitor its contracts, diminishes the assurance that efficient  methods and cost controls are being used.
TSA generally used single-source contracts judiciously for the contract  files we reviewed. TSA’s policies, which encourage competition as the  preferred method of contracting, state that use of single-source contracts  is permitted when necessary to accomplish TSA’s mission and merely  require that a rational basis for the decision be documented.  Of the 21  contract files we reviewed, 3 were for single-source contracts. The  remaining contracts were awarded using a variety of procurement  methods, including use of existing government contracts, the Federal  Supply Schedule, required government supply sources, and competitive  procedures. In the 3 single-source contract awards we reviewed, the  contract files contained justifications for using such noncompetitive  procedures as required by TSA’s policies. The justifications for awarding  contracts on a single-source basis varied. In one case, for example, the  agency identified a need for additional office furniture to be integrated  with furniture systems already installed at the work site. The justification  stated that the furniture components were not interchangeable between  manufacturers and that it would be more costly to hire a different  contractor to perform follow-on work. (See appendix IV for a description  of the other contracts we reviewed.)
section_title: TSA’s Human Capital Management
subsections: section_title: Best Practices
paragraphs: A strategic human capital management approach enables an agency to  recruit, develop, and retain the right number of personnel with the right  skills to accomplish its mission effectively. Through our work on human  capital management, we have found that high-performing organizations  identify their current and future human capital needs and then develop  acquisition workforce plans containing strategies—such as targeted  investments in employees or recruiting and retention bonuses—to meet  these needs. These plans enable the organization to address the critical  skills and competencies needed to achieve results. Strategic human  capital approaches need sufficient resources. Senior managers should  devote adequate resources to recruiting, hiring, developing, rewarding,  and retaining talented personnel. Succession planning is also needed to  ensure that the workforce is composed of the right number of personnel  with the necessary skills and qualifications to perform the acquisition  function into the future. Changes in the required skill sets of the  acquisition workforce, coupled with the prospect of a decline in  experienced acquisition personnel throughout the government, make the  need for acquisition workforce planning more significant.
Industry and government experts alike recognize that having the right  people with the right skills is key to making a successful transformation  toward a more effective acquisition environment. Over the last decade, the  emergence of several procurement trends, including a rise in services  contracting, has created a need for acquisition workers with a much  greater knowledge of market conditions, industry trends, and the technical  details of the commodities and services they procure.
section_title: Assessment
paragraphs: TSA risks an imbalance in its acquisition workforce that could diminish  the performance of the acquisition function throughout the agency. With  almost half of TSA’s fiscal year 2003 budget devoted to acquisition, a  qualified and trained workforce is critical to ensuring the efficiency of  TSA’s acquisition activities.
The Department of Homeland Security has developed a departmentwide  acquisition workforce plan, and TSA began implementing it in February  2004. The plan focuses on formalizing competencies and skill sets;  establishing certification standards; and identifying training  requirements, first for contracting specialists and then for acquisition  professionals in other key career fields—including program management,  financial management, engineering, and information technology.  Subsequent phases of the plan include establishing career paths, targeting  positions for recruitment, establishing mentoring programs, and creating a  strategy for succession planning.
TSA’s Office of Acquisition contributed significantly to the Department of  Homeland Security’s acquisition workforce plan. However, TSA’s Office  of Human Resources, which is responsible for recruiting and hiring and  for succession planning throughout TSA—including the acquisition  workforce, did not participate in developing the plan. Since there are many  acquisition-related positions in offices throughout TSA, the involvement of  key TSA personnel offices—particularly the Human Resources Office—is  important to the success of the acquisition workforce plan. It is not yet  clear how effective the acquisition workforce plan will be, given that an  office responsible for key aspects of implementation did not participate in  the plan’s development.
