Department of Homeland Security: Continued Progress Made Improving and Integrating Management Areas, but More Work Remains
Released: 2012-03-01T00:00:00

Letter

DHS Has Updated Its Strategy for Addressing Its High- Risk Designation

Since January 2011, DHS has continued to update and strengthen its strategy for how the department plans to address our high-risk designation and resolve its management challenges. In January 2011, DHS provided us with its initial Integrated Strategy for High Risk Management, which summarized the department’s preliminary plans for addressing the high-risk area. The January 2011 strategy, which DHS later updated in June 2011 and December 2011, was generally responsive to the actions and outcomes we identified for the department to address this high-risk area. Specifically, in our March 2011 written response to DHS’s January 2011 update, we stated that the strategy generally identified multiple, specific actions and target completion time frames consistent with the outcomes we identified; designated senior officials to be responsible for implementing most actions; and included scorecards to depict, at a high level, the department’s views of its progress in addressing each high-risk area and a framework for monitoring implementation of corrective actions through, among other things, quarterly meetings between DHS and us.

However, the January 2011 update generally did not discuss the root causes of problems. Further, while the strategy identified whether DHS believed it had the resources available to implement planned actions, it did not identify what the specific resource needs were or what additional resources may be needed, making it difficult to assess the extent to which DHS has the capacity to implement those actions.

In June 2011, DHS updated its Integrated Strategy for High Risk Management. The update demonstrated the department’s continued leadership commitment to address the high-risk designation and represented continued progress. For example:

DHS identified 10 root causes that cut across the four management functions and management integration. By identifying these root causes, the department better positioned itself to determine corrective actions for addressing the underlying problems that have affected its management implementation efforts, and to assess the extent to which progress made in implementing the corrective actions has mitigated those underlying problems.

DHS organized its corrective actions into 16 key management initiatives (e.g., financial management controls, IT program governance, and procurement staffing model) to address its management challenges and the 31 actions and outcomes we identified.

Identifying key management initiatives should help DHS prioritize its efforts and resources for addressing its root causes and management challenges, and provide a useful framework for monitoring the department’s implementation of the initiatives and associated corrective actions. However, elements of the update could be strengthened or clarified to better address our high-risk criteria and the actions and outcomes we previously identified, including (1) better defining the root causes of its management problems; (2) clarifying the resources available to implement corrective actions; (3) consistently reporting the progress of its corrective actions; and (4) more clearly and consistently reporting the progress of its key management initiatives.

DHS provided its most recent update to its strategy in December 2011. Overall, we believe that the December update positions the department to address its management challenges and the implementation and transformation high-risk area. For example:

DHS updated its initiatives—removing two initiatives from the management integration area and adding four new initiatives, including human resources information technology, management health assessment, strategic sourcing, and acquisition workforce development;

DHS included, for the first time, ratings of the department’s progress addressing the 31 high-risk outcomes; and

DHS enhanced its reporting and rating methodology for its key management initiatives. Specifically, DHS replaced a color-coded (green, yellow or red) rating system used in previous updates with a new system for self-reporting progress. DHS now measures and reports its progress addressing the five criteria for removal from high risk in two ways. One way uses standard indicators for measuring progress and a pie graph for reporting such progress across all of its key management initiatives against the first four criteria—leadership commitment, capacity, corrective action plans, and monitoring. The second way uses specific performance measures unique to each initiative for measuring progress and a fuel-type gauge for reporting on the fifth criterion—demonstrated progress. According to DHS, the revised methodology, amongst other things, results in a more objective view of each initiative’s progress.

