Department of Homeland Security: A Comprehensive Strategy Is Still Needed to Achieve Management Integration Departmentwide
Published: 2009-12-15T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Significant management challenges exist for the Department of Homeland Security (DHS) as it continues to integrate its varied management processes, policies, and systems in areas such as financial management and information technology. These activities are primarily led by the Under Secretary for Management (USM), department management chiefs, and management chiefs in DHS's seven components. This testimony summarizes a new GAO report (GAO-10-131) that examined (1) the extent to which DHS has developed a comprehensive strategy for management integration that includes the characteristics recommended in GAO's earlier 2005 report, (2) how DHS is implementing management integration, and (3) the extent to which the USM is holding the department and component management chiefs accountable for implementing management integration through reporting relationships. GAO reviewed DHS plans and interviewed DHS management officials.
section_title: What GAO Found
paragraphs: DHS has not yet developed a comprehensive strategy for management integration as required by the Implementing Recommendations of the 9/11 Commission Act of 2007 and with the characteristics GAO recommended in a 2005 report. Although DHS stated at that time that it was developing an integration strategy it has not yet done so, in part because it has focused on building operations capacity within functional management areas. In the absence of a comprehensive management integration strategy, DHS officials stated that documents such as strategic plans and management directives address aspects of a management integration strategy and can help the department to manage its integration efforts. However, they do not generally include all of the strategy characteristics GAO identified, such as identifying the critical links that must occur among management initiatives. In addition, DHS has increased the number of performance measures for the Management Directorate, but has not yet established measures for assessing management integration across the department. Without these measures, DHS cannot assess its progress in implementing and achieving management integration. In the absence of a comprehensive strategy, DHS's Management Directorate has implemented management integration through certain initiatives and mechanisms to communicate and consolidate management policies, processes, and systems. For example, DHS is in the process of consolidating its financial management, acquisition, and asset management systems. The directorate has also instituted a system of management councils and governance boards to communicate information and manage specific activities related to management initiatives. The USM and department and component management chiefs are held accountable for implementing management integration through reporting relationships at three levels--between the Secretary and the USM, the USM and department chiefs, and the department and component chiefs--in which, among other things, the Secretary of Homeland Security, USM, and department chiefs are required to provide input into performance plans and evaluations. Performance management practices for management integration between DHS's department and component management chiefs are not consistently in place. Department chiefs are not consistently providing the guidance and input required by department management directives and in accordance with performance management leading practices. Without ensuring that the management chiefs provide input into component chiefs' performance plans and evaluations as required, the directorate cannot be sure that component chiefs are fully implementing management integration.

section_title: Letter
paragraphs: I appreciate the opportunity to appear before the Subcommittee to discuss  our report, which is being released today, on the actions that the  Department of Homeland Security (DHS) has taken towards integrating its  various management processes, systems, and people, both within and  across areas such as information technology, financial management,  acquisition, and human capital, as well as in its administrative services.  These activities are primarily led by the Under Secretary for Management  (USM), departmental management chiefs, and management chiefs in  DHS’s seven components. It is critically important that DHS work to unify  and strengthen its management functions because the effectiveness of  these functions will ultimately affect its ability to fulfill its various  missions.
After the department was first created, you asked us to assess the status of  DHS’s management integration. In our 2005 report, we noted that DHS had  made progress in addressing its departmentwide management integration  through the issuance of guidance and plans to assist the integration of  each individual management function within the department. However,  we observed that DHS had the opportunity to expand upon those efforts  by implementing a more comprehensive and sustained approach to  management integration departmentwide. In particular, we recommended  that DHS develop an overarching strategy for management integration,  and, in response, DHS stated that it was developing such a strategy.  Subsequently, the Implementing Recommendations of the 9/11  Commission Act of 2007 (9/11 Commission Act) required DHS to develop a  strategy for management integration.