In responding to a draft of this report, TSA officials commented  that the Human Resources Office was unable to participate in  departmentwide acquisition workforce planning because it has been  facing critical day-to-day problems associated with supporting growth  in the workforce throughout TSA. After functioning for just over 1 year,  the office has hired a manager who will be working on their human capital  strategic planning in conjunction with the overall departmental human  capital planning effort. They also said that TSA is drafting a Human Capital  Officer Strategy that will focus on identifying career paths for all  occupations, including acquisitions and contracting.
Effective implementation of the acquisition workforce plan is all the  more important because acquisition officials face challenges in attaining  sufficient staffing levels. Office of Acquisition officials are concerned that  their staff of 61 is not adequate to support the mission. In January 2003,  the Deputy Assistant Administrator of the Office of Acquisition conducted  a study to determine appropriate staffing levels for TSA’s Office of  Acquisition. This study assumed contract awards in excess of $4 billion  per year, to estimate staffing requirements. Using three different  benchmarks that attempted to estimate staffing needs based on total  awarded value of contracts, the study concluded that the Office of  Acquisition would require a staff of between 179 and 628 employees. We  did not conduct an independent assessment of this TSA study to verify the  validity of the study’s results. Further, the Office of Human Resources has  not conducted similar studies to determine appropriate staffing levels for  other acquisition professionals not assigned to the Office of Acquisition.
TSA’s Office of Acquisition has been challenged in trying to maintain its  existing acquisition workforce. According to TSA acquisition officials,  attrition among its contracting workforce has been a problem. In the time  period from March 2002 to December 2003, TSA’s Office of Acquisition  experienced attrition of approximately 22 percent of its contracting  workforce. To identify the causes for attrition, the Office of Acquisition  began conducting exit interviews. According to acquisition officials,  attrition is a result of the heavy workload, as well as a lack of incentives,  such as tuition reimbursement and performance awards. TSA’s human  resource officials have not monitored the acquisition workforce  throughout the agency to determine if there are similar troubles retaining  acquisition professionals outside the Office of Acquisition. TSA’s human  resources officials said they conducted a job satisfaction survey and plan  to begin conducting exit interviews, but acknowledged that the survey and  exit interviews would be concerned primarily with screener satisfaction.
Efforts to hire acquisition professionals to work in the Office of  Acquisition have been undercut by the limited number of qualified  applicants and possible negative perceptions about TSA. According to TSA  acquisition officials, there is a lack of applicants with adequate acquisition  experience, and TSA is competing with other agencies that offer more  generous benefits, such as tuition reimbursement and clear career tracks.  TSA is authorized to use recruiting and retention incentives. However,  according to officials, the agency has not provided funding for these types  of incentives. Further, qualified applicants are difficult to recruit because  TSA’s role within the Department of Homeland Security is not clearly  understood and TSA has a reputation for long work hours. Human  resources officials admitted that their focus is primarily on screeners, and  they do not know whether other offices are experiencing similar  difficulties hiring acquisition professionals.
In addition, acquisition and training officials told us that training funds  for the acquisition workforce are very limited. Training officials said that  funds are sufficient for meeting federal training mandates; however, there  are no additional training funds for further professional development.  Acquisition officials told us that funding for training Office of Acquisition  personnel is limited to $1,000 per year per employee—an amount that  acquisition officials say is insufficient to train staff who came to TSA  without prior contracting experience. The Office of Acquisition’s training  funds do not cover training of other acquisition professionals outside  this office. Without sufficient training funds, TSA is able to provide few  professional development opportunities for the acquisition workforce— limiting career growth. To address the most critical training needs for the  acquisition workforce outside the Office of Acquisition—such as program  managers, contracting officers’ representatives, and technical monitors— TSA’s Office of Acquisition has proactively developed workshops in-house.  However, these workshops are not mandatory for the acquisition  workforce.
section_title: TSA’s Knowledge and Information Management
subsections: section_title: Best Practices
paragraphs: To make strategic, mission-focused acquisition decisions, organizations  need knowledge and information management processes and systems that  produce credible, reliable, and timely data about the goods and services  acquired and the methods used to acquire them. Leading companies use  procurement and financial management systems to gather and analyze  data to identify opportunities to reduce costs, improve service levels,  measure compliance and performance, and manage service providers. For  example, organizations need integrated financial management systems  that provide reliable, accurate, relevant, and timely financial data to help  ensure dollars are well spent. Such data are needed to estimate and  control program costs, support funding decisions, and oversee contract  spending. Many leading organizations have already implemented an  enterprisewide system to integrate financial and operating data to support  both management decision-making and external reporting requirements.
