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

Letter

Background

OCPO’s Oversight and Strategic Support Division manages the Chief Procurement Officer’s procurement oversight efforts. Figure 1 shows the division’s four branches. All branches except the strategic sourcing branch are responsible for aspects of the procurement oversight efforts.

Component-level contracting activity is led by component Heads of Contracting Activity (HCA), who have overall responsibility for the day-to- day management of the component’s contracting function. OCPO has oversight responsibilities for all nine DHS HCAs—one for each of the seven components with procurement offices and one HCA each for the Office of Selective Acquisitions and the Office of Procurement Operations, which provide contracting support to all other components. The Selective Acquisitions and Procurement Operations HCAs report directly to the Chief Procurement Officer. The seven other HCAs report directly to their component heads, but their contracting authority is delegated to them from the Chief Procurement Officer. Figure 2 shows the organizational relationships among the HCAs, the Chief Procurement Officer, and other senior DHS leadership.

The Oversight and Strategic Support Division’s strategic sourcing branch has management responsibilities for DHS’s strategic sourcing initiative. DHS defines strategic sourcing as a collaborative and structured process of critically analyzing DHS spending and using an enterprise approach to make business decisions about acquiring and managing commodities and services more effectively and efficiently across multiple components or the entire department. DHS’s strategic sourcing contract vehicles include contracts or agreements that have been established for use by two or more components. To maximize cost savings, DHS encourages component utilization of established strategic sourcing vehicles.

DHS Has Improved Some Aspects of Its Procurement Oversight but Guidance Is Not Sufficiently Updated

OCPO’s oversight has helped ensure that components address constructive assessments of their compliance with procurement regulations and policies and has increased the Chief Procurement Officer’s visibility into components’ progress against procurement-related metrics. OCPO has been less consistent in—but continues to hone—its implementation of other aspects of the program, including self assessments and parts of its acquisition planning reviews. However, at the time of our review, DHS had not issued updated policy or guidance reflecting OCPO’s current approach to procurement oversight, which led to a lack of clarity for components regarding what the oversight efforts entail.

Procurement Oversight Focus Has Changed

OCPO has maintained the overarching structure of its oversight program while making some modifications to reflect a more specific focus on procurement issues versus broader acquisition issues. As described in the management directive and guidebook, OCPO’s original oversight program included four types of reviews: on-site reviews, operational status reviews, self assessments, and acquisition planning reviews. It was based largely on GAO’s Framework for Assessing the Acquisition and assessed broad issues related to both Function at Federal Agenciesacquisitions and procurement. Our prior work on the acquisition oversight program in 2007 found that OCPO’s oversight plan generally incorporated effective acquisition management principles, but that DHS faced challenges in implementing its oversight program. OCPO began making changes to the program in 2008, starting a transition to what is now referred to as “procurement oversight.” OCPO’s current efforts, which at the time of our review were not documented in written policy or guidance, still include the four types of reviews, but no longer fully reflect the original guidance. For example, some reviews are now focused on procurement rather than broader acquisition-related topics, which now fall under the responsibility of other offices such as the recently created Program Accountability and Risk Management Division, which is responsible for acquisition program management oversight.current oversight efforts no longer examine cost, schedule, and performance variances for major investments, which are the responsibility of the Program Accountability and Risk Management Division. Table 1 compares the oversight review structure and focus as described in the original management directive and guidebook with current efforts as described by OCPO officials, since updated guidance was not available at the time of our review.

