Homeland Security: DHS Has Enhanced Procurement Oversight Efforts, but Needs to Update Guidance
Published: 2012-09-10T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: DHS bought over $14 billion in goods and services in fiscal year 2011--over one quarter of its budget--and processed over 100,000 transactions to support its homeland security missions. In 2005, DHS established an oversight program to provide department-level insight into components' procurement of goods and services and to identify successful acquisition management approaches. DHS has also established specific initiatives, such as a strategic sourcing program in 2003 to reduce procurement costs and gain other efficiencies by consolidating requirements. GAO (1) assessed DHS's efforts to implement procurement oversight, and (2) identified DHS components' use of strategic sourcing to leverage their buying power. To do this, GAO reviewed procurement oversight policies and guidance, interviewed officials from OCPO and DHS components, reviewed prior GAO reports, reviewed on-site review findings and recommendations, and examined DHS and component documentation of oversight and strategic sourcing efforts.
section_title: What GAO Found
paragraphs: The Department of Homeland Security's (DHS) Office of the Chief Procurement Officer (OCPO) continues to implement and has improved some aspects of its procurement oversight but has not sufficiently updated its guidance. OCPO's oversight has helped ensure that DHS components receive and address constructive assessments of their compliance with procurement regulations and policies. The oversight also has increased the Chief Procurement Officer's visibility into components' progress against procurement-related metrics. For example, OCPO establishes annual procurement goals for the components and tracks their progress in quarterly reports. OCPO has been less consistent in--but continues to hone its implementation of--other aspects of the program, such as self assessments and parts of its acquisition planning reviews. However, until GAO sent DHS a draft of this report recommending that DHS issue updated policy and guidance to reflect changes to the department's procurement oversight efforts, the department did not issue updated policy or guidance. This has led to a lack of clarity among components regarding what the oversight efforts entail. For example, some components did not complete a required self assessment in 2011. GAO's review of the revised policy and guidance found inconsistencies between the two and with current oversight efforts.
DHS component officials stated that most of their efforts to leverage buying power are through the department's strategic sourcing program, which provides departmentwide contract vehicles for the purchase of specific items or services. According to DHS data, the department's spending through strategic sourcing contract vehicles has increased steadily from $1.8 billion in fiscal year 2008 to almost $3 billion in fiscal year 2011, representing about 20 percent of DHS's procurement spending for that year. The Office of Management and Budget has recognized some of DHS's strategic sourcing efforts as best practices. DHS policies encourage components to consider, but do not require, the use of strategic sourcing contract vehicles. The Chief Procurement Officer has identified increasing strategic sourcing as a departmentwide priority and OCPO encourages the utilization and development of strategic sourcing contract vehicles in a variety of ways, including hosting quarterly training sessions and posting contract information on the strategic sourcing web page. In addition, while components have leveraged contracts with other agencies, many found it more efficient to use DHS's strategic sourcing contract vehicles. DHS components generally do not use other components' contracts.
section_title: What GAO Recommends
paragraphs: Based on DHS's actions in response to the recommendation contained in the draft report, GAO recommends that the Secretary of Homeland Security direct the Chief Procurement Officer to review and ensure consistency between the new procurement oversight directive and guidebook and with the department's current procurement oversight efforts.

section_title: Letter
paragraphs: The Department of Homeland Security (DHS) is a complex organization  responsible for a broad range of mission and management areas, such as  border security, immigration services, aviation security, maritime security,  and emergency preparedness and response. DHS bought over $14 billion  in goods and services in fiscal year 2011—representing over one quarter of  its budget—and processed over 100,000 transactions to support its  homeland security missions. DHS has initiated broad oversight efforts to  improve its procurement of goods and services as well as specific initiatives  to reduce procurement costs, such as strategic sourcing. The Chief  Procurement Officer’s Strategic Plan for Fiscal Year 2012 to 2014  highlights these efforts and other priorities for improving procurement  operations including the oversight activities required to implement the plan.