Additionally in our 2005 report, we suggested that Congress might want to  consider whether DHS’s USM has the authority to drive, implement, and  ensure accountability for management integration departmentwide. More  specifically, we suggested that Congress might want to continue  monitoring whether it needed to provide additional leadership authorities  to the USM or create a Chief Operating Officer/Chief Management Officer  (COO/CMO) position, with provisions for a term appointment and  performance agreement, that could help elevate, integrate, and  institutionalize DHS’s management initiatives. The 9/11 Commission Act  designated the USM as the CMO for the department and principal advisor  on management-related matters to the Secretary. We have previously  suggested that agencies engaged in major transformation efforts and those  agencies experiencing particularly significant challenges in integrating  disparate organizational cultures, such as DHS, could also be good  candidates for having COO/CMO-type positions in place.
In light of these prior recommendations and requirements, you asked us to  revisit DHS’s progress. This testimony, which summarizes our report to  you, discusses:  the extent to which DHS has developed a comprehensive strategy for  management integration that includes the characteristics recommended in  our 2005 report,    how DHS is implementing management integration, and  the extent to which DHS’s USM is holding the department and component  management chiefs accountable for implementing management integration  through reporting relationships.
In summary, in the more than 6 years since its establishment, DHS has  taken actions that could help it transform its organization and integrate its  management functions to establish a unified department. In particular, the  department has developed common policies, procedures, and systems  within individual management functions, such as human capital and  information technology, that help to vertically integrate its component  agencies. However, DHS has placed less emphasis on integrating  horizontally, and bringing together these multiple management functions  across the department. Moreover, DHS has not yet fully developed a  comprehensive management integration strategy, as we have  recommended and is required by law. DHS could also improve the extent  to which it is measuring its progress on management integration, and  holding its management chiefs accountable for implementing management  integration.
To conduct the work for our report, we reviewed DHS’s strategies and  plans and interviewed management officials in DHS’s headquarters, seven  components, and one directorate—the National Protection and Programs  Directorate (NPPD). To address the extent to which DHS developed a  management integration strategy, we assessed whether DHS documents  and plans included the characteristics recommended in our 2005 report for  a management integration strategy, which required that the strategy:  look across the initiatives within each of the management functional units;    clearly identify the critical links that must occur among these initiatives;   identify trade-offs and set priorities;    set implementation goals and a time line to monitor the progress of these  initiatives to ensure the necessary links occur when needed; and  identify potential efficiencies, and ensure that they are achieved.
We also reviewed DHS’s performance goals and measures for fiscal years  2008 and 2009, and assessed these goals and measures against  Government Performance and Results Act of 1993 (GPRA) requirements to  determine the extent to which they provided a framework for assessing  management integration across the department. Additionally, we  examined DHS performance agreements and performance management  activities against requirements set forth in law and in DHS policies. These  requirements include the need for input from senior to subordinate  officials for performance agreements and evaluations, and the alignment  of goals and objectives in a “line of sight” that shows how individual  performance contributes to organizational goals.
This statement is based on our performance audit which was conducted  from September 2008 through November 2009 in accordance with  generally accepted government auditing standards. Those standards  require that we plan and perform the audit to obtain sufficient, appropriate  evidence to provide a reasonable basis for our findings and conclusions  based on our audit objectives. We believe that the evidence obtained  provides a reasonable basis for our findings and conclusions based on our  audit objectives.
subsections: section_title: Background
paragraphs: In 2003, we designated the implementation and transformation of DHS as a  high-risk area because it represented an enormous undertaking that would  require time to achieve in an effective and efficient manner. The  department has remained on our high-risk list since 2003. Most recently,  in our January 2009 high-risk update, we reported that, although DHS had  made progress in transforming into a fully functioning department, its  transformation remained high risk because it had not yet developed a  comprehensive plan to address the transformation, integration,  management, and mission challenges we identified since 2003.
The Management Directorate, which is led by the USM, includes the Chief  Financial Officer (CFO), the Chief Security Officer (CSO), the Chief  Human Capital Officer (CHCO), the Chief Administrative Officer (CAO),  the Chief Procurement Officer (CPO), and the Chief Information Officer  (CIO). They are referred to as the departmental management chiefs. In  addition to the department’s Management Directorate, each of the seven  DHS component agencies has its own component management chief for  the procurement, financial, human capital, information technology,  administrative, and security management areas.  Figure 1 shows the DHS  Management Directorate’s organizational structure.