Components Leverage Buying Power through DHS’s Strategic Sourcing Program

Components Actively Support DHS’s Strategic Sourcing Program

DHS component officials stated that most of their efforts to leverage buying power are through the department’s strategic sourcing program, which facilitates the development and award of contracts for the purchase of specific items or services across DHS. According to DHS data, DHS’s spending through strategic sourcing contract vehicles has increased steadily from $1.8 billion in fiscal year 2008, to almost $3 billion in fiscal year 2011, representing about 20 percent of DHS’s $14 billion in procurement spending for that year. The Office of Management and Budget’s Office of Federal Procurement Policy has cited DHS’s efforts among best practices for implementing federal strategic sourcing initiatives. DHS has implemented 42 strategic sourcing efforts, including indefinite-delivery indefinite-quantity contracts and blanket purchase agreementsengineering services. The department also has several new initiatives under development. for goods and services ranging from ammunition to DHS policies encourage components to consider, but do not require, the use of departmentwide strategic sourcing contract vehicles. Usage of all departmentwide contracts is “mandatory for consideration” unless otherwise approved by the Under Secretary for Management, and therefore must be considered by DHS components prior to awarding a contract. Before pursuing their own procurements, components are to review the DHS-wide intranet site that lists available strategic sourcing contract vehicles. Some component officials said that their staff routinely check that list to determine whether one of those vehicles can be used before initiating a new procurement effort. Further, to encourage increased establishment of strategic sourcing contract vehicles, the HSAM requires the components to involve the strategic sourcing program office to determine if the requirement lends itself to the establishment of a departmentwide contract. If a DHS component makes a decision to implement its own contract instead of a departmentwide contract, it must document in the acquisition plan and contract file the rationale for doing so and notify the Chief Procurement Officer for review and approval. DHS is taking steps to strengthen the use of strategic sourcing at the department and has drafted, but not yet issued, a management directive that would make use of strategic sourcing contract vehicles mandatory with exceptions.

The Chief Procurement Officer has identified increasing strategic sourcing as a departmentwide priority and OCPO encourages the utilization and development of strategic sourcing vehicles in a variety of ways. OCPO officials explained that they host quarterly meetings and training sessions with the DHS Strategic Sourcing Working Group, meet with individual component programs and procurement offices, and post all contract information and ordering guides on the strategic sourcing web page. OCPO includes metrics in its quarterly reports to track components’ strategic sourcing contract vehicle utilization rates and savings, though it has not established component-specific goals or targets to further encourage use and development of strategic sourcing contract vehicles. OCPO officials told us that they consider their strategic sourcing program to be robust, and therefore do not currently think it would be worth the additional effort to develop and track component-specific goals. They said that if component participation were to decline, they might consider developing component-specific goals.

Component officials we met with cited a variety of benefits associated with using DHS’s strategic sourcing program. Most components we interviewed stated that they rely on department-level strategic sourcing policy and efforts rather than developing their own. Several officials explained that, once the contract vehicle is in place, it is much quicker to award contracts. Some components cited economies of scale and indicated that they thought prices had gone down in some areas.

In addition to using the vehicles, DHS components are involved with the program in a variety of ways. Component representatives serve on working groups to help identify potential strategic sourcing opportunities and develop shared requirements. Components are also tasked with serving as the lead for specific initiatives. For example, the Secret Service initiated a department-wide contract on tactical communications in 2012 and Customs and Border Protection led a department effort to obtain canines in 2011.

Components Have Leveraged Contracts with Other Agencies

Some components offered examples of contracts they leveraged with other agencies. For example, Customs and Border Protection leveraged a contract with the Department of Defense for air and marine assets in 2008 and the Secret Service partnered with the Defense Information Systems Agency and White House Communications Agency in 2012 to obtain an event planning, scheduling and reporting system. In another example, the Coast Guard received price discounts for its HC-130J aircraft starting in 2000 by leveraging an Air Force vehicle rather than contracting directly with the manufacturer. However, most components found it more efficient to use DHS’s strategic sourcing vehicles than to leverage contracts with other agencies. Components described several challenges associated with leveraging contracts with other agencies, such as additional up front planning, identifying shared requirements, and paying associated fees to the lead agency.

Component officials indicated that they generally do not leverage contracts directly with other DHS components. Several component officials and the director of DHS’s strategic sourcing branch said that it is not an efficient use of time or resources for individual components to reach out directly to other components to identify shared requirements given the DHS-wide effort does this across components. The director also noted that if a component had an idea of a contract to leverage with another component, they should first share that example at a DHS-wide strategic sourcing forum in case any other components share that same requirement. However, if the components then determine only two components share that requirement, it would make sense for those two components to work together directly.

Conclusions

With its initial oversight efforts in 2005 and today’s more streamlined procurement oversight approach, OCPO has increased department-level insight into components’ procurement operations and recommended ways that components can take steps to improve their overall procurement operations. OCPO’s consistent and constructive on-site and operational status reviews also help ensure that components work towards common departmental procurement goals. However, we found that DHS had not updated its procurement oversight policy and guidance to reflect the increased focus on procurement and changes to the original oversight program. As a result, we found that component officials did not always know what was expected of them regarding the implementation of the procurement oversight efforts. DHS’s recent revision of its policy and guidebook is a step in the right direction, but inconsistencies in the documents as well as with the program as described to us by DHS officials could lead to further confusion, which would diminish the value of the program and opportunities for increased accountability for procurements.

