DHS Management and Administration Spending: Reliable Data Could Help DHS Better Estimate Resource Requests
Released: 2014-01-03T00:00:00


Highlights: section_title: Why GAO Did This Study
paragraphs: DHS is the third-largest federal department, with budget authority of approximately $60 billion. Since its inception in 2003, DHS has faced challenges strengthening its multiple management systems and processes. Some Members of Congress said that DHS's components' budget requests do not provide sufficient detail to allow them to distinguish between funding for mission and M&A activities. GAO was asked to provide information on what DHS spends on M&A activities, including spending by its components since fiscal year 1999.

This report addresses the following questions: (1) How have select DHS components defined and identified their M&A activities and spending, and to what extent are M&A data available from fiscal years 1999 through 2013? (2) How has DHS identified M&A spending department-wide, and to what extent has DHS defined M&A activities and taken steps to enhance efforts to collect M&A data? GAO analyzed documents, such as DHS's budget execution reports, and efforts to identify spending on M&A activities since fiscal year 1999. GAO interviewed officials from eight DHS components, selected on the basis of their budget authority, which in total accounts for nearly 88 percent of DHS's fiscal year 2013 budget authority. Though not generalizable, the interviews provided insights.

section_title: What GAO Found
paragraphs: Officials from all eight Department of Homeland Security (DHS) components in GAO's review define management and administration (M&A) activities--activities that help agencies achieve their mission and program goals--differently, and while component officials said they can identify M&A spending, limitations exist in obtaining spending data from fiscal years 1999 through 2013. Officials from four of the eight components define their M&A activities according to the activities funded through their appropriations accounts and programs, projects, or activities (PPA) that are M&A in nature. For example, officials from the Transportation Security Administration said its M&A activities are those found within three PPAs within its Transportation Security Support appropriations account. The remaining four components each define M&A activities differently, and those definitions are not tied to activities contained in specific appropriations accounts. For example, the Coast Guard's M&A activities are those associated with headquarters and its service centers (e.g., personnel support), according to officials. According to component officials, the eight components GAO reviewed can identify their M&A spending, but currently do not because they are not required to do so by the department. Officials from seven of the eight components said they could provide M&A spending data for some, but not all, fiscal years since 1999 because of changes in their financial systems, among other reasons. Federal Emergency Management Agency (FEMA) officials stated that FEMA could provide data since fiscal year 1999. Because components define M&A differently, have different methods for identifying spending, and limitations exist in obtaining data, it is not possible to compare components' M&A spending data from fiscal years 1999 through 2013.

DHS has not identified the department's total spending on M&A activities, but has identified some M&A spending through DHS's Efficiency Review--an effort to identify opportunities to improve efficiency--and the Campaign to Cut Waste--a government-wide effort to reduce administrative spending. DHS is also taking steps to define and collect data on M&A activities, but has encountered difficulties in implementing these steps. Specifically, in 2010, DHS developed a common definition of M&A in conjunction with the Future Years Homeland Security Program (FYHSP) System Program Data Module (PDM) for components to submit resource allocation requests for future years by activity type: mission/operational, mission support, and business support/M&A. However, DHS is unable to reliably estimate what percentage of its requests are identified as M&A because 4 out of 15 components did not enter all appropriate business support/M&A activities and 1 component did not enter any business support/M&A activities, among other errors, which DHS officials said are a result of manual data entry and components not adhering to the guidance in the user manual. DHS does not have a mechanism in place to work with the components to correct data errors in the FYHSP System PDM. By implementing a mechanism to assess whether components have entered the appropriate M&A activities into the PDM, and working with the components to correct the data, as needed, DHS would be better positioned to reliably estimate and report to external stakeholders what percentage of DHS's resource allocations requests are identified as M&A.

section_title: What GAO Recommends
paragraphs: GAO recommends that DHS implement a mechanism to assess and correct M&A data entered by components into the PDM. DHS concurred with GAO's recommendation.

section_title: Letter
paragraphs: The Department of Homeland Security (DHS) is the third-largest federal  department, with a total budget authority of approximately $60 billion for  fiscal year 2013 and more than 240,000 employees performing a wide  variety of missions. Since its inception in 2003 from 22 originating  agencies and offices, DHS has faced challenges consolidating its multiple  management systems and processes and transforming into a more  effective organization with robust planning, management, and  operations. In recent years, DHS has reported maximizing effectiveness  and efficiency by, in part, prioritizing the funding of frontline activities  (core missions) by redirecting funding from management and  administration (M&A) activities—activities that help agencies achieve their   These activities include, among other things,  mission and program goals.planning and budgeting, legal support, acquisitions and grants  administration, workforce management, information technology (IT)  infrastructure and operations, and facilities support. However, according  to some Members of Congress, the budget requests of DHS’s  components and offices do not provide a sufficient level of detail to allow  them to distinguish between funding for mission versus M&A activities.

You asked us to provide information on what DHS spends on M&A  activities, including spending by its components since fiscal year 1999— prior to their inclusion in DHS. This report addresses the following  questions:  1.  How have select DHS components defined and identified their M&A  activities and spending, and to what extent are M&A data available  from fiscal years 1999 through 2013?  2.  How has DHS identified M&A spending department-wide, and to what  extent has DHS defined M&A activities and taken steps to enhance  efforts to collect M&A data?

To address the first objective, we analyzed DHS’s congressional budget  justifications, budget execution reports, and budget-in-briefs, as well as  presidential budgets and appropriations legislation from fiscal years 2004  through 2013 to understand how M&A activities are defined and  accounted for within components’ appropriations accounts. We sought to  independently identify components’ M&A activities and related spending,  but were unable to because of various challenges. In particular, sources  of federal budget data do not define and distinguish all M&A spending  from other types of spending. Moreover, in cases where groupings of  budget data, such as appropriation accounts, are largely M&A, the  activities contained in those groupings do not include all M&A activities  and are not consistent from year to year. See appendix I for further  details. To determine how selected DHS components define their M&A  activities and how they would go about identifying spending associated  with these activities, we interviewed officials representing two of DHS’s  eight support components—Departmental Management and Operations  (DMO) and the Federal Law Enforcement Training Center (FLETC)—and  six of DHS’s seven operational components—the Federal Emergency  Management Agency (FEMA), U.S. Customs and Border Protection  (CBP), the U.S. Coast Guard, the Transportation Security Administration  (TSA), U.S. Immigration and Customs Enforcement (ICE), and the U.S.

Secret Service (USSS). We selected these eight components based on  the amount of their budget authority (totaling nearly 88 percent of DHS’s  fiscal year 2013 budget authority); their mission, whether operational or  support; and date established, whether before or after the inception of  DHS. To determine the extent to which M&A data are available from fiscal  years 1999 through 2013, we interviewed officials from the eight selected  components about their ability to provide M&A spending data during the  time frame. We did not obtain available data from the components  because the data would not be comparable. While the results of our  interviews cannot be generalized across all DHS components, these  interviews allowed us to obtain perspectives on how selected components  define and would identify M&A spending, as well as the availability of their  M&A data since fiscal year 1999.