section_title: Departmental Plans and Documents Address Aspects of Management Integration, but DHS Has Not Yet Developed a Comprehensive Strategy
paragraphs: The 9/11 Commission Act requires DHS to develop a strategy for  management integration as part of the department’s integration and  transformation to create a more efficient and orderly consolidation of  functions and personnel in the department. In our 2005 report, we  recommended that DHS develop an overarching management integration  strategy for the department that would, at a minimum, contain such  characteristics as identifying the linkages among management initiatives,  trade-offs and priorities, and potential efficiencies. Although DHS stated  at that time that it was developing an integration strategy, it has not yet  developed a comprehensive strategy for management integration that is  consistent with statute and that contains all of the characteristics we  identified in 2005. According to DHS’s USM, the department has not yet  done so because, in part, the Management Directorate has focused on  building the management operations capacity within the functional areas,  such as financial management and information technology. The  Management Directorate has not yet focused on integration across the  functional areas and has not clearly or systematically identified trade-offs  and linkages among initiatives in different functional areas.
According to DHS’s USM, Chief of Staff, and department and component  management chiefs, in the absence of a comprehensive management  integration strategy, various departmental documents collectively  contribute to the department’s strategy for implementing and achieving  management integration. These documents are discussed in detail in our  report. In particular, DHS officials identified (1) departmentwide  documents that provide guidance that relate to management integration  across the department, such as DHS’s Integrated Strategy for High Risk  Management and Management Directorate Strategic Plan; and (2)  documents for management of functional areas.
With regard to functional area documents, DHS officials indicated that  both management directives and functional area strategic plans contain  elements of the department’s strategy for achieving management  integration. DHS issued management directives for each of the six  department management chiefs—the CAO, CFO, CHCO, CIO, and CPO  management directives were issued in 2004 (with updates for the CIO and  CPO in 2007 and 2008, respectively); the management directive for CSO  was issued in 2006. These directives communicate standard definitions of  the management chiefs’ respective roles and responsibilities; define 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 department management  chiefs; and establish the need for the department management chiefs,  along with the heads of agencies, to annually recommend and establish  integration milestones for the consolidation of the chiefs’ functions.  Functional area strategic plans generally discuss, among other things, the  missions and goals of the department management chiefs and the link  between the goals and objectives in each functional area strategic plan and  the goals and objectives in DHS’s Strategic Plan. Among the six  department chiefs, four have issued strategic plans for their functional  areas—the CAO, CIO, CHCO, and CSO.
While some of the documents DHS officials identified as contributing to  the department’s strategy for implementing and achieving management  integration address some of the characteristics we have previously  identified for such a strategy, these documents, either individually or  taken together, do not include all of the characteristics we have identified.  The documents described by DHS officials as contributing to the  department’s strategy for achieving management integration can provide  high-level guidance for integration efforts and can help the department to  manage those efforts. Moreover, the Management Directorate Strategic  Plan and other departmentwide documents, for example, set performance  goals, measures, and targets for achieving certain management initiatives.  Such elements as goals, objectives, milestones, performance targets, and  priorities documented in these plans and strategies can help the  department to manage, implement, and monitor the specific initiatives to  which these elements apply. They can also help to guide efforts to  consolidate policies, processes, and systems within each management  functional area. However, among the documents cited by DHS officials as  being part of the department’s management integration strategy, DHS has  not yet looked across the management initiatives within management  functional areas to identify the critical links that must occur among these  initiatives to integrate the department’s management functions both within  and across functional areas. Furthermore, the documents generally do not  identify the priorities, trade-offs, and potential efficiencies among  management initiatives, nor do they set implementation goals and a time  line for monitoring the progress of initiatives to ensure the critical links  occur when needed. Thus, when considered either individually or  together, these documents do not constitute a management integration  strategy containing all of the characteristics we have identified.