However, the December 2011 update could be strengthened or clarified to better enable DHS and GAO to assess the department’s progress, in the following ways:

More clearly and consistently report the resources available to implement corrective actions. DHS identified whether it had sufficient resources to implement most of the corrective actions. However, as we also reported to DHS regarding the January and June 2011 strategies, for many corrective actions DHS did not provide information on what the specific resource needs are or what additional resources may be needed to implement the corrective actions. The absence of resource information makes it difficult to fully assess the extent to which DHS has the capacity to implement these actions, particularly within the time frames identified for the corrective actions

Consistently report on corrective actions. DHS provided information on the department’s rationale for eliminating and adding key management initiatives, but has not consistently provided such information for the corrective actions it established for each initiative. For example, the December strategy contained three new corrective actions for the IT program-governance initiative that were not in the June 2011 strategy, but did not include three corrective actions that had been in the June 2011 strategy. The December strategy did not consistently explain the department’s rationale for eliminating or adding corrective actions from the June strategy, such as whether the corrective actions were already completed, or if the corrective actions were no longer appropriate or feasible. Without consistently providing information on the basis for DHS’s decision to add or remove corrective actions, it is difficult for DHS and us to track the status and progress of the department’s efforts to fully implement its management initiatives.

Establish measures and report on progress for all initiatives. DHS established a total of 58 measures to track its demonstrated progress in implementing the 18 initiatives included in the December 2011 strategy. While these measures provide additional insight into DHS’s self-reported progress and represent an important improvement from the June 2011 strategy, DHS has not yet established measures for one of its initiatives—the new management health assessment initiative—and did not report on its progress for more than 40 percent (24 of the 58) of the measures in the December 2011 strategy. Without establishing measures and consistently reporting on their progress, neither DHS nor we can fully assess the department’s progress in implementing its initiatives.

Stabilize its methodology for measuring progress. We believe that the enhanced methodology DHS established for assessing its progress in implementing its initiatives generally allows for a more- objective assessment. However, the evolving nature of DHS’s methodology, which the department revised in the June 2011 strategy and again in the December strategy, makes it difficult to effectively monitor the department’s progress over time.

By strengthening these four aspects, we believe the December 2011 strategy, if implemented and sustained, provides a path for DHS to address our high-risk designation. We will continue to closely monitor and assess DHS’s progress in addressing the high-risk designation and the department’s overall transformation efforts as part of our work for the 2013 high-risk update, which we plan to issue in January 2013.

DHS Has Made Progress, but More Work Remains to Achieve High-Risk Outcomes

DHS has made progress addressing management challenges and achieving high-risk outcomes in some key areas. The Secretary and Deputy Secretary of Homeland Security, and other senior officials, have demonstrated commitment and top leadership support to address the department’s management challenges. As the following examples illustrate, DHS is making progress achieving the long-term goal of enhancing its management capabilities and building a more-integrated department.

In June 2011, we reported that, per departmental acquisition guidance, DHS’s Science and Technology directorate reviewed and approved test and evaluation documents and plans for programs undergoing testing, and conducted independent assessments for the programs that completed operational testing. In October 2011, to enhance the department’s ability to oversee major acquisition programs, DHS realigned the acquisition management functions previously performed by two divisions within the Office of Chief Procurement Officer to establish the Office of Program Accountability and Risk Management (PARM). PARM, which is responsible for program governance and acquisition policy, serves as the Management Directorate’s executive office for program execution and works with DHS leadership to assess the health of major acquisitions and investments. To help with this effort, PARM is developing a database, known as the Decision Support Tool, intended to improve the flow of information from component program offices to the Management Directorate to support its governance efforts. DHS also included a new management initiative in its December 2011 update (strategic sourcing) to increase savings and improve acquisition efficiency by consolidating contracts departmentwide for the same kinds of products and services, and reported awarding 14 strategically sourced contracts in fiscal year 2011. We currently have ongoing work related to both of these areas that we will report on later this year. In February 2012, we reported that the DHS Chief Information Officer (CIO) and Chief Human Capital Officer were coordinating to streamline and consolidate the department’s human resources investments. Specifically, in 2010 and 2011, the DHS CIO conducted program and portfolio reviews of hundreds of IT investments and systems. DHS evaluated portfolios of investments within its components to avoid investing in systems that are duplicative or overlapping, and to identify and leverage investments across the department. DHS also consolidated (1) 6 personnel security–related systems into its departmentwide Integrated Security Management System—with an additional personnel security system planned for consolidation in 2012, and (2) two components’ portals into the Homeland Security Information Network, with plans to consolidate 12 additional portals before 2014.

