Department of Homeland Security: Progress and Challenges in Implementing the Department's Acquisition Oversight Plan
Published: 2007-06-13T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The Department of Homeland Security (DHS), the third largest department in federal procurement spending in fiscal year 2006, has faced ongoing cost, schedule, and performance problems with major acquisitions and procurement of services. In December 2005, DHS established an acquisition oversight program to provide insight into and improve components' acquisition programs. In 2006, GAO reported that DHS faced challenges in implementing its program. Congress mandated that DHS develop an oversight plan and tasked GAO with analyzing the plan. GAO (1) evaluated actions DHS and its components have taken to implement the acquisition oversight plan and (2) identified implementation challenges. GAO also identified opportunities for strengthening oversight conducted through the plan. GAO reviewed relevant DHS documents and GAO and DHS Inspector General reports and interviewed officials in the office of the Chief Procurement Officer (CPO) and nine DHS components.
section_title: What GAO Found
paragraphs: The CPO has taken several actions to implement DHS's acquisition oversight plan--which generally incorporates basic principles of an effective and accountable acquisition function. The plan monitors acquisition performance through four recurring reviews: self-assessment, operational status, on-site, and acquisition planning. Each component has completed the first self-assessment, which has helped components identify and prioritize acquisition weaknesses. In addition, each component has submitted an initial operational status report to the CPO and on-site reviews are being conducted. Despite this progress, the acquisition planning reviews are not sufficient to determine if components adequately plan their acquisitions--in part because a required review has not been implemented and the CPO lacks visibility into components' planning activities. DHS faces two key challenges in implementing its acquisition oversight plan. First, the CPO has had limited oversight resources to implement plan reviews. However, recent increases in staff have begun to address this challenge. Second, the CPO lacks sufficient authority to ensure components comply with the plan--despite being held accountable for departmentwide management and oversight of the acquisition function. GAO has previously recommended that DHS provide the CPO with sufficient enforcement authority to enable effective acquisition oversight. In addition to these challenges, GAO identified two opportunities to strengthen internal controls for overseeing the plan's implementation and for increasing knowledge sharing. Specifically, independent evaluations of DHS's oversight program could help ensure that the plan maintains its effectiveness over time. Sharing knowledge and lessons learned could provide DHS's acquisition workforce with the information needed to improve their acquisition processes and better achieve DHS's mission.

section_title: Letter
paragraphs: Since it was established, the Department of Homeland Security (DHS) has  been responsible for integrating 22 federal agencies with disparate  missions into one department. In fiscal year 2006, DHS obligated   $15.6 billion for goods and services, making it the third largest department  in federal procurement spending. DHS components have experienced  ongoing cost, schedule, and performance problems with major  acquisitions as well as procurement of services. Since January 2003, GAO  has designated the implementation and transformation of DHS a high-risk  area, stating the need for management capacity and oversight  mechanisms.
In December 2005, DHS established an acquisition oversight program in  addition to existing oversight mechanisms, such as the investment review  process. The program is designed to provide the Chief Procurement  Officer (CPO) comprehensive insight into each component’s acquisition  programs and disseminate successful acquisition management approaches  throughout DHS. In 2006, we reported that DHS faced challenges in  implementing this program, due to unclear accountability for acquisition  outcomes and inadequate staffing to conduct departmentwide oversight.  Subsequent to our report, Congress, in a conference report accompanying  the DHS fiscal year 2007 Appropriations bill, directed DHS to submit a  plan to the Appropriations Committees by January 2007 identifying  necessary oversight resources and how improvements in the performance  of its procurement functions will be achieved. GAO was required to assess  the plan.
In April 2007, we briefed your Committees on our analysis and findings.  This report expands on that briefing. Specifically, we (1) evaluated the  actions DHS and its components have taken to implement the acquisition  oversight plan through May 2007 and (2) identified the challenges DHS  faces in implementing the plan. We also identified opportunities for  strengthening oversight conducted through the plan.