In addition, although DHS has developed some performance goals and  measures to measure management activities, it has not yet established  measures for assessing management integration across the department.  For example, DHS has increased the number of departmentwide  performance measures for the Management Directorate in support of Goal  5 of DHS’s Strategic Plan. Specifically, since fiscal year 2008, DHS has  added 13 new measures and retired 3 others for the Management  Directorate in support of its strategic plan, going from 5 performance  measures for the Management Directorate in fiscal year 2008 to 15  measures in fiscal year 2009. These measures relate to activities in  functional areas but do not help to measure management integration. DHS  officials told us that the department’s current measures do not allow the  department to gauge the status of management integration and that the  department has focused on the development of measures for departmental  components, offices, and directorates—such as a measure for the attrition  rate for career senior executive service personnel and a measure for the  percentage of improper payments collected. However, these performance  measures do not allow the department to assess its progress in achieving  departmental goals for management integration within and across  functional areas. DHS officials stated that the department’s goal is to  develop a set of measures that will help the department assess its  management integration. Without such a set of measures, DHS cannot  assess its progress in implementing and achieving management integration  both within and across its functional areas. A comprehensive strategy for  management integration that clearly sets implementation goals and time  lines could help the department establish measures for assessing its  management integration. We are continuing to work with DHS to review  and provide input on the department’s performance measures used to  assess the department’s progress in its mission and management areas.
section_title: DHS’s Management Directorate Has Taken Actions to Communicate and Consolidate Management Policies, Processes, and Systems
paragraphs: While DHS does not have a comprehensive management strategy, its  Management Directorate is working to consolidate management policies,  processes, and systems and it has instituted a system of management  councils and governance boards. The Management Directorate has  developed and implemented departmentwide policies to replace policies  from each of the legacy agencies that make up DHS in all six management  functions. For example, the DHS CFO’s office launched an online  Financial Management Policy Manual tool, which serves as the single  authoritative guide on financial management and the foundation for  departmentwide financial management knowledge sharing and  standardization. According to officials from the DHS CFO’s office, the  Financial Management Policy Manual is part of its approach to integrate  within the financial management function and is critical to enable financial  management employees to carry out their duties and responsibilities  effectively and efficiently.
The Management Directorate also has other initiatives under way to  consolidate its management systems. For example, the Transformation  and Systems Consolidation (TASC) initiative is the department’s current  effort to consolidate its financial management, acquisition, and asset  management systems. DHS has been working to consolidate its financial  management systems since the department was first created.
Through various management councils, the Management Directorate  shares information related to the implementation of management  initiatives, solicits feedback from the components, and provides a forum  for coordination between component management offices. Each  management chief chairs a functional council to address issues pertaining  to that management function. Likewise, the USM chairs a Management  Council made up of the DHS management chiefs and a representative from  each component that discusses issues of departmentwide importance,  such as training and development programs. The Management Directorate  has also taken steps toward consolidating some management processes  and established governance boards to manage the processes in the areas  of acquisition, information technology, financial management, and  resource allocation.
section_title: Performance Management Practices Could Be More Consistently Applied Departmentwide to Strengthen Reporting Relationships between Department and Component Management Chiefs
paragraphs: The USM and department and component management chiefs are held  accountable for implementing management integration through reporting  relationships at three levels—between the Secretary and the USM, the  USM and department management chiefs, and the department and  component management chiefs—in which, among other things, the  Secretary of Homeland Security, USM, and department chiefs are required  to provide input into performance plans and evaluations. Our prior work  has shown that, to be successful, transformation efforts must align  individual performance expectations with organizational goals. In the  case of transforming and integrating DHS, the USM, department, and  component management chiefs must align their goals and activities  through performance management practices in support of DHS’s  management integration goals. In our review, we found that performance  management practices for management integration between DHS’s  department and component management chiefs are not consistently in  place. Department chiefs are not consistently providing the guidance and  input required by department management directives and in accordance  with performance management leading practices. The inconsistent  application of such guidance and practices presents challenges to  institutionalizing individual accountability and enabling the effective  exercise of authority at the department. Without ensuring that the  management chiefs provide input into component chiefs’ performance  plans and evaluations as required, the Management Directorate cannot be  sure that component chiefs are fully implementing management  integration.
For the first level of reporting relationships involving the Secretary and the  USM, the 9/11 Commission Act requires the USM to enter into an annual  performance agreement with the Secretary and be subject to an annual  performance evaluation. We found that the Deputy Secretary provided  input into the USM’s performance plan in October 2007, and conducted a  performance evaluation in 2008 based on this agreement. According to  DHS officials, the Deputy Secretary conducted the performance agreement  and evaluation—rather than the Secretary—based on delegated  responsibilities for the performance of management reform as the  department’s chief operating officer. Further, the performance objectives  in the USM’s agreement and evaluation are linked to strategic plans, and  include references to several efforts related to management integration.