DHS has reduced the number of material weaknesses in internal controls from 18 since the inception of the department in 2003 to 5 in fiscal year 2011. In addition, in fiscal year 2010 DHS committed to the goal of receiving a qualified audit opinion on its consolidated balance sheet in fiscal year 2011 by, for example, remediating financial management issues at the U.S. Coast Guard (USCG). In fiscal year 2011, DHS achieved this goal by moving from a disclaimer of opinion to a qualified audit opinion on its balance sheet and statement of custodial activity for the first time since the department’s creation. In its December 2011 strategy, DHS reported plans to expand the audit to all financial statements in fiscal year 2012. DHS believes this will identify additional areas for corrective action and help it to obtain a clean audit opinion on all financial statements by September 2013, although there is no clear plan for how full auditability will be achieved. In February 2012, we reported that DHS consolidated five time-and- attendance systems into a departmentwide time-and-attendance system and plans to incorporate an additional component by June This consolidation effort is part of DHS’s broader human 2012. resources IT initiative. This initiative is intended to, among other things (1) support the development and implementation of consistent and consolidated human resources IT systems across DHS, and (2) strengthen and unify the department’s ability to collect and share human resource information. We also reported in February 2012 that DHS had initiated a Senior Executive Service Candidate Development Program in May 2011 to build its senior leadership pipeline within the department—consolidating what had been four individual leadership programs into a single DHS-wide program—and lowered its senior leadership vacancy rates from a peak of 25 percent in 2006 to 10 percent at the end of fiscal year 2011.In February 2011, we reported that the department put in place common policies, procedures, and systems within individual management functions, such as human capital, that help to integrate its component agencies.commitment by identifying roles and responsibilities at the departmental level for the key management initiatives it has included in the December 2011 strategy. Additionally, DHS has promoted accountability for management integration among department and component management chiefs by, among other things, having the department chiefs provide written objectives that explicitly reflect priorities and milestones for that management function as well as aligning the component chiefs’ individual performance plans to the department’s goals and objectives.

DHS has also demonstrated top leadership In its December 2011 strategy, DHS presented detailed plans to address a number of management challenges. However, in many instances, DHS has considerable work ahead to fully implement these plans and address these challenges.

Our prior work has identified challenges related to acquisition oversight, cost growth, and schedule delays, including departmental concerns about the accuracy of cost estimates for some of DHS’s major programs. For example, in June 2010 we reported that over half of the programs we reviewed awarded contracts to initiate acquisition activities without component or department approval of documents essential to planning acquisitions, such as mission need statements outlining the specific functional capabilities required to accomplish DHS’s mission and objectives; operational requirements; and acquisition program baselines. Additionally, we reported that only a small number of DHS’s major acquisitions had validated cost estimates. Further, DHS reported in its December 2011 strategy that senior executives are not confident enough in the data to use the Decision Support Tool developed by PARM to help make acquisition decisions. However, DHS’s plans to improve the quality of the data in this database are limited. At this time, PARM only plans to check the data quality in preparation for key milestone meetings in the acquisition process. This could significantly diminish the Decision Support Tool’s value because users cannot confidently identify and take action to address problems meeting cost or schedule goals prior to program review meetings.

DHS continues to face challenges in managing its IT acquisitions, ensuring proper implementation and departmentwide coordination, and implementing information security controls. For example, as we reported in 2011, DHS faces challenges fully defining key system investment and acquisition management policies and procedures for IT. Moreover, the extent to which DHS implemented these investment and acquisition management policies and practices in major IT programs has been inconsistent. We also reported that major IT acquisition programs were not subjected to executive-level acquisition and investment management reviews. As a result, major programs aimed at delivering important mission capabilities had not lived up to their capability, benefit, cost, and schedule expectations. DHS is currently pilot testing a new approach for overseeing and managing its IT acquisitions. We are currently reviewing this new governance approach and expect to report the results of our work later this year. Further, we previously reported on the need for federal agencies, including DHS, to improve implementation of information security controls, such as those for configuring desktop computers and wireless communication devices. DHS reports that, as of December 2011, it mostly addressed IT security. However, the DHS Office of Inspector General continues to report a material weakness in this area and identifies information security as a major management challenge facing the department.