To address the second objective, we examined DHS’s two efforts to  identify its spending on specific M&A activities—DHS’s Efficiency Review  (ER)—an effort to identify opportunities to improve efficiency and  streamline decision making through a series of initiatives—and the  Obama administration’s Campaign to Cut Waste—a government-wide   Specifically, we analyzed all  effort to reduce administrative spending. available expenditure and cost avoidance data collected through the ER  from the third quarter of fiscal year 2009—when data collection began— through the first quarter of fiscal year 2013—the most recent data  available at the time of our review.we traced one component’s recorded expenditure and cost avoidance  data back to documentation showing its original data submission. We also  interviewed component officials responsible for entering the data and the  ER Director to determine how the data are collected and maintained. We  determined that the expenditure data were sufficiently reliable to illustrate  general levels of spending by DHS. We determined that the cost  avoidance data prior to fiscal year 2012 were not reliable for two of the  initiatives, since the formula used during that time was not an accurate  method to determine cost avoidances, a conclusion with which  component officials concurred since figures could be overstated.  However, we determined that cost avoidance data beginning with the first  quarter of fiscal year 2012 were sufficiently reliable for reporting DHS’s  cost avoidances, as the ER Office began requiring an explanation of the  specific actions that led to cost avoidance in order for the cost avoidance  to be counted.

To assess the reliability of the data,  We analyzed data collected for the Campaign to Cut Waste for fiscal year  2012 through the second quarter of fiscal year 2013—all of the data  available at the time of our review. Specifically, we analyzed DHS’s  spending against its spending targets for all seven categories of the  campaign—(1) travel, (2) printing, (3) supplies, (4) advisory service  contracts, (5) promotional items, (6) IT devices, and (7) executive sedan  services. To assess the reliability of the data, we discussed DHS’s  implementation of and methodology for developing metrics for the  campaign with a Budget Analyst from the Office of the Chief Financial  Officer (OCFO) Budget Division, and we interviewed officials from the  eight DHS components in our review about how they determine and  report their spending figures for the campaign and any challenges they  experience in determining these figures. We determined that the data  were sufficiently reliable to illustrate general levels of DHS’s spending  against its spending targets on the Campaign to Cut Waste categories for  six of the seven categories—all but IT devices, for which data were not  complete, and therefore excluded from our analysis.

We also analyzed fiscal year 2012 and 2013 data in the Future Years  Homeland Security Program (FYHSP) System Program Data Module  (PDM), which was developed by DHS, in part to model the percentage of  DHS’s resource allocation requests that are for activities identified as  M&A in future years. We compared components’ categorization of  activities by type in the PDM with the definitions for the three activity type  categories (mission/operational, mission support, and business  support/M&A) as stated in the FYHSP System PDM User Manual, which  provides guidance to components on entering data into the PDM. We  discussed the development and implementation of the FYHSP System  PDM with DHS OCFO Program Analysis & Evaluation (PA&E) officials  who oversee the PDM. Moreover, we reviewed PA&E’s data quality  analysis, conducted in March 2013, of fiscal years 2014 through 2018  resource requests identified as M&A to determine the accuracy of M&A  data entered into the PDM. On the basis of our review of the analysis for  any obvious data errors and outliers, we determined that the results of  PA&E’s analysis were reliable for identifying any limitations of the PDM  data. On the basis of our analysis, PA&E’s analysis, and interviews with  PA&E officials, we determined the data were not sufficiently reliable for  reporting the percentage of DHS’s resource allocations requests that are  categorized as M&A, as discussed later in the report. We compared the  ability to use the PDM data with criteria in Standards for Internal Control  in the Federal Government  and Statement of Federal Financial  Accounting Concepts No. 1, Objectives of Federal Financial Reporting.  We did not assess the reliability of data beyond the categorization by  activity type (e.g., categorization of activities by investment type), since  such data were outside of the scope of our review.

Also, to address the second objective, we interviewed DHS OCFO  officials in the Resource Management Transformation Division to discuss  the steps DHS has taken to enhance the collection of M&A data for the  department. We analyzed documentation related to DHS’s efforts to  implement its business intelligence initiative to standardize financial data,  including its draft Accounting Classification Structure (ACS) Policy and  Standards and ACS Guidebook. We compared these efforts to  standardize financial data with criteria for cost accounting in the  Statement of Federal Financial Accounting Standards No. 4, Managerial  Cost Accounting Standards and Concepts. We also reviewed the  Concept of Operations and program milestones for “CFO Horizon”—a  means to consolidate components’ financial data. Finally, we interviewed  OCFO Resource Management Transformation officials about their efforts  to implement CFO Horizon and develop ACS. Appendix II provides more  details on our objectives, scope, and methodology.

We conducted this performance audit from February 2013 to December  2013 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
subsections: section_title: DHS Organization and Missions
paragraphs: DHS’s seven operational components, listed along the bottom of figure 1,  lead the department’s frontline activities. As described in DHS’s  Quadrennial Homeland Security Review Report, the department has five  core missions: (1) preventing terrorism and enhancing security, (2)  securing and managing our borders, (3) enforcing and administering our  immigration laws, (4) safeguarding and securing cyberspace, and (5)  ensuring resilience to disasters.focuses on two areas: (1) providing essential support to national and  economic security, such as maximizing the collection of customs revenue,  and (2) maturing and strengthening DHS, such as enhancing shared  awareness of risks and threats. DHS’s eight support components provide  resources, analysis, equipment, research, policy development, and   In addition to the five missions, DHS  support to help ensure the operational components have the tools and  resources to accomplish DHS’s missions. Figure 1 shows DHS’s  organizational structure.

Appropriation account and PPA: Congress appropriates funds to DHS in  appropriations accounts that authorize it to incur obligations and make payments (expenditures) from the Treasury for specified purposes.These appropriations accounts are further broken down by program,  project, or activity (PPA). PPAs are identified in conference reports and in  the President’s budget submission. In addition, each DHS component  explains its funding request by PPA in DHS’s congressional budget  justification. PPAs are intended to provide a meaningful representation of  the operations financed by the account. PPAs are not standard among  DHS components. For example, the Transportation Security  Administration’s PPAs generally align with its programs (e.g., Screening  Partnership Program and Secure Flight), whereas the Coast Guard’s  PPAs align with expense type. For example, the Coast Guard’s  Operating Expenses account consists of the following six PPAs: military  pay and allowances, civilian pay and benefits, training and recruiting,  operating funds and unit-level maintenance, centrally managed accounts,  and depot-level maintenance. In addition, the number of appropriations  accounts and PPAs each component has varies. For example, the  President’s fiscal year 2013 budget submission requested funding for the  Federal Law Enforcement Training Center in a total of two appropriations  accounts and three PPAs. In contrast, the budget submission requested  funding for FEMA in a total of nine appropriations accounts and 19 PPAs.  We previously found that there are limitations to using account structures  to identify and analyze M&A spending.appropriation account structure was not constructed to delineate program  and administrative expenses. In particular, (1) the budget does not  identify an administrative account for all agencies, (2) similar expenses  are categorized differently across agencies and within the same agencies  from year to year, and (3) administrative accounts do not include all  administrative expenses of an agency. See appendix I for more details on  the limitations of using appropriations accounts and PPAs to identify M&A  spending.