In a 1994 study of fundamental practices that led to performance  improvements in leading private and public organizations, we reported  that electronic business system initiatives must be focused on process  improvements. Information systems that simply use technology to do the  same work the same way, although faster, typically fail, or reach only a  fraction of their potential. In May 2000, we reported that when developing  new electronic business processes, it is important to ensure that current  business processes are working well before applying new technology. In  fact, agency heads are required by statute to analyze an agency’s mission  and revise mission-related and administrative processes, as appropriate,  before making significant investment in information technology that is to  be used in support of the performance of those missions. Not improving  business processes prior to investing in new technology creates the risk of  merely automating inefficient ways of doing business.
section_title: Assessment
paragraphs: While TSA is participating in the Department of Homeland Security’s  efforts to develop functional requirements for an enterprisewide solution  that supports the department’s resource management functions— including finance and procurement, TSA does not currently have the  strategic information needed to support effective acquisition management  decisions. Near-term improvements to TSA’s acquisition outcomes will be  difficult until TSA has critical knowledge management systems, such as  financial and procurement information systems, that allow decision  makers to track spending and manage budgets and collect detailed data on  goods and services, suppliers, and spending patterns. Despite the fact that  TSA lacks detailed information on the goods and services it purchases,  some aggregate data is available. TSA is an active participant in the  Department of Homeland Security’s strategic sourcing program, which is  using the aggregate data to develop a strategy that will allow the  department to leverage its buying for particular commodities.
To manage on a day-to-day basis, inform acquisition decisions, and  oversee contracts, program and acquisition managers are relying on data  derived from informal, ad hoc systems—which are often out of date,  incomplete, inaccurate, or otherwise unreliable. TSA’s Office of  Acquisition is temporarily relying on an Access database developed in- house to track manually entered procurement information and make  acquisition decisions. However, the temporary database does not contain  enough information to analyze purchases or measure the acquisition  function’s performance. For example, a TSA official told us that when a  congressional committee asked for a list of sole-source contracts, TSA  officials had to compile the list manually, by asking contracting officers  which contracts had been awarded on a sole-source basis, because this  information was not in TSA’s database. Further, the database does not  automatically track the status of a procurement request. Currently,  program officials must contact the Office of Acquisition to determine the  progress being made on a procurement request—relying on manually  compiled paper files, which are frequently incomplete or inaccurate, to  track the status of a purchase. TSA is now voluntarily reporting its  contract actions to the Homeland Security Contract Information System,  which feeds into the Federal Procurement Data System. This system can  produce some aggregate data, but lacks detailed information on goods and  services purchased.
Until a departmentwide solution is developed, TSA’s Office of Acquisition  is planning to adopt the Coast Guard’s procurement information system as  a faster and more cost-efficient way of obtaining the basic capability to  track purchase requests and write contracts. But TSA officials told us  that, in its current configuration, the system does not have all the  components necessary to enhance strategic acquisition decisions or  enable effective evaluation and assessment of acquisition outcomes.
An additional challenge to data collection and analysis is TSA’s financial  management system. According to TSA officials, the agency’s current  financial management system, run by the Department of Transportation,  does not provide the information needed to track financial events,  summarize financial information, or otherwise provide critical acquisition- related information. For example, because program offices do not have  access to reliable financial information, program budget officials cannot  certify funds availability to approve a procurement request. As a result, the  Office of Finance must certify funds availability centrally. According to  finance officials, the inability to track spending has also resulted in  difficulties in processing invoices and procurement requests.
