Sixty-eight of the  71 programs that responded to our survey reported that they experienced  funding instability, faced workforce shortfalls, or their planned capabilities  changed after initiation. We used this information and our survey results to identify 42  programs that experienced cost growth, schedule slips, or both. Cost  information DHS submitted to Congress provides insight into the  magnitude of the cost growth for 16 of the 42 programs. Using this  information, we found total project costs increased from $19.7 billion in  2008 to $52.2 billion in 2011, an aggregate increase of 166 percent. Programs Proceed without Meeting Sound DHS Acquisition Policy

DHS acquisition policy reflects many key program management  practices.critical knowledge that would help leaders make better informed  investment decisions when managing individual programs. However, as of April 2012, the department  had only verified that four programs documented all of the critical  knowledge required to progress through the acquisition life cycle. Officials explained that DHS’s culture has emphasized the need to rapidly  execute missions more than sound acquisition management practices,  and we have found that most of the department’s major programs are at  risk of cost growth and schedule slips as a result. In addition, they lack  the reliable cost estimates, realistic schedules, and agreed-upon baseline  objectives that DHS acknowledges are needed to accurately track  program performance, limiting DHS leadership’s ability to effectively  manage those programs and provide information to Congress. DHS  recognizes the need to implement its acquisition policy more consistently,  but significant work remains. DHS Needs Policy and Process Enhancements to Effectively Manage Its Portfolio of Investments

DHS acquisition policy does not fully reflect several key portfolio- management practices, such as allocating resources strategically, and  DHS has not yet reestablished an oversight board to manage its  investment portfolio across the department. As a result, DHS has largely  made investment decisions on a program-by-program and component-by- component basis. The widespread risk of poorly understood cost growth,  coupled with the fiscal challenges facing the federal government, makes it  essential that DHS allocate resources to its major programs in a  deliberate manner. DHS plans to develop stronger portfolio-management  policies and processes, but until it does so, DHS programs are more likely  to experience additional funding instability in the future, which will  increase the risk of further cost growth and schedule slips. These  outcomes, combined with a tighter budget, could prevent DHS from  developing needed capabilities. DHS Acquisition Management Initiatives Target Longstanding Challenges, but Key Implementation Issues Remain

DHS has introduced seven initiatives that could improve acquisition  management by addressing longstanding challenges we have identified— such as funding instability and acquisition workforce shortfalls—which  DHS survey respondents also identified in 2012. Implementation plans  are still being developed for all of these initiatives, and DHS is still  working to address critical issues, particularly capacity questions. Because of this, it is too early to determine whether the DHS initiatives  will be effective, as we have previously established that agencies must  sustain progress over time to address management challenges. DHS is  also pursuing a tiered-governance structure that it has begun to  implement for IT acquisitions. In 2011, DHS began to develop initiatives to address these challenges,  and DHS has continued to evolve these plans in 2012. Recommendations for Executive Action

We recommend that the Secretary of Homeland Security direct the Under  Secretary for Management to take the following five actions to help  mitigate the risk of poor acquisition outcomes and strengthen the  department’s investment management activities:
Modify DHS acquisition policy to more fully reflect the following  program management practices:
Require that (1) programs demonstrate technologies in a realistic  environment prior to initiating development activities, and (2)  manufacturing processes be tested prior to production;
Require that (1) exit criteria be quantifiable to the extent possible,  and (2) consistent information be used across programs at ADE  2B and 2C;
State that program managers should remain with their programs  until the next major milestone when possible;
Modify DHS acquisition policy to more fully reflect the following  portfolio management practices:
Empower portfolio managers to decide how best to invest
Establish that investments should be ranked and selected using a
Establish that (1) resource allocations should align with strategic  goals, and (2) the investment review policy should use long-range  planning; and
Require portfolio reviews (1) annually to consider proposed  changes, (2) as new opportunities are identified, and (3) whenever  a program breaches its objectives;
Ensure all major acquisition programs fully comply with DHS  acquisition policy by obtaining department-level approval for key  acquisition documents before approving their movement through the  acquisition life cycle;
Once the department’s acquisition programs comply with DHS  acquisition policy, prioritize major acquisition programs  departmentwide and ensure that the department’s acquisition portfolio  is consistent with DHS’s anticipated resource constraints; and
Clearly document that department-level officials should not delegate  ADE decision authority to component-level officials for programs  lacking department approved APBs or not meeting agreed-upon cost,  schedule, and performance thresholds. Specifically, we  assessed the extent to which: (1) DHS’s major acquisition programs face  challenges that increase the risk of poor outcomes; (2) DHS has policies  and processes in place to effectively manage individual acquisition  programs; (3) DHS has policies and processes in place to effectively  manage its portfolio of acquisition programs as a whole; and (4) DHS has  taken actions to resolve the high-risk acquisition management issues we  have identified in previous reports.
Why GAO Did This Study