Recommendation for Executive Action

In order to help ensure that DHS component officials understand what OCPO expects of them in its procurement oversight, we recommend that the Secretary of Homeland Security direct the Chief Procurement Officer to review and ensure consistency between Directive 143-05 and the Procurement Oversight Program Guidebook and with the department’s current procurement oversight efforts.

Agency Comments and Our Evaluation

We provided a draft of this report to DHS for review and comment. The draft included a recommendation that DHS issue updated policy and guidance to reflect changes to the department’s procurement oversight efforts. In written comments, the department concurred with our findings and recommendation. The department’s comments are reprinted in Appendix II. DHS informed us that, to address the recommendation in our draft report, it updated its directive and guidebook to better mirror current procurement oversight practices and that it will make both documents available on DHS’s internal website.

DHS’s revisions to the policy and guidance are a step in the right direction. However, we found inconsistencies between the updated directive and guidebook as well as with the program as described to us by DHS officials. As we noted when we made our draft recommendation, component officials do not always know what is expected of them regarding the implementation of the procurement oversight efforts, which diminishes the value of the program. Therefore, while we acknowledge DHS’s most recent efforts to update the directive and guidebook, we continue to believe that additional action is needed and have therefore revised our recommendation.

We are sending copies of this report to the Secretary of Homeland Security. In addition, the report is also available at no charge on the GAO website at http://www.gao.gov.

If you or your staff have any questions about this report or need additional information, please contact me at (202) 512-4841 or huttonj@gao.gov.

Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. Staff acknowledgments are provided in appendix IV.

Appendix I: Scope and Methodology

The objectives of this review were to (1) assess the Department of Homeland Security’s (DHS) efforts to implement procurement oversight, and (2) identify DHS components’ use of strategic sourcing to leverage their buying power.

To assess DHS efforts to implement procurement oversight, we examined DHS’s procurement oversight policies and guidance; reviewed prior GAO reports on acquisition and procurement oversight; interviewed knowledgeable officials from the Office of the Chief Procurement Officer (OCPO) and from DHS components; and examined OCPO and component documentation of oversight efforts, including OCPO’s review schedule, quarterly reports, goal letters, operational status reports, and documentation of on-site reviews from 2007 to the present. Specifically, we interviewed the Chief Procurement Officer, the Director for Oversight and Strategic Support, officials from the four branches of the Oversight and Strategic Support Division, and senior officials, including four Heads of Contracting Activity (HCA), from the nine DHS contracting offices with HCAs to discuss the evolution of DHS’s oversight efforts. To evaluate the extent to which DHS components address the findings and recommendations identified in on-site reviews, we interviewed OCPO and component contracting officials, reviewed on-site review findings and recommendations, and analyzed components’ written responses regarding actions they took to address recommendations from their most we recent reviews. For all eight contracting offices that OCPO reviewed,examined the contracting offices’ descriptions of actions they took to address recommendations from their most recent on-site reviews and assessed their documentation of those actions.

To identify DHS components’ use of strategic sourcing to leverage their buying power, we reviewed relevant policies and guidance, examined department and component documentation and interviewed OCPO and component officials on practices they employ, contracts they have leveraged, and views on resulting benefits. Specifically, we interviewed officials from DHS’s strategic sourcing branch, as well as all nine contracting offices with HCAs, to gain an understanding of DHS’s strategic sourcing processes, the availability of strategic sourcing contracting vehicles, and the potential of establishing component specific strategic sourcing goals.

We conducted our work from March 2012 to September 2012 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.

Appendix II: Comments from the Department of Homeland Security

Appendix III: Snapshot from a 2012 DHS Component Quarterly Report

Appendix IV: GAO Contact and Staff Acknowledgments

GAO Contact

Staff Acknowledgments

In addition to the contact named above, the following individuals made key contributions to this report: Katherine Trimble, Assistant Director; Laura Holliday, Andrea Bivens, Laura Greifner, and Sylvia Schatz.