Here too, while the department-level enterprise architecture effort is  proceeding, TSA is in the process of adopting the Coast Guard’s financial  management system, which TSA finance officials say is more user-friendly  and provides better reporting capabilities and access than the system TSA  currently uses. It is unclear, however, whether the Coast Guard’s financial  management software will facilitate TSA’s financial accountability  activities. Independent auditors gave the Department of Homeland  Security’s financial statement a qualified balance sheet opinion based, for  the most part, on problems with the Coast Guard’s financial statements.  The Coast Guard was unable to provide sufficient documentation to  support certain financial conditions prior to the completion of the audit.
section_title: Conclusions
paragraphs: As a new agency, TSA was tasked to build an organization from the  ground up to meet a critical and demanding mandate. TSA worked  quickly to put a transportation security workforce in place, creating basic  organizational and acquisition infrastructures and subordinating cost  concerns and disciplined acquisition practices to meet deadlines. With the  challenging initial mandate fulfilled, TSA has begun to build a permanent  infrastructure. TSA now has the opportunity to build a model acquisition  function based on best practices. The opportunity may be lost, however, if  TSA fails to think strategically about the practices it uses to carry out its  acquisition function. By assessing its existing organizational alignment,  policies and processes, human capital approaches, and knowledge and  information systems against a framework of best practices and in  coordination with the Department of Homeland Security, TSA can identify  weaknesses and risk areas to target for improvement.
Attention from TSA’s leadership is needed to help TSA’s Office of  Acquisition improve acquisition practices agencywide—focusing on all  elements key to a successful acquisition program. Ensuring a strong  workforce and developing well-built procurement and financial  management systems, coupled with a strong message of compliance with  policies and processes and supported by performance measures, would  demonstrate the agency’s commitment to effective acquisition practices.
section_title: Recommendations for Executive Action
paragraphs: To help ensure that TSA receives the goods and services it needs at the  best value to the government, we recommend that the Secretary of  Homeland Security direct the Administrator of the Transportation Security  Administration to take the following three actions:    Elevate the Office of Acquisition to an appropriate level within TSA to  enable it to identify, analyze, prioritize, and coordinate agencywide  acquisition needs.
Develop an adequate system of internal controls, performance measures,  and incentives to ensure that policies and processes for ensuring efficient  and effective acquisitions are implemented appropriately.
Direct the TSA Human Capital Office to do the following in coordination  with key offices in the Department of Homeland Security:    assess TSA’s current acquisition workforce (as defined by the  Department of Homeland Security) to determine the number, skills,  and competencies of the workforce;  identify any gaps in the number, skills, and competencies of the current  acquisition workforce; and    develop strategies to address any gaps identified, including plans to  attract, retain, and train the workforce.
We also recommend that the Secretary of Homeland Security ensure that  its planned departmentwide knowledge management system provides TSA  sufficient data and analytic capability to    measure and analyze spending activities and performance—and thereby  highlight opportunities to reduce costs and improve service levels;    support effective oversight of acquisitions; and  facilitate the timely reporting of the agency’s acquisition activities and its  compliance with acquisition policies and processes.
section_title: Agency Comments and Our Evaluation
paragraphs: In written comments on a draft of this report, the Department of  Homeland Security generally concurred with our report and  recommendations and stated that our identification of areas for  improvement will help to develop the efficiency and effectiveness of  TSA’s Office of Acquisition. In response to our recommendation to elevate  the position of the Office of Acquisition, the department stated that the  office has been elevated once before. We have acknowledged this in our  report and note that the office was elevated before we began our review  of TSA’s acquisition function. Our review found that even after the office  was elevated, it remained at an organizational level too low to oversee the  acquisition process, coordinate acquisition activities, and enforce  acquisition policies effectively. The department further noted that the  Department of Homeland Security’s Chief Procurement Officer is on par  with the Chief Financial Officer and Chief Information Officer, stating that  TSA will consider this option along with others as it works toward  improving the efficiency and effectiveness of its acquisition program.  Whichever option is chosen, we maintain that the Office of Acquisition  should be elevated to an appropriate level within TSA to enable it to  identify, analyze, prioritize, and coordinate agencywide acquisition needs.