Specifically, we found that the  Object classification: Object classes are numbered categories used in  budget preparation to classify obligations by the types of goods or  services purchased by the federal government. Obligations are  commitments that create a legal liability of the federal government for the  payment of goods and services. For example, an agency incurs an  obligation when it places an order, signs a contract, purchases a service,  or awards a grant. Obligations may also include interagency transactions  where funds are transferred from one appropriation account to another.  Object class information is mandated by law, which requires the  President’s budget to present obligations by object class for each  account. In DHS’s annual congressional budget justification, components break down their funding requests for each PPA by object  class. The Office of Management and Budget (OMB) established five  major object classes; by number, they are as follows: 10, personnel  compensation and benefits; 20, contractual services and supplies; 30,  acquisition of assets; 40, grants and fixed charges; and 90, other. See  appendix I (table 5) for a description of the major object classes. These  major classes are divided into smaller classes. For example, object class  20 includes 21, travel and transportation of persons; 24, printing and  reproduction; and 26, supplies and materials. See figure 2 for examples  of the contractual services and supplies object classification for DHS.

We previously found that object class data have limitations when used to  identify and analyze obligations of an M&A nature.not an object class exclusively for M&A activities, so obligations for M&A   For example, there is  activities cannot be separated from obligations for mission activities. See  appendix I for more details on the limitations of using object class data to  identify M&A spending.

section_title: Financial Systems
paragraphs: Components use financial systems to track obligations and expenditures  by account and PPA, as well as object classification. The term “financial  system” includes an information system, composed of one or more  applications, that is used for collecting, processing, maintaining,  transmitting, or reporting data about financial events; supporting financial  planning or budgeting activities; accumulating and reporting costs  information; or supporting the preparation of financial statements. Of the  15 DHS components, 6 own and operate financial systems. The  remaining components, with the exception of the Office of Inspector  General, which relies on the Department of the Treasury, are customers  of those 6 components that own and operate their own financial systems   For example, the Coast  and serve as internal shared service providers.Guard owns and operates a financial system, and TSA and the Domestic  Nuclear Detection Office are customers of the Coast Guard. Each of the 6  components that own financial systems use different software or versions  of software. Table 1 depicts which DHS components own financial  systems and which are customers that use those systems.

In addition to the financial systems components utilize to track budget  execution, DHS utilizes the FYHSP System PDM to develop the FYHSP  report to Congress and assist the department with budget formulation. In  response to DHS’s Bottom-Up Review, which called for the capability to  better align DHS’s budget with its missions, PA&E developed the FYHSP  System PDM.submit their resource allocation plans to request funding for future years.  Financial systems use the appropriation structure specified by Congress  for budget execution, while the PDM captures DHS’s programmatic   The PDM is a data collection tool for components to  structure used for resource formulation, managerial decision making,  performance management, and articulating outcome-oriented mission  programs to the public.

section_title: DHS Components Define M&A Activities Differently and Can Identify M&A Spending, but Limitations Exist in Obtaining Data from Fiscal Years 1999 through 2013
paragraphs: The eight DHS components we reviewed define M&A spending  differently. According to component officials, the components can identify  M&A spending, but they do not do so because they are not required to by  the department. In addition, the methods for identifying M&A spending  vary among components. Components also have varied ability to report  consistent, reliable M&A data, limiting the data available from fiscal years  1999 through 2013. Because components define M&A differently, have  different methods for identifying spending, and limitations exist in  obtaining data, it is not possible to compare components’ M&A spending  data from fiscal years 1999 through 2013.
subsections: section_title: DHS Components Define M&A Activities Differently and Can Identify M&A Spending
paragraphs: Officials from all eight DHS components we reviewed provided us  different definitions of M&A activities and told us that they can identify  spending on M&A activities. (See table 2.) Four of the eight components  in our review—FEMA, FLETC, ICE, and TSA—define their M&A activities  according to the activities funded through their appropriations accounts  and PPAs that are M&A in nature (i.e., activities of a support nature such  as planning and budgeting, legal support, and IT infrastructure), while the  other four—Coast Guard, DMO, CBP, and USSS—each define M&A  activities differently and their definitions are not tied to activities in specific  appropriation accounts or PPAs. For example, TSA officials stated that  TSA’s M&A activities are those found within its Transportation Security  Support appropriations account, specifically the following three  PPAs: Headquarters Administration, Human Capital Services, and  Information Technology. These three PPAs fund TSA’s headquarters and  support functions. Alternatively, the Coast Guard does not have an M&A  PPA. According to Coast Guard officials, the Coast Guard’s M&A  activities are those associated with headquarters and its service centers,  such as personnel support and finance, which support the entire Coast  Guard and cannot be attributed to a single unit or mission. Unlike officials  in other components, DMO officials said that they consider all of DMO’s  activities to be M&A in nature, and therefore all of its spending to be M&A.

DHS components are not required by the department to identify M&A  spending as they obligate or expend funds, and as a result, none of the  eight components we reviewed currently do so. However, all the  components said they can identify M&A spending. Seven of the  components would use their financial systems to identify M&A spending,  while one component would use its cost model. However, methods for  identifying spending vary among components. For example, FEMA  officials said they can obtain M&A data from object classes within FEMA’s  financial system, while Coast Guard officials said that they can use  expenditures by cost centers and ICE officials said that they can calculate  obligations and expenditures by PPA. Alternatively, officials from one  component, CBP, said that CBP can use its cost model, which aligns  costs with activities—but is separate from its financial system—to identify  M&A spending. Table 2 summarizes how DHS components we reviewed  define and would identify M&A activities and spending.

DHS components have varied ability to report consistent, reliable M&A  data, limiting the data available from fiscal years 1999 through 2013.  While FEMA officials stated that FEMA could provide data since fiscal  year 1999, officials from seven of the eight DHS components we  reviewed told us they would be able to provide M&A spending data for  some, but not all, fiscal years since 1999 because of changes in their  financial systems and data reliability issues, among other reasons.  Examples of these limitations in obtaining data include the following:  Financial system changes: Officials from two of eight components  cited a change or upgrade to their financial systems as a reason for  not having data readily available since fiscal year 1999. For example,  according to USSS officials, they could most easily identify M&A data  for fiscal years 2005 through 2012, since USSS changed its financial  system in 2005. The officials added that obtaining M&A data before  fiscal year 2005 would be time-consuming, and the data would be  difficult to merge with data in USSS’s current system because the  financial systems are not compatible or linked.

Data reliability: Officials from two of eight components cited data  reliability as a reason for not having data readily available since fiscal  year 1999. For example, officials representing DMO—which was  established in fiscal year 2004 along with its financial system—told us  that they do not consider fiscal year 2004 data to be reliable because  the data are for a partial year and the officials were learning the  system; however, they consider the next fiscal year’s data (2005)  reliable, as the financial system was fully operational for an entire  fiscal year and officials had become familiar with using the system.

Date component established: Four of the eight components were  not established, or not established in their current form, until after  1999, and therefore data are not available or could be difficult to  obtain. For example, CBP officials told us that obtaining M&A data  prior to fiscal year 2003—when CBP was part of other federal  departments—would be nearly impossible because the offices and  agencies in those departments were not wholly transferred into what  is now CBP.

Table 3 provides information on the range of M&A data available by fiscal  year, and the reason for that range.