DHS’s Office of the Chief Procurement Officer (OCPO) established an  acquisition oversight program in 2005 to complement DHS’s existing  acquisition management governance process for major investments.  Management Directive 0784, “Acquisition Oversight Program” (2005) and  the “Acquisition Oversight Program Guidebook” (2006) included policy  and guidance for the program, which was designed to provide  department-level insight into components’ acquisition functions and to  identify successful acquisition management approaches. The program  addressed a broad range of acquisition- and procurement-related issues  through four main oversight mechanisms: operational status reviews, on- site reviews, self assessments, and acquisition planning reviews.
OCPO established a strategic sourcing program in 2003 to leverage  DHS’s buying power to increase savings and other efficiencies by  consolidating requirements, increasing standardization of requirements  across components, and enhancing management of commodities or  services. According to DHS, since the program’s inception, it has led to  over $1 billion in savings and increased administrative efficiencies.
Given your interest in sound procurement practices, you requested that  we undertake a review of DHS procurement oversight efforts.  Accordingly, we (1) assessed DHS’s efforts to implement procurement  oversight, and (2) identified DHS components’ use of strategic sourcing to  leverage their buying power.
To assess DHS’s efforts in implementing procurement oversight, we  reviewed procurement oversight policies and guidance; interviewed  knowledgeable officials from OCPO and DHS components; reviewed prior  GAO reports; and examined DHS and component documentation of  oversight efforts, including OCPO’s review schedule, quarterly reports,  goal letters, and on-site reviews from 2007 to the present. To evaluate the  extent to which DHS components address the recommendations  identified in on-site reviews, we interviewed OCPO and component  contracting officials, reviewed on-site review findings and  recommendations, and analyzed components’ written responses  regarding, and documentation of, actions they took to address  recommendations in their most recent on-site reviews.
To identify practices DHS components use to leverage their buying power  through strategic sourcing, we reviewed relevant policies and guidance;  examined OCPO documentation of strategic sourcing efforts; and  interviewed OCPO and component officials about practices they employ,  contracts they have leveraged, and resulting benefits.
A more detailed description of our scope and methodology is presented in  appendix I. We conducted this performance audit from March 2012 to  September 2012 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: OCPO’s Oversight and Strategic Support Division manages the Chief  Procurement Officer’s procurement oversight efforts. Figure 1 shows the  division’s four branches. All branches except the strategic sourcing  branch are responsible for aspects of the procurement oversight efforts.
Component-level contracting activity is led by component Heads of  Contracting Activity (HCA), who have overall responsibility for the day-to- day management of the component’s contracting function. OCPO has  oversight responsibilities for all nine DHS HCAs—one for each of the  seven components with procurement offices and one HCA each for the  Office of Selective Acquisitions and the Office of Procurement  Operations, which provide contracting support to all other components.  The Selective Acquisitions and Procurement Operations HCAs report  directly to the Chief Procurement Officer. The seven other HCAs report  directly to their component heads, but their contracting authority is  delegated to them from the Chief Procurement Officer. Figure 2 shows  the organizational relationships among the HCAs, the Chief Procurement  Officer, and other senior DHS leadership.
The Oversight and Strategic Support Division’s strategic sourcing branch  has management responsibilities for DHS’s strategic sourcing initiative.  DHS defines strategic sourcing as a collaborative and structured process  of critically analyzing DHS spending and using an enterprise approach to  make business decisions about acquiring and managing commodities and  services more effectively and efficiently across multiple components or  the entire department. DHS’s strategic sourcing contract vehicles include  contracts or agreements that have been established for use by two or  more components. To maximize cost savings, DHS encourages  component utilization of established strategic sourcing vehicles.
