In 2003, we designated the implementation and transformation of DHS as a high-risk area because it represented an enormous undertaking that would require time to achieve in an effective and efficient manner. The department has remained on our high-risk list since 2003. Most recently, in our January 2009 high-risk update, we reported that, although DHS had made progress in transforming into a fully functioning department, its transformation remained high risk because it had not yet developed a comprehensive plan to address the transformation, integration, management, and mission challenges we identified since 2003. The Management Directorate, which is led by the USM, includes the Chief Financial Officer (CFO), the Chief Security Officer (CSO), the Chief Human Capital Officer (CHCO), the Chief Administrative Officer (CAO), the Chief Procurement Officer (CPO), and the Chief Information Officer (CIO). They are referred to as the departmental management chiefs. In addition to the department’s Management Directorate, each of the seven DHS component agencies has its own component management chief for the procurement, financial, human capital, information technology, administrative, and security management areas. Figure 1 shows the DHS Management Directorate’s organizational structure. The 9/11 Commission Act requires DHS to develop a strategy for management integration as part of the department’s integration and transformation to create a more efficient and orderly consolidation of functions and personnel in the department. In our 2005 report, we recommended that DHS develop an overarching management integration strategy for the department that would, at a minimum, contain such characteristics as identifying the linkages among management initiatives, trade-offs and priorities, and potential efficiencies. Although DHS stated at that time that it was developing an integration strategy, it has not yet developed a comprehensive strategy for management integration that is consistent with statute and that contains all of the characteristics we identified in 2005. According to DHS’s USM, the department has not yet done so because, in part, the Management Directorate has focused on building the management operations capacity within the functional areas, such as financial management and information technology. The Management Directorate has not yet focused on integration across the functional areas and has not clearly or systematically identified trade-offs and linkages among initiatives in different functional areas. According to DHS’s USM, Chief of Staff, and department and component management chiefs, in the absence of a comprehensive management integration strategy, various departmental documents collectively contribute to the department’s strategy for implementing and achieving management integration. These documents are discussed in detail in our report. In particular, DHS officials identified (1) departmentwide documents that provide guidance that relate to management integration across the department, such as DHS’s Integrated Strategy for High Risk Management and Management Directorate Strategic Plan; and (2) documents for management of functional areas. With regard to functional area documents, DHS officials indicated that both management directives and functional area strategic plans contain elements of the department’s strategy for achieving management integration. DHS issued management directives for each of the six department management chiefs—the CAO, CFO, CHCO, CIO, and CPO management directives were issued in 2004 (with updates for the CIO and CPO in 2007 and 2008, respectively); the management directive for CSO was issued in 2006. These directives communicate standard definitions of the management chiefs’ respective roles and responsibilities; define the concept of “dual accountability” for both mission accomplishment and functional integration as the shared responsibility of the heads of DHS’s individual agencies or components and the department management chiefs; and establish the need for the department management chiefs, along with the heads of agencies, to annually recommend and establish integration milestones for the consolidation of the chiefs’ functions. Functional area strategic plans generally discuss, among other things, the missions and goals of the department management chiefs and the link between the goals and objectives in each functional area strategic plan and the goals and objectives in DHS’s Strategic Plan. Among the six department chiefs, four have issued strategic plans for their functional areas—the CAO, CIO, CHCO, and CSO. While some of the documents DHS officials identified as contributing to the department’s strategy for implementing and achieving management integration address some of the characteristics we have previously identified for such a strategy, these documents, either individually or taken together, do not include all of the characteristics we have identified. The documents described by DHS officials as contributing to the department’s strategy for achieving management integration can provide high-level guidance for integration efforts and can help the department to manage those efforts. Moreover, the Management Directorate Strategic Plan and other departmentwide documents, for example, set performance goals, measures, and targets for achieving certain management initiatives. Such elements as goals, objectives, milestones, performance targets, and priorities documented in these plans and strategies can help the department to manage, implement, and monitor the specific initiatives to which these elements apply. They can also help to guide efforts to consolidate policies, processes, and systems within each management functional area. However, among the documents cited by DHS officials as being part of the department’s management integration strategy, DHS has not yet looked across the management initiatives within management functional areas to identify the critical links that