Because components define M&A differently, have different methods for  identifying spending, and limitations exist in obtaining data, it is not  possible to compare components’ M&A spending data from fiscal years  1999 through 2013. Furthermore, components’ missions and authorities  have changed over time, making a meaningful analysis of a single  component’s spending over time difficult. For example, the Coast Guard  doubled in size shortly after the terrorist attacks of September 11, 2001,  because its mission was broadened to include additional national security  responsibilities such as increasing port security. Specifically, as reported  in the President’s fiscal year 2003 budget, port security accounted for  approximately 1 to 2 percent of daily operations before September 11,  2001, and accounted for between 50 and 60 percent of daily operations in  fiscal year 2003. Additionally, FEMA’s authority changed with the Post- Katrina Emergency Management Reform Act of 2006. The act enhanced  FEMA’s autonomy—FEMA became a distinct entity within DHS—and  responsibilities. For example, the act tasked FEMA with leading and  supporting the nation’s risk-based, comprehensive emergency  management system of preparedness, protection, response, recovery,  and mitigation. Appendix I provides additional information on limitations  to identifying and analyzing DHS’s M&A data.

section_title: DHS Identifies Some M&A Spending and Is Taking Steps to Define and Collect Data on M&A Activities, but Could Improve Reliability of Data for Estimating Future Resource Requests
paragraphs: DHS has not identified the department’s total spending on M&A activities,  but through two efforts to achieve efficiencies and reduce spending, it  identifies spending on some M&A activities. DHS implemented a system  to estimate the percentage of the department’s budget request in future  years that is identified as M&A using a common definition, but not all  components are adhering to the definition when entering resource  allocation requests into the system. DHS is taking steps to require  components to apply the same common M&A definition to obligations and  expenditures contained in their financial systems, but it is too early to tell  whether the steps DHS is taking will allow it to successfully collect reliable  M&A data in the future.
subsections: section_title: DHS Identifies Spending on Specific M&A Activities through Two Efforts to Achieve Efficiencies and Reduce Spending
paragraphs: According to DHS OCFO officials, DHS has not identified the  department’s total spending on M&A activities since DHS’s inception in  2003 because (1) there has not been a common M&A definition and (2)  obtaining data would require requesting data from the components, which  would require a manual, labor-intensive effort on their part to identify the  data in their financial systems. However, through two efforts to achieve  efficiencies and reduce spending, DHS is identifying and collecting data  on components’ spending on specific M&A activities.

As  avoidance figures quarterly through the ER Quarterly Reporting System.The ER collects expenditure data for three initiatives to determine  whether the cost avoidance figures are reasonable and to verify  components’ compliance with the initiatives:  1.  facilities: rental costs for nongovernmental facilities for meetings,  conferences, and training events;  2.  printing: total cost of printed products; and  3.  travel: all expenditures assigned to object class 21 travel and  transportation of persons.

The data provided reflect all spending on the initiatives, including M&A  activities and operational activities, such as mission-critical travel.  According to the ER data, travel expenditures far exceeded spending on  facilities rental and printing from fiscal years 2010 through 2012.  Furthermore, components’ travel and printing expenditures were similar in  both fiscal years 2010 and 2011, but increased in fiscal year 2012. In  contrast, expenditures on facilities rental steadily declined from fiscal  years 2010 to 2012. According to the ER Director, variations in  expenditures across years are a result of mission needs, which can be  cyclical in nature. For example, according to USSS officials, USSS  generally has increased travel costs in an election year because of its  mission to protect presidential candidates. Figure 3 shows DHS spending  by initiative for fiscal years 2010 through 2012.

The ER office requires components to report their cost avoidance figures  for 5 of the 46 initiatives: (1) facilities, (2) IT inventory management, (3)  printing, (4) travel, and (5) wireless assets and services. Cost avoidances  are savings that are reallocated to mission-critical activities, and do not  result in decreases to the budget. These initiatives include M&A activities  as well as operational activities, such as mission-critical travel, so the cost  avoidances reported are not limited to M&A activities. DHS has reported  achieving cost avoidances through sharing excess IT equipment within  the department rather than buying new equipment, and using government  office space and online tools for conferences instead of renting private  facilities, for example. Figure 4 shows the cost avoidances DHS has  achieved by these five initiatives for fiscal year 2012 through the first  quarter of fiscal year 2013.

DHS has achieved the greatest cost avoidances through the wireless  assets and services, IT inventory management, and facilities initiatives.  According to the ER data, FEMA, for example, reported a collective cost  avoidance of $8 million during the time period as a result of reducing by  approximately half what it was paying for wireless service per employee.  Cost avoidances have been limited for the printing and travel initiatives  relative to the other initiatives. According to officials from six of the eight  components we interviewed, there are limited opportunities to avoid these  costs, since mission needs dictate spending. For example, USSS officials  stated that while USSS looks for opportunities to reduce costs and has  recently opted for travel by bus rather than by aircraft, it ultimately has  limited control over travel spending because the agency must provide  protection for its protectees when and where they travel.

In response to the Campaign to Cut Waste—a government-wide effort to  reduce administrative spending—DHS sets spending targets and tracks  components’ spending (obligations and expenditures) for seven M&A  categories: (1) travel, (2) printing, (3) supplies, (4) advisory service  contracts (e.g., contracts for IT services and program management), (5)  promotional items, (6) IT devices, and (7) executive sedan services. DHS  components’ spending targets generally reflect a 20 percent decrease  from their fiscal year 2010 spending levels in accordance with Executive  Order 13589, issued in November 2011, and a subsequent May 2012  memorandum from OMB providing implementation guidance. Unlike ER  data, the figures reported for the Campaign to Cut Waste generally  exclude spending on mission-essential activities (e.g., travel for national  security purposes), as the goal of the Campaign to Cut Waste is to  reduce spending on administrative activities. The Campaign to Cut Waste  concluded at the end of fiscal year 2013 per OMB guidance, with the  exception of continued collection of spending data for travel.

Of the eight components we reviewed, officials from six reported having  difficultly determining spending for some of the Campaign to Cut Waste  categories, highlighting the challenges of both defining and identifying  M&A activities and spending. More specifically, while officials from all  eight components did not report any difficulties determining travel  spending, six of the eight components reported difficultly determining  spending on promotional items, supplies, and/or IT devices. Officials from  these six components cited unclear definitions and lack of a  straightforward method to identify spending, such as no corresponding  object class, as reasons for the difficulty. For example, ICE, TSA, and  USSS officials stated that what qualifies as a promotional item is not well  defined in the guidance, and as a result, the activities and associated  spending that should be reported for this category are subjective.  According to DHS OCFO and FEMA officials, FEMA delayed reporting its  spending on office supplies in April 2013 when it realized the figures  previously reported may have been overstated, as the object class that  contains office supplies also includes purchases made on credit cards,  which could include items other than office supplies. Officials from four of  the eight components we reviewed reported difficulties determining  spending for IT devices as a result of the broad definition in the executive  order and the ability to isolate spending on specific types of IT devices  (e.g., laptops) in their financial system.

Despite the data limitations described above, we determined that the data  are sufficiently reliable to illustrate general levels of DHS’s spending  against its spending targets on the Campaign to Cut Waste categories for  six of the seven categories (all but IT devices). Overall, DHS spent 12  percent less than its spending target for fiscal year 2012 on these six  categories. However, given that data for the IT device category are  incomplete and the final spending and spending target figures are being  determined, it is unknown at this time whether DHS met its overall  spending goal for fiscal year 2012. According to DHS’s Budget Division,  for fiscal year 2013, the department was on track to meet or exceed the  reduction levels established in the executive order in the areas of supplies  and advisory service contracts, which will allow DHS to meet its overall  spending target. Table 4 shows the amount DHS spent compared with its  spending target by Campaign to Cut Waste category during fiscal year  2012 and the first two quarters of fiscal year 2013.