section_title: DHS Has Improved Some Aspects of Its Procurement Oversight but Guidance Is Not Sufficiently Updated
paragraphs: OCPO’s oversight has helped ensure that components address  constructive assessments of their compliance with procurement  regulations and policies and has increased the Chief Procurement  Officer’s visibility into components’ progress against procurement-related  metrics. OCPO has been less consistent in—but continues to hone—its  implementation of other aspects of the program, including self  assessments and parts of its acquisition planning reviews. However, at  the time of our review, DHS had not issued updated policy or guidance  reflecting OCPO’s current approach to procurement oversight, which led  to a lack of clarity for components regarding what the oversight efforts  entail.
subsections: section_title: Procurement Oversight Focus Has Changed
paragraphs: OCPO has maintained the overarching structure of its oversight program  while making some modifications to reflect a more specific focus on  procurement issues versus broader acquisition issues. As described in  the management directive and guidebook, OCPO’s original oversight  program included four types of reviews: on-site reviews, operational  status reviews, self assessments, and acquisition planning reviews. It was  based largely on GAO’s Framework for Assessing the Acquisition   and assessed broad issues related to both  Function at Federal Agenciesacquisitions and procurement. Our prior work on the acquisition oversight  program in 2007 found that OCPO’s oversight plan generally incorporated  effective acquisition management principles, but that DHS faced  challenges in implementing its oversight program. OCPO began making  changes to the program in 2008, starting a transition to what is now  referred to as “procurement oversight.” OCPO’s current efforts, which at  the time of our review were not documented in written policy or guidance,  still include the four types of reviews, but no longer fully reflect the original  guidance. For example, some reviews are now focused on procurement  rather than broader acquisition-related topics, which now fall under the  responsibility of other offices such as the recently created Program  Accountability and Risk Management Division, which is responsible for  acquisition program management oversight.current oversight efforts no longer examine cost, schedule, and  performance variances for major investments, which are the responsibility  of the Program Accountability and Risk Management Division. Table 1  compares the oversight review structure and focus as described in the  original management directive and guidebook with current efforts as  described by OCPO officials, since updated guidance was not available at  the time of our review.
section_title: Components Leverage Buying Power through DHS’s Strategic Sourcing Program
subsections: section_title: Components Actively Support DHS’s Strategic Sourcing Program
paragraphs: DHS component officials stated that most of their efforts to leverage  buying power are through the department’s strategic sourcing program,  which facilitates the development and award of contracts for the purchase  of specific items or services across DHS. According to DHS data, DHS’s  spending through strategic sourcing contract vehicles has increased  steadily from $1.8 billion in fiscal year 2008, to almost $3 billion in fiscal  year 2011, representing about 20 percent of DHS’s $14 billion in  procurement spending for that year. The Office of Management and  Budget’s Office of Federal Procurement Policy has cited DHS’s efforts  among best practices for implementing federal strategic sourcing  initiatives. DHS has implemented 42 strategic sourcing efforts, including  indefinite-delivery indefinite-quantity contracts and blanket purchase  agreementsengineering services. The department also has several new initiatives  under development.   for goods and services ranging from ammunition to  DHS policies encourage components to consider, but do not require, the  use of departmentwide strategic sourcing contract vehicles. Usage of all  departmentwide contracts is “mandatory for consideration” unless  otherwise approved by the Under Secretary for Management, and  therefore must be considered by DHS components prior to awarding a  contract. Before pursuing their own procurements, components are to  review the DHS-wide intranet site that lists available strategic sourcing  contract vehicles. Some component officials said that their staff routinely  check that list to determine whether one of those vehicles can be used  before initiating a new procurement effort. Further, to encourage  increased establishment of strategic sourcing contract vehicles, the  HSAM requires the components to involve the strategic sourcing program  office to determine if the requirement lends itself to the establishment of a  departmentwide contract. If a DHS component makes a decision to  implement its own contract instead of a departmentwide contract, it must  document in the acquisition plan and contract file the rationale for doing  so and notify the Chief Procurement Officer for review and approval. DHS  is taking steps to strengthen the use of strategic sourcing at the  department and has drafted, but not yet issued, a management directive  that would make use of strategic sourcing contract vehicles mandatory  with exceptions.