To conduct our work, we reviewed relevant GAO and DHS Office of the  Inspector General reports and DHS documents, such as the oversight plan,  completed reviews, and guidance to components. We interviewed officials  in the office of the CPO and nine DHS components. Appendix I presents  our scope and methodology in more detail. We conducted our work from  February 2007 to June 2007 in accordance with generally accepted  government auditing standards.
subsections: section_title: Background
paragraphs: In 2003, the Department of Homeland Security was created and tasked  with integrating numerous agencies and offices with varying missions  from the General Services Administration; the Federal Bureau of  Investigation; and the Departments of Agriculture, Defense, Energy, Health  and Human Services, Justice, Transportation, and Treasury; as well as the  Coast Guard and the Secret Service.
Eight DHS components have internal procurement offices with a Head of  Contracting Activity (HCA) who reports directly to the component head  and is accountable to the CPO. The Office of Procurement Operations  (OPO) also has an HCA who provides contracting support to all other  components and reports directly to the CPO. The HCA for each  component has overall responsibility for the day-to-day management of  the component’s acquisition function. Figure 1 shows the organizational  relationship between the HCAs and the CPO.
section_title: Plan Implementation Is Under Way, but Acquisition Planning Oversight May Not Be Sufficient
paragraphs: We reported in September 2006 that DHS planned to fully implement its  acquisition oversight program during fiscal year 2007. The plan is  composed of four recurring reviews: self-assessment, operational status,  on-site, and acquisition planning. The CPO has issued an acquisition  oversight program guidebook, provided training on self-assessment and  operational status reviews, and began implementation of the four reviews  in the plan (see table 1).
The acquisition oversight plan generally incorporates basic principles of  an effective and accountable acquisition function and includes  mechanisms to monitor acquisition performance. Specifically, the plan  incorporates DHS policy, internal controls, and elements of an effective  acquisition function: organizational alignment and leadership, policies and  processes, human capital, knowledge and information management, and  financial accountability. While it is too early to assess the plan’s overall  effectiveness in improving acquisition performance, initial implementation  of the first self-assessment has helped most components prioritize actions  to address identified weaknesses. In addition, the CPO has helped several  components implement organizational and process changes that may  improve acquisition performance over time. For example, one component,  with the assistance of the CPO, elevated its acquisition office to a level  equivalent to its financial office.
However, the acquisition planning reviews are not sufficient to determine  if components’ adequately plan their acquisitions. Federal acquisition  regulations and DHS directives require agencies to perform acquisition  planning in part to ensure good value, including cost and quality.  Component HCAs are responsible to ensure that acquisition plans are  completed in a timely manner, include an efficient and effective  acquisition strategy and the resulting contract action or actions support  the component’s mission. Inadequate procurement planning can lead to  higher costs, schedule delays, and systems that do not meet mission  objectives. Several recent reviews have identified problems in DHS’s  acquisition planning. In 2006, we reported that DHS often opted for speed  and convenience in lieu of planning and analysis when selecting a  contracting method and may not have obtained a good value for millions  of dollars in spending. As part of a 2006 special review of Federal  Emergency Management Agency’s (FEMA) contracts, DHS’s CPO found  significant problems with the requirements process and acquisition  strategy and recommended in part that FEMA better plan acquisitions.
For example, the CPO reported that FEMA’s total cost for its temporary  housing program could have been significantly reduced if FEMA had  appropriately planned to acquire temporary homes before the fiscal year  2005 hurricane season. A 2006 internal review of the Office of  Procurement Operation’s contracts similarly found little evidence that  acquisition planning occurred in compliance with regulations. While a key  goal of the oversight program is to improve acquisition planning, we found  potential problems with each of the three elements of the acquisition  planning reviews, as shown in table 2.
section_title: The CPO Faces Challenges in Implementing Reviews and Corrective Actions
paragraphs: DHS faces two challenges in achieving the goals of its acquisition  oversight plan. First, the CPO has had limited resources to implement the  plan reviews. When implementation of the plan began in 2006, only two  personnel were assigned acquisition oversight as their primary duty. The  CPO received funding for eight additional oversight positions. However,  officials told us that they have struggled to find qualified individuals. As of  June 2007, seven positions had been filled. As part of the Department’s  fiscal year 2008 appropriation request, the CPO is seeking two additional  staff, for a total of 12 oversight positions. The CPO will also continue to  rely on resources from components to implement the plan, such as  providing staff for on-site reviews.