In response to DHS’s 2010 Bottom-Up Review, which called for the  capability to better align DHS’s budget with its missions, PA&E  implemented the FYHSP System PDM in March 2010, as well as three  activity types for categorizing the department’s activities: (1)  Mission/Operational; (2) Mission Support; and (3) Business Support (also  referred to as M&A), including a definition of M&A activities. The FYHSP  System PDM User Manual directs components to submit resource  allocation requests by activity type according to the definitions below:  1.  mission/operational activities: activities that directly contribute to a  mission outcome (e.g., screening and disaster operations).2.  mission support: activities providing a product or service for, and  tailored to, mission/operational activities (e.g., logistical support,  research and development, and intelligence).  3.  business support (also referred to as M&A): activities found on the  master list of 92 activities included in the user manual (e.g., conduct  strategic planning, manage public affairs, and ensure information  security).

As a result, DHS has the ability to model the percentage of its future  years’ budget requests allocated to each of the three activity categories,  including M&A, using a consistent definition. However, on the basis of our  analysis of the activities entered into the FYHSP System PDM for fiscal  years 2012 and 2013, we determined that 1 component did not enter any  business support/M&A activities, and 5 components did not correctly  categorize their business support activities since they entered some  business support activities as mission support activities. Further,  according to an analysis conducted by PA&E of the activities entered in  the PDM as business support/M&A for fiscal years 2014 through 2018,  components did not correctly categorize their requests by activity type or  enter all of their business support/M&A activities, among other errors. For  example,

9 out of 15 components did not correctly word a portion of their  business support/M&A activities to correspond with the master list;

4 of the 15 components entered the wrong corresponding business  support/M&A activity number as found on the master list for a portion  of their business support activities; and

4 out of 15 components entered fewer business support/M&A  activities than PA&E would have expected, and 1 component did not  enter any business support activities.

According to DHS PA&E officials, the errors are a result of manual data  entry or components not adhering to the guidance in the PDM user  manual. For example, 1 component believes every activity it undertakes  is in support of its mission and therefore it has no business support/M&A  activities. Standards for Internal Control in the Federal Government calls  for relevant, reliable, and timely information to be available for external  reporting purposes and management decision making. Additionally,  these Standards state that management should put in place control  mechanisms and activities to enable it to enforce its directives and  achieve results, such as providing relevant, reliable, and timely  information. Furthermore, the Statement of Federal Financial Accounting  Concepts No. 1, Objectives of Federal Financial Reporting, states that the  objectives of federal financial reporting are to provide useful information  to assist internal and external users in assessing the budget integrity,  operating performance, stewardship, and systems and control of the  federal government. DHS does not have a mechanism in place to work  with the components to correct data errors in the PDM. According to  PA&E, as of August 2013, it was in the process of working with  components to revise the master list from 92 activities to fewer than 50 in  conjunction with DHS’s efforts to revise its Quadrennial Homeland  Security Review Report. In addition, in September 2013, PA&E told us  that it plans to develop drop-down menus for the FYHSP System PDM to  systematically ensure consistency of nomenclature and spelling of  business support activities. While the development of drop-down menus  will likely address the errors as a result of incorrectly worded activities  and wrong activity numbers, the steps to be taken will not address the  errors related to components not entering business support activities into  the PDM or entering business support activities as mission support  activities. By implementing a mechanism to assess whether components  have entered the appropriate business support activities into the PDM,  and working with the components to correct the data, as needed, DHS  would be better positioned to reliably estimate and report to external  stakeholders, such as Congress, what percentage of the department’s  resource allocations requests are identified as M&A.

section_title: DHS Has Taken Steps to Enhance the Collection of Actual M&A Spending, but It Is Too Early to Assess These Efforts
paragraphs: DHS has taken steps to enhance the collection of actual M&A spending  for the department as a whole. However, DHS’s M&A definition only  applies to future allocation requests entered into the FYHSP System PDM  beginning with fiscal year 2012. Accordingly, it is not used by components  to identify obligations or expenditures by activity type in their financial  systems. According to DHS, there is no linkage between components’  financial systems and the FYHSP System PDM because the systems  were built upon different structures. Components’ financial systems are  designed to track how components are spending funds and track  obligations and expenditures according to their appropriations accounts  and PPAs, which are established by the Appropriations Committees and  are different for each component. The PDM was designed to help  estimate future resource needs and was created based on a common  account structure that aligns activities with the department’s  programmatic structure—missions and objectives, according to the  FYHSP System PDM User Manual. Managerial cost accounting concepts  and standards call for reliable and timely information on the full cost of  federal programs, their activities, and outputs. The cost information can  be used by Congress and federal executives in making decisions about  allocating federal resources, authorizing and modifying programs, and  evaluating program performance. The cost information can also be used  by program managers in making managerial decisions to improve  operating economy and efficiency.

Financial Systems Integration Office, 2007 Report on Federal Financial Management  Standards: Common Government-wide Accounting Classification Structure, version 1.0. major upgrade to their system, or (3) move to a shared service provider.  One element of the 73, defined by DHS is “mission activity,” which  requires components to identify data by activity type using the same  business support (or M&A) definition in the FYHSP System PDM.  Furthermore, through an effort called CFO Horizon, DHS has developed a  data repository in which to collect data from DHS and its components’  various financial systems, so when data such as M&A are collected by  the components in the future, they can be readily accessible by the  department for consolidation, according to the CFO Horizon Concept of  Operations.

DHS OCFO is implementing ACS in two phases: Phase I and Phase II.  According to DHS OCFO officials, DHS anticipates publishing the ACS  Policy and Standards in November 2013, thus completing Phase I in the  first quarter of fiscal year 2014. Phase II, implementation of ACS by the  components, is scheduled to begin in fiscal year 2014. If a component  does not store and cannot derive the data element, the component will  not be expected to report on the data element until it modernizes,  upgrades or move to a shared service provider, according to a DHS  official. The mission activity element is not an element components can  provide or easily provide without financial system modernization.  According to the preliminary results of an assessment conducted by  OCFO on the ability of the components to meet the ACS requirements  using their financial systems as of May 2013, none of the components  capture or store data by “mission activity” in their financial systems. While  4 of 15 components responded they could derive the data from their  existing systems, 3 reported the level of difficulty to be high. Therefore,  most components will need to modernize their systems in order to obtain  M&A data, as they are currently unable to obtain or derive the data with  their current financial systems. DHS is in the early stages of the phased  implementation of its financial system modernization, with completion  projected for the second quarter of fiscal year 2018.