Due to material weaknesses in internal controls over financial reporting, DHS was unable to provide assurance that internal controls over financial reporting were operating effectively as of September 30, 2011. According to DHS, due to existing internal control weaknesses and focus on corrective actions, the audit opinion on internal controls over financial reporting will likely remain a disclaimer in fiscal year 2012. DHS also faces challenges in modernizing its financial systems. We previously reported that DHS twice attempted to implement an integrated departmentwide financial management system, but had not been able to consolidate its disparate systems. Specifically, in June 2007, we reported that DHS ended its Electronic Managing Enterprise Resources for Government Effectiveness and Efficiency effort after determining that the resulting financial management systems would not provide the expected system functionality and performance. In December 2009, we reported that the Transformation and Systems Consolidation program had been significantly delayed by bid protests and related litigation. In March 2011, DHS ended this program and reported that moving forward it would consider alternatives to meet revised requirements. In 2011, DHS decided to change its strategy for financial system modernization. Rather than implement a departmentwide integrated financial management system solution, DHS opted for a decentralized approach to financial management systems modernization at the component level. Specifically, DHS reported in its December 2011 strategy that it plans to replace financial management systems at three components it has identified as most in need, including the Federal Emergency Management Agency (FEMA), USCG, and Immigrations and Customs Enforcement (ICE). As of February 2012, DHS officials stated that they first planned to modernize FEMA’s system, which would start using a federal shared service provider at the beginning of fiscal year 2015. DHS officials told us they had not yet identified the specific approach or necessary resources and time frames for implementing new systems at USCG and ICE. It is not clear whether DHS’s new, decentralized approach to financial system modernization will ensure that component’s financial management systems can generate reliable, useful, timely information for day-to-day decision making; enhance the department’s ability to comprehensively view financial information across DHS; and comply with related federal requirements at DHS and its components. We will continue to monitor DHS’s actions in this area.

DHS continues to face challenges implementing some of its key human capital initiatives and functions. For example, the DHS Chief Information Officer’s (CIO) September 2011 assessment of the human resources IT program identified two risks that could have adverse effects on the cost and schedule of the program. First, if the program is unable to meet its established baseline schedules, there is a high probability of program breach and potential loss of funding due to lack of prioritization. Second, if a thorough understanding of existing legacy applications and processes across the DHS components is not achieved, the new, consolidated system will not adequately replace existing functionality nor provide the stable operational functionality needed from the program. DHS has also struggled with low job satisfaction among its employees since its inception. For the 2011 Federal Employee Viewpoint Survey, DHS scored below the governmentwide average on the Office of Personnel Management’s Job Satisfaction Index and ranked 31st of 33 federal agencies on employee satisfaction, according to the Partnership for Public Service’s analysis of the survey results. At the subcommittee’s request, we currently have work underway evaluating the effectiveness of DHS’s plans and efforts to address its employee morale issues and expect to report our findings later this year. Further, in June 2011, DHS reported that it was developing component operational plans to implement its departmentwide workforce strategy and align the component plans with the goals, measures, and objectives of the strategy. However, in its December 2011 strategy, DHS reported that it had not finished providing feedback to components on their fiscal year 2011 plans.

DHS needs to continue to demonstrate sustainable progress in integrating its management functions within and across the department and its components and take additional actions to further and more effectively integrate the department. Specifically, in its January 2011 high-risk strategy, DHS described plans to establish an Integrated Investment Life Cycle Model (IILCM) for managing investments across its components and management functions; strengthening integration within and across those functions; and ensuring mission needs drive investment decisions. This framework seeks to enhance DHS resource decision making and oversight by creating new department-level councils to identify priorities and capability gaps, revising how DHS components and lines of business manage acquisition programs, and developing a common framework for monitoring and assessing implementation of investment decisions. DHS reported in December 2011 that the IILCM initiative had made little progress since January 2011 though the department planned to begin using the IILCM by the end of September 2012. The department also indicated it had not determined resource needs to accomplish any of the eight associated corrective actions it has identified for this initiative.