Second, while the CPO can make recommendations based on oversight  reviews, the component head ultimately determines what, if any, action  will be taken. DHS’s organization relies on cooperation and collaboration  between the CPO and components to accomplish departmentwide  acquisition goals. However, to the extent that the CPO and components  disagree on needed actions, the CPO lacks the authority to require  compliance with recommendations. We have previously reported that the  DHS system of dual accountability results in unclear working relationships  between the CPO and component heads. DHS policy also leaves unclear  what enforcement authority the CPO has to ensure that acquisition  initiatives are carried out. In turn, we recommended that the Secretary of  Homeland Security provide the CPO with sufficient enforcement authority  to effectively oversee the Department’s acquisitions—a recommendation  that has yet to be implemented. CPO officials believe that there are other  mechanisms to influence component actions, such as providing input into  HCA hiring decisions and performance appraisals.
section_title: External Reviews and Knowledge Sharing Could Improve Acquisition Oversight
paragraphs: Making the most of opportunities to strengthen its acquisition oversight  program—along with overcoming implementation challenges—could  position the agency to achieve better acquisition outcomes. We identified  two such opportunities: periodic external assessments of the oversight  program and sharing knowledge gained from the oversight plan reviews  across the department.
Federal internal control standards call for periodic external assessments  of programs to help ensure their effectiveness. An independent  evaluation of DHS’s acquisition oversight program by the Inspector  General or an external auditor could help strengthen the oversight  conducted through the plan and better ensure that the program is fully  implemented and maintaining its effectiveness over time. In particular, an  external assessment with results communicated to appropriate officials  can help maintain the strength of the oversight program by alerting DHS to  acquisition concerns that require oversight, as well as monitoring the  plan’s implementation. For example, the plan initially called for  components to complete the self-assessment by surveying their acquisition  staff; however, the level of staff input for the first self-assessments was left  to the discretion of the HCAs. Specifically, CPO officials advised HCAs to  complete the questions themselves, delegate the completion to one or  more staff members, or select a few key people from outside their  organization to participate. While evolution of the plan and its  implementation is to be expected and can result in improvements, periodic  external assessments of the plan could provide a mechanism for  monitoring changes to ensure they do not diminish oversight.
Federal internal control standards also call for effective communication to  enable managers to carry out their responsibilities and better achieve  components’ missions. The CPO has been assigned responsibility for  ensuring the integrity of the oversight process—in part by providing  lessons learned for acquisition program management and execution. While  the CPO intends to share knowledge with components by posting lessons  learned from operational status reviews to DHS’s intranet, according to  CPO officials, the Web site is currently limited to providing guidance and  training materials and does not include a formal mechanism to share  lessons learned among components. In addition to the Web site, other  opportunities may exist for sharing knowledge. For example, CPO officials  indicated that the CPO meets monthly with component HCAs to discuss  acquisition issues. The monthly meetings could provide an opportunity to  share and discuss lessons learned from oversight reviews. Finally,  knowledge could be regularly shared with component acquisition staff  through internal memorandums or reports on the results of oversight  reviews.
section_title: Conclusion
paragraphs: Integrating 22 federal agencies while implementing acquisition processes  needed to support DHS’s national security mission is a herculean effort.  The CPO’s oversight plan generally incorporates basic principles of an  effective acquisition function, but absent clear authority, the CPO’s  recommendations for improved acquisition performance are, in effect,  advisory. Additional actions are needed to achieve the plan’s objectives  and opportunities exist to strengthen oversight through enhanced internal  controls. Until DHS improves its approach for overseeing acquisition  planning, the department will continue to be at risk of failing to identify  and address recurring problems that have led to poor acquisition  outcomes.
section_title: Recommendations for Executive Action
paragraphs: To improve oversight of component acquisition planning processes and  the overall effectiveness of the acquisition oversight plan, we recommend  that the Secretary of Homeland Security direct the Chief Procurement  Officer to take the following three actions:    Reevaluate the approach to oversight of acquisition planning reviews  and determine whether the mechanisms under the plan are sufficient to  monitor component actions and improve component acquisition  planning efforts.