OCFO officials told us that in response to their assessment of  components’ readiness to implement ACS, some components reported  that even after they have a financial system that provides the capability to  categorize by mission activity, they may not be able to do so because  funds are not obligated by activity type. For example, CBP officials told us  that approximately 70 percent of CBP’s budget is for salaries and  benefits, and defining an individual’s salary by mission activity is difficult  given that individuals, especially those working in the field (e.g., border  patrol agents), perform a wide variety of tasks, making it difficult to  accurately break down their salary expenses by activity type (mission,  mission support, and business support). Additionally, TSA reported that it  would be an extensive burden to manually enter such data. According to  DHS OCFO officials, while implementation of any new financial system  and new accounting structure is inherently challenging, it is executing a  process to address issues as they are identified. However, it is too early  to tell whether the steps DHS is taking will allow it to successfully collect  reliable M&A data in the future.

section_title: Conclusions
paragraphs: DHS has developed a common definition of M&A activities for resource  planning for the department, but on the basis of our analysis, and PA&E’s  analysis, not all components are accurately identifying or entering  business support/M&A activities in accordance with the definition in the  FYHSP System PDM User Manual when entering their future resource  allocation requests into the PDM. By implementing a mechanism to  assess whether components have entered the appropriate M&A activities  into the PDM, and working with the components to correct the data, as  needed, DHS would be better positioned to reliably estimate and report to  external stakeholders, such as Congress, what percentage of the  department’s resource allocations requests are identified as M&A. DHS’s  M&A definition applies only to future allocation requests entered into the  FYHSP System PDM. Accordingly, it is not used by components to  identify obligations or expenditures by activity type in their financial  systems. While DHS has drafted the ACS Policy and Standards to require  components to collect the same data elements, including mission activity,  financial system modernization, which is scheduled for completion in  fiscal year 2018, will need to take place before all components are in a  position to implement the mission activity element. Further, some  components have identified challenges to categorizing obligations and  expenditures by activity type regardless of the capability of their financial  systems. Consequently, it is too early to tell how successful the steps  DHS is taking will be in allowing it to collect reliable M&A spending data in  the future.

section_title: Recommendation for Executive Action
paragraphs: To help ensure DHS is able to reliably estimate the department’s future  resource allocation requests identified as M&A, we recommend that the  Under Secretary for Management direct PA&E to implement a  mechanism to assess whether components have entered the appropriate  M&A activities into the PDM, and work with the components to correct the  data, as needed.

section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft of this report to DHS for its review and comment.  DHS provided written comments, which are reprinted in appendix III, and  concurred with our recommendation. In its written comments, DHS stated  that it will continue to periodically assess whether components have  entered the appropriate M&A activities into the PDM and continue to work  with components to correct the data, as needed. In addition, DHS stated it  will develop and implement a mechanism to ensure component  compliance with guidance in time for the fiscal years 2016-2020  programming and budget process with an estimated completion date of  June 30, 2014. Such actions should address the intent of our  recommendation. DHS also provided technical comments, which we  incorporated as appropriate.

As agreed with your office, unless you publicly announce the contents of  this report, we plan no further distribution for 30 days from the report date.  At that time, we will send copies of this report to the Acting Secretary of  Homeland Secretary, appropriate congressional committees, and other  interested parties. In addition, this report will be available at no charge on  GAO’s website at http://www.gao.gov.

If you or your staff have any questions about this report, please contact  me at (202) 512-9627 or maurerd@gao.gov. Contact points for our  Offices of Congressional Relations and Public Affairs may be found on  the last page of this report. GAO staff who made key contributions to this  report are listed in appendix IV.

section_title: Appendix I: Limitations to Identifying and Analyzing Management and Administration Spending
paragraphs: We sought to independently identify and analyze the Department of  Homeland Security’s (DHS) management and administration (M&A)  activities and related spending from fiscal years 1999 through 2013 but  were unable to because of various limitations. In particular, sources of  federal budget data, including appropriations accounts broken down into  program, project, or activity (PPA) and object classes, do not clearly  distinguish M&A spending from other types of spending. Moreover, in  cases where appropriations accounts and PPAs are largely M&A, the  activities contained in those groupings are not consistent from year to  year or complete since M&A activities can be found in other accounts or  PPAs.
subsections: section_title: Appropriation Account and PPA Limitations
paragraphs: We previously found that there are limitations to using account structures  to identify and analyze M&A spending because the appropriation account  structure was not constructed to delineate program and administrative  expenses. In particular, (1) the budget does not identify an administrative  account for all agencies, (2) similar expenses are categorized differently  across agencies and within the same agencies from year to year, and (3)  administrative accounts do not include all administrative expenses of an  agency. We identified the same limitations based on our review of DHS’s  appropriations accounts and PPAs.

On the basis of our review, of DHS’s appropriation account and PPA  structure, 5 of 15 DHS components did not have an M&A account or PPA  for fiscal year 2013. Moreover, for those 10 components that did have  M&A PPAs in 2013, they did not all exist as far back as fiscal year 1999  or did not exist in their current form, making an analysis over time nearly  impossible. For example, the Federal Law Enforcement Training Center’s  (FLETC) Management and Administration PPA was established  beginning with fiscal year 2013 at the request of the Office of  Management and Budget to obtain better insight on M&A costs.  Additionally, the Federal Emergency Management Agency (FEMA)  previously had a Management and Administration account with an  Operating Activities PPA, but those activities were within the Salaries and  Expenses account, including all seven of its PPAs, for fiscal year 2013.  For the components, such as U.S. Customs and Border Protection (CBP),  which existed as legacy agencies in different federal departments before  DHS was established, it would be difficult to identify relevant expenditures  by PPA before 2003 because agencies and offices were not transferred  intact.

For those 10 components with M&A PPAs, they differed from one another  in terms of the activities funded through those PPAs. For example,  activities contained in the Management and Administration PPA for  FLETC include providing budget, finance, accounting, financial systems,  financial statements, relocation, travel, and strategic planning functions,  as well as asset management and human capital services, among others.  U.S. Immigration and Customs Enforcement’s (ICE) activities contained in  its Personnel Compensation and Benefits, Service, and Other Costs PPA  include overseeing the budget, procurement, and facilities; providing  human resources services and training for all employees and special  agents; and tracking the agency’s performance measurements, but do not  include strategic planning functions and asset management like FLETC’s.  Without a consistent definition, comparing M&A spending among DHS  components would likely lead to inaccurate conclusions about which  components are spending more or less on M&A activities.

On the basis of our review we also found that the activities included and  funded in a component’s PPA can also change annually. As a result, an  increase in an M&A PPA may not actually mean increased M&A  spending. For example, the conference report accompanying the fiscal  year 2012 DHS appropriations act provided that funding for the Office of  the Assistant Secretary for Cybersecurity and Communications and the  Office of the Assistant Secretary for Infrastructure Protection had been  moved to the National Protection and Programs Directorate M&A  account. As a result, the National Protection and Programs Directorate  requested an additional $3.9 million for its Directorate Administration PPA  within its M&A account in fiscal year 2013. Without understanding this  organizational change or the activities included in a particular PPA, the  National Protection and Programs Directorate appears to have increased  spending on Directorate Administration activities by $3.9 million.  Conducting a year-to-year comparison without understanding these types  of organizational changes could lead to faulty conclusions. Finally, M&A  PPAs may not capture all M&A-related expenses, as some M&A activities  may be captured in other PPAs. For example, FEMA officials reported  that its M&A PPAs are found within its Salaries and Expenses  appropriation account, but noted that there may be other accounts  containing M&A activities.

section_title: Object Classification Limitations
paragraphs: We previously found that object class data have limitations when used to  identify and analyze obligations of an M&A nature since (1) no object  class contains purely M&A activities, so obligations for M&A activities  cannot be separated from obligations for mission activities; (2) the same  type of expenses can be assigned to different object classes; and (3)  reimbursements made by federal agencies are reobligated, which can  lead to double counting. We identified the same limitations on the basis  of our review. For example, we found that object class 26, supplies and  materials, which is seemingly an administrative object class, is  appropriately used by DHS components to capture obligations for more  than office supplies. Specifically, Coast Guard officials told us the Coast  Guard’s obligations for fuel for marine and air assets, uniforms, and  ammunition, among other operational expenses, are assigned to object  class 26. Similarly, the U.S. Secret Service (USSS) uses this object class  to report obligations for fuel for the presidential limousine as well as the  rest of its vehicle fleet. See table 5 for the entire list of object classes.