The department also commented that its Office of Human Resources has  only been functioning as a distinct office for a year and that after focusing  on establishing policies, processes, and effective contract management  services, it has hired a manager for planning. TSA has committed to  providing a more proactive approach to all human capital planning.
The department also noted that it is moving towards the enterprisewide  implementation of Oracle Financials and Prism starting in October 2004,  stating that the knowledge management tools recommended in the draft  report will be available to provide TSA sufficient data and analytic  capability to evaluate its processes, performance, and spending. Our  report acknowledges that TSA will be using these Coast Guard  procurement and financial systems; however, we maintain that these  systems do not have all the components necessary to enhance strategic  acquisition decisions or enable effective evaluation and assessment of  acquisition outcomes.
As requested by your offices, unless you publicly announce the contents of  this report earlier, we plan no further distribution of it until 30 days from  the date of this letter. We will then send copies of this report to interested  congressional committees, the Secretary of Homeland Security, and the  Administrator of the Transportation Security Administration. We will  make copies available to others upon request. In addition, the report will  be available at no charge on the GAO Web site at http://www.gao.gov.
If you or your staff have any questions regarding this report, please call me  at (202) 512-4841 or Blake Ainsworth, Assistant Director, at (202) 512-4609.  Other major contributors to this report were Lara Laufer, Gordon Lusby,  William Petrick, Shannon Simpson, Karen Sloan, Adam Vodraska, and  Kelli Ann Walther.
section_title: Appendix I: Scope and Methodology
paragraphs: To review how well TSA is positioned to carry out its acquisition function,  we used GAO’s previous best practices work as our criteria. Our studies of  best business practices show four interrelated elements—organizational  alignment, policies and processes, human capital, and information  management— that help to promote good acquisition outcomes. We used  each of the elements to assess TSA’s acquisition function.
To assess TSA’s acquisition function across the four elements, we  interviewed senior agency officials, including the Chief Support Systems  Officer and a representative for the Acting Chief Operating Officer. We  also interviewed management and staff within the Office of Acquisition  regarding acquisition policy and processes, contracting training, program  support, and quality assurance.
To assess how well the organization is aligned to facilitate the integration  of the acquisition function throughout the agency, we reviewed TSA  organizational charts, process flowcharts, and presentations by agency  officials on key roles and responsibilities to understand how the  acquisition process is integrated into TSA’s organization. To assess  leadership commitment to good acquisition, we also reviewed TSA’s  strategic plan and investment review board meeting agendas, minutes, and  investment criteria. For an understanding of organizational alignment and  coordination, we interviewed the Chief Support Systems Officer and a  representative for the Acting Chief Operating Officer. To assess how well  acquisition activities are coordinated and carried out throughout the  agency, we interviewed Assistant Administrators of all major Operations  offices—Aviation Operations, Maritime and Land Security, Security  Intelligence, and Operations Policy—and Mission Support offices— Finance and Administration, Human Resources, Information Technology,  and Workforce Performance and Training.
To determine TSA’s current policies and processes, we reviewed  applicable laws and policies that granted TSA the flexibility to use and  modify FAA’s system, and we also interviewed a member of TSA’s Legal  Counsel. We analyzed FAA’s Acquisition Management System and  reviewed TSA’s modified version of this guidance. To assess TSA’s  progress towards developing and implementing policies and processes, we  reviewed TSA and Department of Homeland Security memoranda,  directives, internal newsletters, handbooks, quality assurance checklists,  and policy documents. To analyze TSA’s effectiveness in implementing  policies and processes, we interviewed Assistant Administrators for each  of the Operations offices, as well as the Division Directors within the  Office of Acquisition for each of the contracting support offices.