DHS invests extensively in major acquisition programs to develop new systems that help the department execute its many critical missions. In 2011, DHS reported to Congress that it planned to invest $167 billion in these major acquisition programs. We previously found that DHS had not managed its investments effectively, and its acquisition management activities have been on GAOs High Risk List since 2005. This report addresses the extent to which (1) major DHS acquisition programs face key challenges; (2) DHS has policies and processes to effectively manage individual acquisition programs; (3) DHS has policies and processes to effectively manage its portfolio of acquisition programs as a whole; and (4) DHS has taken actions to address the high-risk acquisition management issues GAO has identified in previous reports. GAO surveyed all 77 major program offices DHS identified in 2011 (92 percent response rate), reviewed available documentation of acquisition decisions from November 2008 to April 2012, and interviewed officials at DHS headquarters and components.

What GAO Found

Nearly all of the Department of Homeland Security (DHS) program managers GAO surveyed reported their programs had experienced significant challenges. Sixty-eight of the 71 respondents reported they experienced funding instability, faced workforce shortfalls, or their planned capabilities changed after initiation, and most survey respondents reported a combination of these challenges. DHS lacks the data needed to accurately measure program performance, but GAO was able to use survey results, information DHS provided to Congress, and an internal DHS review from March 2012 to identify 42 programs that experienced cost growth, schedule slips, or both. GAO gained insight into the magnitude of the cost growth for 16 of the 42 programs, which increased from $19.7 billion in 2008 to $52.2 billion in 2011, an aggregate increase of 166 percent.
DHS acquisition policy reflects many key program management practices that could help mitigate program risks. It requires programs to develop documents demonstrating critical knowledge that would help leaders make better informed investment decisions when managing individual programs. However, DHS has not consistently met these requirements. The department has only verified that four programs documented all of the critical knowledge the policy requires to proceed with acquisition activities. Officials explained that DHSs culture has emphasized the need to rapidly execute missions more than sound acquisition management practices. Most major programs lack reliable cost estimates, realistic schedules, and agreed-upon baseline objectives, limiting DHS leaderships ability to effectively manage those programs and provide information to Congress. DHS recognizes the need to implement its acquisition policy more consistently, but significant work remains.
DHS acquisition policy does not fully reflect several key portfolio management practices, such as allocating resources strategically, and DHS has not yet re-established an oversight board to manage its investment portfolio across the department. As a result, DHS has largely made investment decisions on a program-by-program and component-by-component basis. The widespread risk of poorly understood cost growth, coupled with the fiscal challenges facing the federal government, makes it essential that DHS allocate resources to its major programs in a deliberate manner. DHS plans to develop stronger portfolio-management policies and processes, but until it does so, DHS programs are more likely to experience additional funding instability, which will increase the risk of further cost growth and schedule slips. These outcomes, combined with a tighter budget, could prevent DHS from developing needed capabilities.
DHS has introduced seven initiatives that could improve acquisition management by addressing longstanding challenges GAO and DHS survey respondents have identified, such as funding instability and acquisition workforce shortfalls. Implementation plans are still being developed, and DHS is still working to address critical issues. Because of this, it is too early to determine whether the DHS initiatives will be effective, as GAO has previously established that agencies must sustain progress over time to address management challenges. DHS is also pursuing a tiered-governance structure, but it must reduce risks and improve program outcomes before regularly delegating major milestone decision authority.

What GAO Recommends

GAO recommends that DHS modify its policy to better reflect key program and portfolio management practices, ensure acquisition programs fully comply with DHS acquisition policy, prioritize major acquisition programs departmentwide and account for anticipated resource constraints, and document prerequisites for delegating major milestone decision authority. DHS concurred with all of GAOs recommendations, and noted its progress on a number of fronts, which is accounted for in the report.