Given the different missions of DHS components and different activities  assigned to an object class from component to component, any cross- component comparison of object class data could lead to inaccurate  conclusions. This problem is compounded given that when components  do have the same types of expenses, they can be appropriately assigned  to different object class categories. For example, on the basis of our  review, we found that one component may decide that information  technology (IT) support belongs to budget object class 26, supplies and  materials, while another component may decide these same IT costs  belong to object class 25.7, operation and maintenance of equipment,  according to a DHS Budget Division Analyst.

Finally, object class data can exaggerate spending because reimbursable  authority can lead to double counting if direct obligations cannot be  distinguished from reimbursable obligations. Object classes present gross  obligations—that is, the separate obligations made by each appropriation  account, including the “reobligation” of amounts received as  reimbursements from other federal agencies—and not actual expenses.  For example, according to a DHS Budget Division Analyst, in fiscal year  2010, DHS had approximately $2 billion in expenditures in the supplies  object class, but $512 million of the $2 billion was reimbursable authority.

section_title: Appendix II: Objectives, Scope, and Methodology
paragraphs: This report addresses the following questions:  1.  How have select DHS components defined and identified their M&A  activities and spending, and to what extent are M&A data available  from fiscal years 1999 through 2013?  2.  How has DHS identified M&A spending department-wide, and to what  extent has DHS defined M&A activities and taken steps to enhance  efforts to collect M&A data?

To address the first objective, we analyzed DHS’s congressional budget  justifications, budget execution reports, and budget-in-briefs, as well as  presidential budgets and appropriations legislation from fiscal years 2004  through 2013 to understand how M&A activities are defined and  accounted for within components’ appropriations accounts. We sought to  independently identify components’ M&A activities and related spending,  but were unable to because of various challenges. In particular, sources  of federal budget data do not define and distinguish all M&A spending  from other types of spending. Moreover, in cases where groupings of  budget data, such as appropriation accounts, are largely M&A, the  activities contained in those groupings do not include all M&A activities  and are not consistent from year to year. To determine how selected DHS  components define their M&A activities and how they would go about  identifying spending associated with these activities, we interviewed  officials representing two of DHS’s eight support components— Departmental Management and Operations (DMO) and FLETC—and six  of DHS’s seven operational components—FEMA, CBP, the U.S. Coast  Guard, the Transportation Security Administration, ICE, and USSS.selected these eight components based on the amount of their budget  authority (totaling nearly 88 percent of DHS’s fiscal year 2013 budget  authority); their mission, for components with both operational and  support missions; and date established, for components established both  before and after the inception of DHS. To determine the extent to which  M&A data are available from fiscal years 1999 through 2013, we   We  interviewed officials from the eight selected components about their ability  to provide M&A spending data during the timeframe. We did not obtain  available data from the components because the data would not be  comparable. While the results of our interviews cannot be generalized  across all DHS components, these interviews allowed us to obtain  perspectives on how selected components would define and identify M&A  spending, as well as the availability of their M&A data since fiscal year  1999.

To address the second objective, we examined DHS’s two efforts to  identify and manage its spending on specific M&A activities—DHS’s  Efficiency Review (ER)—an effort to identify opportunities to improve  efficiency and streamline decision making through a series of initiatives— and the Obama administration’s Campaign to Cut Waste—a government- wide effort to reduce administrative spending. Specifically, we analyzed  all available expenditure and cost avoidance data collected through the  ER. The ER collects expenditure data for three initiatives: (1) facilities,  (2) printing, and (3) travel. The ER also collects cost avoidance data for  five initiatives: (1) facilities, (2) IT inventory management, (3) printing, (4)  travel, and (5) wireless assets and services. We analyzed all expenditure  and cost avoidance data available from the third quarter of fiscal year  2009—when data collection began—through the first quarter of fiscal year  2013—the most recent data available at the time of our review. To assess  the reliability of the data, we reviewed the data for obvious errors and  traced one component’s recorded expenditure and cost avoidance data  back to documentation showing its original data submission. We also  interviewed component officials responsible for entering the data, and the  ER Director to determine how the data are collected and maintained in  the ER Quarterly Reporting Site. We determined that the expenditure  data likely understate DHS’s total spending, since some components and  offices did not submit their expenditures at all in certain quarters or did  not report all expenditures, as they excluded certain types of travel.  Specifically, one component and one office did not report their facilities  expenditures, one component and two offices did not report their printing  expenditures, and one office did not report its travel expenditures, and  three components under-reported their travel expenditures. Despite these  limitations, the data were sufficiently reliable to illustrate general levels of  spending by DHS. We determined that the cost avoidance data prior to  fiscal year 2012 were not reliable, since the formula used during that time  frame for two of the initiatives—printing and travel—was not an accurate  method to determine cost avoidances, a conclusion with which  component officials concurred because figures could be overstated.  However, we determined that cost avoidance data beginning with the first  quarter of fiscal year 2012 were sufficiently reliable for reporting DHS’s  cost avoidances as the ER Office began requiring an explanation of the  specific actions that led to cost avoidance in order for the cost avoidance  to be counted.

We analyzed data collected for the Campaign to Cut Waste for fiscal year  2012 through the second quarter of fiscal year 2013—all of the data  available at the time of our review. Specifically, we analyzed DHS’s  spending against its spending targets for all seven categories of the  campaign—(1) travel, (2) printing, (3) supplies, (4) advisory service  contracts, (5) promotional items, (6) IT devices, and (7) executive sedan  services. To assess the reliability of the data, we discussed DHS’s  implementation of and methodology for developing metrics for the  campaign with a Budget Analyst from the Office of the Chief Financial  Officer (OCFO) Budget Division. We also interviewed officials from the  eight DHS components in our review about how they determine and  report their spending figures for the campaign, and any challenges they  experience in determining these figures. On the basis of these interviews,  we identified data limitations in terms of the consistency, completeness,  and accuracy of the data for three of the categories as a result of  components defining categories differently, and experiencing difficulty  identifying accurate figures or not reporting figures as a result of the  difficulties. After considering the portion of spending these categories  contributed to total spending tracked by the Campaign to Cut Waste, we  determined the data were sufficiently reliable to illustrate general levels of  DHS’s spending against its spending targets on the Campaign to Cut  Waste categories for six of the seven categories—all but IT devices, for  which data are not complete, and therefore excluded from our analysis.

We also analyzed fiscal year 2012 and 2013 data in the Future Years  Homeland Security Program (FYHSP) System Program Data Module  (PDM), which was developed by DHS, in part to model the percentage of  DHS’s resource allocation requests that are for activities identified as  M&A in future years. We compared components’ categorization of  activities by type in the PDM with the definitions for the three activity type  categories (mission/operational, mission support, and business  support/M&A) as stated in the FYHSP System PDM User Manual, which  provides guidance to components on entering data into the PDM. We  discussed the development and implementation of the FYHSP System  PDM with DHS OCFO Program Analysis & Evaluation (PA&E) officials  who oversee the PDM. Moreover, we reviewed PA&E’s data quality  analysis of fiscal year 2014 through 2018 resource requests identified as  M&A to determine the accuracy of M&A data entered into the PDM  consistent with instructions in the user manual. On the basis of our review  of the analysis for any obvious data errors and outliers, we determined  that the results of PA&E’s analysis are sufficiently reliable for identifying  any limitations of the PDM data. On the basis of our analysis, PA&E’s  analysis, and interviews with PA&E officials, we determined the data were  not sufficiently reliable for reporting the percentage of DHS’s resource  allocations requests that are categorized as M&A. We compared the  ability to use the PDM data with criteria in Standards for Internal Control  in the Federal Government  and Statement of Federal Financial  Accounting Concepts No. 1, Objectives of Federal Financial Reporting.  We did not assess the reliability of data beyond the categorization by  activity type (e.g., categorization of activities by investment type), since  such data were outside of the scope of our review.