Additionally, we interviewed management and staff within the Office of  Acquisition regarding acquisition policy and processes, program support,  and quality assurance.
To assess TSA’s effectiveness in hiring, developing, and retaining its  acquisition workforce, we interviewed Office of Acquisition management  and staff, the Director and staff of the Workforce Performance and  Training Office, and two Assistant Administrators for Human Resources.  We also interviewed the Department of Homeland Security’s Acquisition  Workforce Manager regarding the department’s Acquisition Workforce  Plan and TSA’s role in its development and implementation. We reviewed  documents and spoke with agency officials about acquisition workforce  training requirements, available courses, and means of tracking acquisition  training and other workforce data. In addition, we reviewed studies on  TSA’s acquisition workforce size, one of which was conducted by a  contractor on behalf of TSA.
To help us assess how effectively the existing TSA information  management system enables the agency to track and manage its  acquisition process and facilitate strategic decision-making, officials from  the Office of Acquisitions, Assistant Administrators for each of the  Operations offices, and Division Directors within the Office of Acquisition  explained TSA’s existing and planned information systems and outlined  their information needs. The same officials explained the capabilities of  the information management systems to perform acquisition transactions  in support of TSA’s mission. Office of Acquisition staff discussed their data  entry and internal control processes and shared supporting documentation  to help us understand their current systems. To assess the capabilities and  limitations of the financial management system and financial management  processes, we interviewed the Chief Financial Officer and Chief  Technology Officer, as well as additional Finance and Administration staff.  To determine how much knowledge and information is available and  accessible to TSA management, we reviewed the Office of Acquisition’s  procurement database, and Strategic Sourcing operations documents. To  assess TSA’s plans for future information systems, we reviewed  documentation describing the operations of TSA’s systems, proposals for  planned initiatives, and summaries of existing challenges. A representative  from the office of Strategic Management & Analysis provided insight about  TSA’s strategic direction.
To gain further insight into how TSA’s infrastructure affects its  acquisitions, we judgmentally selected 40 contract files for review. Using  TSA’s database of contracts, we identified four types of contract actions  from which to sample—new contracts, task and delivery orders, blanket  purchase agreements, and purchase orders. In each category, we selected  contracts based on award value. Nineteen of the 40 files were not available  or removed from the sample for the following reasons: they were being  closed out at a payment center, FAA awarded the contract rather than  TSA, it represented a duplicate contract, it had already been reviewed by  the Inspector General, they were actually interagency agreements, or it  was being managed by the Defense Contract Management Agency. We  reviewed the remaining 21 pre- and post-award contract files to assess key  aspects of the acquisition process at TSA—such as requirements  development, market research and analysis, acquisition planning,  procurement method (including use of competitive procedures and single- source contracting), and contract administration.
We conducted our review from July 2003 through March 2004 in  accordance with generally accepted government auditing standards.
section_title: Appendix II: Key Activities, Roles, and Responsibilities of Key Personnel Involved in TSA’s Acquisition Process
paragraphs: Figure 3 shows key activities performed during TSA’s acquisition process.
Table 1 identifies some of the major acquisition responsibilities associated  with the roles of key personnel.
section_title: Appendix III: Inspector General Testimony and Reports Reviewed
paragraphs: Table 2 shows the Department of Transportation Inspector General  testimony and reports reviewed to identify issues associated with the  contracting process at the TSA.
Table 3 shows the Department of Homeland Security Inspector General  reports reviewed to identify problems associated with the contracting  process at the Transportation Security Administration.
section_title: Appendix IV: Contracts Reviewed
subsections: section_title: Gate, checkpoint, and baggage screener services
section_title: Appendix V: Comments from the Department of Homeland Security