While DHS has made progress, the department still faces considerable challenges. Going forward, DHS needs to continue implementing its Integrated Strategy for High Risk Management and show measurable, sustainable progress in implementing its key management initiatives and corrective actions and achieving outcomes. We will continue to monitor and assess DHS’s implementation and transformation efforts through our ongoing and planned work, including the 2013 high-risk update that we expect to issue in early 2013.

Chairman McCaul, Ranking Member Keating, and Members of the Subcommittee, this concludes my prepared statement. I would be pleased to respond to any questions that you may have.

GAO Contact and Staff Acknowledgments

For questions about this statement, please contact David C. Maurer 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 statement. Individuals making key contributions to this statement include Maria Strudwick, Assistant Director; Scott Behen, analyst-in- charge; Michael Laforge, Anjalique Lawrence, Gary Mountjoy, Sabine Paul, Nathan Tranquilli, and Katherine Trimble. Other contributors include: David Alexander, Katherine Davis, Jan Montgomery, and Tomas Ramirez, Jr. Key contributors for the previous work that this testimony is based on are listed within each individual product.

Related GAO Reports

Information Technology: Departments of Defense and Energy Need to Address Potentially Duplicative Investments. GAO-12-241. Washington D.C.: February 17, 2012.

DHS Human Capital: Senior Leadership Vacancy Rates Generally Declined, but Components’ Rates Varied. GAO-12-264. Washington, D.C.: February 10, 2012.

Department of Homeland Security: Additional Actions Needed to Strengthen Strategic Planning and Management Functions. GAO-12-382T. Washington D.C.: February 3, 2012.

Department of Homeland Security: Progress Made and Work Remaining in Implementing Homeland Security Missions 10 Years after 9/11. GAO-11-881. Washington D.C.: September 7, 2011.

High-Risk Series: An Update. GAO-11-278. Washington, D.C.: February 2011.

Information Security: Federal Agencies Have Taken Steps to Secure Wireless Networks, but Further Actions Can Mitigate Risk. GAO-11-43. Washington, D.C.: November 30, 2010.

Department of Homeland Security: Assessments of Selected Complex Acquisitions. GAO-10-588SP. Washington, D.C.: June 30, 2010.

Information Security: Agencies Need to Implement Federal Desktop Core Configuration Requirements. GAO-10-202. Washington, D.C.: March 12, 2010.

Financial Management Systems: DHS Faces Challenges to Successfully Consolidating Its Existing Disparate Systems. GAO-10-76. Washington, D.C.: December 4, 2009.

Department of Homeland Security: Actions Taken Toward Management Integration, but a Comprehensive Strategy Is Still Needed. GAO-10-131. Washington, D.C.: November 20, 2009.

Homeland Security: Despite Progress, DHS Continues to Be Challenged in Managing Its Multi-Billion Dollar Annual Investment in Large-Scale Information Technology Systems. GAO-09-1002T. Washington, D.C.: September 15, 2009.

Department of Homeland Security: Billions Invested in Major Programs Lack Appropriate Oversight. GAO-09-29. Washington, D.C.: November 18, 2008.

Department of Homeland Security: Better Planning and Assessment Needed to Improve Outcomes for Complex Service Acquisitions. GAO-08-263. Washington, D.C.: April 22, 2008.

Homeland Security: Departmentwide Integrated Financial Management Systems Remain a Challenge. GAO-07-536. Washington, D.C.: June 21, 2007.

Information Technology Investment Management: A Framework for Assessing and Improving Process Maturity, version 1.1. GAO-04-394G. Washington, D.C.: March 2004.

High-Risk Series: Strategic Human Capital Management. GAO-03-120. Washington, D.C.: January 2003.

Determining Performance and Accountability Challenges and High Risks. GAO-01-159SP. Washington, D.C.: November 2000.

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