Also, to address the second objective, we interviewed DHS OCFO  officials in the Resource Management Transformation Division to discuss  the steps DHS has taken to enhance the collection of M&A data for the  department as a whole. We analyzed documentation related to DHS’s  efforts to implement its business intelligence initiative to standardize  financial data, among other things. Specifically, we analyzed  documentation describing DHS’s plans for standardizing its accounting  structure across the department, including its draft Accounting  Classification Structure (ACS) Policy and Standards and ACS Guidebook.  We compared these efforts against criteria for cost accounting in the  Statement of Federal Financial Accounting Standards No. 4, Managerial  Cost Accounting Standards and Concepts. We also reviewed the  Concept of Operations and program milestones for “CFO Horizon”—a  means to consolidate components’ financial data. Finally, we interviewed  OCFO Resource Management Transformation officials about their efforts  to implement CFO Horizon and develop ACS.

We conducted this performance audit from February 2013 to December  2013 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 III: Comments from the Department of Homeland Security

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, Glenn Davis (Assistant Director),  Lisa Canini, and Wendy Dye made significant contributions to this work.  David Dornisch, Eric Hauswirth, Tracey King, Mike LaForge, Lara  Miklozek, Leah Nash, Jack Warner, and Leonard Zapata also contributed  to this report.

section_title: Related GAO Products
paragraphs: DHS Financial Management: Additional Efforts Needed to Resolve  Deficiencies in Internal Controls and Financial Management Systems.  GAO-13-561. Washington, D.C.: September 30, 2013.

High Risk Series: An Update. GAO-13-283. Washington, D.C.:  February 2013.

Streamlining Government: Key Practices from Select Efficiency Initiatives  Should Be Shared Governmentwide. GAO-11-908. Washington, D.C.:  September 30, 2011.

Financial Management: NOAA Needs to Better Document Its Policies and  Procedures for Providing Management and Administration Services.  GAO-11-226. Washington, D.C.: January 31, 2011.

A Glossary of Terms Used in the Federal Budget Process.  GAO-05-734SP. Washington, D.C.: September 2005.

Budget Object Classification: Origins and Recent Trends.  GAO/AIMD-94-147. Washington, D.C.: September 13, 1994.

Budget Issues: Assessing Executive Order 12837 on Reducing  Administrative Expenses. GAO/AIMD-94-15. Washington, D.C.:  November 17, 1993.

Budget Issues: Limitations on Analyzing the Cost of Administrative  Operations. GAO/AFMD-86-54BR. Washington, D.C.: July 22, 1986.


Question-summary annotations: questions: question: What challenges exist in analyzing the spending data of DHS?
answer: Officials from all eight Department of Homeland Security (DHS) components in GAO's review define management and administration (M&A) activities--activities that help agencies achieve their mission and program goals--differently, and while component officials said they can identify M&A spending, limitations exist in obtaining spending data from fiscal years 1999 through 2013.
child_questions: question: What do officials from the first four components define M&A activities as?
answer: Officials from four of the eight components define their M&A activities according to the activities funded through their appropriations accounts and programs, projects, or activities (PPA) that are M&A in nature. For example, officials from the Transportation Security Administration said its M&A activities are those found within three PPAs within its Transportation Security Support appropriations account.
child_questions: question: How does this differ from the opinions of officials in the last four components?
answer: The remaining four components each define M&A activities differently, and those definitions are not tied to activities contained in specific appropriations accounts. For example, the Coast Guard's M&A activities are those associated with headquarters and its service centers (e.g., personnel support), according to officials.

question: How accessible is M&A spending data to the eight components GAO interviewed?
answer: According to component officials, the eight components GAO reviewed can identify their M&A spending, but currently do not because they are not required to do so by the department. Officials from seven of the eight components said they could provide M&A spending data for some, but not all, fiscal years since 1999 because of changes in their financial systems, among other reasons. Federal Emergency Management Agency (FEMA) officials stated that FEMA could provide data since fiscal year 1999.

question: Why is it impossible to compare components' M&A spending data?
answer: Because components define M&A differently, have different methods for identifying spending, and limitations exist in obtaining data, it is not possible to compare components' M&A spending data from fiscal years 1999 through 2013.

questions: question: What steps is DHS taking to identify its M&A spending?
answer: DHS has not identified the department's total spending on M&A activities, but has identified some M&A spending through DHS's Efficiency Review--an effort to identify opportunities to improve efficiency--and the Campaign to Cut Waste--a government-wide effort to reduce administrative spending. DHS is also taking steps to define and collect data on M&A activities, but has encountered difficulties in implementing these steps. Specifically, in 2010, DHS developed a common definition of M&A in conjunction with the Future Years Homeland Security Program (FYHSP) System Program Data Module (PDM) for components to submit resource allocation requests for future years by activity type: mission/operational, mission support, and business support/M&A.
child_questions: question: What difficulties has DHS encountered?
answer: However, DHS is unable to reliably estimate what percentage of its requests are identified as M&A because 4 out of 15 components did not enter all appropriate business support/M&A activities and 1 component did not enter any business support/M&A activities, among other errors, which DHS officials said are a result of manual data entry and components not adhering to the guidance in the user manual.
child_questions: question: Why is DHS unable to make reliable estimates?
answer: DHS does not have a mechanism in place to work with the components to correct data errors in the FYHSP System PDM.

question: How would developing a mechanism to improve data reliability benefit DHS?
answer: By implementing a mechanism to assess whether components have entered the appropriate M&A activities into the PDM, and working with the components to correct the data, as needed, DHS would be better positioned to reliably estimate and report to external stakeholders what percentage of DHS's resource allocations requests are identified as M&A.

questions: question: What is DHS?
answer: DHS is the third-largest federal department, with budget authority of approximately $60 billion.
child_questions: question: What difficulties has DHS faced since its inception?
answer: Since its inception in 2003, DHS has faced challenges strengthening its multiple management systems and processes. Some Members of Congress said that DHS's components' budget requests do not provide sufficient detail to allow them to distinguish between funding for mission and M&A activities.

question: What was GAO asked to provide information on?
answer: GAO was asked to provide information on what DHS spends on M&A activities, including spending by its components since fiscal year 1999.

questions: question: What questions does this report address?
answer: This report addresses the following questions: (1) How have select DHS components defined and identified their M&A activities and spending, and to what extent are M&A data available from fiscal years 1999 through 2013? (2) How has DHS identified M&A spending department-wide, and to what extent has DHS defined M&A activities and taken steps to enhance efforts to collect M&A data?
child_questions: question: What steps did GAO take to collect data for this report?
answer: GAO analyzed documents, such as DHS's budget execution reports, and efforts to identify spending on M&A activities since fiscal year 1999. GAO interviewed officials from eight DHS components, selected on the basis of their budget authority, which in total accounts for nearly 88 percent of DHS's fiscal year 2013 budget authority.
child_questions: question: What did the interviews provide?
answer: Though not generalizable, the interviews provided insights.