For the second level of reporting relationships involving the USM and  department management chiefs, five department management chiefs  report directly to the USM, and the CFO has a dual reporting relationship  to the Secretary and the USM. We found that the department  management chiefs’ performance agreements supported higher level  Management Directorate goals and objectives, and included references to  management integration-related activities. Fiscal year 2009 was the first  year that the USM provided a common objective to department  management chiefs related to management support for the expansion of  NPPD. In addition, the agreements consistently include objectives related  to management integration.
For the third level of reporting relationships involving the department and  component management chiefs, the component management chiefs report  directly to their component agency heads, while also having a “dotted  line,” or indirect, reporting relationship to their respective department  management chief. The arrangement of component heads and  department chiefs both supporting integration of management functions is  referred to as “dual accountability.” Under the dual accountability system,  management directives require the department management chiefs to  provide written performance objectives to the component management  chiefs at the start of each performance cycle and feedback to the  component rating official on the component chief’s accomplishment of  objectives. We found that all the department management chiefs except  for the CSO said that they specifically established annual priorities for  their function. At an individual level, however, we found that only two  department chiefs—the CAO and CPO—said that they provided individual  input to their component chiefs at the beginning of their performance  cycle. The USM told us the functional councils have improved their  development of common management goals for their functions, but have  not yet consistently followed through by putting those goals into  individual performance plans. She stated the department’s management  chiefs would be including this information in component chiefs’  performance plans for 2010. With regard to the department chiefs  providing feedback to the component rating official, the CFO, CSO, and  CAO told us that they provided input into component chiefs’ performance  appraisals, while the CIO and CPO did not provide input. The CHCO said  that, due to his limited tenure in the position, he could not state whether  input had occurred. The CPO stated that he would be providing input  beginning with the fiscal year 2010 performance appraisals. The USM said  that departmental chiefs’ input into component chiefs’ performance  appraisals would be a priority in the future.
section_title: GAO Recommendations
paragraphs: In our new report, we reiterated our 2005 recommendation, not yet fully  implemented, that DHS develop a comprehensive management integration  strategy. We recommended that once the strategy is developed, DHS’s  USM should establish performance measures to assess progress made in  achieving departmentwide management integration. We also  recommended that the Under Secretary take several actions to implement  existing performance management mechanisms—such as having the  departmental management chiefs provide written input into component  chiefs’ performance plans and evaluations, and strengthening linkages  between department goals and objectives in individual performance plans  for component management chiefs—to ensure that the Management  Directorate can exercise its authority and leadership to implement a  management integration strategy.
A DHS official said the department concurred with our report. In addition,  DHS’s USM provided information on steps the department was taking or  planning to take to develop a strategy for management integration, as we  had recommended in our 2005 report, and to link this strategy to the  Senior Executive Service (SES) performance appraisals for the  management chiefs. Specifically, the USM said that she is leading the  process for developing a detailed, measurable plan that will include the  actions and milestones necessary to accomplish management integration  at the department. Additionally, the USM stated that the integration plan  will be tied to the SES performance appraisals for each management chief  for the fiscal year 2010 performance cycle, and that the plan will also serve  as the required annual performance agreement between the Secretary and  the USM.
Chairman Akaka, Senator Voinovich, and Members of the Subcommittee,  this concludes my prepared statement. I would be happy to respond to any  questions you may have.
section_title: Contacts and Staff Acknowledgements
paragraphs: For further information regarding this statement, please contact Bernice  Steinhardt, Director, Strategic Issues, at (202) 512-6543 or  steinhardtb@gao.gov or David Maurer, Director, at (202) 512-9627 or  maurerd@gao.gov. Points of contact for our Offices of Congressional  Relations and Public Affairs may be found on the last page of this report.  Individuals making key contributions to this testimony include Sarah  Veale, Assistant Director; Rebecca Gambler, Assistant Director; S. Mike  Davis; Barbara Lancaster; Jared Hermalin; Susan Sato; and David Fox.
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