Request a periodic external assessment of the oversight plan  implementation and ensure findings are communicated to and  addressed by appropriate officials.
Develop additional opportunities to share lessons learned from  oversight reviews with DHS components.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft of this report to DHS for review and comment. In  written comments, DHS generally agreed with our facts and conclusions  and concurred with all of our recommendations and provided information  on what actions would be taken to address them.
Regarding the recommendation on acquisition planning, DHS stated that  during on-site reviews they will verify that CPO comments on acquisition  plans have been sufficiently addressed. DHS is also developing training for  component HCAs and other personnel to emphasize that CPO comments  related to compliance with applicable laws and regulations must be  incorporated into acquisition plans. The CPO will also annually require an  acquisition planning review as part of the oversight plan’s operational  status reviews. Additionally, DHS intends to change the advanced  acquisition planning database so that historical data are available for  review. With regard to the recommendation for periodic external  assessment of the oversight plan, DHS stated they plan to explore  opportunities to establish a periodic external review of the oversight  program. However, the first priority of the acquisition oversight office is to  complete initial component on-site reviews. For the recommendation to  develop additional opportunities to share lessons learned from oversight  reviews, DHS stated it intends to share consolidated information from  operational status and on-site reviews in regular meetings with component  HCA staff. In addition, the CPO plans to explore further opportunities for  sharing oversight results with the entire DHS acquisition community.
DHS also responded to a 2005 GAO recommendation on the issue of the  CPO lacking authority over the component HCAs. DHS commented that it  is in the process of modifying its acquisition lines of business management  directive to ensure that no DHS contracting organization is exempt. In  addition, DHS stated that the Under Secretary for Management has  authority as the Chief Acquisition Officer to monitor acquisition  performance, establish clear lines of authority for making acquisition  decisions, and manage the direction of acquisition policy for the  department, and that these authorities also devolve to the CPO. Modifying  the management directive to ensure no DHS contracting organization is  exempt is a positive step. However, until DHS formally designates the  Chief Acquisition Officer, and modifies applicable management directives  to support this designation, DHS’s existing policy of dual accountability  between the component heads and the CPO leaves unclear the CPO’s  authority to enforce corrective actions to achieve the department’s  acquisition goals, which was the basis of our earlier recommendation.
DHS’s letter is reprinted in appendix II. DHS also provided technical  comments which were incorporated as appropriate.
We are sending copies of this report to interested congressional  committees and the Secretary of Homeland Security. We will also make  copies available to others upon request. In addition, the report will be  available at no charge on GAO’s Web site at http://www.gao.gov.
If you or your staff have questions regarding this report, please contact me  at (202) 512-4841 or huttonj@gao.gov. Contact points for our Offices of  Congressional Relations and Public Affairs may be found on the last page  of this report. Principal contributors to this report were Amelia Shachoy,  Assistant Director; William Russell; Tatiana Winger; Heddi Nieuwsma;   Lily Chin; Karen Sloan; and Sylvia Schatz.
section_title: Appendix I: Scope and Methodology
paragraphs: To determine actions taken by DHS to implement the acquisition oversight  plan and challenges DHS faces, we reviewed prior GAO and DHS Office of  the Inspector General reports pertaining to acquisition oversight as well as  relevant DHS documents, such as the oversight plan, documents of  completed reviews and guidance to components, including training  materials. We interviewed officials in the CPO’s office and the nine DHS  components with acquisition offices. We compared efforts undertaken to  implement the plan by DHS officials against established program policies,  the fiscal year 2007 implementation schedule, and other guidance  materials. We reviewed four component self-assessments that were  provided to us and also reviewed areas in which the CPO provided  assistance to components based on self-assessment results. We also  reviewed Standards for Internal Control in the Federal Government.
We conducted our work from February 2007 to June 2007 in accordance  with generally accepted government auditing standards.
section_title: Appendix II: Comments from the Department of Homeland Security