The Chief Procurement Officer has identified increasing strategic sourcing  as a departmentwide priority and OCPO encourages the utilization and  development of strategic sourcing vehicles in a variety of ways. OCPO  officials explained that they host quarterly meetings and training sessions  with the DHS Strategic Sourcing Working Group, meet with individual  component programs and procurement offices, and post all contract  information and ordering guides on the strategic sourcing web page.  OCPO includes metrics in its quarterly reports to track components’  strategic sourcing contract vehicle utilization rates and savings, though it  has not established component-specific goals or targets to further  encourage use and development of strategic sourcing contract vehicles.  OCPO officials told us that they consider their strategic sourcing program  to be robust, and therefore do not currently think it would be worth the  additional effort to develop and track component-specific goals. They said  that if component participation were to decline, they might consider  developing component-specific goals.
Component officials we met with cited a variety of benefits associated  with using DHS’s strategic sourcing program. Most components we  interviewed stated that they rely on department-level strategic sourcing  policy and efforts rather than developing their own. Several officials  explained that, once the contract vehicle is in place, it is much quicker to  award contracts. Some components cited economies of scale and  indicated that they thought prices had gone down in some areas.
In addition to using the vehicles, DHS components are involved with the  program in a variety of ways. Component representatives serve on  working groups to help identify potential strategic sourcing opportunities  and develop shared requirements. Components are also tasked with  serving as the lead for specific initiatives. For example, the Secret Service  initiated a department-wide contract on tactical communications in 2012  and Customs and Border Protection led a department effort to obtain  canines in 2011.
section_title: Components Have Leveraged Contracts with Other Agencies
paragraphs: Some components offered examples of contracts they leveraged with  other agencies. For example, Customs and Border Protection leveraged a  contract with the Department of Defense for air and marine assets in  2008 and the Secret Service partnered with the Defense Information  Systems Agency and White House Communications Agency in 2012 to  obtain an event planning, scheduling and reporting system. In another  example, the Coast Guard received price discounts for its HC-130J  aircraft starting in 2000 by leveraging an Air Force vehicle rather than  contracting directly with the manufacturer. However, most components  found it more efficient to use DHS’s strategic sourcing vehicles than to  leverage contracts with other agencies. Components described several  challenges associated with leveraging contracts with other agencies, such  as additional up front planning, identifying shared requirements, and  paying associated fees to the lead agency.
Component officials indicated that they generally do not leverage  contracts directly with other DHS components. Several component  officials and the director of DHS’s strategic sourcing branch said that it is  not an efficient use of time or resources for individual components to  reach out directly to other components to identify shared requirements  given the DHS-wide effort does this across components. The director also  noted that if a component had an idea of a contract to leverage with  another component, they should first share that example at a DHS-wide  strategic sourcing forum in case any other components share that same  requirement. However, if the components then determine only two  components share that requirement, it would make sense for those two  components to work together directly.
section_title: Conclusions
paragraphs: With its initial oversight efforts in 2005 and today’s more streamlined  procurement oversight approach, OCPO has increased department-level  insight into components’ procurement operations and recommended  ways that components can take steps to improve their overall  procurement operations. OCPO’s consistent and constructive on-site and  operational status reviews also help ensure that components work  towards common departmental procurement goals. However, we found  that DHS had not updated its procurement oversight policy and guidance  to reflect the increased focus on procurement and changes to the original  oversight program. As a result, we found that component officials did not  always know what was expected of them regarding the implementation of  the procurement oversight efforts. DHS’s recent revision of its policy and  guidebook is a step in the right direction, but inconsistencies in the  documents as well as with the program as described to us by DHS  officials could lead to further confusion, which would diminish the value of  the program and opportunities for increased accountability for  procurements.