must occur among these initiatives to integrate the department’s management functions both within and across functional areas. Furthermore, the documents generally do not identify the priorities, trade-offs, and potential efficiencies among management initiatives, nor do they set implementation goals and a time line for monitoring the progress of initiatives to ensure the critical links occur when needed. Thus, when considered either individually or together, these documents do not constitute a management integration strategy containing all of the characteristics we have identified. In addition, although DHS has developed some performance goals and measures to measure management activities, it has not yet established measures for assessing management integration across the department. For example, DHS has increased the number of departmentwide performance measures for the Management Directorate in support of Goal 5 of DHS’s Strategic Plan. Specifically, since fiscal year 2008, DHS has added 13 new measures and retired 3 others for the Management Directorate in support of its strategic plan, going from 5 performance measures for the Management Directorate in fiscal year 2008 to 15 measures in fiscal year 2009. These measures relate to activities in functional areas but do not help to measure management integration. DHS officials told us that the department’s current measures do not allow the department to gauge the status of management integration and that the department has focused on the development of measures for departmental components, offices, and directorates—such as a measure for the attrition rate for career senior executive service personnel and a measure for the percentage of improper payments collected. However, these performance measures do not allow the department to assess its progress in achieving departmental goals for management integration within and across functional areas. DHS officials stated that the department’s goal is to develop a set of measures that will help the department assess its management integration. Without such a set of measures, DHS cannot assess its progress in implementing and achieving management integration both within and across its functional areas. A comprehensive strategy for management integration that clearly sets implementation goals and time lines could help the department establish measures for assessing its management integration. We are continuing to work with DHS to review and provide input on the department’s performance measures used to assess the department’s progress in its mission and management areas. While DHS does not have a comprehensive management strategy, its Management Directorate is working to consolidate management policies, processes, and systems and it has instituted a system of management councils and governance boards. The Management Directorate has developed and implemented departmentwide policies to replace policies from each of the legacy agencies that make up DHS in all six management functions. For example, the DHS CFO’s office launched an online Financial Management Policy Manual tool, which serves as the single authoritative guide on financial management and the foundation for departmentwide financial management knowledge sharing and standardization. According to officials from the DHS CFO’s office, the Financial Management Policy Manual is part of its approach to integrate within the financial management function and is critical to enable financial management employees to carry out their duties and responsibilities effectively and efficiently. The Management Directorate also has other initiatives under way to consolidate its management systems. For example, the Transformation and Systems Consolidation (TASC) initiative is the department’s current effort to consolidate its financial management, acquisition, and asset management systems. DHS has been working to consolidate its financial management systems since the department was first created. Through various management councils, the Management Directorate shares information related to the implementation of management initiatives, solicits feedback from the components, and provides a forum for coordination between component management offices. Each management chief chairs a functional council to address issues pertaining to that management function. Likewise, the USM chairs a Management Council made up of the DHS management chiefs and a representative from each component that discusses issues of departmentwide importance, such as training and development programs. The Management Directorate has also taken steps toward consolidating some management processes and established governance boards to manage the processes in the areas of acquisition, information technology, financial management, and resource allocation. The USM and department and component management chiefs are held accountable for implementing management integration through reporting relationships at three levels—between the Secretary and the USM, the USM and department management chiefs, and the department and component management chiefs—in which, among other things, the Secretary of Homeland Security, USM, and department chiefs are required to provide input into performance plans and evaluations. Our prior work has shown that, to be successful, transformation efforts must align individual performance expectations with organizational goals. In the case of transforming and integrating DHS, the USM, department, and component management chiefs must align their goals and activities through performance management practices in support of DHS’s management integration goals. In our review, we found that performance management practices for management integration between DHS’s department and component management chiefs are not consistently in place. Department chiefs are not consistently providing the guidance and input required by department management directives and in accordance with performance management leading practices.