section_title: Recommendation for Executive Action
paragraphs: In order to help ensure that DHS component officials understand what  OCPO expects of them in its procurement oversight, we recommend that  the Secretary of Homeland Security direct the Chief Procurement Officer  to review and ensure consistency between Directive 143-05 and the  Procurement Oversight Program Guidebook and with the department’s  current procurement oversight efforts.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft of this report to DHS for review and comment. The  draft included a recommendation that DHS issue updated policy and  guidance to reflect changes to the department’s procurement oversight  efforts. In written comments, the department concurred with our findings  and recommendation. The department’s comments are reprinted in  Appendix II. DHS informed us that, to address the recommendation in our  draft report, it updated its directive and guidebook to better mirror current  procurement oversight practices and that it will make both documents  available on DHS’s internal website.
DHS’s revisions to the policy and guidance are a step in the right  direction. However, we found inconsistencies between the updated  directive and guidebook as well as with the program as described to us by  DHS officials. As we noted when we made our draft recommendation,  component officials do not always know what is expected of them  regarding the implementation of the procurement oversight efforts, which  diminishes the value of the program. Therefore, while we acknowledge  DHS’s most recent efforts to update the directive and guidebook, we  continue to believe that additional action is needed and have therefore  revised our recommendation.
We are sending copies of this report to the Secretary of Homeland  Security. In addition, the report is also available at no charge on the GAO  website at http://www.gao.gov.
If you or your staff have any questions about this report or need additional  information, 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. Staff  acknowledgments are provided in appendix IV.
section_title: Appendix I: Scope and Methodology
paragraphs: The objectives of this review were to (1) assess the Department of  Homeland Security’s (DHS) efforts to implement procurement oversight,  and (2) identify DHS components’ use of strategic sourcing to leverage  their buying power.
To assess DHS efforts to implement procurement oversight, we examined  DHS’s procurement oversight policies and guidance; reviewed prior GAO  reports on acquisition and procurement oversight; interviewed  knowledgeable officials from the Office of the Chief Procurement Officer  (OCPO) and from DHS components; and examined OCPO and  component documentation of oversight efforts, including OCPO’s review  schedule, quarterly reports, goal letters, operational status reports, and  documentation of on-site reviews from 2007 to the present. Specifically,  we interviewed the Chief Procurement Officer, the Director for Oversight  and Strategic Support, officials from the four branches of the Oversight  and Strategic Support Division, and senior officials, including four Heads  of Contracting Activity (HCA), from the nine DHS contracting offices with  HCAs to discuss the evolution of DHS’s oversight efforts. To evaluate the  extent to which DHS components address the findings and  recommendations identified in on-site reviews, we interviewed OCPO and  component contracting officials, reviewed on-site review findings and  recommendations, and analyzed components’ written responses  regarding actions they took to address recommendations from their most   we  recent reviews. For all eight contracting offices that OCPO reviewed,examined the contracting offices’ descriptions of actions they took to  address recommendations from their most recent on-site reviews and  assessed their documentation of those actions.
To identify DHS components’ use of strategic sourcing to leverage their  buying power, we reviewed relevant policies and guidance, examined  department and component documentation and interviewed OCPO and  component officials on practices they employ, contracts they have  leveraged, and views on resulting benefits. Specifically, we interviewed  officials from DHS’s strategic sourcing branch, as well as all nine  contracting offices with HCAs, to gain an understanding of DHS’s  strategic sourcing processes, the availability of strategic sourcing  contracting vehicles, and the potential of establishing component specific  strategic sourcing goals.
We conducted our work from March 2012 to September 2012 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.
section_title: Appendix II: Comments from the Department of Homeland Security
section_title: Appendix III: Snapshot from a 2012 DHS Component Quarterly Report
section_title: Appendix IV: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, the following individuals made  key contributions to this report: Katherine Trimble, Assistant Director;  Laura Holliday, Andrea Bivens, Laura Greifner, and Sylvia Schatz.